COS Weekly Newsletter - Friday, 5 August 2022

CN Rail has released its highly anticipated 2022-23 Grain Plan as required under the Canadian Transportation Modernization Act. CN expects the movement of Western Canadian grain via carload on CN in 2022–23 to rebound to 24.5–27.0 million metric tons (MMT), with grain shipped via container direct from Western Canada in addition to these volumes. The Plan sets out the specific steps that CN is taking to ensure it can meet the forecast demand from the grain sector in the new crop year. For example, the Plan provides details on workforce recruitment, adding 57 new high horsepower locomotives and new rolling stock, all to support the delivery of grain and other commodities. Faced with growing demands from all sectors, the Plan also calls for greater balance across all rail corridors to reach the upper end of the maximum sustainable supply chain capacity range. "Intense pressure" is expected this crop year, especially with respect to rail movement to Canada’s West Coast ports and total demand for rail capacity between Edmonton and the ports of Vancouver and Prince Rupert will exceed network capacity during some weeks in the fall of 2022 and in early 2023.

Last week the Federal Court released the judgment and decision in the judicial review filed by GCT Canada Limited Partnership with respect to the Vancouver Fraser Port Authority (VFPA) executives’ conduct and perceived bias with respect to the preliminary project enquiry submitted for GCT’s proposed expansion at Deltaport (DP4).  The Honourable Mr. Justice Pamel determined that there was insufficient evidence of bias on the part of the VFPA executives.  Furthermore, as DP4 would now be considered a “designated project” under the Impact Assessment Act enacted in August 2019, the judge dismissed GCT’s application as the issues between the parties have become moot.

The Vancouver Fraser Port Authority has confirmed that no changes have been made to the Rolling Truck Age Program effective as of September 15, 2022. As of now, 15 trucks will age out of the program on that date. The port authority thanks the many trucking companies and drivers, representing 80% of container trucks serving the port, who are already in compliance with the program, which aims to reduce harmful emissions and improve air quality.  The VFPA met recently with the United Truckers Association (UTA), together with Randeep Sarai, Member of Parliament for Surrey Centre, to hear the UTA’s perspective on operational challenges their membership is experiencing at the Port of Vancouver.  For more information about the Rolling Truck Age Program, visit the program’s webpage.

Woodfibre LNG Limited and Enbridge Inc. announced an agreement to jointly invest in the construction and operation of the Woodfibre LNG project. Under the partnership agreement, Enbridge will invest in a 30% ownership stake in the $5.1 billion Woodfibre LNG project, with Pacific Energy retaining the remaining 70% stake in the facility. Capital for the project includes a contribution in aid of construction for the expansion of FortisBC Energy Inc.’s (“FortisBC”) Eagle Mountain to Woodfibre pipeline which will connect the facility through FortisBC’s system to Enbridge’s T-South natural gas transmission system. The partners will jointly participate in project’s execution and governance of ongoing operations, while Pacific Energy retains responsibility for daily operations.

The Canadian Ferry Association (CFA) has elected Captain Jamie Marshall as Chair of the Board of Directors.  Captain Marshall’s previous mandate as Chair (ended in 2019) had seen unprecedented growth for the association.  CFA thanked Mark Collins for his dedication and leadership as Chair of CFA.  Capt. Marshall has just been appointed as Vice President Safety Security & Environment at BC Ferries.

As part of the Oceans Protection Plan, the federal government’s 2022 budget announced intentions to update the Canada Shipping Act, 2001. These proposed changes take into account comments from Indigenous peoples, coastal communities, and marine stakeholders in all coastal regions over the past few years as outlined in the discussion paper. A virtual engagement session will be held on September 12^th, 2022 from 10:30 – 12:00pm PDT (English) and on September 13^th, 2022 from 10:30 – 12:00pm PDT (French). To register complete the form indicating the preferred session by August 31^st.

On September 8 and 9, 2022, the Competition Bureau will host two virtual public information sessions to let the public know about changes to the Competition Act.  Members of the public can register and send questions on Eventbrite.  Notable changes to the Act that came into effect on June 23, 2022, include clarifying that incomplete price disclosure—drip pricing—is a deceptive marketing practice; allow private parties to apply directly to the Competition Tribunal if they are impacted by abuse of dominance; and enable more effective enforcement in today’s digital economy. More information on the amendments can be found by consulting the Bureau’s Guide to the 2022 amendments to the Competition Act.

As record-breaking container ship queues threaten to tie up ports around the country ahead the of the fall peak shipping season, the Port of New York and New Jersey announced it will be charging ocean carriers a $100 per-container fee on long-dwelling import or export containers, with the goal of freeing up space and improving the balance between imports and exports. Under the new rules, ocean carriers’ total outgoing container volume must equal or exceed 110% of their incoming container volume during the same period. If they fail to achieve this, the ocean carriers will be charged $100 per container of imbalance. Rail volume is not included. The new tariff is effective as of September pending a mandatory 30-day federal notice.  The fee will be reassessed once the container crisis eases and a review by the agency’s board of commissioners is required no later than September 2023.

The Federal Maritime Commission (FMC) is seeking public comments on a proposed plan for gathering import and export information from vessel-operating common carriers as required under the Ocean Shipping Reform Act of 2022 (OSRA). The FMC is mandated to collect and publish total import and export tonnage and the total loaded and empty 20-foot equivalent units (TEU) per vessel of vessels calling the United States. Each month the FMC intends to collect information from carriers that transport 1,500 or more TEUs monthly (laden and/or empty) and if necessary additional information may be requested.  A Request for Public Comment will be published in the Federal Register and interested parties will have 60 days to share their views with the Commission.

Three more ships loaded with grain have left Ukrainian ports today, only days after the first grain-laden vessel left the country since Russia’s invasion. The initial shipment under the deal brokered by the United Nations amid concerns of a global food shortage left Ukraine’s Port of Odesa on Monday on the Razoni.  The vessel was escorted by a tugboat to avoid Ukrainian mines and passed through a Russian-controlled Black Sea corridor and anchored in Turkish waters at the Bosporus for inspection.  On Wednesday the vessel was cleared to sail on to Tripoli, Lebanon. Ukraine hopes to export 20 million tonnes of grain in silos and 40 million from its new harvest and Ukraine's Seaport Authority said on Monday there were 68 ships in Ukrainian ports with 1.2 million tonnes of cargo on board, two-thirds of it being food.

Asset manager Atlas Corp (ATCO.N) has received a takeover offer from consortium group Poseidon Acquisition Corp in an all-cash deal for $3.64 billion. Poseidon, which comprises Atlas' board chairman David Sokol, affiliates of Canadian investment company Fairfax Financial Holdings Ltd (FFH.TO), the Washington Family, and Japanese shipping company Ocean Network Express Pte Ltd, has made an offer to the asset manager for $14.45 cash per common share. Altas’ wholly-owned subsidiaries includes Seaspan, the largest independent owner and operator of containerships in the world.

China's military exercises in the waters around Taiwan have prompted some ships to navigate around the Taiwan Strait and give the island a wide berth, disrupting key trading routes for cargo and commodities sailing around the world. The exercises, China's largest-ever around Taiwan, are a major show of strength after US House Speaker Nancy Pelosi visit. The disruption is a reminder of the severe impact a conflict over Taiwan could have on global trade given the 180-km wide (110-mile) Taiwan Strait and a shipping lane to the island's east are major routes for ships transporting goods from East Asia to the United States and Europe. Nearly half the world's container ships passed through the narrow Taiwan Strait which is also a key artery for natural gas.

A total of 147 ports around the globe can bunker LNG to vessels at the moment and this figure is likely to reach 200 by 2024 as demand continues to grow, estimates from Clarksons Research show. Europe is leading the way with LNG bunkering infrastructure, with the majority of its top ports offering the service, including those in the Netherlands, Germany, and Norway, followed by major ports in Asia and the Americas.  The expansion of the global bunkering capacity comes as LNG capable newbuilds reach 37% of all vessel type newbuilding capacity currently under construction. The interest in LNG as fuel has seen a major upswing in the shipping industry over the recent period with dual-fuel technology being the likely choice for newbuilds. The rise in demand has also brought about a record contracting of newbuild LNG carriers, with 104 vessels of 17.4m cbm and $22bn ordered in 2022 as of mid-July.

The Digital Container Shipping Association (DCSA) and European Shippers’ Council (ESC) will now collaborate to accelerate the adoption of the DCSA standards. The two associations will leverage DCSA’s open-source, vendor-neutral standards to help their members and other business partners make data exchange more timely, accurate, and interoperable. Standardizing documents such as the bill of lading to enable paperless trade is also a key topic for the collaboration. By working together, DCSA and the ESC will carry out structured, cross-member engagement activities to ensure DCSA standards meet shipper needs and facilitate adoption. During recent supply chain disruptions, it has become increasingly apparent how important it is to improve cargo visibility and data communication between ocean carriers and cargo owners.

RightShip is acquiring Thynk Software’s maritime tech business as it recognizes big data and predictive analytics play a massive role in the ship vetting agency’s business, enabling owners to select greener and safer vessels. The agency is also working with the Australian Marine Environment Protection Association to develop a maritime emissions portal, enabling ports and their stakeholders to measure air quality and changing air patterns throughout the port ecosystem.

Ocean Network Express’ new 11,800 TEU container vessel, ONE Parana, has been deployed to the Asia- North America trade on the Pacific North 2 service.  The vessel’s maiden voyage to the Pacific Northwest is underway and we should see her in Vancouver around August 24^th after her first North American stop in Tacoma.

Flag: Hong Kong
Length: 330m
Beam: 48m
DWT: 132,736
Gross Tonnage: 114,643

Ocean Network Express (ONE) was established on July 7, 2017 by the integration of three Japanese shipping companies, 'K' Line, MOL and NYK.  The fleet with its cherry blossom colour is representative of Japan’s spring season, as the trees blooming is a common sight across the country. ONE is one of the partners in the US $3.64 billion Atlas Corp takeover offer.