Thank you for the invitation to speak to you today.

The theme of my speech centers on the role of the Port of Vancouver in our economy and the challenges we face both now and in the future. And when I say "we" by that I mean everyone here in this room, in this city, in this province and across western Canada. This is everybody's port.

Let me illustrate the reach and impact of the Port of Vancouver by highlighting some of the key findings from a recent study we commissioned.

Conducted by Intervistas the study provided us with details of economic benefits that surpassed our own expectations.

Direct, indirect and induced jobs created by the Port of Vancouver across Canada number: 62,000.

The contribution that the Port of Vancouver makes to Canadian wages is $1.3 billion annually and we pay some $620 million in taxes to various levels of government.

The value of cargo moved through the port equals $29 billion per year, or approximately $80 million per day.

If you haven't already done so, please help yourself to one of our brochures. We would be happy to respond to any questions you have about the study.

We are the largest port in Canada. Last year, 72.8 million tonnes of cargo passed through this port. If you were to put this cargo into rail cars and line them up end to end, they would encircle the globe at the latitude of Vancouver.

The Port of Vancouver ships more cargo than the Ports of Montreal, Halifax, Quebec and St. John combined.

So you can see, the Port of Vancouver is a large generator of jobs, taxes and revenue.

This type of study illustrates the benefits of the Port of Vancouver to our economy. I would also like to share with you some other initiatives we are undertaking at the Port.

In many ways, the Port of Vancouver has been a leader in new approaches to doing business by taking advantage of technology to retain our competitive position.

Almost three years ago there was a trucking dispute at the port, which centered on long line-ups at container terminals.

At peak times, the line-ups lasted three hours, creating a frustrating and unacceptable situation to drivers, terminals and our customers.

To solve this dilemma, the port worked with terminal operators and other stakeholders to implement a web-based appointment system. Today, the system is fully utilized with waiting times ranging from zero to 20 minutes on average.

Customers of ports in the U.S. are now demanding similar systems to reduce their delays.

We will continue this initiative by graduating to proximity cards for cargo information, gate clearances, and port access.

In four years we expect to have eliminated much of the paper flow that surrounds these movements.

In the area of cruise operations, once again, the Port of Vancouver is seen as a leader and model port.

In 2000, the VPA invested $89 million to build a new cruise berth and new facilities. This year the new north berth will be opened and operational, one year ahead of schedule.

Coupled with the expansion and renovations at Canada Place is a highly modern security system of cameras and access control.

It was these new systems that allowed us to react so decisively and effectively following the events of September 11th, a fact which is confirmed by two separate sources.

At a meeting in Florida last November, the North West CruiseShip Association advised our staff that Vancouver was the most secure port for their passengers of any that they used in North America.

In addition, the federal Minister of Transport, following reports from his staff here in Vancouver, advised his counterpart in the United States that if they want to improve their port security, they should talk to the Port of Vancouver. And, in fact, Commissioner Bonner, Head of US Customs visited our Port last week to gain an insight of how we handle our security and other matters.

Our commitment to security is of paramount importance and comprises a major component of our operations. I'm sure you have all been reading the recent press coverage regarding the Senate Report on security and I want to assure you that we at the Port welcome the Committee's recommendations to hold an Inquiry. If there are any concerns regarding security and crime on the waterfront, we want the organizations responsible for responding to these issues, Customs, police and Transport Canada to be fully aware and to be given the necessary resources to deal with any problems found.

Let me assure you that we share these concerns and that we take security at the port very seriously. In 1997, the port hired a Chief of Security following the Minister of Transport's decision to eliminate the Canada Ports Corporation and, as a consequence of this, the Ports Canada Police.

This focused the attention of the VPA on the areas where at the time our security was, quite frankly, weak or non-existent.

To counteract this we undertook the following initiatives:

We hired a Security firm to supply patrol services, and they do an absolutely excellent job of security and traffic control.

And, in addition to the $56 million in local taxes paid by the Port and its tenants, the Port provides funding to the RCMP and the local Police to pay the costs of policing services not covered by our tax payments, this provides a police presence at a level that was not previously possible.

In January, VPA commissioned new mobile container scanning equipment. The equipment, which is being operated by the Canada Customs and Revenue Agency, uses gamma ray technology, which can safely and non-intrusively scan containers for contraband at the rate of one per minute.

By doing so, the Port of Vancouver becomes the first port in Canada to use such technology.

In purchasing this equipment, the need and cost to our customers for on dock inspections is reduced.

We are discussing further technologies that could get us to achieve 100% inspection rates. If this is successful, every box in and out of Vancouver could be examined.

This would make Vancouver a very difficult port to use for contraband.

Similarly, with the participation of the Terminals, Labour and employer organizations we have developed the mechanism for access control to the port roads, the terminals and other areas where security is necessary.

An incident and alert system is included in this joint security program, where anyone in the system can notify the others of thefts, suspicious behaviors etc. This program is scheduled to commence this year.

Our commitment to security is essential if we are to maintain and enhance our reputation as a safe and efficient place to do business.

It serves no purpose, however, if cargo is cleared through this port only to be stopped at the U.S. border due to concerns by our neighbours to the south over similar security issues. We have been working very hard with other ports, railroads, airports etc. on this issue.

This is why we are encouraged by recent developments to work on the pre-clearance of U.S.-destined cargo at Canadian ports. One initiative resulting from the Border Agreement signed last year by US Attorney General John Ashcroft and Solicitor General Lawrence MacAulay was outlined in yesterdays announcement made by the Minister of National Revenue. The Minister stated "By March 25, 2002, Canada and the U.S. will have joint teams of customs officials in the ports of Vancouver, Montreal, Halifax, Seattle-Tacoma and Newark to target marine containers destined for either country at their port of arrival into North America." This is an excellent example of how the Border Agreement will contribute to the secure and efficient flow of goods across our borders.

The current work underway on coordinated clearance must continue if this port is to remain successful. I believe that technologies and new initiatives such as I just described will help pave the way.

There are issues that, without our intervention, and help from others, may prove detrimental to our competitive position.

In particular, there are two fundamental points that affect the future health and prosperity of the port and its surrounding communities. These issues are taxation and transportation in the Lower Mainland. I will speak about transportation in a minute but let me first address the issue of taxation.

Put quite simply, taxation is affecting our ability to compete.

In recent years, this port has made serious gains in attracting business from U.S. ports to the south of us. Containers landed in Seattle, bound for Canada, used to be around 35% of the total now its around 6% as these containers come direct to Vancouver.

In the past two years, the Port of Vancouver has climbed to the number one spot in the Pacific Northwest for the number of full foreign containers. This is ahead of Seattle, Tacoma and Portland.

We now rank number three on the West Coast for full foreign containers, behind L.A. and Long Beach California.

However, without some changes in this marine gateway, we will lose business back to our U.S. competitors.

Experience has shown that once lost, it can take up to ten years to recapture it.

At the heart of this challenge to remain competitive is the fundamental issue concerning the differences in tax structures between our ports.

As I said earlier, VPA and its tenants pay some $56 million in taxes to the local municipalities annually.

Seattle on the other hand is a tax raising authority and assesses the residents in each and every household. This raises around $50 million Canadian that the Port of Seattle can use to fund infrastructure.

Furthermore, U.S. ports are able to float tax-exempt bonds to pay for terminals and other infrastructure. A new terminal here in Vancouver would cost approximately $500 million. This has to be funded from revenues from our customers. In contrast, it costs U.S. ports nothing to provide the required infrastructure. This puts Vancouver at a severe disadvantage to provide the infrastructure thats needed to compete.

VPA is a member of the Greater Vancouver Gateway Council, and together we have been working with the new Provincial Government to address some of the issues surrounding the levels of property taxation that ports in this province and their tenants are paying.

The consequences of this situation are now being experienced by some of the terminal operators at this port as their businesses strain under crippling taxes.

In the U.S., Seattle to be exact, taxes payable on a terminal are legislated to a maximum of 12.84% of their rent. Here in the Lower Mainland it ranges from 100 to 300% of the rent. High taxes combined with other trade implications like softwood duties create an uneven playing field. For many businesses, the only hope for survival is to bring in more volume coupled with operational synergies and reduced unit costs. But even then, they believe that without changes in taxation, it's just a matter of time before they hit the wall.

Along with taxation, the other major obstacle this port faces is in the area of transportation infrastructure.

U.S. Ports are also able to access Federal and State grants to provide further transportation benefits outside of their port areas.

In 1999 the U.S. federal government provided $218 billion for transportation infrastructure. Clearly they recognize the importance of this industry. Our federal government is presently working on a Blueprint on Transportation designed to help shape future policy. We are keen to see the results of this work, as its outcome is fundamental to the creation of our own long-term growth plans.

Investment in infrastructure in the Lower Mainland has fallen behind the required levels for several years now and unless something is done very soon, this region will begin to experience gridlock.

A recent study by the Canadian urban Transit Association (CUTA) compared senior government spending for urban transportation among the G-8 nations. It is worth noting that Canada is alone among these countries in having almost no involvement in urban transportation funding. For instance in the UK, central government considered the need for policy and financing for urban transportation to be a national priority. CUTA's studies go on to report that on average Senior Government financial contributions to urban transportation in Japan are up to 20%, in Europe are 30% - 100%, in the USA 76% and in Canada 5%.

The Gateway Council has published its Major Commercial Transportation System initiative proving that $7.5 billion in funding is required over the next 20 years to upgrade and provide infrastructure.

As a member of the council, the VPA supports this initiative to ensure that todays road and rail corridors are protected and maintained, and also to provide added infrastructure that will be required to move the Canadian cargo through this marine, rail and air gateway. Without these expenditures, gridlock in the Lower Mainland is inevitable.

We congratulate everyone responsible for helping to build the reputation of the port as an efficient place to do business. This includes labour, terminal operators and transport providers who service the Port. By their efforts The Port of Vancouver has been ranked by the Wall Street Journal as number 11 in the list of the world's most efficient ports.

But the movement of cargo does not stop at the dock. If road and rail corridors are insufficient, goods cannot move efficiently to their destination. The Port of Vancouver is only one part of the logistics chain. It is in everybody's interest to ensure that each link in that chain is strong and can support the amount of cargo that moves through this region.

We need to begin to view our road and rail network as an extension of our trade corridors. Our economy is based on healthy trade and we need expanded transportation infrastructure to ensure that trade continues.

This is why I urge all levels of government to revisit their policies on taxation so that funding for transportation infrastructure is viewed as an investment in our collective future. And as members of the business community in the Lower Mainland I would ask you to press our elected representatives for change.

We need to move forward. Quickly. Because standing still is not an option. The competition is not standing still. And neither are our customers.

Co-operation is the key to success in these issues. Being pro-active is also necessary if the Port is to retain its competitive position. To this end, we have been active in developing methods to utilize our assets better to delay expensive investment.

In the container business we believe that changes in the operating procedures both on and outside the terminals could increase our capacity.

Computerized operating systems, such as are used today on the terminals, enhanced e-transfer of information, and other procedures will increase our capacity.

This will delay our need to provide very expensive infrastructure in a port that does not have spare land.

Another area we are working on is at the cruise facilities, such as the terminal at Canada Place.

Used for 6 months a year, from 7 a.m. to 6 p.m. we have an occupancy rate of around 35%. In what other business would that level of utilization of an asset require you provide more facilities?

We have been working with the cruise industry to develop alternative products that possibly would see vessels arrive at 7 p.m. and sail at say, 5 a.m.

Or a cruise that does not leave British Columbia.

If Prince Rupert is successful in building a cruise berth then a one-week trip could be a cruise to Rupert from Vancouver, stopping off along the way, and then train from Rupert to Vancouver. Imagine the wonderful scenery of British Columbia that such a trip would provide. This will also provide increased economic benefit for the Province and for Prince Rupert.

In another co-operative venture between ports I believe that the three ports in the Lower Mainland should work together to provide a coordinated marine gateway.

The objective would be to work together on several initiatives that would provide a benefit to our individual customers.

Joint planning on expensive structures to avoid duplication of expenditures, coordinated transportation initiatives that would allow for better movement of goods and people and sharing of expertise are all ways that efficiencies could be driven.

To recap, I have given you an overview of the good news about the Port's impact on the community, and our initiatives to remain on top competitively. However, good news like this and the ability to stay on top, does not come without hard work to overcome hurdles. I have outlined some of these hurdles along with the actions we are taking to minimize their impact.

While the turmoil of the past year continues to make short-term planning difficult, the Port of Vancouver continues to ready itself for continued long-term growth. There is much at stake here in the form of jobs, taxes and other revenue, and we must enter a new phase of infrastructure development to remain competitive.

But, as I have attempted to demonstrate, there are key issues that lie outside of our own planning processes that must be addressed as soon as possible.

I hope I have been able to explain some of our recent initiatives and to provide you with an understanding of the economic benefits that the Port of Vancouver brings to us all.

Thank you.

For more information, please contact:

Anne McMullin,
Director, Corporate Communications and Public Affairs
Vancouver Port Authority
(604) 665-9069 (office)
(604) 665-9073 (fax)
(604) 218-1403 (cellular)
anne.mcmullin.com

For more information:
For more information on any of these stories, call 1-888 PORTVAN.
Or, send an email to:
public_affairs.com