Good afternoon.

I'm thrilled to be back here in Long Beach. It's one of my favorite Port cities and I thank Peter Tirchswell and the JOC for inviting me to be part of todays discussion.

Today, I'd like to spend some time talking with you about the current market conditions under which the Port of Vancouver operates and some of the perceptions and realities that exist.
Specifically I'd like to address some of the programs and strategies we're implementing at the Port of Vancouver to improve overall efficiency and capacity in Vancouver.

Finally, and most importantly, I want to share with you my thoughts on how business, transportation and others can work together to overcome current challenges and capture future opportunities.

As many of you know, the Port of Vancouver is Canada's largest port. We are also North America's most diversified port.
Our new economic impact study shows that the Port trades more than $42 billion in goods with more than 90 trading nations each year.

Port activities alone are responsible for generating: more than 62,000 jobs across Canada; $1.6 billion in Gross Domestic Product and; $3.5 billion in economic output.

In 2004, we continued to see huge increases in cargo shipments at our port with forest products up by 22% and new records in the shipment of potash, sulphur and containers.

Total cargo tonnage increased by 11 per cent to 73.9 million tonnes last year. Clearly, there is a lot to be proud of.
But despite the growth today, I believe there is an even brighter future ahead. In fact, I believe that over the next 15 years, we will see the greatest period of expansion in the Port of Vancouver's history.

Current studies indicate that container traffic will at least triple by 2020. The Port of Vancouver therefore has the opportunity to capture nearly 5 million TEUs within the next 15 years.
This kind of growth will provide everyone in transportation and industry with a wealth of opportunities. But we all need to work together to prepare for it. And not only in Canada, World Trade is increasing each year, and at the top of the pyramid is China as you all know with in excess of 7% this year. Having reverted to a market based economy we are now all struggling to find solutions to the growth.

Vancouver is an export driven port, 80% of what goes through the port is in the form of bulk cargoes. These are being used to feed the Chinese manufacturing plants with the materials needed to produce the fridges, toasters, cars, kettles and electronics that are then shipped to us. So the Port of Vancouver is in a position of "Double Jeopardy." Not only are we experiencing very large increases in exports, brought to us on the same rail lines that our 8% increase in containers uses.

Here is a sobering thought, Canada has slipped to #17 in the Chinese list of their trading partners, on the other hand, they soon they will be our largest trans Pacific market, and yet Canada accounts only 1% of their exports. What is it going to be like in Canada if we double our trade with them to 2% or 3 %?

As many speakers today have noted, it is not just the U.S. that is congested from the increase in world trade. It is every region in the world that participates in the movement of goods. North America, Europe, Australasia, the Far East and so on.

Perception
The minds of many importers, journalists and others seem to be seized with a notion that the port of Vancouver is at capacity and can't handle the volumes that are being shipped through the port. Witness some of the articles at the end of January, and many of the discussions we have had with importer and exporter organizations.

Reality
We increased the overall tonnage through the port by 11% last year, we had growth in our container business of an average 8%. One terminal grew by a staggering 22%, there was clearly not a capacity issue last year.

Perception
the Port of Vancouver is doing nothing to respond to the marketplace and its need for capacity.

Reality
In August 2004 a joint meeting of port service providers and users agreed that they could sustain a growth target of 10% for 2005 for the shipment of containers. I stress that this included users of the port (I will come back to this last point in a few moments). This included looking at strategies to increasing capacity and maximizing the existing supply chain to ensure business continues to grow.

Perception
A Gallon jug will hold 1 1/2 gallons.

Reality
It won't.

At the August 2004 meeting I referred to earlier, everyone agreed that the increase of business the system could handle this year was 10%. However we find that many of our shareholders and customers are trying to push increases in excess of 20%. When the system cant handle it they look for someone else to blame. Live up to your commitments, there would be no capacity issues in Canada just now in everyone in the system did so.

At the Port of Vancouver, we don't believe in taking anything for granted. We want to maintain our competitive position and we're working hard to do so. This means improving productivity, enhancing Port infrastructure and developing new facilities.

Increasing capacity needs a three pronged approach.

A. You must look at every process in the chain and question it. You have to find every inefficiency and correct it. Railways have done much of this work in their system with some very good results, and though it is painful for us all at times they are driving a discipline into the carriage of goods. We have been all scrambling to push every container along the logistics chain only to have them sit on the docks or railyards waiting for the receiver to need them. The time for prioritizing has come. This is not new, in Canada we have been paying more to have an important article delivered sooner, not so important can attract a lesser price, and low value or not required till much later has the lowest price. At home this is known as Canada Post and it is how mail has been delivered since 1967. I ask you, are containers any different?

B. Technology: One of the most interesting and exciting opportunities for us all lies in the area of technology. There is now nothing you can't do, almost all systems can be linked and the internet has revolutionized our ability to communicate. When we had 3km line-ups at the gates at our container terminals in Vancouver, and finally a stoppage of work it was because there were about 600 trucks all trying to be first past the post in the morning. We, in concert with the terminal operators, introduced a web based appointment system which automatically hands out gate appointments. Pre stoppage our Deltaport gate handled some 600 truck moves per day. After the introduction of the appointment system it reached a peak of 1650, almost a threefold increase.

Peter Keller, COO of NYK says that in the past vessels would go where the cargo was. Now vessels will go to the place where the data is. New systems of sharing data, allowing for advanced notification of accurate requirements mean that for the ship their port stay is much more efficient and hence less costly. In a test in Tacoma an experiment called The Agile Port, they increased their throughput by 8 times going from 3000 teu/acre/year to over 24000. All by coordinating the data flow and hence the services that are required.

C. Having taken out the inefficiencies and maximized the current technology, Boards of Directors are now justified in approving the hundreds of millions of dollars that are required for new infrastructure.

Perception
Transportation of goods is a 24/7 business

Reality:
It's not.

We need to move all aspects of the business to 24/7 operations. Today the docks, ships, trucks and railroads will all work continuously but the trucks cannot move at night if there is nowhere to drop the box.

You and your companies should insist that all cargo you are moving is handled by an off dock facility that is working 24 hours a day. Do not patronize those that do not. Go to their Association Conferences, lobby with their Executive, offer incentives to make changes. There needs to be leadership from you all and your affiliations in pressuring all sectors of the industry into 24 hour operations in order to better utilize finite resources which again increases capacity.

An estimate at the port of Vancouver regarding the off docks is that if they all went to 24/7 operations, we could delay the investment of $1.4 billion dollars by as much as 5 years.

Perception
Everyone wants expanded infrastructure.

Reality
Many of the people who live in the same area as a port definitely do not want any expansion, and in fact "while we are talking about it why not move it all to someone else's neighbourhood." Ports operate in their host community by the will of the people that make up that community, we operate with a Social License, granted by them to us. You never see a v copy of it, never sign one because they are implied not express. But woe betide the port that denies its existence or ignores its most important clauses. As an example of one that did, look to the Port of Sidney in Australia. They lost their ability to operate in Darling Harbour, one of the World's most scenic ports, and had to move their operations to Botany Bay.

Users need to encourage and support growth in all of our transportation systems in order to make best use of these west coast gateways. Write letters, attend meetings. This includes providing resources to work with ports, trucking representatives and rail companies at the local community level to help those that are impacted by the increased traffic the trade generates, and can be negatively disposed towards growth.

The more facets of the business they hear from as to the necessity of growth in Transportation and understand why it is important to our country. And see that we are supportive of each others future plans then the more they will be convinced. Go to Business Lunches, better still give speeches at these lunches and dinners. How many people in this room have given a speech about transportation in the last year? You should all give at least 3 per year. That would be 3,000 speeches or about half a million people a year that would understand.

Front and centre in our efforts to meet future growth is our Container Development Program, a multi-faceted initiative that will provide the infrastructure we need to add capacity for another 3 million TEUs. It includes the enhancement of 2 container handling facilities in the heart of Vancouver in Burrard Inlet.

It also includes the addition of a third berth to the existing Deltaport container terminal, and the development of a new three berth container terminal at Roberts Bank in Delta, B.C.

Every two years from 2006 to 2016 we need a new facility or redevelopment of an existing one.

Collectively, these projects will require an investment of more than $1.4 billion. This is a significant investment that by the year 2020 will generate more than 38,000 new jobs and increase our capacity to over 5 million TEU. It is a staged approach for two reasons. One, we like you, do not want to over-captalise the market but the second reason would allow us to stop at any time if the world economy strays from the expected path

Perception
Security slows down the efficient movement of goods.

Reality
Properly designed and implemented it can not only speed up the movement of goods, but save a lot of capital as well. Our security stakeholder Committee has been functioning since 2000 well in advance of 9/11.

We are also looking strategically at improvements to port security. As the Port of Vancouver works to enhance and improve its security efforts, we are grateful for the efforts of the port community to share resources and best practices.

This has made our work easier because we're better able to implement security measures into existing processes.
And this is important because it allows for the establishment of sustainable security programs that are easily adapted to reflect changes in legislation or business requirements. By closing off the port roads to commuter traffic, we saw trucks move much quicker through the port area as there were less traffic delays, therefore the environment got an unexpected boost, and we delayed expanding the road network in the port by about 15 years. A multi-million saving.
So do not fight security in our ports or anywhere else. In the world of 2005 it is a reality and I would ask that you embrace it as we have done and look to see where your advantage would be from a well thought out security plan.
Finally, the Port of Vancouver is also changing the way it measures capacity. Currently, we're working with our rail and terminal partners, to create a matrix that will measure and monitor the effectiveness of our supply chain.

By doing so, we'll be able to identify all possible opportunities to build out capacity and ensure we have the most efficient and productive supply chain possible.

The bottom line is that to take advantage of the infrastructure in place and prepare for the future, we need leadership from government, business and all our partners in transportation. We need to make some tough decisions.

And we need investment to improve our transportation systems.

By investing in infrastructure and programs to build out capacity, we'll ensure that jobs are secured, ports remain competitive, businesses and economies continue to grow and prosper.

Ultimately, we're working to better use what we have while pressing for an integrated port/road/rail transportation solution that will facilitate the efficient movement of goods and people throughout North America. Because if we do not, we all know that the consequences of not addressing the growing capacity deficit across our transportation network are dire.

And it's not just the Port of Vancouver's competitiveness that's at stake, or our status as a leading player in international trade, but the competitiveness of every port and every facet of the import and export trade in North America.

There are huge opportunities. And there are huge challenges to be overcome together.

So we must find ways to work together to capture economic opportunities and facilitate the growing international trade activity. We must understand our own supply chain and think bigger and more holistically about it.

But being proactive and anticipating future port growth is not enough. Capital investment in our ports will only carry us so far. Our ports are worthless without the road and rail connections to our hinterlands.

We need corresponding investment in our road and rail infrastructure. The growth of container trade is putting more and more trucks on our roads and highways at a time when overall road congestion is growing. The Gateway Council in Vancouver has identified $6.9 billion required over the next 20 years on roads.

In the same way that our railways must be motivated to make strategic investments in our country's rail infrastructure, our governments must be encouraged to invest in the country's roads and other area of transportation infrastructure. Investment in transportation is crucial to the continued success of importers and exporters. We cannot afford to have system bottlenecks that undermine the ability of businesses to get their goods to market on time. It's simply unacceptable.

That is why the VPA is working closely with federal, provincial, and regional transportation authorities, and municipal governments to identify road solutions. We have also met with railways to identify solutions that will make current infrastructure more efficient.

We understand that long-term rail solutions will require money and that we need to create an environment that makes railway investment attractive. In B.C. land tax on rail is $10,000/mile three times what they are charged in the most expensive state in the U.S.

Already, we are thankful to our partners in the railway business who have taken steps to build on existing capacity through co-production agreements and other innovative programs. But we need more agreements like this and we need them implemented across our nation.
You all need to encourage and support growth in all transportation systems in order to make best use of our west coast gateways. But not passively. Write letters, attend meetings, voice your concerns. if nothing is being done or no clear path is evident. But do not sit back and afterwards wonder why nothing is changing.

There is a need for stakeholders to commit time and resources to work with government, ports and railways to ensure port, road and rail infrastructure expands in parallel with cargo capacity and growth

There is a need for stakeholders to take an holistic approach and support regional committees and groups that are dealing locally with systemic issues and trying to find solutions.

And there is a need to support transportation community initiatives that ensure security does not become an impediment to trade.

Stakeholders need to help market the gateways and sell these opportunities both in North America and abroad.

There is much work to do we have a good story to tell about the growing importance of the west coast gateway to the future economy of our respective countries.

But to affect change, we must present a united front. Everyone in this room MUST get involved in effecting the changes required. This wont be easy and we are facing some tough decisions, but the benefits will be worth the effort.
It is only by taking action now that well be prepared to capture the opportunities before us. In my 42 years in the transportation of people and goods we've never gotten more attention from industry, governments and users. Everyone has their attention fixed on the problems, knows the solution, and the downside of doing nothing. Now is the time to capture that attention and move forward. If we do not do it now we will not get another chance for decades, and I do not want my grand children pointing to our generation as the one who failed them.

Thank you for your attention.


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@portvancouver.com

For more information:
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Or, send an email to:
public_affairs@portvancouver.com