Trade 2021

BIV MAGAZINE

TRADE THE

JULY 2021

DECARBONIZATION JOURNEY TO GREENER TRUCKING, SHIPPING

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ISSUE

CAPACITY CRUNCH COMPETING CONTAINER PROJECTS ADVANCE

B.C. EXPORTERS THREE COMPANIES THAT ARE THRIVING

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Mass timber is transforming the construction sector

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biv magazine: the TRADE issue 2021 published by Business in VAncouver

contents

BIV MAGAZINE

TRADE THE

18

ISSUE

JULY 2021

DECARBONIZATION JOURNEY TO GREENER TRUCKING, SHIPPING

CAPACITY CRUNCH COMPETING CONTAINER PROJECTS ADVANCE

B.C. EXPORTERS THREE COMPANIES THAT ARE THRIVING

President: Alvin Brouwer publisher and Editor-in-chief, business in Vancouver; Vice-president, Glacier Media: Kirk LaPointe Executive Editor: Hayley Woodin Design: Petra Kaksonen Production: Rob Benac CONTRIBUTORS: Nelson Bennett, Chuck Chiang, Timothy Renshaw, Hayley Woodin Researchers: Anna Liczmanska, Albert van Santvoort Director, Sales and Marketing: Pia Huynh Sales Manager: Laura Torrance Advertising sales: Blair Johnston, Corinne Tkachuk, Chris Wilson Administrator: Katherine Butler

features 6 voyage to decarbonization Global marine industry debates best route 11 in it for the long haul Reducing fleet emissions an uphill battle 16 Trade by the teu Displaying B.C. port data 18 container capacity Challenges persist as projects advance 22 export excellence Profiles of successful B.C. exporters 28 CHINA CONNECTION Trade ties may be difficult to loosen 30 Fleet expansion Seaspan sinks multimillions into ships

11 22

BIV Magazine: The Trade Issue is published by BIV Magazines, a division of BIV Media Group, 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6, 604‑688‑2398, fax 604‑688‑1963, biv.com.

Copyright 2021 Business in Vancouver Magazines. All rights reserved. No part of this book may be reproduced in any form or incorporated into any information retrieval system without permission of BIV Magazines. The publishers are not responsible in whole or in part for any errors or omissions in this publication.

ISSN 1205-5662 Publications Mail Agreement No.: 40069240.

Registration No.: 8876.

Return undeliverable Canadian addresses to Circulation Department: 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6 Email: subscribe@biv.com Cover: Nick Souza

Columns 10 Restarting B.C.’s economy Exports key to growth, says province 14 the next pandemic Preparation and prevention needed now 26 Canada-Asean trade Why it’s time for a free trade agreement

Produced by

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MESSAGE FROM THE EDITOR

TRADING REACTION FOR RECOVERY AS B.C. RESTARTS Restrictions, shutdowns and uncertainty brought by the pandemic have had an impact on B.C. trade.

International exports fell 8% yearover-year to $39.9 billion. The last time they fell below $40 billion was in 2016.

But as B.C. swaps restrictions for an economic restart, trade, too, is set to recover.

The data already bears this out.

In the first four months of 2021, international exports were up more than 24% over the same period the year before. And despite disruptions caused by COVID-19, weather events, protests and

other factors, B.C. ports managed to set records at the close of 2020 (p. 16).

Some B.C. exporters are having record years of their own (p. 22) and the province is working on a new trade diversification strategy that will help B.C.’s economy grow in a sustainable way (p. 10).

The future seems bright. But though the storm clouds may have parted, the route to progress in a number of trade-related areas will not be without its challenges.

There is still debate and controversy as to how Greater Vancouver ought to expand its container capacity (p. 18). The path to improving Canada-China relations

remains contentious (p. 28). How shipping ought to decarbonize is uncertain (p. 8). And though we are in some ways moving beyond this pandemic, leadership and investment in infrastructure and prevention will be needed to mitigate the impact of the next one (p. 14).

We have expanded our Gateway publication to cover the opportunities and issues mentioned above, and more. Welcome to our first issue of Trade.

Hayley Woodin Executive editor, BIV Editor, BIV Magazine

Congratulating DP World Canada on surpassing 1,500 Short Sea Shipping barge trips between its Centerm, Duke Point and Fraser Surrey container terminals.

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THE COMPLEX VOYAGE TO

DECARBONIZATION LNG’s value downgraded as global marine industry debates best route to decarbonization

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A container ship owned

by A.P. Møller - Maersk •SUBMITTED

TIMOTHY RENSHAW

I

t needs to be industry driven, and the industry needs to start driving it now.

That’s the consensus of a panel debating the global maritime shipping sector’s progress on what will be an expensive and complex voyage to decarbonization.

And the role of liquefied natural gas (LNG) in accelerating that progress was a flashpoint in the panel discussion, which was organized in mid-May by shipping industry journal Lloyd’s List.

For Jacob Sterling, LNG’s role is negligible at best and counterproductive at worst.

“It is borderline greenwashing to call LNG a transition fuel towards the decarbonization of shipping,” A.P. Møller - Maersk’s head of decarbonization, innovation and business development said in response to a question about LNG’s place in the hierarchy of alternatives to heavy marine fuel oil. “It’s being portrayed as a transition fuel, but a transition fuel towards what?”

Sterling questioned the long-term prudence of marine cargo carriers and ports investing heavily in expensive infrastructure for a fuel source that, when well-to-wake methane gas emission totals from production, supply and incomplete combustion are factored in, “is just marginally better than what we use today, and, at worst, … could be way worse than what we use today.”

He is not alone in dismissing LNG as a meaningful alternative fuel to heavy marine bunker oil for ocean carriers.

The International Transport Forum’s Navigating Towards Cleaner Maritime Shipping report concludes that neither LNG nor methanol, when produced from fossil fuels, delivers “significantly lower [greenhouse gas] emissions than conventional marine fuels.”

But LNG produces almost no particulates, sulphur or nitrous oxide emissions and generates a third less carbon dioxide than marine diesel. It and the technology to use it to power deep-water freighters are also available now. That cannot be said for hydrogen and many other potential lowto-zero-carbon fuel options for the global marine cargo sector.

So regardless of its drawbacks, Roger Holm,

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pre s id e nt of m a r i n e p owe r a nd e x e c ut ive vice-president at Wärtsilä Corp., said, “LNG is still a step in the right direction. We all know it’s not the end solution, but the uptake of other alternative fuels today is still going to take quite some time.”

Wärtsilä, which is based in Finland, manufactures power sources for the marine and energy markets.

As noted i n a prev ious BI V story, K rish na Achuthanandam, Shell LNG’s marine LNG business development team lead, told an alternative fuels conference that, while Shell sees hydrogen as the long-term solution to decarbonizing shipping, LNG makes the most sense now as a bridge fuel en route to that goal.

Some major global shipping players in B.C. agree.

Vancouver-based Seaspan Corp., for example, has commissioned 10 new 15,000 20-foot-equivalent (TEU) container ships that will have dual-fuel LNG technology.

Bing Chen, president and CEO of Seaspan’s parent company Atlas Corp., said during the company’s 2021 first-quarter earnings call that the LNG ship order is part of the “strong commitment” of the world’s largest lessor of container ships to “ESG [environmental, social and governance] and our long history in innovative ship designs.”

The infrastructure for bunkering LNG is also further ahead than other shipping fuel alternatives, although, according to international company Danish Ship Finance, LNG is available at only 77 out of 1,800 major global marine cargo ports.

In the lead-up to complying with the International Maritime Organization’s (IMO) low-sulphur fuel regulations at the outset of 2020, Vancouver’s Teekay Shipping Ltd., the world’s third-largest independent owner and operator of LNG carriers, chose to focus on switching to low-sulphur marine fuel rather than convert any of its ships to LNG propulsion.

Of the other leading fuel candidates for decarbonizing shipping, sooner than later, the Lloyd’s List panel agreed that methanol and ammonia have the biggest near-term upside.

Jacob Sterling oversees decarbonization, innovation and business development at A.P. Møller - Maersk • SUBMITTED

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DECARBONIZATION

Linda Sigrid Hammer is a principal consultant at DNV, a maritime industry riskmanagement company based in Norway • SUBMITTED

Roger Holm is president of marine power and executive vice-president at Finland-based Wärtsilä Corp. • WÄRTSILÄ CORP.

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But an underlying key to the decarbonization conundrum for ship owners is fuel flexibility, said Linda Sigrid Hammer, a principal consultant working in maritime advisory for DNV, a maritime industry risk-management company based in Norway.

“We think that the uncertainty related to future fuels can be managed by planning for fuel flexibility. And by installing dual-fuel engines, you have more flexibility to use different types of fuels. And it’s a matter of fuel availability. As we have already discussed here today, it will be a long time before we have available other types of fuel that can give any reduction in greenhouse gas emissions. So LNG is one of the few fuels that are available that can give an emission reduction today.”

Holm agreed that propulsion technology flexibility is critical, because “no one really knows exactly what the future fuel is. That’s a question we get a lot: ‘Tell me what’s the future fuel?’ And I think we honestly can’t say. I really don’t have the answer.”

But Holm added that methanol is a leading candidate because it is one of the easiest to start implementing now.

Vancouver’s Waterfront Shipping Co. (WFS), a subsidiary of Methanex Corp., the world’s largest producer and supplier of methanol, currently operates the world’s largest methanol tanker fleet.

As Ayça Yalcin, Methanex’s director of market development, pointed out in a previous BIV story, methanol is a clean-burning low-emission marine fuel that biodegrades rapidly in ocean water.

It also has the lowest carbon content and highest hydrogen content of any liquid fuel and can be produced from various sources, including black liquor from pulp and paper mills. The additional costs of installing methanol systems on ships are roughly one-third those of installing LNG systems.

However, building a fuel supply and infrastructure network for methanol faces a classic chicken-andegg challenge: there will be no major investment in supply or infrastructure if suppliers have no commitment from carriers to convert their ships to methanol, and there will be no major commitment to that conversion from carriers unless there are guarantees of a reliable and widespread supply of methanol.

Sterling said methanol and ammonia are both on Maersk’s candidate list for near-term decarbonization fuels.

“We have ships running on methanol today. So the journey is a little shorter on the technical side.

Ammonia definitely is also a fuel that is on our candidate list, but it’s a lot further out. And I think that it is important that we acknowledge that there are a lot of challenges related to running a ship on ammonia that have not been solved yet.”

IF WE JUST TRY TO USE THIS AS A COMPLIANCE THING, WHERE WE GO FOR MEETING THE MINIMUM STANDARDS SET OUT BY THE IMO, WE MIGHT LOSE THE GAME ALTOGETHER j Jacob Sterling Head of decarbonization, innovation and business development A.P. Møller - Maersk

Hammer agreed.

She said safety issues connected with the use of ammonia, which is extremely corrosive and toxic, need to be resolved before it can become a mainstream marine cargo transportation fuel.

While the panel members debated fuel alternatives and technologies, they agreed on two key points: action on ship fuel conversion needs to begin now, and the industry cannot rely on the IMO to clean up marine cargo transportation.

That initiative has to come from the industry, governments and shipping customers up and down the global supply chain.

In early June, the governments of Denmark, Norway and the United States, along with the Maersk McKinney Møller Center for Zero Carbon Shipping and the Global Maritime Forum, announced plans to lead a new zero-emission shipping mission.

The mission’s goals include ensuring that by 2030 at least 5% of the global deep-sea fleet will be capable of running on green ammonia, green methanol and other hydrogen-based zero-emission fuels.

A group of leading international shipping organizations led by the World Shipping Council is also calling on the IMO to initiate discussions on instituting “market-based measures” that would lead to carbon-pricing in the shipping industry and close the cost gap between low-sulphur heavy marine oil and low-to-no carbon fuel alternatives.

Maersk is pushing for a US$150-per-tonne carbon tax on marine fuels to close that gap.

Swire Shipping, a multinational shipping services brand operated by the China Navigation Co. (CNC), has also called for a universal greenhouse gas levy in the global marine cargo sector. CNC opened its North American headquarters in Vancouver in

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Aerial shot of the MS Tallink Megastar, the first LNG-powered ship in the fleet of Estonia-based shipping company Tallink. Its dual-fuel engines were built by Finland’s Wärtsilä Corp. • WÄRTSILÄ CORP.

August 2018.

Sterling said more Maersk customers are now willing to pay a premium to have their goods shipped carbon-neutral.

That appetite, which is rooted in ESG’s growing market value, underscores the willingness in the global cargo supply chain to change and to pay for that change.

Sterling said the shipping industry “cannot depend on the IMO to set the pace for this; we need to go much faster than what the IMO suggests, and what the IMO can reach consensus on.

“If we decarbonize too slowly, the whole concept of global trade, where you produce in one end of the world and consume in the other end of the world, might be challenged by consumers in five, 10, 15 years’ time. Because if we just try to use this as a compliance thing, where we go for meeting the minimum standards set out by the IMO, we might lose the game altogether.” É

Shipping plays an essential role in keeping Canada’s trade competitive

shippingmatters.ca

Representing ship owners, operators, agents, and shippers 640 - 355 Burrard Street, Vancouver, BC V6C 2G8 | 604.681.2351

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RESTARTING A SUSTAINABLE, EXPORT-ORIENTED ECONOMY How B.C. is committing to grow the provincial economy in a sustainable way RAVI KAHLON AND GEORGE CHOW

As B.C. looks to restart its economy, the demand for our provi nce’s clea n a nd susta i nable products and services is surging across a variety of sectors, demonstrating the key role that trade will play in our economic recovery.

Exports increased 24% yearto-date for April – that’s up $3 billion over the same time last yea r. It’s a big boost for the provincial economy, with a majority of our exports being commodities in great demand.

O u r st r i ngent env i ron mental standards in wood exports, burgeoning clean tech sector and high standards in labour protections mean that when other markets buy from us, they’re also contributing to a cleaner and more socially responsible global economy.

B.C. was committed to international trade long before the pandemic. It creates new opportunities for businesses, and more importantly, it creates good jobs and prosperity for people in B.C. When businesses export, they are more resilient. Access to more markets means they have a more diverse customer base and aren’t as impacted by fluctuations in their local economies.

We have a program perfectly designed to help small businesses get their goods and services to new markets.

It’s called Export Navigator. This program offers businesses free expert guidance on exporting. Businesses get connected with an expert advisor who will help “navigate” them through the export process. It’s hugely beneficial, helping businesses reach new customers for the first time and making the process a lot easier along the way.

We continue to support B.C. businesses in other ways as well. For example, we developed a series of grant programs to meet their unique needs, making over half a billion dollars available in direct supports. The Launch Online program helps businesses improve their online presence to attract and keep customers and meet demand as online shopping hit new heights during the pandemic.

The Supply Chain and Value-Added Manufacturing grant helps B.C.-based manufacturers in the aerospace, shipbuilding, food processing and forestry sectors recover and grow, supporting them to seek efficiencies to continually keep goods flowing into the marketplace.

From natural resources and agrifoods to manufactured goods and high-tech goods and services, B.C. has a lot

to offer to the world. We are a responsible, low-carbon producer of natural resources and manufactured goods, and we are working hard to make sustainability a larger part of B.C.’s brand and our global competitive advantage.

Our priority is to help B.C.-based businesses start up, scale up, access global markets and succeed in the highly competitive world marketplace. The more we export, the more new dollars we bring into B.C. and generate revenue that supports government investments in health care, education and critical infrastructure.

We stand behind the high-quality goods that B.C. has to offer to the world. Globally, companies large and small are increasingly applying environmental, social and governance filters to their investment decisions. We are committed to growing our economy in a sustainable way, and are working on a new trade diversification strategy that will provide us with the opportunity to develop an updated, forward-looking and ambitious approach that aligns closely with these principles, while ensuring that our exporting businesses are maximizing the opportunities afforded to them through Canada’s existing free trade agreements. Our recently announced Mass Timber Demonstration Program is an example of how we are advancing technologies that can showcase to the world the possibilities of building with a more sustainable and environmentally friendly product from B.C. The pandemic leaves behind many lessons and creates a once-in-a-generation opportunity for B.C. to redefine itself. We know the pandemic is not impacting everyone equally, with women and visible minorities being disproportionately impacted. This is why we are committed to continuing to grow strong, robust industries that can provide good jobs for all of B.C.’s diverse populations.

Growth in trade will be a big part of our economic recovery, and as we transition through our restart plan, we will continue to engage with businesses, industry and key stakeholders to ensure we’re supporting their efforts to expand globally.

Our goal is to diversify our trade sectors to include not just our natural resources, but clean tech, high tech, agritech and advanced manufacturing. We need to support our exporters and encourage new exporters to expand our opportunities in global markets and strengthen our resilience.

We’re committed to invest in people and in businesses to restore economic growth and we are confident that the entrepreneurial spirit of B.C.’s business community will rise to the challenge as we work together to build a better future with meaningful jobs and a strong, sustainable economy for all. É Ravi Kahlon is B.C.’s minister of jobs, economic recovery and innovation. George Chow is the province’s minister of state for trade.

WE NEED TO SUPPORT OUR EXPORTERS AND ENCOURAGE NEW EXPORTERS TO EXPAND OUR OPPORTUNITIES IN GLOBAL MARKETS AND STRENGTHEN OUR RESILIENCE

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IN IT FOR THE

LONG HAUL Efforts to decarbonize long-haul trucking face a literal uphill battle

“In the long-haul world, this is where it gets scary,” says Dave Earle, president of the BC Trucking Association • CHUNG CHOW

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NELSON BENNETT

W

hen it comes to decarbonizing the economy, pretty much everyone in the sustainable energy field agrees aviation and long-haul trucking will be the last mile on the road to net-zero by 2050.

“Of the on-road applications, long-haul trucking is probably the single most challenging,” says Gordon McTaggart-Cowan, professor of sustainable energy engineering at Simon Fraser University.

Transportation accounts for 25% of Canada’s greenhouse gas (GHG) emissions, with heavy trucking accounting for 35% of that, or 9% of total national emissions. Globally, it’s estimated that heavy-duty trucking accounts for only 4% of the vehicles on the road, but 27% of road emissions.

There are 60,000 heavy-duty trucks (vehicles that weigh at least 25 tonnes) registered in B.C. and 156,000 medium-duty trucks, according to the BC Trucking Association. They emit slightly more carbon dioxide (CO2) than the 2.2 million light-duty vehicles in B.C. Converting buses and medium-duty trucking to battery electric or natural gas engines that run on ever-increasing amounts of renewable natural gas is feasible, says Dave Earle, president of the BC Trucking Association. In fact, it’s already starting.

“In the long-haul world, this is where it gets scary,” he says. “We are literally decades away in the long-haul world.”

Indeed, projections by Bloomberg New Energy Finance and IHS Markit suggest that 70% to 80% of heavy-duty trucks will still be running on diesel or natural gas in 2040, with only about 19% electrified.

The long-haul sector faces a mountain of barriers – including actual mountains – when it comes to switching from diesel to zero-emission fuels or power sources.

One is physics, notably energy and power densities and energy transfer. The longer the range, the heavier the load and the steeper the grade, the more that energy density and energy transfer become limitations, and there are few fuels as energy dense and efficient as diesel or gasoline.

Then there’s the chicken-and-egg problem of fueling infrastructure – regardless of whether that fuel is electricity, hydrogen or biofuel – and the range anxiety that goes with it. But the biggest hurdle is fleet turnover, Earle says.

A diesel engine for a Class 8 semi truck can last up to one million miles (1.6 million kilometres) for an average lifetime of 15 years. The average year for a heavy commercial truck in B.C. is 2008, Earle says, with a 3% turnover per year. Even if the technology, infrastructure and fuels were widely available today, which they’re not, it would take 25 years to convert the entire fleet, Earle estimates.

“That assumes you start turning it over today,” he adds.

The medium-duty and, in some instances, heavy-duty trucking sector can switch to battery electric or natural gas (which could be displaced with renewable natural gas, as it becomes available) for local and regional routes.

Fleet operators with return-to-base operations would be able to charge or refuel their trucks at base each night,

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without needing to find recharging or fueling stations in the communities they serve.

ColdStar Solutions, which operates a fleet of refrigerator trucks, has already begun making the switch. Of a fleet of 35 company-owned trucks, 25 run on compressed natural gas (CNG), which produces fewer emissions – including CO2 – than diesel. The company has also put in its first order for a battery-electric reefer truck.

“Our goal is, by the end of 2023, our trucks will be 100% natural gas or electric,” says ColdStar CEO Kelly Hawes.

One advantage of CNG and liquefied natural gas (LNG) is that no engine modifications would be needed, should a sufficient supply of renewable natural gas (RNG) become available as a zero-emission drop-in fuel.

“There just isn’t enough supply at this point,” Hawes says.

While starting with CNG and LNG, and converting eventually to 100% RNG, is a solution for some sectors of trucking, long-haul trucking once again poses a problem.

Natural gas is not as energy dense as diesel, so it has limitations when it comes to heavy loads and long distances.

“We’ve got carriers where the bulk of their fleet is natural gas because it works,” Earle says. “We’ve got other carriers that have tried it and said it just doesn’t work because it doesn’t have the energy density.”

As for biodiesel, it can reduce emissions intensity, but at a certain percentage it can gel and foul engines.

“Biodiesel is a nightmare,” Earle says. “Because of the chemical makeup of it, it gels in cold weather.”

So what about battery-electric trucks? Despite efforts by Tesla, Inc. to develop a battery-electric semi truck, battery electric has some serious limitations for long-haul trucking.

After visiting PACCAR Inc.’s research and development division in Washington State, which builds prototypes for low- and zero-emission trucks, Earle came away fairly skeptical about the prospects of applying battery-electric solutions to long-haul trucking.

A major problem is the weight of the batteries needed to power a semi truck – a problem that gets compounded in cold weather, which reduces battery efficiency. While Tesla says its semi would have a range of 475 to 800 kilometres before needing to be recharged, a typical diesel semi truck has a range of 1,000 to 1,500 kilometres.

Earle has done the math, which looks like this: 1,200 metres, vertically, with perfect fuel efficiency requires 100 kilowatt hours of power, which is the vertical lift of a run from Hope to the Coquihalla Summit.

“That’s about two Tesla model threes,” Earle says. “If you look at the current batteries that are available, you could conceivably run a load from the Fraser Valley to the top of the Coquihalla summit on a 400-kilowatt battery and need to charge at the summit. That ain’t going to work.”

One carrier is currently trialing an electric semi truck

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Kelly Hawes is the CEO of ColdStar Solutions, which operates 25

between Vancouver and Puget Sound, Earle says. To date, those trials suggest that what now takes four trucks would require six electric semis to move the same amount of freight.

At a recent forum on decarbonizing transportation hosted by the Greater Vancouver Board of Trade, Randy MacEwan, CEO of Ballard Power Systems, said hydrogen fuel cells can addresses the decarbonization problem for the long-haul sector.

“When you have heavy vehicles, heavy payloads that have long range and high utilization requirements, we see an opportunity for hydrogen fuel cells to decarbonize these segments, and to date they’ve been very difficult to abate,” he said.

He’s not the only one who thinks fuel cells may win over battery electric for the long-haul sector, or at least some segments of it.

“We also see, for long-haul, there’s a few challenges with the battery electric technology,” says Joanna Kyriazis, senior policy advisor for Clean Energy Canada. “As much as battery technology is kind of winning the race in a lot of these other vehicle segments, a lot of people are holding out for hydrogen on the long-haul side.”

To date, there are no fuel cell semis on the road, except in trials. Daimler recently announced its new GenH2 semi truck, powered by hydrogen fuel cells, with a range of 1,000 kilometres. The company will begin customer trials in 2023, with production scheduled for 2027. É

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compressed natural gas trucks and recently ordered an electric reefer truck • FORTISBC

AS MUCH AS BATTERY TECHNOLOGY IS KIND OF WINNING THE RACE IN A LOT OF THESE OTHER VEHICLE SEGMENTS, A LOT OF PEOPLE ARE HOLDING OUT FOR HYDROGEN ON THE LONG-HAUL SIDE j Joanna Kyriazis Senior policy advisor Clean Energy Canada

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BUSINESS AND PREPARING FOR THE NEXT PANDEMIC We need to stop the panic-neglect cycle and invest in prevention

CARLO DADE

Amidst talk at the political level of “building back better” there has been a consistent drum beat in the business press and even the U.S. Senate on the need to build now for next pandemic.

Preparing for the next pandemic is distinct from the current, very good work being done by the Future Borders Coalition and others on recovering from the present pandemic.

The fundamental changes that occurred with the September 11 attacks can provide a useful framework for business.

As with the trajectory between SARS and COVID, it was only the second time that the World Trade Center was bombed that the full implications of a real and present threat – one which had existed but had not been appreciated – suddenly came into focus. In the hindsight of the current COVID pandemic, the appearance of SARS in 2003, H1N1 in 2009, Ebola in 2014 and in MERS 2018 take on new significance. Any one of these could have manifested differently and become the pandemic we now face. With September 11, once the latent, ever-present threat of terrorism became clear, public policy in the West, and certainly in Canada and the U.S., was enacted to impose new rules, new norms and even new physical structures that governed how business, and trade in goods and services, was conducted. It was more than just restoring operations interrupted by September 11; it was retooling for a new reality. This is analogous to what we can expect going forward.

There is much room for input in the areas where new policy intersects trade, or where the private sector will play a predominate role in thinking about a new normal that incorporates pandemic preparedness.

So, what would an agenda for business involvement look like, especially in Western Canada?

Fi rst, it wou ld recog n ize that there a re reg iona l responsibilities, needs, variations, successful and not so successful initiatives. In other words, this is not an issue that lies solely in the hands of Ottawa and Washington D.C. There is room for state or provincial and even municipal initiatives. Responsibility for the border lies with the national governments, but beyond the border, responsibility shifts.

Cities that are intimately connected, like Detroit-Windsor and Seattle-Vancouver, can simply sit down together to take stock of what did and did not work and what can be done to make things work better next time.

The best-known example of this sub-national cooperation may be the vaccination agreements between the governments of North Dakota-Manitoba and Alberta-Montana for vaccinating Canadian truckers, and the Blackfoot Confederacy in Montana vaccinating Albertans on the other side of the medicine line or border.

Cooperation can include shared standards for testing and monitoring, to lobbying for special consideration for ‘bubble corridors.’ Local business communities in smaller, isolated border communities need to lobby provincial governments to ensure that in the breathing space that we now have, special measures are put in place to allow

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for cross-border travel in future global health emergencies.

As both Canada and the U.S. look at ramping up infrastructure investments and “building back better together,” now is the time to think about using this momentum and money to build infrastructure that we now realize is needed to facilitate trade and commerce out West, and daily life in smaller isolated rural border communities.

It is also a good time to think about post-9-11-type pandemic infrastructure in airports and other facilities lest we wait for a third bombing of the Twin Towers to make the case for these investments.

Second, domestically, we saw the impact of the collapse of global supply and production chains for critical products needed to survive and then fight the pandemic. The previous U.S. administration’s attempts to prevent the shipment of N95 masks to Canada from the 3M next to the border in Minnesota got our attention. But less noticed was that over 68 other governments, including normally reliable trade partners like Germany and the U.K., also imposed some form of export restriction on materials related to fighting COVID-19.

In response, the federal government moved belatedly to try and facilitate production of needed supplies in Canada by getting firms that could tweak production of existing goods. Rather than scrambling at the last minute to put something like this in place, we must reflect on what worked with this program and what needed to be improved, and institutionalize those changes into a platform that can be kept updated and ready for the next pandemic.

One critical update to Canada’s Plan to Mobilize Industry to fight COVID-19 is creating an online “marketplace” portal to match buyers and suppliers of critical equipment.

This is particularly needed for those firms retooling to make products they do not normally produce. A platform that could be quickly turned on for emergency situations at local, provincial and national levels, and coordinate demand from health authorities and other essential services, would allow the country to better respond to disruptions in foreign supply and production chains, and encourage more Canadian firms to take the risk in retooling.

These are but two of many items that need be addressed now while the memories of what was needed but not available, what worked and what needed to be done differently are still fresh.

In the rush to put the current pandemic behind it, business risks setting itself up for a repeat instead of an avoidance of the pain experienced over the past year and a half.

Part of what is needed is individual stock taking, adjustment and investment by firms. Equally important is helping to ensure that the public policy processes to “build back better” account for our new reality, which is preparing for the next pandemic, and ensuring that pandemic response measures that were politically expedient but harmful to the public good do not get repeated. Above all, it means not repeating the failure to learn, take seriously and institutionalize the lessons from SARS, what former World Bank president Jim Kim noted “happens every time in the face of pandemics… a cycle of panic, neglect, panic, neglect.” É Carlo Dade is the director of the Canada West Foundation’s Trade & Investment Centre.

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SPONSORED CONTENT

Rogers deepens its roots in BC Rogers Rick Sellers speaks on investments, technology and giving back in our communities What sets Rogers apart from other service providers?

What many people don’t know—and what is at the heart of everything we do is our people, and we are one of Canada’s largest employers. Our teams across this country are our greatest asset. We’ve opened our Customer Solution Centre in Kelowna, and we’re on track to have more than 2,000 employees here in BC by the end of 2021.

While we are creating jobs, it’s also in our DNA to contribute, to give back to the communities we serve. That means making sure our communities in BC are connected. We recently announced our work with the Provincial government to connect the 250km stretch along Highway 16 – known as the Highway of Tears.

This route has a deeply profound and tragic history that impacts British Columbians, particularly Indigenous peoples and women, so we are truly humbled to do our part in making it safer.

Once the merger is approved, Rogers and Shaw combined will work to close the digital divide in western Canada by creating a new $1 billion Rogers Rural and Indigenous Connectivity Fund to connect communities across Western Canada.

Rogers launched Canada’s first 5G network in 2020 with new communities launching regularly. What does 5G bring to your customers?

Our 5G network is now in nearly 70 cities and towns in the province, which covers 86% of the population, offering 10 times more coverage than any other wireless provider. For our customers, 5G provides faster speeds—at full capacity it will deliver up to 100 times faster download speeds than LTE. Arguably the biggest impact however will be for businesses and communities. 5G will massively extend the potential for the Internet of Things, where everything can be connected. This will completely transform business operations, from supply chain management, to the retail experience, to creating more efficient and safer communities.

As part of that announcement, Rogers has highlighted its partnership with the University of British Columbia.

Why are these partnerships important to Rogers?

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accomplishment that showcases how we can make more possible.

Rick Sellers is President of B.C. Region for Rogers Communications

Our partnership with UBC is so exciting.

It’s important to not only work in the province, but across the country. UBC was one of the first partnerships we signed in BC about three years ago as part of a multi million-dollar investment in Canada’s leading academic institutions. Our goal is to bring together the smartest minds to build innovation applications - all leveraging our 5G network.

This research is really what will fuel the future of 5G technology and shape how it impacts businesses and communities.

We’re also connecting research with businesses to trial real-world use cases.

One great example is InDro Robotics.

With our 5G network covering the Point Grey campus, we successfully completed Canada’s first 5G drone flight—a big

What excites Rogers about investing in BC? British Columbia has such a thriving small business community, not just in major cities but everywhere in the province, and these companies make up the vast majority of our economy. The entrepreneurial spirit here is so strong and inspiring. British Columbia has also become a dynamic hub for innovation, especially in technology. Yes, Rogers can support these businesses with our wide range of products and solutions, far beyond wireless. We also want to tap into this innovation and talent to build partnerships and foster the next generation of business leaders. That’s what really excites us.

We’re also focused on our community engagement, with a particular focus on diversity and inclusion. Rogers is an active sponsor and participant in Pride Month. We are also actively supporting vulnerable communities across the province including Women’s Shelters Canada to provide free devices to the most vulnerable in BC. It’s the right thing to do, and we’re just getting started.

We’re partnering and connecting with BC community leaders to truly understand their challenges and find creative, innovative ways to bring connectivity and investment to their communities. At the end of the day, bringing meaningful change for BC residents is what matters most and we are fully committed to delivering on that vision.

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TRADE BY THE TEU PORT OF VANCOUVER Canada’s largest port showed resiliency last year in the face of a global pandemic that shocked markets and economies around the world. Cargo passing through the Port of Vancouver increased by 1% in 2020, growing to 145.5 million metric tonnes from 144.2 million metric tonnes in 2019.

For the fifth consecutive year, the port set a new record for shipments of Canadian grain.

New annual records were also set for potash and container trade. Auto imports, and exports of breakbulk forest products and coal, were down by double-digit percentages due to the pandemic, railroad blockades, weather conditions and other disruptions.

CARGO VOLUMES

AUTOMOBILES

-18%

BREAKBULK:

BULK:

-3%

+2%

CONTAINERS:

+2%

CRUISES:

-100%

VANCOUVER FRASER PORT AUTHORITY

REVENUE:

-59%

EBITDA:

-14%

CAPITAL INVESTMENT:

+66%

SOURCE: Financial Report 2020, Vancouver Fraser Port Authority (2021)

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PORT OF PRINCE RUPERT Despite the unprecedented challenges brought by the pandemic, the Port of Prince Rupert had a record year for cargo volumes. Some 32.4 million tonnes of cargo passed through the port last year, up 9% over 2019.

Overall, the Port of Prince Rupert enabled more than $50 billion in international trade. It also fostered $1.5 billion in economic activity in B.C.’s north, and supported more than 6,200 direct and indirect jobs related to moving trade through the province’s northern corridor.

ONE HUNDRED PORTS 2020: U.S. and Canada rankings from Lloyd’s List of the world’s largest container ports

16

52

LOS ANGELES, U.S.

VANCOUVER*, CANADA

LONG BEACH, U.S.

HOUSTON, U.S.

NEW YORK/

VIRGINIA, U.S.

21

62

23

65

NEW JERSEY, U.S.

79

38

SAVANNAH, U.S.

47

SEAPORT ALLIANCE, U.S.

OAKLAND, U.S.

81

CHARLESTON, U.S.

94

MONTREAL, CANADA SOURCE: One Hundred Ports 2020, Lloyd’s List (2020)

SOURCE: Port of Prince Rupert Delivers Another Record Year Amid COVID-19 Pandemic, Prince Rupert Port Authority (2021)

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COMPETING FOR

CONTAINER CAPACITY Challenges persist as VFPA and GCT Canada advance their own projects

PHOTO: NICK SOUZA

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CHUCK CHIANG

T

he long, contentious fight over how to expand container capacity at Roberts Bank has exposed fault lines between the Metro Vancouver port’s managerial and operational factions that may be difficult to heal.

That is because the controversial Terminal 2 debate – where the Vancouver Fraser Port Authority (VFPA) is advocating for a massive, multibillion-dollar landfill to quench the container capacity thirst expected on Canada’s west coast by the 2030s – has essentially put the port authority in the unique situation of being in quasi-competition with its current container port operator tenant at Roberts Bank.

Global Container Terminals Canada (GCT Canada) currently operates the port authority’s existing container facility, Deltaport, at Roberts Bank. GCT Canada has championed its own Berth 4 expansion to the three-berth Deltaport as the solution to upcoming capacity demand, and has become one of the fiercest opponents to the potential creation of a new three-berth Terminal 2.

“We look up north, and we are a little envious of what’s happening in Prince Rupert,” says Marko Dekovic, vice-president of public affairs with GCT Canada, in reference to the relationship between the port authority there and DP World Canada, the operator of that port’s Fairview container terminal.

“Their terminal operator up there and their port authority seem to be working hand-in-hand and winning. We want to get back to that environment here in Vancouver as fast as possible.”

GCT Canada and VFPA are currently embroiled in a legal fight in which the former has filed for a federal judicial review of the latter’s alleged bias against Berth 4, in favour of Terminal 2. However, despite how rancorous the fight has become, both sides say they remain committed to working with one another to ensure Vancouver remains effective in its role as Canada’s Asia-Pacific trade gateway.

“We continue to work with GCT at an operating level, and we need to do that,” says Duncan Wilson, vice-president of environment, community and government affairs at VFPA. “They are an important stakeholder and tenant in the port. I would say that

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we agree with GCT in terms of the need for additional capacity; there’s some disagreement about the sequence of that capacity and how to deliver on that, but that capacity is required. So irrespective of how Terminal 2 turns out, we will work with GCT, DP World and others to continue to develop that capacity for Canada.”

On that point, Dekovic agrees.

“Our day-to-day operational collaboration and work with the port authority remain,” he says. “We are both very committed, and it’s working well. Yes, on the front of these two projects, there are obviously some challenges, and the relationship is stressed on that level. But we are a proven and committed terminal operator here, and we want nothing more than to get beyond this and back to an environment where we are collaborating and winning for Vancouver.”

But despite both sides putting on a brave face, the friction points are glaring. The port authority’s Terminal 2 is scheduled to file additional information to the federal Ministry of Environment to facilitate a final decision (likely to come later this year or in early 2022). Construction could begin in 2024. GCT Canada meanwhile has commenced its own Impact Assessment Agency of Canada process for Berth 4, and is anticipating construction to commence in late 2026 or early 2027, if everything is approved. Neither side is backing down from their positions.

Terminal 2, the bigger and more expensive project, will involve the creation of a new 177-hectare landfill in the waters of Roberts Bank, and will add 2.4 million 20-foot equivalent units (TEUs) of container capacity per year by the 2030s. Berth 4’s scale is smaller: GCT Canada says it plans to add 56 hectares of landfill to the existing Deltaport to boost annual container capacity by about two million TEUs. Dekovic says Berth 4’s smaller scale is “right-sized” for the growth expected under current shipping trends, adding that the completely privately funded

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CONTAINER CAPACITY

WE ARE NOT BEING DRIVEN BY SHAREHOLDER VALUE AND PROFITS; WE ARE DRIVEN BY DELIVERING VALUE TO CANADIANS AND ENSURING THEIR ACCESS TO MARKETS j Duncan Wilson Vice-president of environment, community and government affairs Vancouver Fraser Port Authority

Duncan Wilson is vice-president of environment, community and government affairs at the Vancouver Fraser Port Authority • SUBMITTED

project would be a much more cost-effective way to address the upcoming capacity crunch.

“We have received comments about our project from our customers – actual ocean carriers who will be using the project – as opposed to the case with Terminal 2,” Dekovic says. “I think that’s a critical component for us... because that’s an integral part of any successful project, to have somebody’s who’s going to use it... We are much more in tune to what’s happening in the market.”

Wilson, however, says the port authority is considering a bigger-scale project because of the unique nature of not only Terminal 2 itself, but also the port authority’s own complex mandate to satisfy multiple stakeholders, including the general public. That means, Wilson notes, it is crucial for Roberts Bank to add Terminal 2 – which would be operated by an yet-unnamed operator that’s not GCT Canada or DP World – in order to maintain a competitive marketplace and keep shipping costs low.

“We are not a typical proponent,” Wilson says. “We have a mandate that’s in the best interest of Canadians and Canadian trade. Our shareholders are Canada, and part of our mandate includes ensuring there’s an adequate level of competition in the gateway and reasonable cost to users. So we are not being

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driven by shareholder value and profits; we are driven by delivering value to Canadians and ensuring their access to markets.”

Wilson again reiterated that the west coast of Canada is going to run out of container capacity in the mid-to-late 2020s, which would pose a major problem for Canadian import and export competitiveness, and could drive some Canadians to ship through U.S. ports at a higher cost – creating a loss of economic benefits for Canada.

He also noted the fact that the port authority has not reached an agreement with an operator for Terminal 2 isn’t concerning – and the delay may allow VFPA to secure the best deal (which would in turn benefit the public).

“There’s a tremendous amount of interest in the project, so we are not worried about a shortage of bidders,” Wilson says.

“What’s happening is that we are quickly running out of container capacity on the West Coast, and as that happens, it creates an even more competitive dynamic – which is good for the bidding process. So frankly, we don’t have an incentive to move forward quickly at this stage with procurement.

“We want to have the most competitive field we can [for bid procurement]. Any profit the port makes gets re-invested back into the gateway, so it’s in the best interest of delivering on our mandate to Canadians to have the best commercial solution, and that’s what we are pursuing.”

Dekovic, however, is skeptical. He notes that GCT Canada is actually in the terminal operations sector – and what they have heard about operators’ reaction to Terminal 2 (T2) is quite different from the reaction described by Wilson.

“Look, we’ve been saying from the get-go that – since the time T2 was conceptualized – the world has significantly changed since then,” he says, noting that projections used by GCT Canada show West Coast capacity not being reached until the 2030s at the earliest. “They had five global leading terminal operators all put and respond to their request for proposals in the past, and they’ve all walked away. It’s not the port authority pausing it.

It’s the terminal operators looking at the business case and what the port authority is proposing, and walking away.

“On the west coast of Canada, we have a great position where we have two proven, successful operators in DP World and GCT who have been winning customers and driving traffic to Vancouver and Prince Rupert,” Dekovic adds. “If the port authority continues pushing Terminal 2, it will cost all terminals in Vancouver ever-increasing rent and make us less competitive as an Asia-Pacific gateway... How does paying for expensive capacity make us more competitive?” É

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EXPORT EXCELLENCE Profiles of three award-winning B.C. exporters

Big Mountain Foods founder Kimberly Chamberland owns and operates the company with her daughter and business partner Jasmine Byrne • ASHLEY DRODY PHOTOGRAPHY

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HAYLEY WOODIN

W

hat do a plant-based foods producer, a rapid test kit developer and a mass timber manufacturer have in common? The three companies profiled in the pages ahead have not only shown resilience in the face of an unprecedented pandemic – they have found ways to expand, innovate and thrive. Their leadership and export success have earned each of them B.C. Export Awards. They represent the diversity of B.C.’s economy, and the growth opportunities that could define the province’s future export and trade success.

PLANT POWER Big Mountain Foods is expanding for export B.C.-based Big Mountain Foods recently moved from a 3,500 square-foot facility into 70,000 square feet of space in Delta to keep pace with demand for plant-based products.

“We were busting out of the seams seven days a week, two and a half shifts a day,” owner Kimberly Chamberland tells BIV Magazine.

The global market for plant-based foods is expected to top US$72 billion by 2027, and grow at a compound annual rate of nearly 12%, according to ResearchandMarket.com.

Intolerance for animal proteins, growing urbanization and significant venture investments in animal-free products are fuelling demand, and Big Mountain Foods is gearing up to cater to it.

Chamberland founded the company in 1987. “It wasn’t the company that it is today,” she explains. Back then she would deliver organic brownies, muffins and cookies to trendy little coffee shops throughout Vancouver.

Today, Big Mountain Foods is available in Whole Foods stores across Canada, and is in conversation with the chain’s U.S. counterpart. The award-winning exporter is working through the certifications it needs to sell into larger U.S. retailers, such as Walmart Inc. and Costco Wholesale Corp.

When Chamberland spoke with BIV Magazine, she had just gotten off a call with Costco Tokyo.

“It seems like it’s finally paying off – my loyalty, my passion for what we’re doing. Providing good, wholesome, allergen-free, vegan options is finally catching on,” says Chamberland, who runs the company with her daughter, Jasmine Byrne.

She credits companies such as Beyond Meat Inc. for breaking down barriers for plant-based options, and bringing vegan products into the mainstream.

From an export perspective, Big Mountain Foods is looking south.

“It’s more practical, economically, for us to ship down the I5 than it is to Quebec. So it was sort of a no brainer for us to open up our horizons and see the bigger picture. Planted-based is exploding everywhere,” says Chamberland, who notes the

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Big Mountain Foods is preparing to add an “exciting” new product to its line of whole, plant-based foods • ASHLEY DRODY PHOTOGRAPHY

company’s expansion in the U.S. has been more challenging than expected.

“We thought hands down Southern California would embrace what we’re doing, but there’s more and more people coming out with plant-based products. It’s all about marketing, and we’re learning every day.”

There are exciting things in the works for Big Mountain Foods.

The company has a corporate team in place and recently hired a new chef. It is also planning to launch an “exciting” new product in the first quarter of 2022.

“I’m just smiling from ear to ear. It’s such exciting times,” Chamberland says. É

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EXPORT EXCELLENCE

RAPID TESTING

A world-class lab is powering BioLytical’s work

BioLytical Laboratories has had a busy year.

During the COVID-19 shutdown, the Richmond-based company moved its operations into a facility twice the size of its former home. Its rapid COVID-19 antibody test has been approved in the European Union and is in active review with the U.S. Food and Drug Administration, and its HIV self-test kit is now the first of its kind approved by Health Canada. The company also built a world-class, in-house antigen lab that will power the development of its tests for years to come.

“We thought we had a seven-year growth plan and now we’re fully grown. The seven-year growth plan turned into seven-month growth plan,” says Robert Mackie, CEO and chairman of the award-winning exporter.

BioLytical invested more than a million dollars in equipment for its antigen lab, which incudes a very rare protein machine Mackie says is second to none. It will mean the company can produce its own antigen and finesse its world-leading tests without going back and forth with a third-party.

Previously, BioLytical purchased antigen from San Diego. For its COVID-19 test, it used the National Research Council of Canada’s lab to build antigen.

“They even laugh that we’ve purchased the machine that they wanted,” Mackie says.

“You can only imagine how easier it is to do it right down the hall, as opposed to doing it in Toronto.”

It is difficult to overstate the significance of BioLytical’s expansion. The lab is unique in Western Canada and one of perhaps a couple in Canada.

“Let’s say if or when there is a new virus out there – COVID-22 or whatever happens – we can spring into action way quicker now and we can build antigen right away,” Mackie says.

BioLytical’s new lab will allow the manufacturer to purify its Hepatitis C assay, which Mackie says will be industry leading, and could surpass sales of BioLytical’s flagship HIV assay.

And in its new facility, the company – which produces a range of one-minute tests for infectious diseases – expects to be able to produce up to 60 million products per year by the end of this year.

The company’s move during the COVID-19 lockdown made that possible.

“I don’t know how we would have done it if we were in full production and we weren’t shut down,” Mackie says.

“Obviously our sales going from record-breaking numbers to zero was no help for my sleep. But I’m really excited for what the future holds, because of how antibody testing, and just testing in general, was put into the forefront through this pandemic.”

As COVID-19 spread around the world, testing for other kinds of diseases came to a standstill. But testing is back, and Mackie tells BIV Magazine that sales of

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Robert Mackie is chairman and CEO of BioLytical Laboratories • SUBMITTED

ABOVE:

BioLytical produces rapid tests for a number of

infectious diseases, and announced a COVID-19 antibody test in partnership with Health Canada last year • SUBMITTED

the company’s HIV testing kit have since broken sales records for two consecutive months.

“Leaving HIV sales dormant for 12 months when you’re fighting something that you’re making very small ground on – which is the HIV epidemic – you can’t take a year off,” he says.

“The market is back, and nobody’s in full swing yet.” É

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Kalesnikoff is seizing massive mass timber opportunities, thanks to the company’s new state-of-the-art facility • SUBMITTED

MASS TIMBER

Kalesnikoff is seizing massive growth opportunities

Even a global pandemic couldn’t keep the Kalesnikoff family and their multi-service mass timber manufacturing business down.

Over the past year and a half, the company that bears their name has added 65 jobs, supported by more than $5 million in wages. Kalesnikoff’s newly minted, multimillion-dollar mass timber facility also came online at the start of 2020, and has been busy producing products for schools, community housing projects, university residences, commercial buildings and more throughout North America.

“2021 is on track to be our best year yet, thanks to our diversification into mass timber and our continued sawmill operations,” says company president and CEO Ken Kalesnikoff.

“Throughout the past year we’ve continued to grow, to create jobs, to secure contracts and to reinvest back into our community. It’s been 82 years since my grandfather and his brothers started our family business, so we’ve gotten used to adapting and innovating as times change.”

Kalesnikoff invested $35 million into its new 110,000 squarefoot mass timber facility, construction on which began in 2019.

The space, and the company’s sawmill, are located in the Kootenays, between Castlegar and Nelson, B.C.

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“Our business has always been focused on adding value right here at home. That’s what has carried us through the past 82 years and what will lead us into a bright future,” Kalesnikoff notes.

He adds that he has seen mass timber going up in buildings around the continent. It is a better option, he says, for builders who are increasingly mindful of the carbon emissions associated with construction.

“Our expansion into mass timber allows us to add significantly more value to the products we supply,” Kalesnikoff says.

Last year, Kalesnikoff was selected to supply mass timber products for Bayview Elementary in Vancouver, Humber College in Toronto and the University of Victoria. The three school projects are among the first major cross-laminated lumber projects that will be built with Kalesnikoff’s products.

“The provincial government recently highlighted the need for those in the industry to focus on value rather than volume,” Kalesnikoff tells BIV Magazine.

“There are many smaller independent companies out there that survive by focusing on value over volume, and that should be recognized and celebrated.” É

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TIME FOR A CANADA-ASEAN FREE TRADE AGREEMENT Canada cannot overlook the high-growth region of Southeast Asia

GEOFF DONALD AND WAYNE FARMER

East Indies. Nanyang. Indochina.

The Land below the Winds.

Regardless of what it has been called, from the global city state of Singapore, to the 17,508 islands of Indonesia, to rapidly growing Vietnam, Southeast Asia is one of the most dynamic and fascinating regions in the world with a wide variation of geography, cultures, risks and opportunities.

With a population of 670 mill ion people a nd a combi ned gross domestic product (GDP) of $2.8 trillion, the countries of Southeast Asia created the Association of Southeast Asian Nations or ASEAN in 1967, an intergovernmental organization that promotes economic, political and security cooperation among its 10 members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

ASEAN’s greatest successes are the promotion of peace and regional economic integration amongst its 10 members. As a bloc, ASEAN is the fifth largest economy in the world and is supportive to the ideas of open, rules-based free trade, with multiple free trade agreements with major regional and international trading partners.

Demographically, while its overall population growth rate is slowing, the ASEAN region will continue to grow to almost 800 million people by 2050.

While 2020 was a difficult year everywhere, ASEAN is set to rebound at over 6% GDP growth in 2021 with countries such as Vietnam and the Philippines expected to perform even better.

This economic growth will raise living standards for the people of ASEAN. A recent World Economic Forum report shows that income levels in the ASEAN bloc will grow annually by 6% to 8%, with the number of high- and upper-middle income households nearly doubling from 30 million in 2019 to 57 million people by 2030. The ASEAN region will be a global economic driver in the years ahead

because of increasing foreign investment, integration with global supply chains and its strategic geographic location.

More people having good jobs and higher incomes means more money in people’s pockets (that they will want to spend). This also means that ASEAN represents a key growth market for any country looking to increase its exports, including Canada.

As our sixth-largest trading partner – with two-way trade between them totalling $20.5 billion in 2019 – ASEAN remains a strategic trading partner and an important diversification partner for Canada.

Currently, Canada has free trade access with Vietnam, Malaysia, Singapore and Brunei through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, it has no free trade agreements with Indonesia, Thailand, Philippines, Myanmar, Cambodia or Laos. So, while Canada does have some trade access to the region, there is much room to deepen the economic partnership.

Now the good news: near the end of 2019, Canada and ASEAN concluded their exploratory discussions for a possible Canada-ASEAN Free Trade Agreement (FTA). Earlier this year, Brunei – as the 2021 ASEAN chair – announced that the launch of a Canada-ASEAN FTA is set as its major policy priority for the regional bloc in 2021. If free trade negotiations are to be formally launched, the ASEAN economic ministers meeting in September would be the most likely forum.

However, Canada is not the only country interested in a closer trade relationship with ASEAN. The European Union, the United Kingdom and the U.S. are all taking steps to upgrade their trade relationships. This means that Canada may soon find itself falling further behind in the region.

With Canada and ASEAN sharing commitments to an open, rules-based, free-trade system, an FTA between the two regions should be within reach, but Canada must pursue it now, or it will find itself at the back of an awfully long line of other suitors.

As Canada continues to look to expand its trade opportunities, the high-growth region of Southeast Asia is one that is not to be overlooked. É Geoff Donald is the Canada-ASEAN Business Council’s advocacy chair and managing director at Asia Engagement Consulting Group.

Wayne Farmer is CABC president and managing partner at Islemount Capital Advisers.

THE ASEAN REGION WILL BE A GLOBAL ECONOMIC DRIVER IN THE YEARS AHEAD

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CHINA CONNECTION Trade ties will be difficult to loosen even with a public and political push to alter course CHUCK CHIANG

T

e latest statistics show how difficult it will be for Canada to reduce its trade with China, the country’s second-largest trading partner, despite increasing evidence of Beijing’s willingness to wield political ties as weapons.

That is the observation of several experts, who noted that despite growing public disillusionment with China, Canada will find it difficult to extricate itself from supply-chain networks and trade ties built over multiple decades.

“It is a constant topic of discussion, whether Canada should pull one of the very, very weak levers that they have [on trade with China],” says Carlo Dade, director of the Trade & Investment Centre at the Canada West Foundation. “I haven’t heard anything specific, but it makes perfect sense. But the first point I make to folks … is that we are not a centrally planned economy. The private sector makes the decision on where to trade, not the government.”

There has been some anticipation of Canada diversifying trade and supply chains away from China in the last two years because of increasingly frosty relations between Ottawa and Beijing. Some moves may indicate a similar will from the federal government, such as Canada launching free-trade talks with Indonesia earlier in 2021. (Analysts also anticipate that Canada could follow Europe’s lead in resuming trade talks with India, the world’s second-mostpopulous country and a staunch rival to China).

However, despite persistent tension since the arrest of Huawei Technologies Co. Ltd. chief financial officer Meng Wanzhou in Vancouver in late 2018, followed by two retaliatory arrests of Canadians in China and a Chinese ban on Canadian imports like canola and red meat, as well as Beijing’s human rights abuses in Xinjiang and Hong Kong, Canadian exports to China rose in 2020 to $25.2 billion – up 7.5% from 2019. Exports to China last year exceeded all previous years on record other than 2018 ($27.7 billion).

According to Statistics Canada’s International Trade Explorer, China was one of only a handful of markets where Canadian exports increased last year. Others

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Hugh Stephens is a distinguished fellow at the Asia Pacific Foundation of Canada and vice-chairman of the Canadian Committee on Pacific Economic Co-operation • SUBMITTED

include Great Britain, the European Union, Peru and the Philippines.

Hugh Stephens, distinguished fellow at the Asia Pacific Foundation of Canada and vice-chairman of the Canadian Committee on Pacific Economic Co-operation, says it is important to note that 2019 was a down year for Canada-China trade, in part because of Beijing’s trade ban on Canadian canola and red meat.

Stephens notes that the private sector ultimately decides where to do business, so a large-scale change in current trade patterns would likely require a change in

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global economic fundamentals – something that does not happen overnight.

“Given the role that China plays globally and in the North American supply chain, it’s not a short-term proposition to suddenly turn off the switch,” Stephens says. “There is a gradual diversification taking place as China’s costs increase, as companies assembling in China move operations to Southeast Asia.… But that’s long term. And other than exerting brute force – as China has done with our Australian friends – there’s not a huge amount of things governments can do.”

China’s heated row with Australia helps explain why Canadian exports may have benefited in the last year.

China’s resurgent consumer demand has driven barley, wine, beef, lobster and timber imports.

All of those commodities produced by Australia have been targeted by Beijing trade barriers after Canberra called for an international investigation into China’s early handling of COVID-19.

And despite political solidarity among the Five Eyes (including Canada and Australia) to take a harder line against China, Canadian exporters have not had the same hesitation in filling the demand left by Australian goods – resulting in a 38% spike in farm, fish and food product exports to China last year.

“You do need to diversify … but you still have to go to markets based on demand and price,” Stephens says.

“There’s no question that the way China plays the game makes us all more vulnerable, but at the moment, we happen to be benefiting from that. They could beat up again on us … but the role China plays on commodities – especially those from Western Canada – is very hard to replace.”

Dade says it’s possible to divert some trade from China in the short term.

For instance, a shift towards crushed plant proteins instead of raw goods like dry peas, lentils and chickpeas would naturally facilitate a shift of exports from China (where the raw seeds are in demand) to Europe and North America (where plant protein is needed).

But making that change, again, is not easy. Dade notes that attempts to expand the plant protein sector in Alberta – where anti-Chinese sentiment in government is the strongest among provinces – faltered because the provincial government cut funding to the cause.

“Here you have the province that’s the most worried about trade dependence on China and is the most vocal about cutting trade with China,” Dade says. “And the one thing they could do … to keep the peas in Canada to process and to export elsewhere, neither the farmers nor the government were interested [in]. Producers are not interested in taking the risk of developing a new market, so we are stuck in this trade-dependency pathway.”

Stephens says Canada could also take advantage of

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There is mounting political and public pressure on Canada to reduce its ties to China • OLEKSII LISKONIH/GETTY IMAGES

existing trade deals. While free-market governments usually cannot dictate the direction of trade, they can make access to markets more attractive. Agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership with Japan, Vietnam, Malaysia and others, and the Comprehensive Economic and Trade Agreement with the European Union, are the best examples of such market-access facilities, Stephens says.

For Dade, however, Canada’s trade history with the United States might point to the outcome of its struggle with China.

“Look at the softwood lumber trade,” Dade says. “If anyone has given us just cause to really diversify, it would be the Americans with softwood lumber. Time after time after time, they’ve imposed penalties and fines. They’ve blocked imports. They ignored rulings from the WTO [World Trade Organization] and the NAFTA [North American Free Trade Agreement] panel. Everything [trade related] that China has done, the U.S. has done 10-times worse.… But over the past couple of decades, softwood lumber export numbers haven’t moved except for periods of decrease in demand in the U.S. “If we haven’t learned with the United States, I see nothing happening with China to give any indications we would learn here.” É

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BIV MAGAZINE

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BIV MAGAZINE: THE TRADE ISSUE 2021 PUBLISHED BY BUSINESS IN VANCOUVER

FLEET EXPANSION Seaspan sinks multimillions into new vessels as global container cargo market booms TIMOTHY RENSHAW

T

he world’s largest lessor of container cargo ships is increasing its bet on the buoyancy of global container cargo in the pandemic economy.

Casino chips on the table this time for Vancouver-based Seaspan Corp. come in the form of an agreement with a major shipyard announced March 30 to build six new container ships to add to its growing fleet.

It’s not a bet for the faint of heart in the volatile global shipping sector.

Capacity of each ship will be 15,500 20-foot-equivalent units (TEUs). The six will provide a portion of the 580,000 TEUs the Atlas Corp. subsidiary plans to add to its fleet to increase its container cargo capacity to 1.65 million TEUs. Seaspan did not release the overall six-ship price tag, but container ships in the 14,000- to 16,000-TEU range would normally cost between US$100 million and US$200 million.

The company’s ship order is the latest step in its expansion ambitions.

Under new corporate leadership that took over Seaspan’s helm approximately four years ago, the company has invested a lot of container-ship capital in an aggressive growth plan.

Since 2017, when Gerry Wang retired as Seaspan CEO and David Sokol was appointed chairman of Seaspan’s board, it has added 71 new container ships and more than 890,000 TEUs. Annual revenue has increased 71% to US$1.42 billion from US$831 million. At the end of 2020, Seaspan’s global fleet consisted of 127 ships.

The company also created Atlas in late 2019 and in early 2020 acquired APR Energy Ltd., the world’s largest lessor of mobile gas turbines, in an all-stock transaction valued at US$750 million.

During Atlas’ March 9 conference call for its 2020 financial results, company president and CEO Bing Chen noted that Seaspan’s new vessel growth “has added $5.9 billion of gross contracted cash flow to Seaspan within the last few months.”

Delivery of Seaspan’s six new ships is anticipated to begin in the second-half of 2023 and be completed by mid-2024.

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The deal, which will be financed through cash on hand and additional debt, is also further indication of Seaspan’s optimism amidst the current trade turbulence created by continuing waves of the COVID-19 pandemic.

In an interview with BIV prior to his departure as Seaspan chief financial officer at the end of September 2020, Ryan Courson said the company “has a very positive view on the long-term supply and demand dynamics of the container shipping space.”

He added that Seaspan’s container ship fleet, the world’s largest, “is going to be a key component of that supply and demand equilibrium.”

That optimism is shared by some analysts in the global shipping sector.

“As a person who has been accused of being Dr. Doom and Gloom for the past 10 years by every single industry participant, I’m weirdly optimistic on the volume side, especially the transpacific over the next year,” says Alan Murphy, the founder and CEO of Denmark’s Sea Intelligence.

Murphy, whose company generates global supply chain research, analysis and data, told Business in Vancouver

AS A PERSON WHO HAS BEEN ACCUSED OF BEING DR. DOOM AND GLOOM FOR THE PAST 10 YEARS ... I’M WEIRDLY OPTIMISTIC ON THE VOLUME SIDE j Alan Murphy Founder and CEO Sea Intelligence

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that his optimism is based on a fundamental change in the container shipping industry that occurred in 2020. In short: “shipping lines have perfected the art of short-term capacity management.”

That is largely the result of consolidation over the past five years and discipline within an industry where those factors have traditionally been in short supply.

He declined to comment on Seaspan or any other major player specifically in the global container shipping sector, but Murphy added that vessel orderings for major shipping lines have more to do with sustaining fleet size and competitiveness while matching demand growth than expanding those fleets.

As to the overall long-term outlook for global marine container freight, Murphy says the past year has been the best in at least 10 years.

“Now, I say we’re looking at at least five to 10 years of good use of the shipping lines, partly because things are looking better, but also because they are now consolidated and now so structured that even when volumes dry up, they can respond to it quickly.”

Container shipping overall did surprisingly well in 2020 and has been on a roll for the past four years.

As reported previously in BIV, the rebound in transpacific container traffic caught shippers, carriers and container terminals by surprise. Coupled with COVID-related labour shortages and operational disruptions, and a 16% drop in trade in 2020’s first half followed by a 30% increase by year’s end, container traffic logjams occurred up and down North America’s west coast.

In an early April analysis, U.K.-based shipping consultancy Drewry noted that the year-end operating profits in the global container shipping sector totalled an estimated US$26 billion, “the best industry performance that Drewry has records for…”

That in turn has sparked a rapid rise in orders for new ships.

However, shipping lines remain wary about trade and business recovery.

Outlooks from major container shipping companies like A.P. Møller - Maersk underscore the volatility of the pandemic economy around the world.

The 2020 annual report from the world’s largest container shipping company notes that the outlook for 2021 is subject to a host of uncertainties, including macro-economic conditions, “COVID-19, bunker fuel prices and freight rates.”

During a March 10 ports and terminals market update webinar, Eleanor Hadland noted that the outlook for trade in 2021 and 2022 remains positive. But Drewry’s senior ports and terminals analyst added that “port congestion continues to disrupt market recovery, and empty container shortages will continue to hold back growth until system rebalance is attained.”

Drewry’s April analysis also pointed out that the rush to add new container shipping capacity in the form of new ships threatens to create future overcapacity that could again undermine the long-term fiscal health of container shipping lines.” É

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Seaspan Corp. has expanded its work force from about 200 people a decade ago to more than 2,000 now • ROB KRUYT

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