BC Shipping News - June 2016 by McIvor Communications

Air Quality: Port of Vancouver’s Emissions Inventory

Clear Seas: Workshop promotes collaboration

Environment: Setting the pace for green technology

BC SHIPPING Commercial Marine News for Canada’s West Coast.

Volume 6 Issue 5

NEWS

www.bcshippingnews.com

June 2016

Industry Insight Ron Brinkhurst President, Tidal Transport

Container ships A race to the bottom

Terminals

Sustained container growth has terminals in a scramble

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BC SHIPPING

Contents

NEWS

June 2016 Volume 6 Issue 5

Cover Story

21 7

Editor’s note

In brief

By Jane McIvor

Industry traffic and news briefs

Industry insight

The journey to success Ron Brinkhurst, President, Tidal Transport & Trading Ltd. The journey from superintendent to president has been fraught with “sleepness nights and hair falling out” but as Ron describes, it starts with one piece of business, and then another, and then another...

Vancouver’s first grain elevator turns 100 By Lea Edgar

21 Terminals

Sustained container growth has terminals in a scramble By Ray Dykes

32 34 37 41

History lesson

Container ships A race to the bottom By Syd Heal

Ship recycling

State of the art: Global ship recycling By Jeffrey Smith

Spill response

B.C. company finds international success with oil spill response equipment

50 Environment

Ports

PAPA recognized as economic engine

Clear Seas

Clear Seas workshop promotes collaboration By Colin Laughlan

Setting the pace for green technology use in maritime transport By Darryl Anderson

Legal affairs

What’s in a word? Security interests in fishing licences and fishery quota entitlements By Roger Tangry

Green Marine

Expanding verification: New Green Marine verifiers By Françoise Quintas

Air quality

Port of Vancouver’s Emissions Inventory By Colin Laughlan

On the cover: The MSC Fabienne at Deltaport (photo: BC Shipping News); above: Nanaimo’st Duke Point (photo: David Mailloux, Nanaimo Port Authority); right: Example of ship recycling (photo source: www.isranetwork.com); left: Ron Brinkhurst, President, Tidal Transport & Trading Ltd. (photo: Dave Roels)

June 2016 BC Shipping News 5

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June 2016 Volume 6/Issue 5

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Contents copyrighted 2016 McIvor Communications Inc. 300 - 1275 West 6th Avenue, Vancouver, British Columbia Canada V6H 1A6 Phone: 604-893-8800/Fax: 604-708-1920 E-mail: contact@bcshippingnews.com International Standard Serial Number ISSN: 1925-4865 / Published 10 times per year. The opinions expressed by contributing writers are not necessarily those of the Publisher. No part of this magazine may be reproduced in any form without written permission of the publisher.

Proud member of: 300 – 1275 WEST 6TH AVENUE, VANCOUVER, BC V6H 1A6 T: 604-893-8800 / F: 604-708-1920 E: JANE@BCSHIPPINGNEWS.COM 6 BC Shipping News June 2016

International Sailor’s Society Canada

EDITOR’S NOTE

Photos by Dave Roels, www.daveroels.com

One of our best so far

hat a great issue we have in store for you this month! Not only has Ray Dykes provided a ful volume of updates on B.C. terminals (and even at that, I bet there are more stories out there to tell), but the calibre of writers is such that each article is very well written, informative and thought-provoking. Don’t miss Syd Heal’s analysis of the container ship sector (A race to the bottom) which, as the title suggests, is at the

low end of the cycle and impacting sectors like shipbuilding and steel production not to mention employment, etc. We have devilishly followed Syd’s article with one on ship recycling by Jeffrey Smith, a master wordsmith with insights into a sector of the industry that requires a lot more of our attention. Darryl Anderson, Colin Laughlan (who does double-duty with two articles this month), Lea Edgar and all the rest have done an outstanding job.

But start with this month’s Industry Insight featuring Ron Brinkhurst, President of Tidal Transport. Brinkhurst is too humble to admit it but he’s a leader in this industry. Not only does he provide BC Shipping News with relevant insights into many facets of B.C.’s shipping industry, but he gives us a glimpse of the character and hard work required to achieve success. Happy reading! — Jane McIvor

Cyber shipping – ship design in a digital age Read the first edition of LR’s guidance on cyber-enabled ships. It is the result of detailed work and consultation with industry and academia.

Read the guidance at www.lr.org/cyber

Working together for a safer world Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Copyright © Lloyd’s Register Group Limited 2016. A member of the Lloyd’s Register group. Half page BC shipping Gas_311015.indd 1

06/05/2016 17:19:18

June 2016 BC Shipping News 7

INDUSTRY TRAFFIC

New president for Squamish Terminals

om Rasmussen, Chair of the Board for Squamish Terminals, was pleased to announce the appointment of Kim StegemanLowe to the position of President of Squamish Terminals effective May 1, 2016. “I have been acting as both President and Chair of the Board since August 2014, when Ron Anderson retired,” said Rasmussen. “Kim will now take over the position of President and continue on as a Director of the Board.” Rasmussen also noted that Joe Webber will remain Vice President Operations and on the Squamish Terminals’ Board. Rasmussen, who is also the President and CEO of Grieg Star Shipping, will remain actively involved as Chair. Stegeman-Lowe came to Squamish Terminals in March 2008 as Manager of Business Administration. In August

FUNDRAISER

2014, she was promoted to Vice President, Administration. In her new role, she will be responsible for all aspects of the operation including a focus on the commercial development of the terminal, supported by a strong operational and administrative team that is already in place. “Please join me in congratulating Kim on her appointment,” said Rasmussen. Squamish Terminals is a deep-water, break bulk terminal located at the north end of Howe Sound — just 32 nautical miles north of the Port of Vancouver. With an intermodal transportation infrastructure (including access to rail, ocean and truck), two berths, three warehouses, specialized handling equipment and an experienced team, Squamish Terminals efficiently handles cargo bound for North America and around the world.

Kim Stegeman-Lowe

A full update on recent activities at Squamish Terminals can be found on page 28 as part of Ray Dykes’ Annual B.C. Terminal Update.

Please help John Horton return his boat, the Steveston Lifeboat, to volunteer service! Where

Vancouver Maritime Museum 1905 Ogden Ave, Vancouver, BC V6J 1A3 (604 257-8300)

When

Wednesday, 15 June, 2016

Time

5pm to 8pm Entry by donation Distinguished Guest Speaker Fundraising Goal: $40,000 Silent Auction Light Refreshments

The Vancouver Maritime Museum, BC Shipping News and The Canadian Fishing Company are hosting this event to assist famed lifeboat commander and marine artist, John Horton. For 36 years John has volunteered his Steveston Lifeboat into SAR and prevention service, but in December 2014 it was involved in an unfortunate training accident, requiring a major refit. John’s support of the marine industry is legendary, but now he needs help to complete the repair as his financial resources have run out. The evening will feature some of John’s art in the silent auction. He will also present a brief version of his highly popular illustrated talk on Captain Vancouver’s Voyage of Discovery of this coast. Please come and support John. 8 BC Shipping News June 2016

If you are able to donate funds or an item for the silent auction or for any questions, please contact: Mary Horton at mary@johnhorton.ca or at 604 943-4399.

NEWS BRIEFS

Ken Harford awarded CIMarE’s Medal of Excellence for 2016

n May 5, the Canadian Institute of Marine Engineering announced the 2016 winner of its Medal of Excellence. The National Council conferred the award on Mr. Ken Harford P.Eng, retiring Managing Director of Robert Allan Ltd. The presentation was made at Mari-Tech 2016, Canada’s annual marine technology exhibition and conference, held this year in St. Johns, Newfoundland. Ken graduated from UBC in 1970 with a B.A.Sc. in Mechanical Engineering and started his career as a consulting Acoustical Engineer, a business that evolved into the consulting firm of Harford Kennedy Ltd (now BKL Consultants Ltd). Through that business, Ken began a long association with the B.C. tugboat industry. He led a detailed study of the noise levels aboard local tugboats which resulted in new noise control regulations in the industry, and fostered a passion for ensuring that tugs are designed to be as quiet and vibration-free as possible. Ken’s commitment to this subject has been a major factor in leading Robert Allan Ltd. to the situation of prominence in the international tug industry which it enjoys today. Ken later joined forces with Steve Hui creating Mechtronics Research Corporation (MRC) in 1975, moving into the field of manufacturing control systems for Z-drives on tugs. In 1981, this work evolved into the establishment of IMPEG (Industrial Marine Power Engineering Group) as distributor of Niigata Z-Peller drives using Mechtronics controls. During this period, Ken was involved in the delivery of many of the first Z-drive tugs in Canada for companies such as C.H. Cates and Sons, and Seaspan. Ken joined Robert Allan Ltd. in 1988, acting principally as the senior Project overseer for new construction, where he

was responsible for QA and vessel completion oversight for numerous Z-drive tugs (primarily for American clients) and a variety of diverse other craft. From about 1994 onward, Ken assumed the role of Vice President of Engineering at Robert Allan Ltd., directing all aspects of the mechanical and marine engineering work within the company. For the next 20 years Ken led the firm’s engineering group, encouraging the strongest standards of design excellence in the development of a world-leading suite of high-performance tug designs for a worldwide client base. In 2008, Ken assumed the position of President at Robert Allan Ltd. overseeing their transition from a privately- held company to one of employee ownership. He turned over that position in 2015 and has

remained as Managing Director until his retirement at the end of April 2016. Ken is a Registered Professional Engineer in B.C., a member of the Institute of Marine Engineers and a member of the Society of Naval Architects and Marine Engineers. Ken retired from Robert Allan Ltd. after 28 years of truly dedicated service and leadership, and as a driving force behind the success of the company, now in its 86th year of continuous business in Vancouver. A reception was held in late April at the Royal Vancouver Yacht Club during which he was recognized for all he has contributed to the collective success of Robert Allan Ltd. and the industry at large. To see photos from the event, visit www.bcshippingnews/photos.

Save

THE DATE THURSDAY, NOVEMBER 17, 2016

ICS CANADA BRANCH DRY BULK & COMMODITIES CONFERENCE 2016 Vancouver Convention Centre With keynote speaker John Kearsey, Head of Research SSY

FOLLOWED BY OUR ANNUAL CHRISTMAS PUB NIGHT Mahony & Sons Pub Photo: BC Shipping News

June 2016 BC Shipping News 9

INDUSTRY TRAFFIC Clean Pacific Conference provides valuable networking, professional development for oil spill responders

he Clean Pacific Conference & Exhibition happens June 21-23, 2016, in Seattle, Washington. The event takes place at The Conference Center — Washington State Convention Center and is designed to bring education and training in spill prevention and response to its attendees. Clean Pacific brings together stakeholders in spill prevention and response from government, environmental, emergency planning, and emergency response industries to share lessons learned, hear best practices and view new products

and services for response operations. It provides attendees the opportunity to connect with the operators, responders, regulators and members of the Coast Guard involved in spill prevention and response, allowing them to build the important relationships needed for a successful response. Training workshops take place on Tuesday, June 21, and include Incident Command System (ICS) and the Incident Command Post — Crisis Communication by Design, Shoreline/ Inland Response and SCAT Surveys,

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and Exercise Program Management through the Homeland Security Exercise and Evaluation Program (HSEEP). Starting on Wednesday, June 22, three concurrent tracks will take place; Planning and Preparedness, Prevention, and Response and Recovery. Over a two-day period, each track will hold multiple educational sessions led spill response experts. Conference sessions include topics such as: • Managing Risks in Alaskan Marine Transportation • Advances in Planning – Response Management Tools • Advances in Non-Mechanical Response Techniques • Assessing Risk and Liability • Advances in Implementation of Plans and Training • Marine Response – Issues and Tools • Advances in Response Tools • Environmental/Response and Restoration Issues • Co-operation in Derelict Vessel Management • Being Prepared for Rail and Pipeline Incidents • Health and Safety Response Issues • Waterway Risk Management • Crisis Communication: Understanding your Audience and Tools • Inland Response – Lessons Learned • Crude-by-Rail Incident Management • Transboundary/International Cooperation/Salish Sea • Managing the Incident The Clean Pacific exhibit hall will feature 50+ exhibitors showcasing their products and services for spill prevention and response. Attendees will have the opportunity to meet face-to-face with all of the exhibitors to discuss their unique products and services over a two day period.

For more information: www.cleanpacific.org

NEWS BRIEFS ClassNK releases updated Guidelines for Gas Fuelled Ships

eading classification society ClassNK has released the fourth version of its Guidelines for Gas Fuelled Ships. With the introduction of increasingly strict environmental regulations, the industry is now turning toward the use of cleaner fuels such as LNG and more recently other low flashpoint fuels such as methanol to curb their NOx, SOx, and PM emissions. The new guidelines provide comprehensive, up-to-date information on key design features relating to bunkering, hull structure, fire safety, and explosion prevention measures for gas fueled vessels. The International Code of Safety for Ships using Gases or other Lowflashpoint Fuels (IGF Code), scheduled to come into force on 1 January 2017, will introduce a wide range of

safety regulations with far-reaching implications for gas fueled vessels. The new guidelines build on the structural requirements set out in the first version of the guidelines published in 2009, with recent technological developments including amendments to the IGF Code and discussions on safety requirements regarding the use of methanol/ethanol as fuel. Other new updates cover areas such as safety measures for vessels not originally built to use LNG as a fuel. Vessels which meet the criteria for conversion to operate as LNG fueled vessels are fixed with the LNG Ready notation in accordance with the new guidelines. The Guidelines for Gas Fuelled Ships (ver. 4) are available on the ClassNK website for ClassNK “My Page” users. Registration for ClassNK’s “My Page”

service is easy and free. Visit ClassNK’s website at http://www.classnk.or.jp and click on “My Page Login.”

June 2016 BC Shipping News 11

INDUSTRY INSIGHT

The journey to success Ron Brinkhurst

President, Tidal Transport & Trading Ltd. Photo by Dave Roels (www.daveroels.com)

The journey from superintendent to president has been fraught with “sleepless nights and hair falling out” but, as Ron describes, it started with one piece of business...

on Brinkhurst, President of Tidal Transport & Trading Ltd., started the company with one client in 1999. Seventeen years later, along with partners Clay Petroff and Paul Gallant, Ron has grown Tidal into a powerhouse that touches on numerous facets of the marine industry along the West Coast of North America. The journey from superintendent to president has been fraught with “sleepless nights and hair falling out” but, as Ron describes, it started with one piece of business which led to another and then another until we arrive at the present day to find a local B.C. success story. BCSN: Let’s first look at how you started Tidal Transport and list the companies that currently fall under the Tidal Transport banner. RB: Growing up in North Burnaby, the Vancouver waterfront provided a

12 BC Shipping News June 2016

lot of job opportunities and there were quite a few from the neighbourhood who went to work as longshoremen and in other areas of the industry. I began working with Empire Stevedoring at Vanterm in 1984. This was just prior to EXPO 86 and Empire needed someone to co-ordinate the inbound movement of equipment and goods from vessel to terminal and on to the EXPO site. I initially focused on containers and project cargoes in various areas of Vanterm’s terminal operations. Over the next 15 years, I worked in the general stevedoring division, concentrating on break bulk, especially forest products, including logs, but also automobiles and bulk commodities such as phosrock and grain as well as cruise vessel services. It was a great company made up of dedicated people with a wealth of experience. I was fortunate to have had

many mentors and when Empire (soon to be renamed Terminals Systems Inc. and now Global Container Terminals) decided to exit the general stevedoring business in 1999, I had the choice to either go to work for a competitor or start something on my own. I had a key log account that encouraged me to consider it and there were some supercargo opportunities so I decided to give it a shot. In the early days, our focus was supercargo services for companies like Westwood, Star, Gearbulk, and Saga, primarily for export raw log stevedoring. We started out of the gate with one log account and quickly grew to exclusively manage 100 per cent of the provincial stevedoring of raw logs to deepsea vessels. This continues as our single largest volume commodity and revenue source. In terms of the roster of companies under Tidal, we established Tidal USA in 2005 with expanded port captain and vessel hold cleaning services. We acquired Mitchell Fothergill Marine Surveyors in 2007, Tidal Coast Terminals and Tymac both in 2008, and most recently in April 2015, CT Terminals, our Coast

INDUSTRY INSIGHT Photo: BC Shipping News

Tsimshian Enterprises joint venture which holds the Ridley Island RoRo and rail operations. BCSN: Is there much integration between companies or are they stand-alone operations? RB: Although operating independently, the overall and financial management of all companies is through our administration head office in Port Moody. BCSN: My main goal is to get your insights into terminal operations but could we look at the other companies briefly to get a sense of their operations and services? RB: Sure. Starting with Port Captain and Supercargo Services, in growing that area, we focused on expanding our offices and supervision team to allow for regional attendance, ensuring local experience and relationships and reducing travel-related costs to our principals. We have 20 permanent port supervisory staff located throughout regions like Prince Rupert, Vancouver, Campbell River, Nanaimo, Crofton, Seattle, Portland, Los Angeles and San Diego. We typically recruit as good people become available, and rarely hire anyone with less than 20 years of shipboard experience for our PC team. In 2015, we provided SC and PC work to over 60 principals for well over 500 vessel operations. Paul Gallant, who is a partner with Tidal, manages all of our B.C. vessel operations. Tidal Transport USA (Port Captain/ Hold Cleaning) came about when we started working with Pacific Basin Shipping in 1999 — that was when they started calling the West Coast for the occasional log cargo. We developed our Portland and Seattle hold cleaning operations around their cement COA and we now have our headquarters in Huntington Beach, California. Taking a bulk carrier from cement to clean cargoes is seen as a significant challenge, but our U.S. team, led by one of Tidal’s partners, Captain Clay Petroff, has developed a reputation for achieving this in a timely and cost-effective manner, managing in excess of 50 cleanings per year along with hundreds of other

Ron, along with local shippng industry representatives from ACGI and Trans-Pac, were on hand for the inaugural visit of the MV Alaska — a brand new purpose-built logger that will be serving the West Coast.

vessel operations, including port captain services. BCSN: With the U.S. economy improving, are you seeing an increase in activity? RB: Yes, it’s coming back. Work basically disappeared during the financial crisis of 2008 but we were able to hold on and things started to improve last year. With a more positive economic

picture, the cement business has come back and our port captaincy business continues to grow as well. BCSN: What about Tymac Launch Service? RB: Tymac Launch Service was founded in 1930. When a major B.C. Tug and Tow outfit passed on the purchase of Tymac, they called and

June 2016 BC Shipping News 13

INDUSTRY INSIGHT recommended it to me. Although too small for them, in reviewing the client list, it seemed to make perfect sense for us and we could see a diamond in the rough as far as site and equipment was concerned. Captain Stephen Brown was with us at that time and was the driving force behind that acquisition. Since then, we have undertaken significant site and fleet upgrades totalling many times our original purchase price — including one new build tug, seven new launches, six new barges and an assortment of used rolling stock and floating equipment. We’ve been able to expand our service efficiency and overall capacity and, at the same time, more than double original annual revenues in the years that we’ve owned it. BCSN: What about future plans for Tymac? RB: We’re planning a redesign of our docks and floating buildings which we hope to start this fall. We are also working with Metlakatla Development

Corporation and are in the final stages of a new North Coast partnership, “Gat Leedm Marine,” where we will grow capacity to support our existing vessel operations (launch and barge) in Prince Rupert and Stewart, and expand into new areas of deepsea vessel support, as well as project development should it proceed. BCSN: That ties into a question I have about growth in the north but let’s finish with Tymac first. Looking at the waste removal portion, could you describe operations within context of greater environmental awareness and regulation. RB: Tymac has always prided itself on the responsible disposal of waste even before it was popular to do so. Since 1989, Tymac has provided the Port of Vancouver and it’s cruise ship industry with comprehensive and economical waste removal services, helping customers implement recycling programs that reduce waste streams, disposal costs and their impact on the environment.

Our environmental commitment is to dispose of all waste when possible using waste-to-energy facilities and/ or repurposing the waste through our large network of vendors and recyclers. Tymac was awarded 2014 BC Recycler of the Year for our Cruise Vessel Waste Services and has recently received Green Marine Certification. We are continually looking for new ways to improve not only our waste management services but also our own footprint — for example, we are currently focusing on reduced idling times to cut emissions. James Collins, our full-time environmental officer, is responsible for ensuring we live up to our commitment to operate in an environmentally responsible manner. BCSN: I’ d like to now focus on terminal operations. First, could you describe your activities at Tidal Coast Terminals (TCT)? RB: TCT was started as a log sort/ processing yard when an existing

Zincs with Aluminum Anodes

Replace

Meets VGP regulations on Cathodic Protection

Benefits of Aluminum: • Outlasts Zinc by 150% • Environmentally friendly (Cadmium Free) • Costs less • Weighs 50% less

Dave aboard the CSL Tecumseh “Action Photography - everywhere!”

“Dave’s not just a photographer, he’s an artist.” Jane McIvor, Publisher BC Shipping News

14 BC Shipping News June 2016

INDUSTRY INSIGHT Photo by Dave Roels (www.daveroels.com)

Tidal Coast Terminals processes about 250,000m3 of logs (scale, sort, bundle, dump) with a growing container reload business that currently sits at about 600 containers per month.

ACCOUNTABILITY l RELIABILITY l SERVICE EXCELLENCE

Photos by Dave Roels

operator left the business. In order to support North Coast shippers, in 2008 we leased West Fraser’s former North Coast Timber Mill site — 54 acres with a dewatering crane — and later installed a debarker in a joint venture with Coast Tsimshian Resources and Alcan Forest Products. Subsequently purchasing the yard from our previous landlords in 2013, we started investing in improvements to the site to allow for more professional and expanded operations. TCT processes about 250,000m3 of logs (scale, sort, bundle, dump) with a growing container reload business that currently sits at about 600 containers per month. My focus when purchasing the property was to develop it in support of break bulk handling for commodities such as steel products and project cargoes for customers using the Prince Rupert Gateway. These plans included inbound break bulk operations for vessel-to-barge discharge which would be subsequently moved through our site, onto trucks and sent for onward delivery. There was some significant interest expressed initially, but then, of course, energy prices collapsed and LNG proponents have been slow to reach final investment decisions. There was also the need to consider whether further terminal investment made sense if it’s based solely on project speculation. After years of environmental and engineering work, we received the necessary permits to proceed with extensive foreshore and dredging work but, based on the variables just mentioned, we’re delaying additional capital outlay for now. BCSN: You also have CT Terminals in Prince Rupert. Could you describe those operations? RB: CT Terminals is our Coast Tsimshian Enterprises joint venture which covers our Ridley Island RoRo and rail operations. For both Tidal Coast Terminal and CT Terminal, we’re at a crossroads of sorts. At the CTT Ro-Ro and rail yards, we have concluded only one major project — seven shipments of project cargo

June 2016 BC Shipping News 15

INDUSTRY INSIGHT For stevedore and terminal operations, there has been both growth and decline over certain commodity sectors and locations. moved from ship to barge to rail. Additional competition from the recently completed Stewart World Port facility now factors into our planning and currently we have no cargo commitments for our terminal infrastructure or barges. We do, however, continue to offer services and have four 2,200-metric-tonne cargo barges on a five-year lease term from Seaspan to support our vessel-to-barge operations. We are plotting strategy on this now, to either hold on in the hopes that something will proceed; reduce our significant CTT overheads asap and delay operations until the economic situation for inbound cargoes improve; or refocus towards supporting Prince Rupert’s container growth, which has been extremely successful thus far. With expansion to a second berth and increased capacity at Fairview coming online in a little over one year, we see increased involvement in off-dock operations as being a worthwhile pursuit. For TCT, our success depends on China. Chinese demand for logs and lumber, typically of lower quality than has been traditionally demanded in Japan and Korea, supports the opportunity for both our log processing and lumber reload operations. All of our lumber reload activity and a large majority of our log volumes are destined for China.

on started his career with Empire Stevedoring in 1984 where he moved through various areas of the company’s terminal operations. Ultimately becoming Senior Superintendent, Ron managed all facets of break bulk handling, with a major focus on forest products, including logs, but also automobiles and bulk commodities as well as cruise vessel services. In June, 1999, following Empire’s exit from the breakbulk sector, Ron started Tidal Transport & Trading Ltd. where he has grown the company from a few initial clients to a variety of companies providing a multitude of services to the shipping industry – from port captaincy and supercargo services, to hold cleaning, launch services and waste management as well as terminal operations. Ron lives with wife Ann near Port Moody, B.C. He has three children — Julie (25), Ryan (23) and Nicole (21). 16 BC Shipping News June 2016

Photo by Dave Roels (www.daveroels.com)

About Ron Brinkhurst

This lack of market diversification of course concerns us, but it is a fact that we can do little about other than manage operations as efficiently as possible for our customers and do our small part to make B.C. forest products as competitive as possible. In spite of a province-wide decline in log exports in 2015, the North Coast (Stewart and Prince Rupert) managed to maintain export volumes and we expect the same for 2016. BCSN: My understanding is that the decline in log exports has more to do with our ability to keep up with demand. RB: In part, yes, that’s correct. Increasingly, B.C.’s ability to meet Chinese demand will be decided by future export volumes. When the financial collapse happened in 2008, the markets in the U.S. dried up, so forest product companies looked to Asia to fill those orders. Now the U.S. is coming back and there’s a question of how much of that volume goes back down south. The export of logs is managed through the provincial surplus system which sets a benchmark for domestic need and what can be considered surplus and available for export. There is also the Softwood Lumber Agreement — we’re expecting to hear something on that this summer and that may impact how much volume finds its way back into the U.S. There are also factors such as fire season restrictions and fears that we may be in for another long stretch of hot, dry weather with long periods of harvest curtailment, much like last year. Another factor is the shift to exporting by container rather than break bulk. For stevedore and terminal operations, there has been both growth and decline over certain commodity sectors and locations. The West Coast break bulk sector collectively continues to face significant challenges. The removal of the container clause in 1987 along with the steady growth of the container sector over the past 30 years has resulted in a majority of break bulk forest products (lumber and pulp) now being stuffed into containers rather than loaded as break bulk. So the proliferation of off-dock reload facilities utilizing lower cost non-ILWU labour, coupled with overcapacity in the container sector, has certainly impacted the break bulk sector more than any other. The more cyclical inbound steel volumes, however, have offset the pain of lower forest products volumes for the Lower Mainland terminals like Lynnterm, Fraser Surrey Docks (FSD) and Squamish. BCSN: What are the trends you’re seeing with steel? RB: Steel volumes are slowing. It was very strong coming into 2016 despite being down a bit in 2015. Now, there’s further decline because of the energy industry slowdown and a lot of the inbound steel products for exploration development, pipelines, etc. are in decline. This will impact Lynnterm, Fraser Surrey Docks and Squamish to some extent but also others — prospects for Nanaimo (who has been actively pursuing break bulk opportunities) and ourselves in Prince Rupert are looking a little weak right now. With steel volumes well past their peaks of the past few years, a recovery in energy seems the only likely saviour for

Photo by Dave Roels (www.daveroels.com)

INDUSTRY INSIGHT RB: We’ve looked at a number of opportunities but aside from having a barge in the Columbia River to suport Panamax vessel hold cleaning, we’ve never pulled the trigger on anything. There is nothing imminent. We do see the increase in cement volumes as holding some opportunities — rather than just Portland and Seattle, shipments are going back into the Bay area in San Francisco after being essentially suspended over the last five or six years. So there is an organic expansion that we’re seeing for the U.S. market. There’s not a lot of opportunity in the Lower Mainland right now but things change — for example, transportation methods change and the question becomes one of whether we should expand into other areas. We think there are some opportunities through our North Coast partnership, “Gat Leedm Marine,” to support our own internal requirements and then look for growth in other areas. There was a very wise man in the industry that once said “grow or die” and I subscribe to that line of thought. I think we need to continue to grow and the only way to do that is to be creative and try to find niches that aren’t yet developed or perhaps under-served. Bottom line, I believe it’s important that no matter what we do, we do it professionally and responsibly. I want to be able to walk through any of our operations and be proud of what I see. BCSN

The hands-on approach...Ron can often be found on and around operations.

break bulk. however a move to develop agri product handling at Fraser Surrey Docks and potentially Lynn West Gate (with the new G3 proposal) is the new reality. So, with increased pressure from containers, declining forest product volumes, uncertainty of energy markets and delays/cancellations of proposed major projects in B.C. and Alberta, the break bulk sector faces challenging times ahead. BCSN: How is this impacting on labour? RB: Labour is the largest portion of handling/transportation costs which creates additional challenges in maintaining break bulk efficiencies. This is further complicated by new ILWU recruits entering the workforce and often working break bulk cargoes which are the most dangerous cargoes handled under the ILWU/BCMEA collective agreements. For longshore workers, break bulk is typically a less favoured commodity compared to container, auto or bulk in terms of safety. The ILWU is an important partner and together, we represent our industry to the customer. We’re fortunate to have a great relationship with the ILWU. Our focus has always been to foster that relationship and grow the partnership. We face so many challenges already that co-operation is essential for our combined success. For example, we had six vessels operating last week with over 200 ILWU workers onboard plus a significant amount of Local 514 foremen — we couldn’t have managed that without great collaboration. BCSN: What does the future hold for Tidal, for example, expansion in the U.S?

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TIDAL TRANSPORT For more information: www.tidaltransport.ca June 2016 BC Shipping News 17

HISTORY LESSON

Vancouver’s first grain elevator turns 100 By Lea Edgar Librarian/Archivist, Vancouver Maritime Museum

Photo credit: Dave Roels (www.daveroels.com)

The elevator was not truly used until 1921 and was at first seen as a failure. It was dubbed “Stevens’ Folly” and was the subject of much public ridicule.

016 marks the 100th year since the opening of the Dominion (also called Government) grain elevator in Vancouver. The structure was the brainchild of Henry Herbert Stevens, a local MP and advocate for turning Vancouver into a major grain export point in Canada. In 1914, the United States was quickly completing the Panama Canal and Stevens saw this as the opportunity to put Vancouver on the map. Before the Vancouver elevator was built, all grain from the prairies was sent east via the Canadian Pacific Railway through Winnipeg. Stevens, elected to Parliament from Vancouver in 1911,

wanted to change all that. In 1913, he lobbied the government for the establishment of a Harbour Commission to control and improve the docks and harbour facilities in Vancouver. Parliament approved, and in May 1913, they created the commission as well as one for New Westminster and South Vancouver. Funds were also made available for the construction of “Government Wharf” and what would become Granville Island. With the new facilities and commission in place, Stevens turned his attention to building a grain elevator to support the vast grain trade coming out of the prairie provinces. With the Panama Canal soon to be operational,

he foresaw the immense potential for Vancouver to become a major grain exporter. He convinced the government to invest in building a grain elevator in the west, so that this prized resource could be shipped via the Pacific Ocean. In February 1914, the location of the western elevator was being fiercely debated. J. D. Taylor, Member of Parliament for New Westminster, wanted the elevator located there, while the grain commissioners appointed with the task of choosing the location preferred Port Moody for the site. That April, a meeting of the grain commission was held in Winnipeg, where delegates from New Westminster and Vancouver, along with other municipalities, stated their cases. But it came down to the Burrard Inlet vs. the Fraser River; Stevens vs. Taylor. Luckily for Vancouver, the Inlet and Stevens won out in the end.

Grain Elevators and dock at the foot of [Commercial] Drive, May 27, 1919. Stuart Thomson. (City of Vancouver Archives, Number AM1535-S1-: CVA 1123-13).

18 BC Shipping News June 2016

VANCOUVER MARITIME MUSEUM Construction began at the end of 1914 and continued into early 1916 when it was finally completed. The site included reinforced concrete buildings such as a working house, track shed, storage house, sacking plant, transformer building and conveyer galleries. The tracks aligned with the existing CPR tracks. The elevator had the capacity of 1.2 million bushels. Sadly, it would not see those bushels for a number of years to come. 1914 brought with it the start of the First World War, and by 1916, when the elevator was finally completed, the Panama Canal was closed. Hopes remained high and in 1918 a trial shipment was sent successfully through the canal to quell fears that the wheat would not survive the journey to Europe. In the end, it did not help the situation. The elevator was not truly used until 1921 and was at first seen as a failure. It was dubbed “Stevens’ Folly” and was the subject of much public ridicule.

However, at the end of the War, provincial officials started a new spirited campaign to steer the grain trade away from Winnipeg and towards Vancouver. B.C. Premier John Oliver and former Vancouver Mayor Gerald G. McGeer lobbied the federal government for a reduction in the freight rates on moving grain west. The rates were much higher than shipping east, and the officials were successful in getting them reduced. With the War over and the rates reduced, nothing stood in their way. Finally, in 1921, with the shipment of 1,251,070 bushels, the western grain trade was taking off. The shipments out of Vancouver continued to grow to the peak of 105,006,925 bushels in 1932. From then on, Stevens’ supposed folly became a triumph as shipping became one of Vancouver’s largest industries. You can still see the remnants of Vancouver’s first grain elevator at the foot of Salsbury Drive. Though many additions have been added throughout

Henry Herbert Stevens, M.P. (City of Vancouver Archives, Number AM54-S4-: Port P937).

the years, the elevator still remains as impressive as it was 100 years ago. Lea Edgar can be contacted at archives@ vancouvermaritimemuseum.com.

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@rupertport | www.rupertport.com 20 BC Shipping News June 2016

TERMINALS

Sustained container growth has terminals in a scramble By Ray Dykes Photo by Dave Roels, www.daveroels.com

ost of British Columbia’s container terminals are amid or about to begin major upgrades. Like a looming tsunami, an expected tidal wave of container growth on the West Coast has facilities from Prince Rupert to Vancouver expanding or reconfiguring their yards and updating equipment. Last year, the talk in this British Columbia-wide review was of grain terminals which were flexing their expansion muscles — and that continues — but this year it seems container terminals have stolen most of the headlines with plans for millions of dollars of upgrades and extensive equipment purchases. The Port of Vancouver, as the Gateway to the Pacific, sees container volumes growing by up to five per cent a year. It has successfully piloted its way through the last decades, seeing its annual throughput volume rise from about 100 million tonnes to over 140 mt. Last year, Vancouver terminals moved a record 3.1 million TEUs (20-foot equivalent units) up five per cent, while in Prince Rupert, container movements through its Fairview Terminal were up 26 per cent at 776,412 TEUs. Some say this latest round of container upgrades and capacity improvements will meet the growing demand, preferably on a just-in-time basis. Apart from another possible expansion at Fairview, there doesn’t appear to be much room left at Vancouver area container terminals for any further upgrades on existing

Last year, the talk in this British Columbia-wide review was of grain terminals which were flexing their expansion muscles — and that continues... footprints. But, that’s a head-scratcher for another day. Here’s our annual look at terminal improvements and plans around the B.C. Coast:

Deltaport

The largest of the Port of Vancouver container terminals, Deltaport at Roberts Bank, is nearing the final stages of a $280-million intermodal yard reconfiguration, which it hopes will be finished in the second quarter of next year. Owner, Global Container Terminals (GCT) Canada, began the project late last year on the 85-hectare, three-berth facility and is moving more and more into an automated or semi-automated state with remote operator stations so it can keep up with growing demand. Extensive use of LED lighting and quieter new equipment will help in the transformation. There’ll be a 50-car boost in rail yard capacity and that will help lift terminal shipping capacity from 1.8 million TEUs currently to 2.4 million TEUs. Main rail users, CP Rail and CN — always striving to reduce train dwell times — are itching to get their hands on that traffic as the container business continues to grow.

Deltaport will also benefit from recent equipment orders by GCT Canada including: • Eight Kunz intermodal cranes — these electric, wide-span cranes have a 41-tonne lift capacity and will increase train handling speed and help to improve worker safety by buffering containers in a transfer zone adjacent to the working tracks. The fully-fitted and tested assemblies arrive late this year and will be fully commissioned in 2017. • Two mega-max ship-to-shore cranes from ZPMC — boasting a 23-plus container-wide outreach, these two cranes will be able to handle the largest vessels in service worldwide. The terminal already has 10 ZPMC post-Panamax cranes. The cranes will be delivered fully erect in late 2016 and should be in service early in 2017. • The rail reconfiguration and the new equipment will ensure that Deltaport is “big ship ready” with improvements made entirely within its existing footprint.

Centerm

A preliminary design report was being finalized in early May for a plan June 2016 BC Shipping News 21

TERMINALS

The proposed Centerm expansion will see that terminal’s capacity jump by 66 per cent to about 1.5 million TEUs.

to expand Centerm to the west and to take advantage of the 2014 decision to move cruise ships away from the aging Ballantyne Pier on its eastern border in Burrard Inlet. The result will be a 66 per cent jump in container capacity to about 1.5 million TEUs. One consultation phase has finished and another will follow in the permitting phase, which is hoped to be over by July 31. The landowner, Port of Vancouver, and the facility operator, DP World, are hopeful that if the project wins permitting approval a construction start could be made early next year with completion of the upgrade and expansion late in 2019. The $320-million project is initially being funded by the port, but it will

22 BC Shipping News June 2016

recoup the costs through revised lease payments from DP World. In the east, Ballantyne Pier will be reconfigured with rock dykes and earth fill and prepared for use as additional container storage. In the west, the terminal will spread over another seven acres through a larger wharf, a reconfigured container yard, and intermodal yard where a fifth rail track will be added.

Fairview Terminal

The quest to be able to handle two container ships at once continues with the northern expansion of Fairview Terminal in the Port of Prince Rupert well into construction. In a $200-million project, a second 150-metre-long berth is being added

to the north along with a 40 per cent expansion of the terminal’s footprint; the addition of four new gantry cranes; and landside reclamation to allow rail track reconfiguration. Operated by DP World, the expanded terminal will allow for a significant increase in ship size from the current 12,000 to 18,000 TEU, says Shaun Stevenson, Vice President of Trade Development & Public Affairs for the Prince Rupert Port Authority. Completion is expected by mid-2017 and the expanded terminal will be operational some time in the third quarter. The expansion will lift container capacity from the current 800,000 to 1.3 million TEUs. Stevenson says a future expansion to the south of the existing terminal is still a possibility and the port and DP World have it under review. “It’s very much on our minds and we are seeing strong container numbers,” adds Stevenson. “There is solid interest in the expansion and we are trying to calculate just when it will be required.”

Richardson Grain Terminal

A new $140-million grain annex project was commissioned late last year “on time and on budget,” according to Phil Hulina, Senior Director of Richardson’s Vancouver terminal. The project involved the construction of two slip form concrete annexes at the east end of the North Vancouver facility amid other work. Despite the disruption in 2015, Richardson shipped a record 5.2 million tonnes of canola, wheat, soy beans, peas and other products from western Canada’s growers. The expanded terminal can now handle over six million tonnes each year. The new storage annexes are 54m high and each can store 40,000 tonnes of product. To make way for them, three pellet storage bins were demolished. Other work included adding over 800 steel or timber piles; upgrading and installing new dust filter systems; building new covered silo roof conveyors and support towers; installing a new motor control centre on the annex roof;

TERMINALS

Photo courtesy Richardson Grain Terminal

Alliance Grain

The Richardson Grain Terminal has expanded to be able to handle six million tonnes of product.

widening and upgrading the south access road; and reconfiguring the rail infrastructure. “It was three years of massive construction with 200 to 300 contractors wandering around the place,” says Hulina. “The fact that we set a shipping record is a tribute to our unionized and management team.”

A project redesign, which forced Alliance Grain back to the Port of Vancouver for a revised development approval permit, has delayed this Burrard Inlet terminal in its plans to make a major gallery replacement. Alliance CEO, David Kushnier, says costs and new technology have brought about the rethink. If all goes well, the terminal could begin pile driving in the winter of 2017 and complete the project in the spring of 2018. The delays aren’t necessarily bad news as the terminal is breaking records and “doing really well,” adds Kushnier. When the new work is completed it will mean much faster loading — from 600 tonnes per hour now to 2,000 tph — and higher capacity from 2.5 million tonnes a year to three million tpy. The project involves the demolition of the existing gallery; adding about 30 new piles and new foundations for the new gallery above the existing pier structure; adding two loading towers with loading spouts on two sides; and installation of a new conveyor gallery about 16 metres higher than the old one and extending another 37m north. Alliance will then be able to fully load Panamax-sized vessels with cargoes of Canadian red spring wheat, canola, soy beans and peas.

Cargill

Work is nearing the midway stage in a three-phase, $35-million rail improvement project for Cargill Terminal in North Vancouver, says General Manager Gerry Dickie. While it doesn’t sound like much — a new lead rail line added, installing a new indexer system for moving rail cars, improving handling equipment in an existing below grade dumper pit, decreasing noise, and making other improvements such as LED lighting and safety upgrades — the project, when finished by about October this year, will boost Cargill’s throughput from 3.4 to five million tonnes a year. As well, CN Rail train handling efficiency will improve with the new rail layout and handling system — the number of trains will jump from 325 to 500 a year thanks to rail car unloading increasing from 140 a day to 180 or even 200 during peak periods. The expected vessel count will go from 88 to a maximum of 132 a year. Since it bought the grain terminal from the Saskatchewan Wheat Pool in 2007, Cargill has spent over $30 million in facility improvements. The latest project will add a new lead track that does not cross the existing main line. There will be three rail car dumping areas with two new bi-directional indexing systems which allow dumping from either side. Only single direction (west to east) unloading is currently available at the terminal which handles exports including wheat, durum, canola, barley, soy beans, lentils and grain byproducts. June 2016 BC Shipping News 23

TERMINALS

Itâ&#x20AC;&#x2122;s bring on the new, out with the old as construction in a $100-million upgrade at Viterra on the south shore of Port Vancouver is nearing completion. The various elements are coming together with the shiploader in place May 1 and completion of the feed tripper coming a week later. The main yard conveyor, transfer tower and drive towers are complete and the mechanical and electrical components are being installed. About 75 per cent of the marine construction is done and this work will be finished about mid-July, followed by the last of the dredging (from 10.6m to 13.7m to allow Panamax vessels to dock), which is due for completion by the end of August. Soon, dust control upgrades will join the cleaner system revamp which is complete as is a substation electrical upgrade. With the upgrade almost ready to go, the demolition of the existing shipping gallery is set to begin in November. The work will bring the annual shipping capacity to six million tonnes for agricultural products such as peas, canola, flax, lentils, soy beans and corn.

G3 Terminal

The transformation of the old Lynnterm West Gate facility in North Vancouver has reached the permit approval stage for

Photo courtesy Viterra

Viterra Pacific Elevators

Viterra Pacific Elevators is almost finished with its $100-million upgrade.

a project that seeks to convert the facility from break bulk to grain handling. The new grain export terminal, if it is approved, could see up to 168 ships call in a year, some for top-off from other grain terminals in the harbour, but most in the Handymax size (40,000 to 60,000 tonnes) or the smaller Handysize (up to 40,000t). Terminal capacity is set at eight million tonnes a year.

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Photos by Dave Roels (www.daveroels.com)

TERMINALS The project backers — a joint venture partnership between G3 Global Holdings and Western Stevedoring Company Limited — have been through the first public and key stakeholder consultation stage and have had feedback on key areas such as marine traffic, the environment, community issues, and land matters such as road and traffic concerns. The project, if it goes ahead, will build 48 concrete silos, each 42 metres high; a rail loop that could hold three 150car trains; a new berth, three new shiploaders; plus a material unloading station, complete with conveyors, storage and cleaning systems. Old buildings on site will be demolished and a new office structure will be built as part of the new grain terminal.

Columbia Containers

Not much has happened in a year after the first two permit applications for a terminal upgrade were approved. Now, the Commissioner Street site is still dealing with the Department of Fisheries & Oceans on some matters but Columbia’s General Manager, Dean Giles, remains “confident we will get through it.” He’s itching to get the first shovel into the ground, but there is still a building permit or two to win. A new modular office has been started and will cheer his spirits. Giles expects that

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the two-storey, eight-unit facility will be up and running by July 15. The plan is to build a new grain transloading facility and nine silos on its existing site including a modern grain dust suppression system, a tandem bucket elevator with a below ground dumping pit, associated conveyors, and a realignment of on-site rail tracks. The existing grain elevator will be demolished later.

Westshore Terminals

Major equipment replacement continues at North America’s busiest coal export facility, Westshore Terminals at Roberts Bank, Delta and part of the Port of Vancouver. While the $270-million Infrastructure Reinvestment Project is a well thought-out plan, there has been a hiccup or two. The plan had a replacement shiploader arriving ready to be lifted off its large equipment carrier and onto Berth One in April, but fabrication delays in China have it now arriving in late August. The first of three replacement stacker-reclaimers (No. 45), will leave China about May 15 and arrive at Fraser Surrey Docks mid-June for transhipment onto barges and towed to the terminal, says Westshore’s Director of Engineering & Environmental Services, Greg Andrew. Westshore will use a self-propelled modular transporter to haul the big machinery pieces across site for assembly and the big coal mover should be up and running by the end of the year. Late this year Stacker-Reclaimer 43, one of the old war horses on site, will be taken down and likely sold for scrap. A second Stacker-Reclaimer known as 46 is being fabricated now and should be on its way to Westshore early in Q2 next year. An option to buy a third stacker-reclaimer has to be made by the end of the year. A new office and warehouse complex is now occupied and fully operational after a move-in late last year. Demolition of the original office and warehouses buildings in the central site is under way and is expected to be completed by the end of October. This will free additional stockpile space for the coal terminal which shipped around 25 million tonnes

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TERMINALS in 2015 after back-to-back record years over 30mt in the previous two years. Thanks to the slumping world coal market, current estimates are for the terminal to ship between 24 to 24.5mt this year. Asked about the prevailing mood in the battered coal industry, Andrew says “generally people are optimistic things will improve, not rapidly, but it appears we are through the worst of it.”

Neptune Bulk Terminals

Major plans to add a second rail car dumper, new conveyors, an additional rail loop and a longer mobile shiploader boom are still on hold, but not forgotten at Neptune. “We are active in the project,” says Neptune President, Jim Belsheim, “but we are still optimizing the timing …it’s still a go.” This will be Phase 2 of a recent $450-million capacity upgrade and improvements program at the North

Shore facility which saw a new stackerreclaimer added in Phase 1. It comes at a troubled time for commodities such as coal yet the terminal is still doing well says Belsheim. Neptune’s current capacity is 12.5 million tonnes for coal, 10 mt for potash, and 1 mt for phosphate rock. In the meantime, Belsheim says there are “lots of smaller projects” going on with continuing improvements around the site, particularly in environmental excellence. These have helped Neptune score at the top level for the last couple of years in the Green Marine program for terminals.

Fraser Surrey Docks

Still no start of construction on the plan to ship coal in Panamax-size vessels from this Fraser River facility, but it’s just a matter of when. Fraser Surrey Docks President & CEO, Jeff Scott, says the company is still “evaluating the market and talking

with customers” to determine if the terminal’s coal export capacity is needed and when. That will be a moot point once the limp coal market starts “moving in the right direction.” While there are no current plans to start construction, Scott says Fraser Surrey Docks “still intends to build the direct-to-ship coal handling facility.” The plan is to ship via Panamax vessels instead of the original idea to barge the coal to Texada Island for transloading to deep-sea vessels. All permits have been obtained from the Port of Vancouver for the amended plan in what proved to be a long process, punctuated by protests over coal handling concerns. FSD is still in the court process with Eco Justice and the Musqueam First Nation over coal handling issues, but Scott says the terminal is working with the parties to come to a resolution and currently there has been an exchange of documents. He hopes the legal wrangles will be settled by the Fall.

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June 2016 BC Shipping News 27

TERMINALS

Pacific Coast Terminals

Construction of a potash rail handling facility including a handling shed and rail car dumper was set to begin in May as part of this Burrard Inlet facility’s continuing $200-million expansion project. Concerns over ground conditions were identified by the construction team near the new waste water treatment system and some 203 steel and wooden piles were being installed through May. Pacific Coast Terminals Vice President & General Manager, Wade Leslie, says the consultation process over construction and dredging identified a number of issues that needed to be addressed, delaying progress, but

Photo courtesy Squamish Terminals

Meanwhile, work on upgrading the adjacent intermodal railyard continues plus other maintenance upgrades “preparing us for when the market turns,” says Scott.

Squamish Terminals has rebuilt their dock with steel pilings and a concrete deck following a fire in April 2015.

the process has been an education. You get the feeling he is glad to get to the construction phase. Last year, the terminal began shipping canola oil (something it last handled between 1965 and 1971), and it totalled shipments of about 400,000 tonnes of the oil, a tonnage that should grow in future years.

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There is an exciting air around the facility as it continues to be “quite busy” even as construction continues on the potash rail handling side of the expansion. The terminal hopes to move about 2.8 million tonnes of potash when start up begins early next year, or if Leslie gets his wish, “ideally late this year.”

Squamish Terminals

It has been a year since the disastrous fire in April 2015, which wiped out one of two deep-sea docks at Squamish Terminals. The replacement, now just over half finished, is steel piling and a concrete deck. New Squamish Terminals President, Kim Stegeman-Lowe, says the rebuild started last November and the new dock should reopen late this summer. While it is the same size as the old wooden one, it has an increased work area with added gangways and a landing platform. The setback doesn’t seem to have cost the break bulk terminal much in relying on a single dock, but Stegeman-Lowe says while the past year has been “logistically challenging, we’ve worked hard with our customers and partners and business is on pace with last year.”

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28 BC Shipping News June 2016

One of British Columbia’s most studied projects is closing in on its final stage with a Phase 3 function and facilities plan expected to be received any day, according to Greater Victoria Harbour Authority CEO Ian Roberston.

TERMINALS Studies began back in 2008 and, to help speed things along, the GVRA now has partnered with Stantec, an Edmontonbased engineering, consulting and design services company, as it nears Phase 4, the rezoning process with the City of Victoria. It is hoped a final plan can be produced by the end of the year. The idea is to turn Canada’s busiest cruise ship facility (226 cruise ship visits in 2015) into a multi-purpose marine and retail facility offering new opportunities and easier access for tour buses and cruise ship customers. Robertson says the area is currently zoned light marine industrial and the aim is to persuade the city fathers to allow 25 per cent of the site to be rezoned to allow retail and commercial space for a marine tech sector, a small boat building area, and other similar uses. Meanwhile, Robertson says the GVHA is aggressively pursuing Victoria as a home port for cruise ships and aims to have its first ship by 2020, perhaps for smaller cruise ships in the 600 to 1,000-passenger range as a start.

Nanaimo Assembly Wharf & Duke Point

What to do with the under-utilized facilities such as the hardy old Assembly Wharf continue to excite the Nanaimo

Port Authority. Once busy with forest product shipments, the three-berth wharf now handles various project cargoes and is the location of the port’s new Cruise Ship Terminal and administration office. There’s a Helijet daily service Monday to Friday from the cruise facility and hope continues that one day there’ll be a viable fast ferry service to downtown Vancouver. That prospect has seen lots of ink over the years through unsuccessful versions and a threatened third-time-lucky proposal. Nanaimo Port Authority President & CEO, Bernie Dumas, says last December the port and the City of Nanaimo issued a call for expressions of interest in the fast ferry service which will close by the end of May. “We decided to go out officially and see what’s out there and we have three companies so far expressing an interest,” he adds. One of the three is Island Ferries which has been actively trying to launch a service for some time. The Assembly Wharf could also offer working lease arrangements with the port for light commercial, warehouse, and commercial marina facilities for such things as tugs. At Duke Point, the first phase of expansion with operator DP World is now operational, including a near new Liebherr container crane, plus a new barge berth. Dumas

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TERMINALS says the port authority and DP World are working on a Business Plan to expand the deep-sea terminal to a second berth and upgrade land facilities and paved area to 30 acres, more than twice the size of the current footprint. The port is seeking federal funding for the new 600-footlong berth and Dumas says the total project could cost as much as $60 million.

Stewart Bulk Terminals

With a Transport Canada permit now received, the privately-owned Stewart Bulk Terminals is still pondering whether to go ahead with its $15-million shipside loading project. “We are going to start filling land, but we still have some construction permits required,” says Dan Soucie, President and joint-owner of the single-berth facility. “We should be expanding by next year.” The uncertain world of resource commodity prices saw the demise of customer Yukon Zinc, but the copper producing Red Chris Mine is shipping enough for a loaded vessel sailing every two weeks and should top 200,000 tonnes this year. Another customer, the Huckleberry Mine has been struggling with current copper prices, but Soucie expects the company will continue to ship about 80,000 tonnes this year.

The upgrade plan is to shorten the current trestle loading equipment to allow it to go alongside the dock vessel loading, plus other landside improvements.

Stewart World Port

With its 230-metre long break bulk wharf up and running (the first ship called February 12 this year) marking the first $70 million spent in a $200-million project to create a new deep-sea terminal, the port is now looking at the next phase — adding a bulk handling travelling shiploader. “We will review that when mining recovers and it looks as if we may be through the worst of it,” says Brad Moffat, Chief Development Officer for Stewart World Port. “That’s what is required for us to move to the next $60-million stage of our total project and it seems mining is starting to get serious again.” Full expansion will see the addition of two more deep-sea berths, but Moffat says the final phase is longer term and “not in the immediate future.” So far the inaugural break bulk wharf has shipped 300 wind turbine components for a Tumbler Ridge project, plus over 100 process units for the Alberta oil sands and is so busy that Moffat has the commendable dilemma of not knowing how many ships have called so far.

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PORTS

PAPA recognized as economic engine

he Port Alberni Port Authority (PAPA) recently contracted Operations Economics Inc. (OEI) to conduct an Economic Impact Study to measure and understand the economic activity at the port. Although a similar study was completed in 2012, a number of new business relationships and capital projects engaged by PAPA have been impactful economic drivers for the community and region. Over that time span, the port has been successful in stabilizing its lumber export shipments with loading at least one lumber ship per month and diversifying its revenue streams by attracting such new operations as: ISCC factory fishing vessel offload; Canadian Alberni Engineering; Cantimber Biotech; Alberni Ice Limited Partnership (a fish processing and ice plant partnership between Tseshaht First Nation and Hub City Fisheries);

32 BC Shipping News June 2016

and Pacific Seaplanes scheduled service between Port Alberni and Vancouver. Additionally, PAPA has continued to invest in the development of the major capital redevelopment of the Fishermen’s Harbour area that started in 2011. The economic impact survey conducted for this project was targeted at businesses which operate at the Port or conduct economic activity to and from the port. In addition to those businesses named, PAPA supports a wide range of economic activity, from log movement by barge to stand up paddle board rentals. The port not only operates shipping terminals but also operates 4 marinas and a campground and continues to develop many positive relationships with the City of Port Alberni, First Nations and funding partners such as Island Coastal Economic Trust to expand current business relationships

and leverage its holdings to attract new businesses. In 2016, Manufacturing related to forestry remains the largest source of employment and economic activity for the port. This has two implications: • The port’s economic activity is therefore directly tied to the health of the forest sector; and • Break bulk movement represents a large proportion of port activity. Economic impacts of 2016 port activity are • 1,100 jobs (990 of which are FTEs) • 353 of those jobs are direct to Port operations and tenants • $90 million in income • $135 million in GDP, and • $385 million in Output Capital impacts in 2016 of port projects are also significant for a community the size of Port Alberni. Although a

PORTS Port Alberni Port Authority “punches above its weight” in relative terms as an economic engine and facilitator for its community and region. Photo by Dave Roels (www.daveroels.com)

relatively small capital project at $1.3 million, the development of land adjacent to Fishermen’s Harbour (known as the “Somass Strip”) will generate seven jobs, $420,000 in income, and $540,000 in GDP. Port activity in 2015 generated more than $13.5 million in taxes for all levels of government; including $6 million for the federal government, $2 million for the provincial government, and $5.5 million for the municipality. In addition to the raw economic impact numbers revealed by the report, the final analysis of the OIE Report for the Port to both be proud of and factor into its strategic planning includes: • PAPA supports a wide range of economic activity, and the Port is actively seeking and attracting new businesses ranging from a kiteboarding school at its Alberni Inlet-located marina and campground, activated carbon producer from wood biomass, marine vessel maintenance and manufacturing right up through to its proposed new Port Alberni container Transhipment Hub (“PATH”) • Manufacturing related to forestry remains the largest source of employment and economic activity for the port. This has three implications: The port’s economic activity is therefore directly tied to the health of the forest sector; break bulk movement represents a large proportion of port activity; and it makes diversifying its range of economic activity even more important. As one of the smaller of the 18 Canadian Port Authorities, the Economic Impact Study clearly demonstrates that the

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June 2016 BC Shipping News 33

CONTAINERS Container ships

A race to the bottom By Syd Heal

s people employed in the container shipping sector know well enough, there are many factors in play that must be critical to their employment as the industry deals with a fall off in trade, reduced demand for ships, new mergers and realignments in groupings, pending bankruptcies and struggling shipyards. The container liner industry is at a cross roads as the latest generations of large container ships are still being delivered from the shipyards to further flood the market with an even greater total of unemployable capacity. It has all the potential for a huge train wreck, but let’s give some credit to the managements of the various companies for the dexterities they have so far contrived in stepping around potential disaster. Let’s also remember the lessons of history and the sometimes maligned conference system that existed for well over 130 years to maintain a high degree of rationality that enabled the break bulk cargo liners to successfully breast the worst shipping depressions of their era and avoid the total ruination facing the liner companies if a good deal of that rationality is not brought to the fore by today’s container liners.

A busy day at Deltaport.

34 BC Shipping News June 2016

The big new ships are undoubtedly creaming the bigger bulk of the mainline routes such as the Asia-Europe which forces smaller ships in the 6,000 10,000 TEU size to displace ships in the 3,000 - 5,000 sizes. My figures are very approximate and are meant to illustrate the continuing move towards displacement of smaller ships which is clearly underway now and will only increase as ships in the very plentiful 4250 TEU size and similar, complete their primary charters and seek to enter the spot or short-term charter market. This, more than ever, means overcrowded layup berths filled with unemployed ships looking for charters and, because of the oversupply, are now close to being economically obsolescent with some at least probably destined for scrapping when still only half through a normal ship life of up to 30 years. A German Panamax built in 2001 has just been sold for scrap, so the trend for 21st century ships has started and more will follow. A statistic well worth noting that comes from think-tank Alphaliner, points out that at the beginning of 2015 the total of laid up container shipping measured out to a capacity of 0.23 million TEU. By the end of 2015, it had

reached 1.36 million TEU and growing despite seasonal fluctuations which may temporarily reduce it, but barely. It’s hardly surprising when rates on the busiest route in the world are so ruinously low that bankruptcy will be the inevitable end of some if some strong leaders do not soon emerge. A hopeful sign as I write this is that Maersk has cancelled the last five of a 10-vessel super E fleet of 10 18,000 TEU liners. It is also a period of takeovers. Hapag Lloyd’s take over of the Chilean liner Compania Sud Americana de Vapores (SAV) is old news, but it has left the Chileans as the biggest shareholder group in Hapag Lloyd which is now the fourth largest international liner company after Maersk, Mediterranean (MSC) and CMA CGM. Similarly, Hamburg Sud has acquired the container business of another Chilean company CCNI (Interoceanica). The union of COSCO and China Shipping Line has been anticipated for some two years at least. With two government-owned lines competing against each other on the same routes and with COSCO, the bigger of the two, bleeding red ink continuously, it makes all kinds of sense. It seems COSCO will

Photo: BC Shipping News

CONTAINERS absorb CSLâ&#x20AC;&#x2122;s container fleet with CSL being used as the platform for unspecified new lines of business. Not so fortunate is the current situation with Hyundai Merchant Marine (HMM) which is now confronted with bankruptcy. With huge losses piling up, HMM sought to sell off its bulker fleet, a daunting task at a time when bulk carrier owners are up to their necks in problems that have been publicized and outlined in the shipping press including this column. HMM has canvassed the four lessor owners who, between them, have 33 ships under long-term lease to the line for a reduction in leasing rates of at least 30 per cent with no takers. It`s a desperate move that overlooks the fact that the lessors themselves have debt commitments of their own where they have to meet critical targets or suffer penalties in much the same way that investors using margin accounts can be called upon to increase their equity balance when stocks held in the account suffer a devaluation. Kites have been flown suggesting that fellow South Korean, Hanjin Container Line should enter into a forced marriage with HMM, but this has been stoutly denied by Hanjin, which is not having an easy time itself. Other companies in the Hyundai industrial group are not falling over themselves with any moves to help their stricken shipping sister. The latest news is that the South Korean government has threatened to impose a solution. If bankruptcy occurs and HMM is forcefully wound up and without someone else taking it over and maintaining contracts, those 33 leased ships could become a dead weight that is bound to shake the four leasing companies involved. These are Danaos Corporation a Greek competitor of Seaspan with 14 ships to HMM, including five recently built 13,100 TEU-size ships; Zodiac Maritime Agencies, a large U.K.-based fleet of leased-out ships in several categories that is a part of the Israeli Ofer Brothers empire with nine ships; Capital Product Partners, a Greek owner with a 34-vessel fleet of mostly product tankers which includes 10 container ships;

and the Greek Navios Group with fleets of bulkers and tankers. CPLP and Navios each have five ships leased to HMM. I have little doubt that all four, being highly experienced ship owners, will wrestle their way through this impasse, but there seems little hope they will make the attractive rates that came with longer term charters when they acquired the vessels. As to the ship leasing companies, I believe they occupy a special unique position within the container industry. There are no leasing companies specializing in just tankers or bulkers, which is not to say that long-term charters more or less equivalent to lease contracts are unknown in those two sectors. However, there are companies that lease ships of

several types to a variety of owners and thus offer extensive diversification as to both owners and ship types. One such is the aforementioned Zodiac Maritime in the U.K. and another is Ship Finance International on the NYSE. Both are successful companies that spread their investments over a much wider spectrum, rather than like the container lessors who only achieve limited diversity through a small group of client lessees. The HMM ships represent a heavy concentration within the Capital Product and Navios container fleets and this experience will perhaps curb their enthusiasm for future similar investments. Additionally Navios Maritime Partners and the core Navios Holdings are confronted with major problems of

June 2016 BC Shipping News 35

CONTAINERS their own because of the disastrous state of dry bulk shipping. The one that this crisis will hurt the most will be Danaos, a container ship lessor with a higher proportion of older and small ships in its fleet built in the last century that was quite badly affected by the 2008 recession. Up to 2008, it appeared to be in a headto-head race with Seaspan and in the process greatly over extended itself and got into trouble with its bankers. As a consequence, it was forced to take a long break from adding new ships due to restrictions imposed by its banker group. It started leasing new ships again very recently and the HMM deal for five 13,100 TEU ships must have ranked as their biggest and best deal in a long time which makes the probability of an HMM bankruptcy a very significant disappointment which could have a knock-on effect to the lessors. The leasing companies must be watching all their liner clients, analyzing their balance sheets and following up on every item of news about them or coming from them. Credit reports are undoubtedly scanned as often as they can be obtained, because the leasing

companies security and prosperity rides on a portfolio of just a limited group of clients which all share the same market. Every one of the lessors has big exposures proportionate to its size. An example of extreme exposure is in the fleet of Seaspan where the combined leased fleets of COSCO and China Shipping approximate to some 40 per cent of the capacity of the Seaspan fleet. The two companies are owned by the Chinese Government which may be a benefit, but it is known to be capricious when it suits them. The reason why the leasing companies have grown so fast and massively is because the container revolution has been so swift in transferring the carriage of goods and commodities from break bulk freighters. It was one of the most expensive and far-reaching transformations in shipping history and involved a far bigger peacetime capital formation over a shorter period of time than anything previous. When the liner companies offered attractive 12-year lease contracts, it was a deliberate move to ferret out capital resources quite beyond the bank money that always required a substantial equity from the

maritime and commercial law on canada’s west coast W. Gary Wharton Catherine A. Hofmann Russell Robertson

Peter Swanson David S. Jarrett Michael M. Soltynski

Thomas S. Hawkins Tom Beasley Megan Nicholls

David K. Jones Connie Risi Roger Tangry

associate counsel: Lorna Pawluk tel: 604.681.1700 fax: 604.681.1788 emergency response: 604.681.1700 address: 1500–570 Granville Street, Vancouver, BC, Canada, V6C 3P1 web: www.bernardllp.ca

36 BC Shipping News June 2016

borrower and a term of usually not over seven years which often saw little real profit for the mortgagee until his loan was repaid. Prudent owners paid off their debt as quickly as possible which contrasts with today when bankers are permanent partners in any successful shipping enterprise as are lessors. Leasing did not put the banks out of business, far from it as the leasing companies which it is estimated might number about 20 on a worldwide basis, used bank money in their early years and still do, until they were able to go to the investment industries and the public market place with Initial Public Offerings (IPO) which were then followed with sophisticated forms of preferred shares and debt instruments. The banks of course are bigger factors in ship finance than they have ever been as debt seems to be a permanent feature of the modern shipping company. An interesting observation is that when it comes to ship finance Scandinavian, German, Dutch, Belgian, French and Swiss banks dominate. Only one British Bank freely participates and no Canadian or U.S. banks are known for a willingness to participate in ship finance. If they do, they keep very quiet about it. In conclusion, international agreement to take a holiday from ordering new ships, agree on rigorous culling out of older ships which may not be functionally obsolescent, but in current circumstances are economically obsolete, is badly needed governed by the spirit and purpose of the old shipping conferences and is a necessity to possibly avoid one of the worst shipping crises in history. It’s probably an impossibility given the diverse nature of the national interests involved and the implications of further slow downs in shipbuilding and steel production and their effects on employment, social, and political issues. The stronger companies will possibly be very glad to see their weaker competitors go to the wall, but that will not rid the world of a huge and growing surplus of ships fast enough with the wastage of capital being phenomenal.

SHIP RECYCLING

State of the art: Global ship recycling By Jeffrey Smith

The global shipbreaking industry is undergoing significant

testament to international trade and technical innovation, the world’s commercial shipping fleet has never been larger. An impressive variety of ships operates with greater efficiency — and safety — bringing people and ideas of every country together. But ships are hardly permanent. They must eventually come to an end, given the harshness of the marine environment, the demands made of them, and changing standards for design and construction. The 70,000 commercial ships now in worldwide trade also face the additional pressures of historic low rates for their charter hire (the result of oversupply) and an excess of shipbuilding capacity. (The United Nations Conference on Trade and Development reminds us that 2011 was the “peak year of the historically largest shipbuilding cycle.” See UNCTAD’s Review of Marine Transport 2015.) Ships of all types — tankers, bulk carriers, and container ships most prominently — will be retired sooner. The global shipbreaking industry is undergoing significant changes that promise to make the “recycling” of ships less environmentally damaging, safer for the workers involved, and more costeffective. The changes have important implications for industry in Canada. And they point to how ships are increasingly commonly regulated through all stages of their life cycle under the aegis of the International Maritime Organization.

changes that promise to make the “recycling” of ships less environmentally damaging, safer for the workers... Think local, act global

Two recent events in Canada illustrate the challenges inherent in disposing of ships. The first was the announced contracting by the Government of Canada for the scrapping of two paidoff (decommissioned) Royal Canadian Navy vessels, HMC Ships Protecteur and Algonquin (both latterly home-ported at Canadian Forces Base Esquimalt) at a combined cost of $39 million. In March, the Protecteur was towed to her dismantling site at Liverpool, Nova Scotia. The federal government was limited in its options to deal with the ships. That is because, as it has for two decades, the Canadian Environmental Protection Act (CEPA) forbids the sale of Canadian-flagged vessels (government and commercial alike) for breaking-up outside of Canada. The policy rationale for this restriction is clear enough: to meet an international commitment to limit the export of hazardous wastes between countries. The progressive renewal of government fleets (the Canadian Coast Guard, and the RCN) means that ships such as the Algonquin and the Protecteur must be disposed of in Canada. (Some CCG vessels are viable for sale to other governments, although a constraint is whether they can continue to meet safety of life at sea (SOLAS) and environmental (MARPOL) standards.) The option of

laying-up ships is hardly cost-effective. Berthing space in Canada’s commercial and government harbours is at a premium. Converting ships to artificial reefs, as was done in early 2015 with the former HMCS Annapolis, is possible although environmental standards are increasingly tougher. The other event that has again on the B.C. coast highlighted the problem of ship disposal is the outcry over abandoned vessels at Ladysmith on Vancouver Island. (There are other cases of derelict and sunken vessels in recent years, of course, including at Baynes Sound and Britannia in Howe Sound.) If ships at life-end must be disposed of in Canada, what incentives exist for owners to act out of self-interest and in response to sound regulation? Supporting a modest, continually operating Canadian shipbreaking industry — including through incentives such as tax measures, contracting preferences by ship owners and pricing which is competitive with traditional shipbreaking centres — can keep some of this economic activity local. And it would ensure derelict vessels could be disposed of with greater certainty. The challenge is the price of labour and environmental regulation in Canada, shown by the cost to retire the Algonquin and Protecteur, standards most can agree should not be compromised. June 2016 BC Shipping News 37

Source: Wikipedia

SHIP RECYCLING

Where old ships go to die...an aerial view of Chittagong, Bangladesh.

All on a rising tide? The Hong Kong Convention

Globalization has its costs, and one of them is the shared understanding that modern shipbreaking creates significant environmental and human impacts in a few of the world’s most impoverished countries. Because the residual value of ships — usually from machinery, steel structures and hulls — could be recovered where labour was cheapest and, in such places governments felt the need for economic activity whatever the environmental cost and failure to ensure workplace safety, the result was predictable. And it took a sustained outcry by activists, followed by mainstream environmental and human rights organizations, to get countries to act in concert through the IMO. (The phenomenon of selling ships for disposal with pollutants aboard revealed the inability of flag states to apply environmental standards, and the limits of the international scheme to restrict the transboundary movement of wastes under the Basel Convention. In the absence of common IMO standards, internationally trading ships are remarkably autonomous entities.) The problem of disposing of used ships at the turn of the 20th century — something outside the usual concern of Canadians given distances to places such as India, Bangladesh, and Pakistan (which, with China and Turkey account for more than 90 per cent of the industry by tonnage of ships dismantled) and because, as consumers, we don’t always reckon the nature of shipping trade to and from our country — was serious. Michael Kot’s 2004 documentary “Shipbreakers” revealed the environmental and human health toll from an almost unregulated industry on the beaches of South Asia. Science demonstrates that pollution has no boundaries, and that industrial contaminants do reach Canadian shores, toxic chemicals such as mercury and persistent organic pollutants transported vast distances by ocean-atmosphere processes. The IMO’s 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships is hardly the last word on shipbreaking. The industry is too complex 38 BC Shipping News June 2016

for a single treaty — one not yet in effect —to be the whole solution. Moreover, the progressive advances in SOLAS and MARPOL regulation of commercial shipping continue to improve industry’s ability to design and operate ships that are easier to recycle. (The IMO’s goal-based construction standards and green passport regime are a part of this.) However, the Hong Kong Convention sets the bar for countries to regulate acceptable shipbreaking. Given that Canada has an advanced (and complex) scheme of environmental regulation, the Convention would be straightforward to introduce locally. (Regulation of the shipbreaking industry, as such, would be needed. And it should be understood that the costs to dispose of hazardous materials would mean that Canada would never have a large-scale industry geared to imported ships.) A number of criticisms can be leveled at the Hong Kong Convention, which (it should be noted) Canada has ratified. A first is that the Convention will be a long time coming into effect. Those familiar with IMO environmental regulation know that the treaty provisions to make agreed-upon rules eventually binding are complex. So it is with the Hong Kong Convention, which needs at least 15 states having 40 per cent of the world’s commercial shipping tonnage and which have as a group themselves recycled at least three per cent of their aggregate fleets before all member states are bound to meet its requirements. A second concern is that specific rules for best practices in shipbreaking are lacking. The Convention is a high-level instrument. As with much of the IMO’s work to transform a disparate global industry, its rules are process oriented, leaving the states involved to apply and ensure compliance with them. Moreover, the Convention’s list of prescribed hazardous chemicals and products is decidedly short. Some synthesis with the global chemical treaties, the Stockholm Convention on Persistent Organic Pollutants, the Basel Convention, the Bamako Convention regulating the import of hazardous wastes into Africa and the recently concluded Minamata Convention on Mercury is needed. A third criticism is that the regulatory and enforcement cost burden falls on states, and not ship owners, some of which have struggled to develop labour and environmental standards. A fourth, related issue is the absence of an effective means to engage flag states, in contrast to Canada with its CEPA prohibition, to control the improper foreign disposal of ships. An economic complication to concluding the Hong Kong Convention, coupled with historical low costs (charter hire rates) of commercial shipping is the current oversupply (that is, excessive manufacturing capacity) of steel in world markets. Recycling ships works best — more efficiently and with rising regulatory standards —where there is a financial incentive. Ship owners now face the prospect of retiring excess tonnage with reduced returns for its salvage.

In local waters: Policy prescriptions for Canada

The limited size of Canada’s commercial shipping fleet — UNCTAD noting that, in 2015, the country had a

SHIP RECYCLING

Tonnage reported sold for demolition, major vessel types and countries where demolished (2014, thousands of GT). (Source: UNCTAD Review of Marine Transportation 2015)

domestically trading, nationally flagged fleet of 209 vessels (0.45 per cent of all global tonnage) — means that a comprehensive approach by government and industry to the recycling of ships will be a challenge. It would be impractical to offer a single solution for sound regulation and to make the regulatory burden easier for ship owners (and government). However, some suggestions can be made in light of recent experience. The first is that a consistent approach to the dismantling of government ships can provide a basis for efficient recycling of commercial vessels. The widely acclaimed National Shipbuilding Procurement Strategy (recently restyled as the National Shipbuilding Strategy), wholly concerned with renewal of CCG and RCN fleets, does not contemplate the industrial development needed for sustained domestic shipbreaking. (Here, the recent regulation-driven increase of ship recycling in the U.S. is worth studying.) What might be predicted as a $100-million program to dismantle RCN warships is worth ensuring a capacity for the commercial shipping industry. A second prescription, given the unparalleled regulation by Canada (a global leader in the matter) is to continue to allow the “conversion” of ships to artificial reefs. Two decades of site monitoring of several such ships (for the most part in the Salish Sea) has

established that environmental standards work. Other measures for effective recycling of ships in Canada and offshore are evident. A revision to the CEPA prohibition is due. If a ship can be assured as not containing hazardous waste, it should be permitted to be exported to a facility that can make the best economic use of it. A second needed initiative is the creation of a modest fund for the assessment, removal and disposal of abandoned vessels, similar to Canada’s Ship-source Oil Pollution Fund. It would be straightforward to capitalize the fund with stakeholder contributions and legislatively structure its operation. The renowned marine engineer John Lamb wrote that “the ultimate effect of any success is ... to raise the standard of living by reducing the cost to produce or transport the things our present civilization requires.” (Backward Thinking, 1954.) Ships bring humanity enormous benefit. Recovering the value of ships at life-end no longer needs to be costly or present the environmental and human health problems of the recent past. Jeffrey Smith teaches law in the Norman Paterson School of International Affairs in Ottawa. A former RCN chief engineer and law of the sea counsel to the United Nations in East Timor, he was Chair of the National Council of the CIMarE from 2009 to 2014. June 2016 BC Shipping News 39

2016 conference Canadian Ferry Operators Association

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40 BC Shipping News June 2016

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AIR QUALITY

Port of Vancouver’s Emissions Inventory By Colin Laughlan President, Laughlan Consulting International Inc. Business Development Advisor, Logico Carbon Solutions Inc.

f ever there were a perfect example of the environmental maxim “Act Local, Think Global,” it would have to be the Emissions Inventory currently underway at the Port of Vancouver. The project includes several “firsts” which should establish the Port not only as an environmental leader in Canada but garner international kudos as well. “The Port of Vancouver is always ahead of the curve. They’re environmentally friendly,” Howard Posluns, Chief, Advanced Technology, at Transport Canada’s Transportation Development Centre told BCSN. For Posluns and his colleagues at the national level, however, it means their own state-of-the-art instrument, the Port Emissions Inventory Tool (PEIT), is not quite up to speed for the Vancouver project. “They’re always going further, they’re more advanced than the PEIT,” said Posluns. It’s the sort of remark that suggests a friendly rivalry, but it all adds up to a collective striving for excellence that advances Canada’s reputation for developing the tools needed to measure portrelated emissions. “We try to make the port inventory as good as possible so that other jurisdictions will use our data,” said Christine Rigby, Environmental Specialist, Air Emissions, for Vancouver Fraser Port Authority. For the project now underway, this entails a huge volume of data on port emissions for 2015 — the most comprehensive emissions data collection since the inventory began in 2005. It measures, for the first time, emissions from transportation modes on both the ocean and land sides,

...it all adds up to a collective striving for excellence that advances Canada’s reputation for developing the tools needed to measure port-related emissions. as well as all the cargo handling equipment and administrative facilities in between. Rigby will oversee the project which utilizes additional expertise from Bryan McEwen and his team at SCNLavalin Environment in Vancouver. “We’re working with them to refine the methodology, to provide feedback on what they’re proposing,” said Rigby, “but they’re developing the system to take in all the data — they’re writing the methodology report.” This is where it all comes together — a kind of expanding feedback loop that starts in Vancouver, works its way up to the national level, and returns to the Port every five years. SNC-Lavalin is able to use part of Transport Canada’s PEIT in the Vancouver inventory — not all of it though because the Port of Vancouver is “always looking at how they can go one step further,” added Posluns. The detailed work involves scores of mathematical equations and revised emissions factors for new models of engines in marine vessels, trucks, rail locomotives, and other equipment contributing to port emissions. “So we go back to SNC-Lavalin, our prime contractor, and ask them to look at the equipment and gather updated emissions information to improve the model,” explained Posluns.

It’s a win-win arrangement for everyone. The Port’s inventory is in part facilitated by the PEIT, and the PEIT is in turn updated and improved with the Port’s advancements in its emissions mitigation agenda. There is, however, an even bigger win here for Canada and the global environment generally. The PEIT is now being promoted by Transport Canada for use in ports around the world “so we have an international standard that we can endorse,” said Posluns. It’s a remarkable story. What began as a simple excel spreadsheet questionnaire, and a model originally developed by the Chamber of Shipping of British Columbia, now has sophisticated algorithms running in the background which are continually updated with the latest emissions factors for new engines, fuels, and of course the latest research on which emissions need monitoring. We will tell that story in the July issue of BC Shipping News.

Port of Vancouver firsts

Rigby’s advances in this year’s inventory at the Port of Vancouver will add significant new data collection to the overall project. Emissions will be measured in five areas of port activities: Marine, Cargo Handling Equipment, Rail, Truck and Administrative facilities. June 2016 BC Shipping News 41

C02e emissions in the Fraser Valley in 2010, among the port-related emissions being updated in the 2015 inventory.

It will also include “fugitive” emissions and vapours, for example grain dust when loading a vessel, and any vapours that don’t come from ends of exhaust pipes, a phenomenon known as “tank breathing.” The standard categories of Criteria Air Contaminants as well as Climate Change, or Greenhouse Gases, will also be enlarged. For air quality data, Rigby said, “We’re including diesel particulate matter as it’s a known human carcinogen.” Black carbon, the soot that is produced from the incomplete combustion of fossil fuels, biofuels, and biomass will also be included for the first time among the data for climate change. Environment and Climate Change Canada describes black carbon as a health hazard small enough to be inhaled and absorbed into the lungs and bloodstream. “But it’s also a potent shortterm climate forcer,” Rigby said.

Another major development is the geographical scope of the Inventory. “[It] is going to extend beyond the Port’s jurisdictional boundaries,” said Rigby. On the ocean side, the data capture will include all ocean-going vessels doing business with the port, where the Port’s navigational jurisdiction covers more than 350 kilometres of shoreline and extends from Point Roberts at the Canada/U.S. border through Burrard Inlet to Port Moody and Indian Arm, and from the mouth of the Fraser River, eastward to the Fraser Valley, north along the Pitt River to Pitt Lake, and includes the north and middle arms of the Fraser River. On the land side, it will include rail and truck emissions data through the Lower Fraser Valley. “It’s a little bit arbitrary,” said Rigby. “You have to draw a line at some point — if a truck

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Source: PMV’s 2010 Landside Emissions Inventory

AIR QUALITY is coming from the Kootenays, at some point those emissions belong to whoever it comes from and at some point those emissions belong to whoever it goes to, so we chose the Lower Fraser Valley because that’s the air shed. That’s what Metro Vancouver looks at when they do their air quality assessment. Our inventory actually feeds into their inventory,” said Rigby.

City of Vancouver

Some still want the Port’s Emissions Inventory to include more. The City of Vancouver’s Sustainability spokesperson, Doug Smith, thinks the Port needs to think “holistically.” While he applauds the Port for “ensuring all emissions going into the port are accounted for — both rail and truck,” Smith said the City of Vancouver believes the inventory should also account for materials shipped out of the Port. His argument appears to reverse the maxim so it reads “Think Local, Act Global” as a necessary condition for calculating the Port’s total emissions sources.

Port of Vancouver’s Emissions Inventory for 2015 collects data on the following: Criteria Air Contaminants (CACS): Nitrogen oxides (NOx) Volatile organic compounds (VOCs) Particulate matter (PM) –PM2.5, PM10 and Total Suspended PM Sulphur oxides (SOx) Carbon monoxide (CO) Ammonia (NH3) Greenhouse Gases (GHGs) and climate forcers: Carbon dioxide (CO2) Methane (CH4) Nitrous oxide (N2O) Refrigerants Black carbon (BC) Air Toxics: Diesel particulate matter (DPM)

AIR QUALITY “Where we’re a little frustrated is that the Port isn’t taking any consideration of any materials, for example, they don’t consider coal and oil part of their emissions portfolio,” Smith said.“When you take coal and oil and ship it overseas and people burn it, which of course leads to climate change — that leads to forest fires, and that leads to poor air quality in Vancouver,” Smith said. “Global climate change is Vancouver’s air quality.”

Conclusion

The Emissions Inventory is an essential part of environmental policymaking at the Port of Vancouver. It is the basis upon which innovations are developed, such as shore power, the Port’s emissions reduction program allowing ships to plug into electrical power while at berth. The inventory provides the metrics for important port environmental programs such as Green Marine and the Northwest

“What Vancouver is now undertaking is something that more and more ports will have to do in the coming years in order to survive...” Ports Clean Air Strategy; and it feeds into the Port’s strategic and business planning cycle. It now also plays a significant role in global efforts to reduce port emissions. The 2014 publication Shipping Emissions in Ports by the Organization for Economic Cooperation Development’s International Transport Forum (OECD/ITF) noted: “In the case of North American ports, vessels have much longer stays than on other continents, so the container ship emissions in ports are larger.” The paper’s author, Olaf Merk, the OECD/ITF Administrator, Ports and Shipping, told BCSN: “Ports need to have a social licence to exist. They are

often located close to urban areas and they frequently pollute. Ports can only continue to exist if they mitigate their negative impacts — and the impact of emissions is one of the most important of these. The most basic way to improve is to start measuring — without a baseline there is no possibility to propose targets and live up to them. “What Vancouver is now undertaking,” said Merk, “is something that more and more ports will have to do in the coming years in order to survive, and to be considered as trustworthy partners that can generate value added for communities.” Colin Laughlan can be reached at colin@laughlanconsulting.com.

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CLEAR SEAS Clear Seas workshop promotes collaboration By Colin Laughlan The take-away was the staggering potential for technological applications for marine hazards — given one essential ingredient: greater collaboration...

ell over 100 delegates from government and industry in Canada, United States, and Europe participated in two-day workshop, “Better Decision Making Through Maritime Traffic Monitoring and Modelling,” organized by the Clear Seas Centre for Responsible Marine Shipping and hosted at the Terminal City Club in Vancouver April 11 and 12. The workshop covered — in a clamshell — everything you ever wanted to know, and more, about Maritime Domain Awareness (MDA) systems. According to Transport Canada, MDA means having true and timely information about everything on, under, related to, adjacent to, or bordering a sea, ocean or other navigable waterway. This includes all related activities, infrastructure, people, cargo, vessels, or other means of transport. For marine security, it means being aware of anything in the marine domain

44 BC Shipping News June 2016

that could threaten Canada’s national security. Rising to the challenge of that definition, the two-day event was packed with 36 presentations and panel sessions ranging from global satellite tracking systems to granular Q&A discussions about information applications even at the grass-roots community level. The take-away was the staggering potential for technological applications for marine hazards — given one essential ingredient: greater collaboration among the multitude of stakeholders across the entire spectrum of marine safety, security, and environmental issues. For Clear Seas, it was the young organization’s successful debut as an independent facilitator of a much-needed collaborative process. “This workshop is to show we can talk, we can help facilitate dialogue, we can help to bring people together; and as an independent organization, we

can talk to government, we can talk to industry, we can talk to environmental groups without being seen as someone pushing a certain agenda,” Dr. Richard Wiefelspuett, Executive Director of Clear Seas, told BCSN. “We have a lot of stuff, we have a lot of knowledge, so what is keeping us from moving forward? We need more collaboration, that’s one of our roles,” Wiefelspuett said. Some of that “stuff” — affectionately so described by Wiefelspuett — was presented by the workshop’s co-sponsors MEOPAR and exactEarth, two Canadian organizations with leadingedge tools being adopted by international bodies. MEOPAR is the pan-Canadian network led by Dalhousie University for Marine Environmental Observation, Prediction and Response. Kristine Boerder, a PhD candidate at Dalhousie, described MEOPAR’s development of a satellite Automated Information System (AIS) for a vessel tracking tool in fisheries management using exactEarth data. Citing the State of Fisheries and Aquaculture Report for 2014, Boerder said there are about 4.7 million fishing vessels of various sizes worldwide, of which 2.1 million are under power and could potentially carry an AIS transponder. While it was unclear how many vessels actually have AIS, Boerder said that from their exactEarth data, they now see about 650,000 unique vessels, though they have not yet determined the number of fishing vessels or the percentage of fishing vessels with AIS. Dr. Rossaline Canessa, part of MEOPAR’s network at the University of Victoria, described links to other projects such as the Vancouver Fraser Port Authority’s “Enhancing Cetacean Habitat and Observation (ECHO)” Program, which aims at better understanding and managing the impact of shipping activities on at-risk whales throughout the southern coast of British Columbia.

CLEAR SEAS Ontario-headquartered, exactEarth has developed the algorithms that turn the enormous quantity of data streaming from Satellite AIS tracking into real-time usable knowledge tailored for both large and small marine vessels. Among its innovations, the company has partnered with the colossus U.S. defence contractor Harris Corporation to develop space technology that allows ship-to-ship communications, creating global coherence from line-of-sight signals. Graham Strickler, Vice President, Products and Services, said exactEarth’s six-year-old archive can now produce data analytics on specific vessels and generate “a long list of items regarding the ship’s history such as the owner, insurance, cargo, fuel reports and emissions.” Harris Corporation’s Advanced Programs Engineer, Donna Kocak, informed the audience that Harris currently has eight exactEarth satellites

tracking 53,000 unique vessels daily. She said the eight satellites detect about 5.3 million AIS positions daily. Kocak announced that Harris will be launching 58 more satellites in 2016 and 2017 with real-time AIS capability (unlike the current eight) as part of their Iridium NEXT constellation which has satellite cross links in space. In a combined session, the workshop focused on the various modelling techniques and applications for maritime traffic data using cases for trends in shipping, risks, noise, collision areas, shipping exclusion zones, and traffic management.

West Coast voices

From Alaska to the State of Washington, West Coast organizations presented their regional issues and developments in their respective maritime mandates. • Alaska Maritime Exchange underscored the importance of wildlife in the

state’s Maritime Domain Awareness, and is now working with Russia to enhance the SafeSeaNet (a maritime data exchange program). • Haida First Nation described its response to the Simushir incident in 2014, when the cargo ship was adrift off the B.C. coast, and how it reviewed “what was learned and how to avoid a repeat.” • Ocean Networks Canada, which operates cabled ocean observatories in the Strait of Georgia and off the West Coast of Vancouver Island, explained how it collects data on biological and geological aspects of ocean changes, and how the system can provide earthquake and Tsunami warnings. • Islands Trust described its work to mitigate risks in oil spill response near the islands in the Salish Sea, a marine ecosystem between the B.C. mainland and the Southern end of Vancouver Island.

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CLEAR SEAS • BC Coast Pilots Ltd. and the Pacific Pilotage Authority made presentations on the knowledge base and expertise of marine pilots for navigating vessels safely in B.C.’s coastal waters. • The Puget Sound Harbor Safety Committee described its work as a volunteer association which monitors activity and serves as an advisory group to several U.S. federal and state agencies. • Western Canada Marine Response Corporation noted the need for information sharing among various sources of data, and emphasized that data systems must be harmonized while also addressing confidentiality and privacy issues. • Washington State Department of Ecology described the State government’s measures in assessing and managing a broad range of threats to the State’s shorelines and waters.

British Columbia’s port authorities

B.C.’s three coastal port authorities provided an insight into their respective Maritime Domain Awareness systems. • Bernie Dumas, Port of Nanaimo President and CEO, described the Port’s MDA system, developed with North Vancouver company Xanatos Marine, with its geofence and dedicated AIS system. • Chris Wellstood, Director of Marine Operations and Harbour Master for Vancouver Fraser Port Authority, described the Port’s 24/7 compliance monitoring operations which include drones, cameras, and sensors on buoys, with additional layers of information from the Canadian Coast Guard, Customs, and the RCMP.

• Captain Gary Paulson, Vice President, Operations, and Harbour Master for Prince Rupert Port Authority, described PRPA’s maritime traffic monitoring which uses shore-based radar along with data from the Coast Guard and RCMP; co-operation with the Port’s terminals, and partnering with First Nations.

European perspective

Marrku Mylly, Executive Director, European Maritime Safety Agency (EMSA) delivered the keynote address to the workshop. EMSA has operated since 2004 on behalf of the European Commission, building and maintaining the maritime tracking systems for all member states of the European Union. While EMSA’s multinational system is more complex than Canada’s, Mylly said he thought the two administrations could share information and absorb best practices. “The systems in Canada are advanced,” he said. “Today we have on our screen, at any given time, about 20,000 vessels on European water,” Mylly told BCSN. “ We can extract information on any vessel there and see a lot a data on the vessel — which is more than we’ve seen here — because we also have sensitive data, which is fed in for inspections, detections of vessels, and that kind of thing.” Mylly also emphasized the EMSA’s environmental protection role. “EMSA has built satellite base monitoring of environmental conditions of European waters … to see if there is spillage on European waters. It takes about 30 minutes to analyze and then authorities verify this – this has proved very successful — so the masters of vessels know they will be caught if there is a spill,” he said.

Conclusion

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At the end of the two days, the totality of the experience was, in a word, outstanding. Some participants described it as “extraordinary.” Perhaps Wiefelspuett’s simple understatement summed it up best: “It’s an amazing amount of information,” he said. However, Wiefelspuett is not convinced that the priority for safer shipping is more technology and information. “We don’t need technological development; we have a lot of data acquisition methods; we know how to get that data; we’ve seen this already as the Port of Nanaimo showed, the Port of Vancouver showed, the Port of Prince Rupert showed — they do this — they have a lot of information out there, but we also see that they are not working together. They could, but they don’t,” he said. “Jurisdictions are divided. They’re complex so even government departments — Coast Guard versus Transport versus Environment — are not necessarily working together,” he said. “We really want to sit down to talk about what is best for the objective of making shipping safer and prevent any disaster.” But Weifelspuett is optimistic. “I think it is getting better today; we are seeing more collaboration.”

SPILL RESPONSE

B.C. company finds international success with oil spill response equipment

gua-Guard Spill Response co-owners Nigel Bennett and Cameron Janz welcomed the local maritime community to their Coquitlam facilities in mid-April to showcase their state-of-the-art oil skimming systems. With a variety of systems on view, Bennett and Janz spent some time with BC Shipping News to provide an overview of their patented RBS TRITONTM oil-skimming technology. With a bit of supplemented research to learn more, we found yet another local B.C. company who has applied innovation and ingenuity to become an international success.

Background

Before being incorporated in 1992, Aqua-Guard Spill Response Inc.â&#x20AC;&#x2122;s, Co-founders: Nigel Bennett, Sue Willis and Lawrence Pertile for 10 years worked in the oil spill response consulting business helping to provide oil spill consulting and training services all over the world. Following the Exxon Valdez spill and the resultant U.S. OPA 90 (Oil Pollution Act 1990) and Canada

Over the next 20 years, Aqua-Guard continually developed their RBS oil-skimming system, reaching new and greater benchmarks with each evolution. Shipping Act amendments requiring all vessels and facilities involved in the transport of oil to have Tier One response capabilities (i.e., the ability to respond to a localized spill), AquaGuard was formed. While the incorporation of Aqua-Guard marked a shift for the co-founders (Janz joined in 2000) from a consulting firm to an equipment-based company, they continued to provide their professional expertise to government and private companies, especially in Alaska where in the 1990s, they were involved in the re-write of no less than 200 contingency plans and supplied over 35 RBS (Rotating Brush Skimmer) oil skimming packages for the Alyeska pipeline. A major milestone for the company was in 1994 when they developed the

The RBS TRITONTM 150 trailer system showing crane deploying brush skimmer head (system certified to recover 150 m3/hr of oil).

first interchangeable RBS brush, drum and disc oil skimmer. Over the next 20 years, Aqua-Guard continually developed their RBS oil-skimming system, reaching new and greater benchmarks with each evolution. The first generation RBS offshore oil skimming system, was developed for the major Korean oil companies in 1999. By 2006, they had launched a new generation of RBS TRITONTM skimmer technology that, under the watchful eyes of ABS (American Bureau of Shipping) and DNV, proved it could recover over 300 per cent more oil compared to their previous RBS Brush skimmers. In 2010, they developed the URO offshore oil skimming system for Petrobas Brasil, a self-contained and fully remote system controlled by one operator. The, the URO 600, is capable of recovering

The large offshore URO 300 oil skimming system demonstrated at Vancouver Drydock prior to being shipped to Brazil.

June 2016 BC Shipping News 47

SPILL RESPONSE ensure it’s up to our quality standards,” Bennett said.

Photo: BC Shipping News

Beyond the technology

Co-owners of Aqua-Guard: Nigel Bennett and Cameron Janz.

over 600 cubic metres per hour and is the largest skimmer of its kind, being supplied to oil companies and offshore supply vessel companies throughout the world.

State of the art

With facilities in North Vancouver and Coquitlam as well as a 25-year partnership with a large manufacturing company in Surrey, Bennett and Janz have been manufacturing a wide range of spill response systems for clients around the world, including most, if not all of the major oil companies. The larger models — like the URO 300 and 600 for offshore — are manufactured in Surrey and assembled in Coquitlam. The medium and smaller skimmers are built in North Vancouver. The range of products is notable and diverse. In addition to the URO and

48 BC Shipping News June 2016

RBS TRITONTM Skimmers, AquaGuard provides weir skimmers, offloading pumps, oil containment booms, boom storage, oil storage tanks, vacuum and dispersant systems. The inventory allows Aqua-Guard to offer a one-stop, total solution package for clients. Depending on the environment — whether it be open, protected or calm water, or for industrial areas — AquaGuard’s RBS TRITONTM systems range from 35 m3/h up to 600 m3/h. The systems have been proven in hundreds of oil spills and industrial site incidents worldwide. They have the unique ability to recover any type of oil as well as an up to 98 per cent oil to water recovery efficiency, reducing storage volume requirements. During Aqua-Guard’s open house in mid-April, a new system for the Western Canada Marine Response Corporation was on display, ready for delivery. The RBS TRITON TM 150T (Trailer), mounted on a customized road trailer system, will be added to WCMRC’s assets on Vancouver Island. An RBS TRITON TM 150 OS (Offshore) oil skimming system was recently supplied and mounted onboard Barge 18, one of WCMRC’s response vessels in Vancouver Harbour. While none were available for display at the open house, the larger systems — the URO 600 and URO 300 Offshore Skimming Systems — have been seen on the West Coast during trials at Vancouver Drydock. “We’ll run the systems for seven to 10 days to test and

Beyond the extensive research and development that results in continuous improvements to their patented technology, Aqua-Guard is a “total solutions provider” according to Bennett. “We have a team of experts who will work closely with clients to determine the scope of their needs, evaluate options and supply fully customized solutions. Everything is taken into consideration, from local environmental laws to optimizing return on investment.” He further noted that maintenance programs, training packages and audit services are available for all solutions. In addition to developing solutions for oil containment and recovery for refineries, oil spill response organizations, and government agencies, AquaGuard also provides solutions for ports and harbours. “Our ISO/IMO-certified staff provide professional assessments and are able to put together a recommended Tier 1 response system that best meets the needs of the harbour,” Bennett said. Aqua-Guard has worked in 104 countries worldwide to provide guidance, assessments, equipment, and maintenance programs.

The future looks bright

Given their track record, we can expect to continue to see new and increasingly effective oil spill response products being developed by AquaGuard. Of particular promise is the continued development of the URO and RBS TRITON TM systems. The international network of support — over 100 partners worldwide — is another factor that works in their favour as Bennett admits that most of their business comes from outside of Canada. Despite the international scope of their business and the success achieved beyond our borders, Aqua-Guard is another company – one of many profiled in BC Shipping News — that puts B.C. on the map for providing worldclass products and service. BCSN

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ENVIRONMENT

Setting the pace for green technology use in maritime transport By Darryl Anderson

Managing Director, Wave Point Consulting

We quickly learn that green values, company initiatives and improvements extend far beyond mere regulatory compliance.

he Paris Agreement on Climate Change was signed by 175 countries in April 2016. The International Maritime Organization (IMO) Marine Environment Protection Committee meeting, which highlighted the shipping industry’s path for smart, responsible sustainable development, overlapped with the signing. The work of this committee advances the IMO’s vision for shipping that

follows the United Nations Conference on Sustainable Development, Rio+20 in 2013. IMO Secretary-General Mr. Kitack Lim has asserted that sustainability could best be achieved under the comprehensive regulatory framework developed and maintained by the IMO. While the above achievements are indeed notable, the real test will come with implementation. By capturing industry insights and perspectives from

ship owners, container terminal operator, and supplier, the challenges and lessons learned for driving enhanced sustainability can be explored. We quickly learn that green values, company initiatives and improvements extend far beyond mere regulatory compliance. Sound governance structures, integrated team-based business processes, new technology and products are being used collaboratively to set the pace for an enhanced sustainability outcome.

Bulk shipping company insights

Fednav Limited (Fednav) is Canada’s largest ocean-going dry-bulk shipowning and chartering firm. Their fleet consists of about 100 owned, long-term

Photo source: www.shipspotting.com/lappino

Fednav’s newly built Federal Champlain has an advanced ballast water handling system — noteworthy to be mentioned when discussing green shipping.

50 BC Shipping News June 2016

ENVIRONMENT chartered and spot chartered vessels and includes St. Lawrence Seawaymax-sized bulk carriers, Supramax and Panamax vessels. For many shipping companies, the arrival of a new vessel, such as the Federal Champlain in 2016, with its advanced ballast water handling system, would be the most newsworthy item to be mentioned when discussing green shipping. A lively discussion with Fednav Limited’s Marc Gagnon, Director, Government Affairs and Regulatory Compliance, revealed a more nuanced and holistic picture regarding the drivers behind the company’s green initiatives. Yes, the company has tackled significant environmental initiatives to address particular challenges such as ballast water, cargo residues, oily wastes, accidental oil spills/leakages, air emissions, energy efficiency and waste management. But Gagnon emphasized the fact that Fednav is a privately owned company where the organizational culture embodies and lives out one of their core values: “being the best we can.” From a green perspective, the company’s environmental policy establishes the standard of conduct for the enterprise. More recently, the renewal of the company’s workforce has resulted in an influx of new employees. Marc stressed the point that young people want to work for a company that shares their values. They don’t want to work for a company that has always done business in a certain way and is not responsive to the environmental impact of their operations. Thus, internal company forces are driving green initiatives, and these are perhaps a stronger drive of change than the external forces that are shaping the business-to-business marketplace where their bulk ships operate. When asked about insights gleaned from specific initiatives, Gagnon mentioned both the ballast water treatments systems onboard their new generation of ships and the Green Marine program that Fednav helped co-found. The Federal Champlain is equipped with a ballast water treatment system,

Sound governance structures, integrated team-based business processes, new technology and products are being used collaboratively to set the pace... a first for a family of sister ships transiting the Great Lakes. Developed by JFE Engineering Corporation in Japan, the BallastAce system will be effective in both fresh and salt water. BallastAce operates through a sophisticated filter and sodium hypochlorite (bleach) injection mechanism in the ship’s ballast system. Fednav is equipping 12 of its new ships with these systems, well before the

regulatory requirement. Gagnon spoke about the need for well-structured regulations but, for a company to be effective, there may be a need to act before regulations come into force. Gagnon enthused about the value of having a platform for industry collaboration and mutual learning to both identify sustainability issues but share technical information with colleagues.

June 2016 BC Shipping News 51

Photo courtesy GCT

ENVIRONMENT

Global Container Terminals has implemented initiatives siuch as changing over the hydraulic fuel to Panolin, a more environmentally friendly solution.

For example, ballast water is a complicated and challenging issue to address, he noted. The ability to use the Green Marine Forum to share their thinking with colleagues and gather insights from others is of great value. Participants may not always agree with the perspective of other leaders in their industry, but Fednav always values the perspectives of others and the industry can and does learn from one another. For Fednav, one of the keys to an effective group is the trust that is built up over time. A formal structure inside a company is most useful when implementing green initiatives. The corresponding technological solutions are critical to Fednav. Within the enterprise, there is an environmental committee headed by a vice-president that reports to the board on the progress of the company’s environmental policy. Internally, Fednav has taken a team-driven approach toward green initiatives. Colleagues from their operation, fleet, and finance

52 BC Shipping News June 2016

departments amongst others are involved. Other environmental initiatives have the office, ship and terminal employees involved. Collaborative platforms, such as the Green Marine certification program, often provide more cost-efficient options for companies to implement their green initatives than a stand-alone approach. Looking ahead, the issue of carbon from shipping and maritime logistics operations, along with underwater noise from vessels, are on the immediate horizon.

Container terminal operator, ferry operator and green product supplier insights

Few topics are as under-appreciated as the type of hydraulic fluid that supports the machinery responsible for the pulsating flow of traffic through a modern container terminal. When implementing a green substitute product, terminal operators are concerned with

equipment productivity and performance: particularly in situations where the original equipment was designed for a conventional product. When Global Container Terminals’ (GCT) predecessor company made a policy decision to implement environmentally friendly products, the transition to find a suitable replacement hydraulic fluid came with a learning curve, observed Serguei Bazov, Maintenance Superintendent at GCT’s Vanterm operation. Container handling equipment such as spreaders use hydraulic oil. Since the spreader is always in use, there is a risk that switching to a green alternative will cause the machinery to operate at a subpar level. Conversely, some equipment is used during periods of peak demand and fluid degradation, and hence machinery readiness and reliability, are a concern. Bazov’s team implemented a year-long test of a green product called Panolin after experimenting with alternative products in previous years. Panolin is a product provided by B.C.-based Biodegradable, Natural, Alternative Chemistry Environmental Solutions (BNAC). This local firm provides alternative, environmentally certified products. Their product line includes hydraulic fluids, gear oils, greases, degreasers, bilge/deck cleaners and absorbents. The goods typically replace traditional toxic chemicals. One of the most valuable lessons from conducting the pilot project was confirmation that even seemingly small organizational changes require attention. For example, Bazov commented: “It is expensive to change the fluid, especially when there could be up to 22 different pieces of equipment each requiring up to 150 litres of hydraulic fluid.” Thus, it was important to record clearly, document and label storage drums and equipment with the type of hydraulic fluid. Bazov also observed that when choosing a green alternative, the technical attributes of the product are just as important as the quality of the service offered by the supplier. He cited the willingness of BNAC’s staff to come

ENVIRONMENT alongside his team when they were applying the green product for the first time as an example of a good business practice. Operating in the Salish Sea’s aquaculture heartland, BC Ferries’ newest ship, the 150-passenger, 50-vehicle Baynes Sound Connector, has been built by Seaspan Shipyard in North Vancouver to be the ‘greenest’ vessel in their fleet. Everything relating to the environment was taken into consideration with the new vessel according to BC Ferries. The use of non-toxic fluid is a vital step in contributing to sustainable shipping should a leak occur. Mark Wilson, BC Ferries’ Vice president of engineering, stated, “The Baynes Sound Connector Cable Ferry has had a good all-round performance with the use of the Panolin Line. The oil is much more environmentally friendly and has resulted in very normal operational parameters around system pressure and temperature.” When asked what were the most valuable management insights learned from implementation green products in the marine sector, Chris Richardson, President of BNAC replied that “going green saves money.” From a financial perspective, customers such as GCT and BC Ferries are benefiting from the use of the green product because they can extend hydraulic oil changes and thereby lower their labour, disposal and product shipping costs. Since Panolin is a zero-waste product, there is no need to dump and flush the oils every six months to a year of service. In contrast, products made from vegetable oil will need to be replaced after 1,500 to 2,000 hours. An inherent part of sustainable shipping is the need for a quality management process because, if kept properly filtered, Panolin will last 10 to 20 times longer than conventional bio and mineral oils.

Conclusion

The theme that emerges from this article is that the successful introduction of a new green product or technology rides on leadership, collaboration and trust. Perhaps this is why company initiatives are in fact driving sustainability improvements that extend beyond mere regulatory compliance. In a sector where commercial supply chain and logistics collaboration is often discussed but lacks a level of trust and integration, it is often difficult to achieve measurable improvements. As the standard of corporate conduct for the maritime sector continues to evolve rapidly, all companies will need to adopt continuous learning and innovation programs. Our ability to engage in international trade as a nation will increasingly depend on the effective use of environmental technologies in the maritime transport and logistics sector. Failure to do so will make it much harder to attract the next generation of employees but will also undermine the public confidence necessary to support increased investments in transportation infrastructure. In an era of intense price competition, tight operating margins and emphasis on improved productivity, it is important to acknowledge and learn from pacesetters who are at the forefront of making a difference. Darryl Anderson is a strategy, trade development, logistics and transportation consultant. His blog Shipper matters focuses exclusively on maritime transportation and policy issues. http://wavepointconsulting.ca/shipping-matters.

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June 2016 BC Shipping News 53

LEGAL AFFAIRS What’s in a word?

Security interests in fishing licences and fishery quota entitlements By Roger Tangry A Vancouver lawyer with Bernard LLP Photo credit: Dave Roels

Importantly, had that single word been inserted into the PPSA documents, it would have avoided the necessity of litigation.

recent dispute between numerous secured lenders claiming priority interests in the quota allotted to the debtor, a commercial fishery, resulted in the high court of Nova Scotia closely examining proprietary interests in fishery quota entitlements. It is common practice in the commercial fishing industry for a fishing licence, including the quota, to be used as collateral by secured lenders when filing security agreements under the Personal Property Security Act (“PPSA”). In Re D’Eon Fisheries Limited, 2016 NSCA 30, the Nova Scotia Court of Appeal was confronted with an appeal of a decision which held that a reference to a fishing licence in a financing statement was not sufficient to perfect a lien on the fishery quota entitlements under the Nova Scotia PPSA. Ultimately, the case resulted in the finding that the term “licence” in the financing documents also included the related quota entitlements despite the lack of a specific reference to the quota. The facts of the case are that D’Eon borrowed money from time to time to support its operations. Pursuant to a fishing licence assignment agreement dated September 23, 2013, the 54 BC Shipping News June 2016

Province of Nova Scotia, represented by the Minister of Economic and Rural Development and Tourism (the “Province”) loaned $500,000 jointly to D’Eon and its affiliate, Blue Wave. That document provided D’Eon would pledge all of its interest in the ‘Licence Assets’ which was defined as the fishing licences and all quota and enterprise allocation. However, the description of general collateral in the financing statements filed pursuant to the PPSA by the Province registered against D’Eon referred only to “groundfishing licence No. 304715.” The word ‘quota’ was omitted. The loans made to D’Eon were subject to security interests granted in favour of two banks. In December 2013, D’Eon declared bankruptcy. The Trustee in Bankruptcy took the position that the Province and the other creditors had failed to perfect their security interest against the quota. That decision was appealed to the Supreme Court of Nova Scotia in Bankruptcy and Insolvency (2015 NSSC 160) which held that the lack of specific wording in the security agreement meant the Province and the other creditors did not have a secured

position in relation to the proceeds of sale of the fishery quota entitlement under the licence. The court held that the licence and the quota were not so inextricably linked such that a reference to one amounted to a description of both. Consequently, the licence was sold, together with the quota, to a single purchaser resulting in a surplus of $1,426,248 remaining with the Court to be distributed. The Province and the other creditors, as appellants, appealed the decision to the Court of Appeal seeking to recover the amounts they advanced in full as a secured creditor thereby avoiding the risk of recovering only a portion of their loans amongst other unsecured creditors. The question of whether a fishing licence can be effectively pledged as security has been well settled since the Supreme Court of Canada’s decision in Saulnier v. Royal Bank of Canada, 2008 SCC 58 (“Saulnier”). Justice Binnie widened the definition of “licence,” specified how to give notice of seizure to the grantor of the licence, and provided expressly that realization against a licence is limited by the terms and conditions of the licence and the applicable law. The Supreme Court of Canada made it clear that while a fishing licence may not be property in the fullest sense, it still gives the licence holder enough rights of the right kind to qualify it as property under the Nova Scotia PPSA and the NSBI. In D’Eon, Justice Scanlan at the Nova Scotia Court of Appeal was cognizant of

LEGAL AFFAIRS In particular, this decision serves as a potent reminder of the lingering uncertainties surrounding security interests in fishing licences and quota entitlements, and quotas as personal property. The outcome also highlights the importance of careful drafting with the onus on commercial lenders to ensure financing statements make proper reference to licences and related quotas in order to preserve their position as a secured creditor vis-à-vis other secured and unsecured creditors. Furthermore, there remain some unabating jurisdictional variations between the provinces that require careful navigation, where some provinces have legislation in place governing certain types of quota entitlements as collateral security. Notably, in British Columbia, the B.C. PPSA was amended in 2011 to follow the approach in Saulnier by expanding the definition of “licence” to encompass a broader range of licences, including fishing licences. Consequently, Saulnier resulted in the DFO establishing a “Notice and Acknowledgement for Recognized Financial Institutions” system allowing a party taking security over a fishing licence and the fisher granting the security interest to jointly give notice of the security to DFO. Roger Tangry is a lawyer with Bernard LLP. He can be reached at tangry@bernardllp.ca. Photo: Dave Roels

the fact that no party was arguing whether a quota, whether part of a licence or a separate asset, was any less a proprietary asset than a licence alone. Instead, the dispute centered on a single word, where the discrete issue confronting the Court was whether the term “licence” included the “quota” for the purposes of registration under the PPSA. The Court of Appeal noted in this case that the real problem was the absence of one key term. Justice Scanlon emphasized that it was unfortunate that the wording in the financial statements registered pursuant to the PPSA did not track the wording of the assignment agreements and specifically reference “quota.” Importantly, had that single word been inserted into the PPSA documents, it would have avoided the necessity of litigation. The Court of Appeal zeroed in on the approach taken by the lower court motions judge in determining that the licence and quota were separable such that to rule otherwise would place the burden on the searcher under the PPSA to find out whether the collateral description in the financing statement is accurate. Under the PPSA, searchers should be under no obligation to demand information in order to ascertain whether additional collateral existed that was not referenced in the registration. Justice Scanlan stated: [32] The motions judge appears to have hung his hat on the fact that quota, in a commercial sense, could be bought and sold. He ignored the fact that even when it is bought and sold, it is at all times attached to a licence. I do not disagree that there is a commercial market and value for quota. That does not change the reality that, in law, the quota is part of the licence. The court disagreed with the notion that if a searcher saw the word “quota” that he/she would look no further to see what the security was. This ignored the fact that a reference to the “quota” in a financing statement under the PPSA would still send a searcher to make further inquiries at the Department of Fisheries and Oceans (“DFO”) to determine the extent of the “quota” attached to the licence. Importantly, Justice Scanlan recognized that the applicable Fishery General Regulations did not use the word “quota,” and as far as the DFO was concerned, there was no separate concept of a quota outside of the licence. Given that the quota was attached as a condition of D’Eon’s licence, the reference to the licence in the registered financing statement was sufficient to include the quota as it existed at the time the security was given. Consequently, the quota remained as a condition to the licence when it was sold by the Trustee. Allowing the appeal, Justice Scanlon concluded that the Province and NSBI had a valid security interest against the licence including the quota based on the description of collateral in the financing statements filed, which complied with the wording requirements of the applicable legislation in describing the assets as rights, title and interest of every kind which D’Eon had in, to or under its fishing licence.

Your donation will help us “Save Lives at Sea” Email: info@canadianlifeboatinstitution.org

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June 2016 BC Shipping News 55

GREEN MARINE Expanding verification:

New Green Marine verifiers By Françoise Quintus,

Green Marine Program Manager

Additional verifiers were essential because the number of Green Marine participants has tripled since the program’s launch in 2007...

reen Marine has expanded the number of verifiers who have been trained and tested to review the environmental performance results of the maritime companies participating in the program. There are now 27 verifiers in Canada and the United States instead of 11. Additional verifiers were essential because the number of Green Marine participants has tripled since the program’s launch in 2007, along with the geographic expanse of the membership. Green Marine ensures its program’s integrity by requiring all participants to have their performance results independently verified every two years. In some cases, the cost of flying a verifier to a participant’s site was more expensive than the verification fees. The program definitely needed verifiers in more locations. On the West Coast, for example, Green Marine had several verifiers based in Canada, but none in the United States. We now have five new verifiers in B.C., for a total of nine, plus two on the U.S. West Coast: one in the State of Washington, and the other in California. More verifiers were also needed in the East. The feedback from one of

56 BC Shipping News June 2016

our advisory committees was that there wasn’t enough choice within the St. Lawrence region, where Green Marine has the bulk of it participating membership. Participants wanted more verifiers so they could choose one from a competitive milieu. Green Marine started out with one verifier doing all the work, and then a second French-speaking verifier to work with francophone companies. When the program first required additional verifiers in 2013, we shared the news within our network.

Desired competition

We later asked our participants whether they wanted us to match each one of them up with a verifier, but they clearly preferred a free-market approach. They asked for enough qualified verifiers so there would be some competition in the price for their services. So we made another call for applicants throughout Canada and the U.S. What’s great is this put Green Marine on the radar of more verifiers who hadn’t previously known about the program. A number of the new verifiers are now actively promoting Green Marine certification to their 14001 ISOcertified clients, noting that Green

Marine differs in how it measurably assesses environmental improvement and specifically ranks like aspects of the maritime industry, such as ports to ports, so that fair comparisons can be made. While the criteria for each level of performance is demanding in detail, a straightforward 1-to-5 ranking system makes it simple for the public and other vested stakeholders to know where a company stands.

Strict criteria

Green Marine is not in the business of verification training, so we had to make sure that all of the applicants were already qualified verifiers. Only applicants who were certified auditors in Compliance, Environmental Management Systems or the International Safety Management (ISM) Code were considered. Each candidate also needed at least five years of experience in conducting audits, and to have done a minimum of three audits in the last five years. We also required all candidates to have at least one year of experience within the marine sector so that they would be familiar with the type of operations conducted by our participants. We received 38 applications — an impressive number, especially given that a significant portion of the candidates had not previously heard of Green Marine. Some applicants were immediately accepted or rejected based on our criteria, but others fell into a grey zone, even though we thought our requirements were precise. Therefore,

GREEN MARINE we sought expert advice from Stratos, a management consulting firm specializing in environmental sustainability, for those cases where a second unbiased expert opinion was deemed preferable to have. We ended up with 20 candidates paying the $300 fee to take part in the three-hour online training session. They subsequently had to complete a two-part examination. The first section featured multiple choice questions. The second required detailed responses. In retrospect, perhaps too detailed! Several candidates noted that it took them many hours — in fact, days — to complete the exam. While it’s good to know the successful candidates have such a thorough knowledge of the Green Marine verification process, we will re-assess the essay portion to ensure it demands a more reasonable amount of time and effort. In all, 18 verifiers passed the exam.

I’ll admit that I was a bit concerned that many participants would end up sticking with their existing verifier for convenience sake, but that has not been the case. A number of participants have taken advantage of the new verifier recruitment to shop around. The representative of one B.C. participant contacted us to say that his company is delighted to have had a choice of seven verifiers in the province, and the quotes for this year’s verification differed significantly. Various factors can account for the differences, including a firm’s size and overhead costs, the distance required to travel, and the amount of other work a verifier already has. As always, Green Marine will be vigilant to ensure that a drop in price doesn’t equate a decrease in service. We always emphasize the need for verifiers to be prepared before they arrive at a participant’s site and to subsequently write a comprehensive report.

I’m confident about the qualifications of our new verifiers because we really put them through their paces, and market forces will now determine who stays and who goes. The additional verifiers also position Green Marine well for the continued expansion of the program. The larger pool of qualified verifiers makes it more likely there is one working closer to a participant’s location. All of the verifiers are listed at http:// www.green-marine.org/certification/ verifiers/

June 2016 BC Shipping News 57

ADVERTISERS Aqua-Guard.................................... 46 Bernard LLP..................................... 36 Bracewell Marine Group.................. 53 Canada Metal/Martyr Anodes......... 14 Canadian Ferry Operators Ass’n....... 40 Canadian Lifeboat Institution.......... 55 Capilano Maritime Design............... 52 Cargill.............................................. 23 Chamber of Shipping of British Columbia.............................. 13 ClassNK........................................... 11 Clean Pacific.................................... 49 Cruise Line International Association North West & Canada......................IFC Corix Water Products....................... 53 CT Terminals/Tidal Transport............. 4 Dave Roels Photography................. 14 EasPark........................................... 10 Euro Asia Transload........................... 3 Fraser Surrey Dock........................... 26 Greater Victoria Harbour Authority.. 28 Greenwood Maritime Solutions....... 10 IMS Marine Surveyors & Analytical Laboratories Ltd.............................. 22 Institute of Chartered Shipbrokers.... 9 Interferry........................................ 31 International Sailors’ Society Canada................................ 15 Jastram Engineering Ltd./

SAVE THE DATE!

Cycling for Seafarers September 17, 2016

Get ready to ride!

Now with three choices for distance: 40, 60 and 100 km! All rides start at the Mission and finish with a deluxe BBQ. Training program for beginners and seasoned cyclists starts in mid-June. Email Don MacInnes to join or for more details: don@jdmac.ca

Photos by Dave Roels (www.daveroels.com)

58 BC Shipping News June 2016

Jastram Technologies Ltd................ 57 John Horton, Marine Artist.............. 19 King Bros. Limited........................... 10 Lloyd’s Register................................. 7 Lonnie Wishart Photography........... 54 Marine and Offshore Canada........... 25 Mercy Ships..................................... 44 Meridian Marine Industries............. 15 Mission to Seafarers........................ 58 Nanaimo Port Authority.................. 29 Nautical Institute BC Branch............ 32 One Ocean Expeditions.................... 45 Osborne Propellers.......................... 48 Port Alberni Port Authority............. 33 Prince Rupert Port Authority........... 20 Redden Net & Rope......................... 35 Robert Allan Ltd.............................. 43 Samson Tug Boats........................... 25 Seaspan Shipyards.......................... 30 Squamish Terminals........................ 27 Steveston Lifeboat Fundraiser........... 8 Tactical Marine Solutions Ltd.......... 39 Tervita............................................. 42 Vancouver International Maritime Centre............................................. BC Vancouver Maritime Museum........ IBC Western Canada Marine Response Corporation..................................... 51 Western Stevdoring......................... 24

AN AT THE

Museum

Wednesday July 27th 2016 | Reception begins at 6:30pm $200 per person · $1,400 per table of 8 (TAXES INCL.)

For information & tickets, please email: gala@vanmaritime.com All proceeds support the Museum as we work to preserve the Maritime heritage of the Paciﬁc Northwest

Expand your shipping operations to ancouver, Canada.

VANCOUVER HONG KONG

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