Port of Vancouver’s Terminal 2 plans put pressure on tenants, neighbours

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From street level, West Coast Reduction cuts an imposing presence on Vancouver’s waterfront. Across the railway tracks at the north end of Commercial Drive, ranks of towering storage tanks surround the massive blocks of its industrial plant.

Looking down on an aerial view from Google Maps, however, the tanks and buildings look a little hemmed in by container yards of the terminals that surround it, which is exactly how owners of the decades-old agricultural rendering plant feel these days.

West Coast Reduction CEO Barry Glotman sees it as a contest between his business, a key link in handling agricultural byproducts and exporting canola oil, and the Port of Vancouver’s contingency plans to keep expanding container capacity.

“Basically it’s containers at the expense of agriculture in the (port’s) south shore (and) everything that we support on the south shore,” said Glotman, as he pushes for a commitment on a five-year lease extension for the 2.5-hectare slice of waterfront his company has occupied since 1964.

For the Port of Vancouver, however, it’s more of a “complex jigsaw” puzzle of managing Canada’s expanding needs for international trade within the port’s finite boundaries and understanding that it isn’t going to make everyone happy, said Robin Silvester, CEO of its governing Vancouver Fraser Port Authority.

The pressures of planning for new growth in container traffic along with managing the needs of existing terminals, such as West Coast Reductions and grain elevators, are raising tensions on the port’s south shore among its commercial tenants.

Residential neighbours in communities that have grown up alongside the port also watch nervously as expanding trade drives increasing amounts of traffic into facilities they thought would have finite limits.

The Port of Vancouver

The Port of Vancouver, Canada’s largest port, consists of 15 square kilometres of federally owned land strung in thin bands along hundreds of kilometres of waterfront in 16 Metro municipalities on Burrard Inlet, the Fraser River and South Delta.

It is the landlord for 29 marine terminals that in 2019 handled 144 million tonnes of cargo: imports, including automobiles and electronics, and exports, including grain, potash, lumber and coal.

West Coast Reduction’s part in that includes growing lines of business in the export of canola oil for Prairie farmers and so-called biofuels derived from the tallow that the company renders from animal byproducts left over from meat processing.

Started on the waterfront by local business magnate Jack Diamond in 1964 and still family owned, West Coast Reduction is now a sprawling operation with rendering plants in Saskatoon, Edmonton, Calgary and Lethbridge and also handles the output from a handful of other facilities.

Glotman said there is rising demand for the oils and tallow as biofuel, which are used as additives to reduce the carbon in gasoline, diesel and other fuels.

West Coast Reduction blends biofuels, then sends them by barge to the Parkland oil refinery in Burnaby, by truck to Washington state, and by ship to one of the world’s largest biodiesel producers, in Singapore.

“Today, we’re at capacity,” Glotman said, and “all our customers are really looking to make sure that we have a secure business model, but they also want us to invest.”

A “port location is critical to support agriculture in Western Canada, it’s critical for B.C. and Canada to meet its low carbon mandates,” Glotman said, as West Coast Reduction seeks a firm, five-year extension to a lease that expires in 2026.

With the extension, Glotman said the company could justify a $50-million investment in biofuel production and shipping.

West Coast, however, has only been able to get a conditional commitment from the Port of Vancouver, while the port tries to get environmental approval for it’s proposed $3 billion new container terminal at Roberts Bank in Delta, Glotman said.

Without certainty of that decision, Glotman said the company can’t proceed with any investment and faces the prospect of vacating the site by the lease’s end in 2026.

That would leave meat and fish processing plants across Western Canada without an outlet to deal with byproduct material from their operations, which amounts to 250,000 tonnes a year from Metro Vancouver alone.

The federal review by the Impact Assessment Agency of Canada was completed in the spring of 2020 with a conclusion that the Roberts Bank project was technically possible, but carried a long list of environmental impacts.

Environment Minister Jonathan Wilkinson sent the application back to the assessment agency in August, seeking more information from the Port of Vancouver “to determine whether the project is likely to cause significant adverse environmental effects,” agency spokeswoman Alison Reilander said in a statement.

Silvester said the Port Authority will have that work complete by this summer. He refers to the Roberts Bank expansion as “a critical project” for the port, which will run out of capacity to handle growth in container trade by 2030 without it.

For the biofuel industry, West Coast Reduction, with its access to marine transportation of its commodities, is “a pretty key facility for industry,” said Ian Thomson, president of Advanced Biofuels Canada, the association that represents producers. “We can anticipate fairly accurately what will happen if that facility disappears, and it’s not a great prospect.”

Grain terminals wary of container expansion

Other port tenants are watching West Coast Reduction’s experience through a lens of their own concerns, including grain terminals that have recently experienced rent increases of 30 per cent in one year.

That places “costs on the system (and) impacts our ability to get product to our customers and be competitive globally,” said Wade Sobkowich, executive director of the industry group Western Grain Elevators Association.

“So we are definitely worried that, if West Coast Reduction, if their future in the Port of Vancouver could be in jeopardy, then who’s to say that grain terminals’ future can’t also be in jeopardy?” Sobkowich said.

His association’s members want better representation of their sector in governance of Canada’s ports and a better means to appeal decisions by port authorities.

Government is in the middle of a port modernization review process and better transparency in and accountability for decision making at all ports tops the list of concerns, said Stephanie Jones, president of the B.C. Marine Terminal Operators Association.

Jones couldn’t speak to the specifics of individual terminals, especially West Coast Reductions, which is not a member. Generally, however, issues such as lease rates and ability to negotiate with the port, which is essentially a monopoly, are concerns.

“It’s really critical that decisions be put through a competitiveness analysis,” Jones said, “because whether (decisions come) with unnecessary risks and costs associated with investments, (those) ultimately get downloaded to terminal operators.”

Port of Vancouver perspective

Port CEO Silvester acknowledged potential stress points, but said trade through the Port of Vancouver has increased in the last decade by the same annual volume handled by the Port of Montreal and there has been construction of a new grain elevator and major expansions of two others.

“To say it’s all about containers is really not supported by just looking at the fact that investment in capacity has been created,” Silvester said. “It’s a complex balance. It’s fair to say that not everybody’s happy all the time.”

In the case of West Coast Reduction, however, Silvester argued that its rendering plant in particular is more of a local processing and manufacturing activity that, if proposed today, wouldn’t fit the port’s mandate for facilitating international trade.

And Silvester said the port’s position, since he arrived a decade ago, is that it likely wouldn’t be able to extend West Coast Reduction’s lease indefinitely, especially considering that its site is next door to the Vanterm container terminal and one of the few port locations that could accommodate more container capacity if the Roberts Bank expansion is rejected.

The port’s four container terminals, Centerm and Vanterm in Burrard Inlet, Deltaport at Roberts Bank, and Fraser Surrey Docks handled 1.94 million containers in 2020, two per cent more than 2019, even with COVID-related interruptions early in the year.

Centerm is in the middle of a $500-million expansion that will increase its capacity by two-thirds, which Silvester thinks will hold the port over until the hoped-for Roberts Bank Terminal 2 project, which will raise the port’s total capacity by another 60 per cent.

“But until we’re clear that the project’s moving forward, we can’t afford to lose options that we have to create container capacity in other areas,” Silvester said.

The environmental review panel concluded that Terminal 2’s construction posed no major technical challenges and “is consistent with Canada’s role as a trading nation.

However, it would also have “numerous adverse residual and cumulative effects,” including habitat loss, on crab and juvenile chinook salmon as well as traditional uses of resources by First Nations.

“We’re working as hard as we can (to) provide more information and to do consultations with First Nations about that more information at the moment,” Silvester said. “We remain hopeful that the federal government will be in a position to take a decision this year.”

Approval of Terminal 2 would give the Port of Vancouver “a bit more flexibility” in managing its short term problems, including consideration of expanding biofuel operations at West Coast Reduction.

“If they came to us with a new project, new investment, and said, ‘We want to do this, have you got land in your portfolio that you could work with us on,’ as with any business engaging in international trade, we’d always try to accommodate that,” Silvester said.

Residents brace for increased port traffic

In the meantime, Vancouver residential communities that border the port’s south shore are closely watching the Centerm expansion, and what might come after it, for its impact on traffic in east Vancouver.

“I think the port expansion is going to be the thing that, mostly in the next 10 years, impacts the quality of life in the neighbourhood,” said Dan Jackson, president of the Strathcona Residents Association.

Jackson said the Port of Vancouver has been willing to listen to community concerns, creating a liaison group for the south shore neighbourhoods to at least hear them out, and offering the community group a grant to support the monitoring of air quality related to port traffic.

At the same time, the group’s members are watching as rail infrastructure into the port is being doubled at the same time new, higher-density housing is being built right up against the tracks.

“We’re surrounded on all sides by, you know, challenges of an expanding city and unaddressed social problems,” Jackson said.

Silvester said the Centerm project is being built with road improvements designed to create a direct route for container traffic from the terminal to Highway 1, and away from other routes with more impact on surrounding neighbourhoods.

However, for the Burrardview neighbourhood, nestled against the port boundary along Wall and North Nanaimo streets, it is still additional traffic, said community advocate Barbara Fousek.

“The other issue with the trucks as they’re coming through the neighbourhood is an issue that there’s no way around, because of the way that the city is around the port,” said Fousek, a past president of the Burrardview Community Association. “But mainly noise and pollution are the biggest issues.”

Everyone recognizes the port’s importance from an economic perspective, said Craig Ollenberger, a board member for the Grandview-Woodland Area Council. Residents have become accustomed to, “if maybe not fully resigned to,” the existing truck and train traffic.

However, a lot more trucks on the road or trains through neighbourhoods are impacts “we’re looking for them to find ways to mitigate that.”

“The neighbours who have lived here for, many of them, decades and decades, understood the port as a finite thing (and) that there wasn’t necessarily going to be continually increasing impact,” Ollenberger said. “That’s sort of the social covenant, as it were, of living down here by the ports.”


This article originally titled Container plans put pressure on Port of Vancouver tenants, neighbours written by Derrick Penner was originally published in the Vancouver Sun on February 19, 2021. 


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