by CN9634
There has been a lot of really interesting remarks by DP World Canada on this port the last few weeks which I suggest looking to. We are still in early innings for this port, an it would seem that global shifts may lead to more catalyzed growth upcoming.
A few points--
Remember the creation of Gemini (Hapag+Maersk) is also leading to the demise of 2M and THE Alliance. 2M leaves MSC to their own, which has taken a strong position in PSA Halifax as its dominant point of entry. Maersk and Hapag will likely drop Halifax in favor of Saint John once the cooperation is underway (assuming they get through the FMC revised application process). Another reason they may opt for SJ is that Gemini is targeting a 90% schedule on time metric, a far improvement from the current 60%. Terminal utilization presently is about 40% at any given time with low rail dwell, so naturally this may be a big boost to achieve te 90% schedule (for ships, not for inland rail).
With the split of THE Alliance, that leaves ONE, HMM and Yang Ming out to fend for themselves. This group is severly weakened by the departure of Hapag, with the strongest line being ONE. However, ONE has realigned itself with CPKC from CN, which suggests it may be trying to go it alone, find its way into another alliance, or coincidentally bond itself to Gemini, which would no doubt be happy to sell slots on ships that have capacity.
At present the AL5 service of THE Alliance calls SJ going eastbound from Caucedo to SJ and back to Europe. On the TAWB trip it hits Halifax as the first port of entry before heading down the USEC. This service exclusively uses ONE vessels in the 5000 TEU range, which is no problem for SJ. I would guess that ONE may consider dropping Halifax in favor of SJ, or at the least add SJ on the WB trip to hedge traffic on both railroads.
The EC5 service calling Halifax features neopanamax vessels in the 14K range, which for SJ is technically possible but really would stretch them. They would need 2-3 more cranes to efficiently work a 14K TEU vessel and protect the other business, since you really need 3 cranes per vessel to peak out your efficiency at each birth (3+3+1 floater/spare). Moving this service to SJ may turn out to be a disaster until the 800K TEU mark is met, and new surface equipment + cranes are brought to the port.
Halifax is in an interesting position at the moment. PSA now owns both terminals and has decided to reconsile traffic into its larger terminal, which has thrust a bit of chaos into the operation. While they'll definitely get through that change, the arrival of the new cranes also will boost efficiency and really push through the operation for big ships at its peak efficiency. While the steamship lines love to get the bigger ships, they also become port hogs and need to be worked quickly with as many cranes as possible for loading/unloading simulatenously.
No one has a crystal ball, but inevitably, the red sea crisis, which is impacting ~15% of global trade at a minimum (likely more), will end. This is a major bottleneck for expanding services from Far East and Indian Subcontinent to the east coast of Canada. Right now, MSC lands a few of these services into Halifax, but with the additional time sailling around the Cape of Good Hope, they've been omitting Halifax on service trips to protect the schedule. Again, once that bottleneck is clear, opportunities for SJ will open on the Asian trade routes. I also expect Halifax to pickup steam with MSC and CMA likewise.
Don't underestimate the Port of Saint John, but also recognize the volatility to major global events. Recessessions, wars, accidents (think a few years ago EVERGREEN plugged up the Suez with a ship) are all major influences at any given time on global trade. Also realize that shippers 20 or so years ago thought the best strategy was to focus on a single port to pump all their volumes. This even lasted up until 5-10 years ago until shippers realized a hedged strategy of tri-coastal ports, but also diversity of labor unions and rail carriers as a much more optimal strategy since if there is trouble on one leg you can easily divert to another. This is the what makes Saint John important-- its a hedge against East Coast US ports, Halifax and CN (with vice versa being true), so it will be part of the mix for many years to come.
Thank you for attending my TED talk.
A few points--
Remember the creation of Gemini (Hapag+Maersk) is also leading to the demise of 2M and THE Alliance. 2M leaves MSC to their own, which has taken a strong position in PSA Halifax as its dominant point of entry. Maersk and Hapag will likely drop Halifax in favor of Saint John once the cooperation is underway (assuming they get through the FMC revised application process). Another reason they may opt for SJ is that Gemini is targeting a 90% schedule on time metric, a far improvement from the current 60%. Terminal utilization presently is about 40% at any given time with low rail dwell, so naturally this may be a big boost to achieve te 90% schedule (for ships, not for inland rail).
With the split of THE Alliance, that leaves ONE, HMM and Yang Ming out to fend for themselves. This group is severly weakened by the departure of Hapag, with the strongest line being ONE. However, ONE has realigned itself with CPKC from CN, which suggests it may be trying to go it alone, find its way into another alliance, or coincidentally bond itself to Gemini, which would no doubt be happy to sell slots on ships that have capacity.
At present the AL5 service of THE Alliance calls SJ going eastbound from Caucedo to SJ and back to Europe. On the TAWB trip it hits Halifax as the first port of entry before heading down the USEC. This service exclusively uses ONE vessels in the 5000 TEU range, which is no problem for SJ. I would guess that ONE may consider dropping Halifax in favor of SJ, or at the least add SJ on the WB trip to hedge traffic on both railroads.
The EC5 service calling Halifax features neopanamax vessels in the 14K range, which for SJ is technically possible but really would stretch them. They would need 2-3 more cranes to efficiently work a 14K TEU vessel and protect the other business, since you really need 3 cranes per vessel to peak out your efficiency at each birth (3+3+1 floater/spare). Moving this service to SJ may turn out to be a disaster until the 800K TEU mark is met, and new surface equipment + cranes are brought to the port.
Halifax is in an interesting position at the moment. PSA now owns both terminals and has decided to reconsile traffic into its larger terminal, which has thrust a bit of chaos into the operation. While they'll definitely get through that change, the arrival of the new cranes also will boost efficiency and really push through the operation for big ships at its peak efficiency. While the steamship lines love to get the bigger ships, they also become port hogs and need to be worked quickly with as many cranes as possible for loading/unloading simulatenously.
No one has a crystal ball, but inevitably, the red sea crisis, which is impacting ~15% of global trade at a minimum (likely more), will end. This is a major bottleneck for expanding services from Far East and Indian Subcontinent to the east coast of Canada. Right now, MSC lands a few of these services into Halifax, but with the additional time sailling around the Cape of Good Hope, they've been omitting Halifax on service trips to protect the schedule. Again, once that bottleneck is clear, opportunities for SJ will open on the Asian trade routes. I also expect Halifax to pickup steam with MSC and CMA likewise.
Don't underestimate the Port of Saint John, but also recognize the volatility to major global events. Recessessions, wars, accidents (think a few years ago EVERGREEN plugged up the Suez with a ship) are all major influences at any given time on global trade. Also realize that shippers 20 or so years ago thought the best strategy was to focus on a single port to pump all their volumes. This even lasted up until 5-10 years ago until shippers realized a hedged strategy of tri-coastal ports, but also diversity of labor unions and rail carriers as a much more optimal strategy since if there is trouble on one leg you can easily divert to another. This is the what makes Saint John important-- its a hedge against East Coast US ports, Halifax and CN (with vice versa being true), so it will be part of the mix for many years to come.
Thank you for attending my TED talk.
