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NEGOTIATING FOR SUCCESS IN THE COMPETITIVE PORT AND MARINE TERMINAL INDUSTRY
AAPA Marine Terminal Management Training Program
September 18, 2015
Tom Corsie, PPMVice-President, Real Estate
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TODAY’S AGENDA
• Background on PMV as an Organization
• PMV as a Gateway to Asia Pacific Region:
• Investing in infrastructure
• Case Studies in Successful Negotiations:
• Real Estate Rental Philosophy
• Tenant Projects
• Container Capacity Improvement Program
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• Canada’s largest gateway to the Asia-Pacific region
• 4th largest tonnage port in North America
• Connects Canadians with trading partners in 160 economies
• Approx. $475 million of cargo moved daily
PORT METRO VANCOUVER CONTEXT
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• Non-shareholder, financially self-sufficient corporation
• Canada Marine Act obligations
• Governed by a diverse board of 11 directors
• Guided by a vision for long-term growth and competitiveness, benefiting communities locally and across the nation.
GOVERNANCE
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• 640 kilometers of shoreline
• 16 municipalities
• One treaty First Nation, several other First Nations
• Region of 2.3 million people
OUR JURISDICTION
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• 28 major marine cargo terminals
• 3,081 vessel calls in 2014
• Serviced by 3 major railways
• Administration of 16,000 hectares of water and nearly 1,000 hectares of land and assets
OPERATIONS & ASSETS
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• 98,800 total jobs across Canada
• 76,800 jobs in British Columbia
• $9.7 billion in GDP
• $20.3 billion in economic output
• $6.1 billion in wages
• $172.4 billion in cargo value handled annually
• 19% of Canada’s total goods trade
ECONOMIC IMPACT
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Top 12 Canadian Ports in Cargo Tonnage
Domestic and International (‘000 t) 2011
2. Saint John31,469
3. Québec/Lévis28,962
4. Montréal/Contrecoeur27,856
5. Come-By-Chance27,3886. Sept-Îles/Pointe-Noire
25,7861. Port Metro Vancouver
107,575
7. Port Hawkesbury23,738
8. Prince Rupert
18,780
9. Port-Cartier17,603
10. Newfoundland Offshore13,663
11. Hamilton10,016
12. Halifax9,930
Domestic
International
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Top 8 Canadian Ports:
Cargo Tonnage And Type (‘000 t) 2011
2. Saint John31,469
3. Québec/Lévis28,962
4. Montréal28,534
5. Come-By-Chance27,3886. Sept-Îles/Pointe-Noire
25,7861. Port Metro Vancouver
95,557
7. Port Hawkesbury23,738
8. Prince Rupert
19,305
Liquid Bulk
Dry Bulk
Breakbulk
Containerized
Ro-Ro
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TODAY’S AGENDA
• Background on PMV as an Organization
• PMV as a Gateway to Asia Pacific Region:
• Investing in infrastructure
• Case Studies in Successful Negotiations:
• Real Estate Rental Philosophy
• Tenant Projects
• Container Capacity Improvement Program
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BUILDING THE PROVINCE, CREATING CAPACITY
• Trade Areas
• North Shore
• South Shore
• Roberts Bank Rail Corridor
• Container Capacity Improvement Program
• Deltaport Terminal, Road & Rail Project
• Roberts Bank Terminal 2
• Tenant-led projects
• Regional investments
• Port Mann Highway 1
• South Fraser Perimeter Road
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BurnabyCoquitlam
Vancouver
Richmond
Delta
Surrey
Pitt Meadows
North Shore Trade Area(Six projects – $225M)
North Vancouver
South Shore Trade Area(Two projects – $127M)
Pacific Coast Terminals($167M)
Beedie($10M)
Deltaport Third Berth ($400M)DTRRIP ($250M)
Roberts Bank T2
Roberts Bank Trade Area(Nine projects - $307M)
Westshore Terminals($330M)
Hopewell($7M)
Lehigh Hanson($150M)
George Massey Tunnel replacement
Vancouver Airport Fuel
Delivery Project
Fraser Surrey Docks($13.7M)
Port Mann Bridge ($3.5B)
76 5
4321
South Fraser Perimeter Road($1.5B)
1 Centerm ($2.3M)
2 Alliance Grain Terminal ($22M)
3 Viterra ($45M)
4 Columbia Containers ($12M)
5 Neptune Terminal ($300M)
6 Richardson International ($120M)
7 Seaspan ($62M)
Private sector Investments
• Burrard Inlet:$650M + ~$500M
• Fraser River: $20M + ~$500M
• Roberts Bank: $1B + ~$2–3B (T2)
1
2
3
4
5
6
7
Gateway corridor investments
• Current: Three Trade Areas ($700M)
• Future: Fraser River Rail capacity
Regional road network investments
(Provincial and Federal)• Current:
Port Mann Bridge and South Fraser Perimeter Roads (SFPR) ($5B)
• Future: George Massey Tunnel (GMT) Replacement (~$1B)
Overview of gateway capacityinvestments
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• Solid Canadian economy
• Balanced trade
• Opportunity for growth
• Infrastructure projects well underway
• Historic labour agreements
• Significantly improved performance
• Sustainable growth, environmental stewardship
WHERE WE ARE TODAY
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TODAY’S AGENDA
• Background on PMV as an Organization
• PMV as a Gateway to Asia Pacific Region:
• Investing in infrastructure
• Case Studies in Successful Negotiations:
• Real Estate Rental Philosophy
• Tenant Projects
• Container Capacity Improvement Program
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PMV’S RENTAL PHILOSOPHY
• Local real estate market should guide rent charges for the use of PMV-administered lands:
• Serves as an objective, fair & equitable indicator of marketplace conditions
• Protects against competitive inequality between port tenants
• Protects against competitive inequality between private sector developers tenants and port land developers/tenants
• Avoids subsidization of the private sector
• Encourages efficient use of limited land resources
• Consistent with PMV purchases of strategic land assets on open market
• As part of building public support for PMV, some uses (e.g. parks and utilities) are charged at less than market rent, as allowed in CMA
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PMV’S RENTAL PHILOSOPHY IN PRACTICE
• PMV offers the following in certain cases:
• Cost certainty through predetermined rent
• Rental concessions during construction
• Fixed/Variable revenue arrangements
• Phased-in rental increases
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PMV’S RENTAL PHILOSOPHY IN PRACTICE
• Appropriateness of PMV’s market-based approach is evidenced by:
• Significant private sector investment in new port facilities and infrastructure
• Almost every case directly after negotiated lease renewal/extension
• Significant growth across sectors and growing market share on west coast
• No arbitration proceedings
• Low vacancy rates
• Good absorption of newly acquired land
• Low rent receivables
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• Marine terminal capacity improvement
• In 2014: nearly 80 applications
• Focus on grain, potash, coal, petroleum, canola and containers
TENANT PROJECTS
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• $80.5 million investment to build new phosphate rock storage and handling facilities
• $120 million investment to expand coal-handling capacity
• Installation of new stacker/reclaimer to increase terminal efficiency
• Project permitted by PMV in January 2013
COAL: NEPTUNE TERMINAL UPGRADES
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• $120 million investment to expand grain storage capacity
• Increase by an additional 80,000 metric tonnes, to 5 million metric tonnes annually
• Recent $20 million investment to improve rail receiving capacity
• Increase operating efficiencies to double railcar unloads to 300 cars per day
• Project permitted by PMV in May 2013
GRAIN: RICHARDSON INTERNATIONAL
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• Increase container capacity to meet growth and demand
• Industrial land densification
•Efficiency gains at existing container facilities
• Improvements to road and rail infrastructure
•New container terminal
CONTAINER CAPACITY IMPROVEMENT PROGRAM
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DELTAPORT TERMINAL, ROAD AND RAIL IMPROVEMENT PROJECT (DTRRIP)
• Increase capacity to 2.4 million TEU
•Overpass, road improvements, track reconfiguration, new track, within existing footprint
•Overpass construction started March 2013
•Entire project completion early 2015
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PROPOSED ROBERTS BANK TERMINAL 2 PROJECT
• Provide additional capacity of 2.4 million TEU per year
• Meet forecast demand until 2030
• Potential construction start in 2017
• Estimated completion 2022-2024
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PROPOSED ROBERTS BANK TERMINAL 2 PROJECT
• Provide additional capacity of 2.4 million TEU per year
• Meet forecast demand until 2030
• Potential construction start in 2017
• Estimated completion 2022-2024
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