Backgrounder on Canada’s port system
From: Transport Canada
This document provides information on Canada’s port system. It is for anyone that has a particular interest in ports.
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Canada’s port system importance
Ports are vital links in the supply chain and gateways that bring goods to market, making them an important part of Canada’s economy. All aspects of the Canadian transportation supply chain, including shippers, carriers, logistics companies, natural resource firms, and local and regional small- and medium-sized businesses, are in some way connected to the work that happens at ports every day. In 2017, ports and marine shipping carried almost $90 billion (17 per cent) of Canada's exports to world markets, and brought in $110 billion (21 per cent) of Canada's total imports by value.
Canada has over 550 port facilities. Seventeen are Canada Port Authorities because of their strategic, regional, national, continental and international importance. Because of their strategic role, the federal government has invested over $715 million in them since 2005. Canada Port Authorities handle more than 60% of the overall marine commercial tonnage. In fact, in 2016, they handled 5.7 million Twenty-Foot Equivalent Unit (TEUs) – a growth of 35% over the last 10 years.
Ports indirectly spur economic development in regional industries that rely on ports to ship their goods to market and grow their businesses. Ports serve as facilitators for local industries, whether they operate on adjacent port industrial lands or thousands of kilometres away.
- Communities in Northern Quebec and Western Labrador rely on the activities at the Port of Sept-Iles, some 400 km away, to bring their products to markets.
- Ports support growth in urban centres such as Calgary and Toronto, where large-scale distribution centres employ hundreds of employees to handle/distribute foreign goods for Canadian and North American markets; goods such as vehicles, smart phones and other consumer products – that arrive by container at our east and west coast ports.
How Canada’s port system is structured
The 1995 National Marine Policy laid out a detailed framework for Canada’s marine transportation system. Its key principles emphasize accountability to users and the public, business discipline and self-sufficiency – to shift the cost of port operations from the general taxpayer to users.
Parliament enacted the Canada Marine Act (CMA), which:
- created 17 Canada Port Authorities; and
- designated several other ports as Public Ports.
- gave the Minister of Transport important authorities to regulate port activities and performance, including: marine safety, marine security, and environmental protection.
Canada port authorities
Canada Port Authorities are federally incorporated, autonomous, non-share corporations that operate at arm’s length from the federal government. They operate on a commercial basis with a view to being financially self-sufficient. They also fulfil important public policy objectives (supporting economic development) and regulatory requirements (safety, security, and environmental protection).
Their corporate structure strikes a balance between commercial autonomy and limitations in the name of control and accountability for the use of public assets. This model aligns commercial, private sector orientation and freedom of operations, with public policy objectives.
The Minister of Transport issues the incorporating documents of Canada Port Authorities – called Letters Patent. These letters:
- outline the Canada Port Authorities’ governance, major activities and powers; and,
- set out the lands and waters under a Canada Port Authority’s management.
In general, Canada Port Authorities manage port lands as set out in their Letters Patent. The CMA does not give Government the power to direct, influence or intervene in their day-to-day operations.
Canada Port Authorities are governed by independent board of directors, which are responsible for:
- determining a port’s strategic and investment plans, including major capital projects; and
- overseeing a port’s operations.
Directors are appointed stewards, and must act in the best interests of the Canada Port Authority. Board members include: one municipal appointee; one provincial appointee; one Governor in Council appointee; and four to seven Governor in Council appointees on the recommendation of the Minister of Transport in consultation with port users.
As set out in the Canada Marine Act, Canada Port Authorities must be financially self-sufficient. They don’t receive federal funding to meet operating costs or deficits. Canada Port Authorities finance their capital projects using their own revenues. But they can also partner with the private sector, borrow from a commercial lender or apply for certain federal grants related to infrastructure, the environment or security.
Canada Port Authorities are responsible to comply with federal environmental regulations. The legal framework for Canada Port Authorities does not outline specific environmental requirements that they must comply with. However, it prohibits certain activities that could impact the soil, the water or the air.
Canada Port Authorities are of strategic importance for Canadian trade
- Canada Port Authorities handled 60% of Canada’s commercial cargo tonnage (335 million tonnes of cargo, an increase of 25 million tonnes from 2016).
- the five largest Canada Port Authorities (Vancouver, Montreal, Prince Rupert, Halifax, Saint John) had a total container throughput of 6.33 million TEUs, up 0.65 million TEUs from 2015, an 11.4% increase.
- As Canada’s largest container port, the Port of Vancouver handled 3,252,223 TEUs, an 11 per cent increase over 2016 (2,929,585 TEUs). This is partially due to a 46% increase in empty containers handled in 2016 over 2017. Total filled containers in 2017 (2,779,445 TEUs) represents an increase of 7% with 2016 (2,606,628 TEUs).
- As Canada’s largest bulk port, the Port of Vancouver handled 98,991,989 bulk tonnes, a 5% per cent increase over 2016 (93,846,874 tonnes), due to increases in coal, grains, chemical and vehicles, while fertilizers, forest products and petroleum products decreased.
Operating revenues increased from $580 million to $617 million in 2015.
The Port of Vancouver accounted for just over 38% of total Canada Port Authorities revenue, Montreal 17% and Prince Rupert 11% per cent. Six Canada Port Authorities (Vancouver, Montreal, Prince Rupert, Toronto, Halifax, and Quebec City) combined, accounted for nearly:
- 88% of Canada Port Authorities’ revenues; and
- 85% of Canada Port Authorities’ expenditures.
In its latest Logistics Performance Index (2016), the World Bank ranks countries based on the performance of their national logistics system. Canada ranked 14th, with strong performances in customs (6th), infrastructure (9th) and tracking (9th). In contrast, Canada ranked 29th in ease of arranging shipments.
Canada’s public ports have a regional orientation. They may be owned by Transport Canada or by non-federal entities (e.g., private entities, provinces or municipalities, or a not-for-profit entity).
Under the Canada Martine Act:
- The Governor in Council may designate as a public port any navigable waters, any lands covered by these waters, and any port facility, for the purposes of safe shipping and navigation.
- The Minister may fix fees at public ports in respect of: ships, vehicles, aircraft, and persons coming into or using the facility; goods loaded and unloaded from ships, or crossing within the limits of a public port; and any service provided by the Minister in respect of the operation of the public port. In 2014-2015, Transport Canada received over $3.5 million in harbour dues from 26 designated Public Ports where Transport Canada was not the owner of the port facility.
- The Minister also has a role as owner/operator role of Transport Canada-owned ports until the port is divested to another entity. In 1996, the Port Divestiture Program began to manage the divestiture Transport Canada-owned ports to other federal departments, provincial governments, municipal authorities, community organizations, private interests, and other groups. As of March 2018, 502 of the 549 sites identified under the program have been divested, leaving 47 sites in its inventory available for transfer.
The biggest Transport Canada-owned public ports are Baie-Comeau, Gapsé, Rimouski, Matane, and Gros-Cacouna, all located in Québec. They mostly handle bulk products, including salt, sand and gravel. The Port of Baie-Comeau handles more diverse cargo including ore minerals and manufactured products.
There are also a number of non-federal ports in Canada. Transport Canada’s role is limited to a regulatory and compliance monitoring role (e.g., Canada Environmental Assessment Act, 2012; Canadian Navigable Waters Act).