Interim Progress Report

Transcription

1 Prairie-to-Port Gateway and Inland Port Prepared by Saskatchewan Agrivision Corporation & Campbell Agri Business Strategists Inc. April 30, 2008

2 Note to Reader: The purpose of this is to provide project investors and transportation stakeholders with a preliminary report of activities and findings. The Final Report of this phase of the Prairie Gateway project initiative is expected to be complete by June 30, Since August 2007, Agrivision has been working with a Project Steering Committee and a lead transportation consultant on a report that will identify important elements in determining the feasibility of a Prairie-to-Ports Gateway and Inland Port located in central Saskatchewan. Making Transformational Change in the Business of Agriculture th Street West, 2 nd Floor Saskatoon, SK S7L 6H2 Canada Tel: Fax: info@agrivision.ca Prepared by: Saskatchewan Agrivision Corporation & Campbell Agri Business Strategists Inc. On behalf of the Project Steering Committee: Moose Jaw REDA Doepker Industries Saskatoon REDA Ghost Transportation Saskatchewan Trade Export Saskatchewan Pulse Growers Partnership [STEP] Saskatchewan Pork International Regina Airport Authority Saskatchewan Association of Rural Saskatoon Airport Authority Municipalities [SARM] For more information go to: Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 2

3 Table of Contents 1.0 Executive Summary Introduction Project History and Structure Definition of Terminals, Ports and Gateways Prairie Gateway Inland Port Container Terminal Shifting Patterns of Prairie Transportation Container Movement and Growth Local Situation [Prairie Region] Canadian Domestic Situation Continental North American Situation International Situation Project Progress to Date The Prairie-to-Ports Gateway and Inland Port Solution Final Comment Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 3

4 1.0 Executive Summary As a geographically large nation, rich in natural resources and a low population base Canada s economic growth is much more reliant on export revenue than from the domestic economy. In fact, compared to the other G8 nations, the Canadian economy is the most reliant on export trade for net earnings and growth. The majority of Canada s exports are destined for the US and Mexican markets, with the exception of Saskatchewan and B.C., which has highest percentage of exports destined for off-shore markets. It can be logically concluded that Saskatchewan s economy is the most dependent on an efficient east-west road and rail transportation system that moves products to coastal ports and on to off-shore markets. There have been rapid changes in how the global transportation supply chain operates and Saskatchewan must ensure it continues to be well connected or the export-based economy will suffer. In summary, the global transportation system is in transition from: Bulk to intermodal [containers], which requires new, expensive infrastructure, but holds the promise of a lower cost option in the future; High to low inventories based on just-in-time delivery; Local buyers & wholesalers, to integrated supply chains Bulk shipping, to identity preserved packaging These changes include a rapid transition in the use of intermodal containers, which are replacing bulk shipments. Saskatchewan s infrastructure is currently highly dependent on the use of traditional bulk shipments. More and more, Saskatchewan s exportbased products are required to be shipped by container due to changing customer demands. However, there are barriers to the increased access and availability of containers for Saskatchewan exporters, which is beginning to impact their global competitiveness. Based on these facts, it is clear that the transportation sector is vitally important for the continued growth and diversification of the provincial economy. Off shore markets are critical for: farm equipment manufacturers, lumber, pulp & paper, potash, agricultural grains [cereals, pulses & oilseeds] and livestock products. The purpose of the Prairie-to-Ports Gateway and Inland Port project [Prairie Gateway] is to look for ways that the export-based industries can work closely with the transportation supply chain to improve the access and availability of not only containers, but also assist in enhancing the reliability of bulk export shipments. Unless there are substantial improvements in transportation, in the short-term and the long-term, Saskatchewan s export-based economy will lose ground in an increasingly competitive world. This Interim Report highlights the progress of the Prairie Gateway project to achieving this goal. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 4

5 2.0 Introduction This does not replace the final project report but it is hoped that it will whet the appetite for the final report. Readers should note that although the project began by assessing the needs and opportunities for improving container service for Saskatchewan exporters, it became clear that this issue had a global reach that required the examination of many other factors that impact the transportation of export and import bound products, both bulk and container, by road, rail and air services. Constructive criticisms to this briefing paper are welcome and encouraged because transportation is a huge topic. Literally no one has full command of the problems ot the answers to creating a nimble and responsive transportation system across the prairies. The objective is to not criticize any of the players or stakeholders, but rather to lay out the issues so that logical concerns can be aired and constructive plans can be designed to optimize exports [and imports] through enhanced transportation planning and coordination. 3.0 Project History and Structure The Prairie Gateway project had its beginning in 2002 with an effort by Agrivision to improve the availability of containers specifically for Saskatchewan pulse growers. Although most stakeholders in the transportation supply chain were involved, the initial project was not successful. However we learned a great deal about the challenges, opportunities and potential solutions for enhanced transportation service. More recently, in February 2006, a public seminar sponsored by Regina REDA (Regional Economic Development Authority) attracted some outstanding speakers on the subject of inter-modal container traffic, among them John Vickerman of TranSystems from Virginia, USA. Vickerman made the statement, which he repeated at subsequent meetings, that, one of the key solutions to solving the congestion in the North American container traffic was to create an Inland Port in the middle of Saskatchewan. As a logical next step, Agrivision contracted John Vickerman and TranSystems to prepare a preliminary Business Case for the concept of an Inland Port. The concept was based on a successful US Inland Port developed in the Kansas City region [see The TranSystems report was presented in Vancouver on January 16, 2007 to a group of transportation experts and stakeholders from across Canada, the US and China. The generally positive response from the Vancouver meeting encouraged Agrivision to continue with the next step. The Inland Port concept began to take hold and in March 2007, Agrivision was joined by the Regina, Moose Jaw and Saskatoon REDA s and STEP (Saskatchewan Trade & Export Partnership) to build on the idea. Based on the success of the Kansas City SmartPort, the idea emerged of a similar 300 km region, including Regina, Moose Jaw and Saskatoon, which could and should develop as an integrated Inland Port to service both importers and exporters utilizing road, rail and air. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 5

6 In August 2007, Agrivision contracted Douglas Campbell, a Saskatchewan native and well respected international authority on transportation issues to further develop the concept for an Inland Port and lead a work plan that would advance the initiative. As suggested earlier, the initial focus on local needs rapidly expanded to understanding that a Prairie solution would have to respond to the needs of the global supply chain. Agrivision invited many of the immediate stakeholders to be part of the study as well as the regional urban centers [cities] that feed products toward the Saskatchewan main lines of the two trans-continental railways (CN and CP). 4.0 Definition of Terminals, Ports and Gateways Before going further it is important to define the various aspects of the Prairie-to-Ports Gateway and Inland Port from the project perspective. It has become clear that many interested parties have different views on what should comprise a Gateway as well as the role and function of terminals and an Inland Port. 4.1 Prairie Gateway The notion of a Prairie Gateway arose from the success of other large geographic regions establishing portals for global traffic. The Pacific Gateway initiative, followed by the Atlantic Gateway and the Southern Ontario Gateway Council ( are examples of large consortiums of private and public organizations and services. The Prairie Gateway will serve the many transportation-related needs of the Western Canadian Prairie Region [Alberta, Saskatchewan and Manitoba], including the northern tier US states of Minnesota, North Dakota and Montana and perhaps even South Dakota, Wyoming and Colorado. It will augment and complement the Canadian east-west Pacific and Atlantic Gateway (CISCOR Canadian Intelligent Super Corridor) initiatives by centrally connecting to the four main north-south NAFTA road, rail and air corridors 4.2 Inland Port An Inland Port is defined by having the characteristics of an ocean port but done inland to improve efficiency and to reduce coastal port congestion, & related higher costs of land and labour. An inland port is composed of many bulk and container terminals, rail yards and trucking firms within a larger region as well as: Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 6

7 Customs clearance and pre-clearance Free-trade zones and assembly facilities Freight forwarders and brokers to serve both importers and exporters Distribution centres, warehousing & assembly Coordinates rail, truck and air traffic Includes a network of regional bulk and container terminals Facilitates growth for both import and export trade logistics Managed by a coalition of key transportation stakeholders Provides network coordination and collaboration among ocean port users Mechanism for marketing the region s potential import/export trade. Individual cities do not have capacity to be an inland port because a single location has limited infrastructure and not enough volume of traffic. For example, despite its location and size, the City of Winnipeg has been unsuccessful in several attempts to establish an integrated road, rail and air Inland Port at one location. Definition The Saskatchewanbased Inland Port (yellow circle) with key Container Terminal Locations and Major Road and Rail Networks The Saskatchewan-based Inland Port, roughly identified by the yellow circle in the above chart, has a very similar geographic size and configuration as the successful Kansas City SmartPort, which is 185 miles [300 km] in diameter and captures the assets of major highway, rail and air corridors. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 7

8 It is important to remember that the Vancouver Port is composed of 41 terminal locations across a broad geographic region. It also is not a single location. The major cities of Moose Jaw, Regina and Saskatoon, when considered as a single entity, provide most of the required assets and services of a port, albeit with a more diffusely dispersed hinterland than the theoretical ideal. 4.3 Container Terminal Container terminals are strategic local facilities where marine and domestic containers are loaded, transloaded or trans-shipped between different transport vehicles, for onward movement. There has been some confusion in the use of the terms inland port, inland terminal and container terminals. Another way to understand the role of container terminal is that they serve a similar function to the many inland grain terminals that are dotted across Western Canada. The grain terminals are not ports and do not provide port functions. The Saskatchewan-based Inland Port will provide the national and international functions of a coastal port, to a broad range of local grain and container terminals that have a mandate and focus on serving the needs of local exporters and importers, such as mobilizing 50-car to 100-car unit trains for efficient rail movement. 5.0 Shifting Patterns of Prairie Transportation From a system that was entirely based on bulk railway movement as recently as the early 1980 s, there has been increased dependence on trucks for bulk traffic and air freight for a growing range of high value manufactured products. However the cost per tonne/mile increases sharply from rail to truck to air. Nevertheless deregulation of the rail system has led to the rationalization of low volume rail lines and closing smaller local elevators and has put much greater emphasis on the use of trucks. The other factor is that while the main line railways run mostly east and west [with of course connections to Chicago through Moose Jaw and Winnipeg] there has been heavy growth in truck traffic moving north-south between the Prairies, the US and Mexico. The north-south truck traffic is steadily increasing despite certain limitations including: Increased regulations by the Homeland Security provisions, required by the US, which is commonly referred to as the thickening of the border Lack of uniformity among provinces and US states in the regulations pertaining to trailer length, hours a driver can drive, and weights carried. Poor quality highways leading to and from the major border crossings, particularly in the Saskatchewan north-south road corridors. Insufficient 24-hour, all service, border crossings across the 49 th parallel. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 8

9 A recent phenomenon has been the acquisition of certain abandoned branch lines by private and community-based groups to maintain some level of local infrastructure and service. This action has supplemented a minimal CN CP operated branch line network with individual short-line railways. These operators may have an important role in collecting bulk and manufactured products from across the prairie basin to regional terminal locations. Branch lines will have an essential role in servicing local container terminals in locations such as Swift Current, Lloydminster, North Battleford, Prince Albert, Yorkton, Weyburn and others. And finally, the timely access and availability of containers [and bulk carriers] for exportbased products from the prairie basin has become, as some describe it, The Achilles heel of the expanding value-adding opportunities on the prairies. Unless there are substantial improvements in the ability to effectively link into the global transportation network, there is little future for Prairie value-add exporters in a competitive global market. 6.0 Container Movement and Growth Ocean shipping by containers has exploded since the first containers were moved in The account is captured well in Marc Levinson s book, The Box 1. This innovative and brash move was followed by truck bodies being moved across the nation by rail on flat beds. However, in order to efficiently move the products overseas required that the truck box (now a container) shed the wheels and a new trading system was created to replace the inefficient load transfers in the bodies of bulk ships. The global container traffic has literally exploded as the preferred mode of transportation and now dominates the trade. However, the Prairie region is still largely dependent on bulk. This must change quickly or Prairie-based processors and manufacturers will lose their competitive edge as transportation costs and just-in-time container deliveries become the global norm. 6.1 Local Situation [Prairie Region] Saskatchewan in particular suffers a number of disadvantages in meeting the growing demand for containers based on the following points: Most significant is the demand for marine containers to be quickly returned to Asia for the head-haul of high valued products destined for the US and Canadian markets. This results in approximately 50% of the marine containers from Eastern Canada returning empty through Saskatchewan with no incentive to stop for lower value back-haul movements. 1 Levinson, Marc, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton University Press, August 14, In April 1956, a refitted oil tanker carried fifty-eight aluminum truck bodies from Newark, NJ and shipped them to Houston where fifty-eight trucks waited to take on the metal boxes to their final destination. From that modest beginning, container shipping developed into a huge industry that made the current boom in global trade possible. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 9

10 Currently, Saskatchewan has a very limited in-bound flow of loaded marine containers because of the relatively small population and very few distribution centres. Therefore, extra steps are required to reposition empty containers from other North American surplus-box locations, into Saskatchewan for its exporting companies. The Saskatchewan pulse and grain exporters prefer heavy 20 foot marine containers, while the ocean shipping lines much prefer 40 foot marine containers. This adds to the difficulty of positioning the most suitable containers [i.e. industrial, food grade, organic, reefers, etc.] to meet the needs of prairie manufacturers and processors from all sectors. The ocean shipping lines, who own the marine containers, often have a poor understanding on the location of their equipment when it moves inland. Local shippers sometimes abuse the situation by stockpiling containers for future needs. This leads to resentment by the container owners and reluctance to allow marine containers to move inland to the Prairie where they are most needed. The CN & CP railways have a policy that favours 50 and 100 car unit trains to reduce costs and improve system efficiency. Understandably, the rail companies prefer not to stop unit trains, double stacked with containers, for more than eight hours anywhere in the centre of North America. This creates a difficult [or impossible] response time for many small and medium manufacturers that are increasingly dependent on containers for the export market. 6.2 Canadian Domestic Situation Approximately 70% of the marine containers arriving in Vancouver have products that are destined for Toronto and eastern Canada. Much of the remainder go to Chicago, the key distribution center in the US. Due to the geography of Vancouver and its harbour area there is growing congestion, which leads to serious blockages and delays if there is a failure in the unloading schedule or a train stoppage in the mountains. A solution to the coastal port congestion has led to the concept of the Prairie-to- Port Gateway and Inland Port in central Saskatchewan. One example of how this could work is that in-bound container ships at the Port of Vancouver would transload marine containers directly from ship to 100-car, double stacked unit trains that would immediately leave the Vancouver docks destined for Saskatchewan. Once arriving at the Saskatchewan Inland Port the marine containers would clear customs, be trans-loaded to domestic 53-foot containers for further North American distribution and/or unloaded for local assembly facilities or regional distribution. This would reduce the congestion in Vancouver terminals and it will provide a dramatic increase in the availability of marine containers, within the Saskatchewan Inland Port region, that can be accessed immediately and Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 10

11 efficiently refilled with Prairie-based export-oriented products, to go through custom pre-clearance and quickly returned to Vancouver [or Ports of Prince Rupert, Montreal, or Halifax] for direct loading on out-bound container ships. An added advantage is that marine containers would have a shorter round-trip to Saskatchewan and back, rather than going all the way to Toronto or Chicago. A Saskatchewan-based Inland port addresses a number of bottlenecks and concerns of the transportation supply chain including: Steamship lines will know where their marine containers are located and be ensured that there will be quick return to the ocean port with valuable back-haul revenue. The Port terminal operators at Vancouver, for example, will have an opportunity to minimize the dwell time of container ships at the docks, reduce the congestion and meet the global demands for increased handling at the West Coast. The class one rail lines will maximize their efficiency and effectiveness by running 100-car or 125-car unit-trains from Vancouver to Saskatchewan and back. For example, the Moose Jaw terminal is a logical place to break CP unit trains with products destined for both Chicago and Toronto. Saskatoon is a logical place to break CN unit trains with products destined to both Eastern Canada and the US. The big importers [Sears, Wal-Mart, Canadian Tire, Home Depot, Costco and others] will benefit from the opportunity to have a central North American distribution centre in Saskatchewan and reduce the growing congestion of relying on national distribution centres located in Toronto and Chicago. There would be a dramatic increase in the timely availability and access of marine containers for Prairie-based processor and manufacturers in the agricultural [meat, pulse, organic], forestry, industrial [equipment], mining [potash] and precious mineral sectors. The result would be incentives for increased manufacturing and value-added processing across the Prairie basin. This has been one of the major spin-off benefits of the Kansas City Smart Port experience. A key point in supporting the Prairie Gateway concept is the needs of the new container port at Prince Rupert, which was opened September It has the stated objective of targeting the majority of its container traffic directly to Chicago. This trip takes less than 100 hours, however it is anticipated that about 20% of the containers will be destined for Toronto requiring the efficient breaking of the trains somewhere on the prairies. Saskatchewan is an ideal location. Further, it is estimated that future container shipments of Prairie cereals and pulses out of the prairies may remain at current levels to the West Coast but shipments through the East Coast Ports will increase, destined for Europe and Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 11

12 the Middle East. Halifax, for example, has plenty of container handling capacity and is the first port-of-call for European-North American traffic as well as that coming through the Suez Canal from South East Asia. The Port of Halifax also requires a central North American distribution network as it attempts to be a major docking point for the Post-Panamex super-size container ships. The Port of Halifax is currently in discussions with the Prairie Gateway Project. The Canadian cabotage [regulatory] rules define that a marine container must (should) be in and out of the country within 30 days or attract a tariff. Furthermore, the regulations state the returning containers can only pick up and deliver one domestic load as it moves back to port. Since Saskatchewan is currently not the end point for very many containers, this means that a domestic back-haul move is limited to points like Toronto or Chicago, which are not in themselves large off-shore exporters. In other words, the current situation of re-positioning containers into Saskatchewan requires that returning empties from Eastern markets need to be dropped in Saskatchewan in some efficient and effective manner with quick loading. The other option is for marine containers to be re-positioned from Vancouver empty into Saskatchewan for loading, which is not an efficient or preferred system. As a point of interest, the US cabotage regulations allow marine containers to be used across the states for up to 365 days, before tariffs kick in. A final point, the shipments [containers] destined for the US must pass through rigorous security checks. This requires the verification of contents and the extensive paper work that accompanies any shipments. As a central North American distribution and logistics centre, a Saskatchewan-based Inland Port can easily provide these services and functions for U.S. destined cargo. 6.3 Continental North American Situation Port congestion is a world-wide issue. The increasing congestion within the Port of Vancouver is repeated down the western coast at Tacoma, Portland and Seattle, but is most pronounced at the Los Angeles-Long Beach dual port areas. Combined LA / Long Beach ports are the 5 th largest container port in the world, whereas Vancouver is the 20 th ; they move approximately 8 times the current volume of Vancouver. The hundreds of container ships plying the Pacific Ocean will usually make calls at two or more coastal ports each trip adding to the demand for docking space. The ships are getting larger year by year with the 4,000 TEU (twenty foot container equivalent unit) average capacity of ships of ten years ago being replaced by those carrying an average of 8,000 and as high as 15,000 TEUs today. These large container ships cannot negotiate the Panama Canal even with the proposed expansion and will increasingly dock only at mega-ports on the western or eastern seaboards and rely on improved eastwest land transportation systems across North America for the delivery of cargo. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 12

13 The US east coast container shipping terminals are rapidly enlarging their port facilities. Newark-New York is the largest, but there are several others: including Norfolk, Charleston, and Savannah, as well as New Orleans and Houston on the gulf. Halifax, with its naturally deep harbour, will serve as a first-port-of-call for large container ships in order to offload part of the load so those vessels can then negotiate the shallower harbours along the eastern US coast. Containers landed at Halifax or Montreal are destined for the major distribution hubs of Montreal, Toronto, Chicago, Memphis and Kansas City. As mentioned, the Kansas City Smart Port is the model for the Prairie-to-Port Gateway and Inland Port. Kansas City has three Interstate Highways and four railways passing through the Smart Port region, which is a circle 185 miles [300 km] across. Correspondingly, the Saskatchewan-based Inland Port will include major bulk and container terminals in Moose Jaw, Regina and Saskatoon, with satellite terminals in Swift Current, Lloydminster, North Battleford, Prince Albert, Yorkton, Weyburn, and the northern tier states on Minnesota, North Dakota and Montana. The Port of Churchill [most accessible from Saskatchewan] will play an increasing role in the Prairie Gateway. 6.4 International Situation The international container traffic is growing rapidly, becoming more costeffective and competitive. The previously dominant global trade between China and the US has been recently superseded and surpassed in early 2008 by China s trade with the European Union [EU] through the Suez Canal. This is partly due to the softening of the US economy but also the growing strength of the Euro and other developing countries in the global economy. Regardless of the reasons, this trend means more Asian container traffic will flow into the Atlantic and the Eastern North American coast [with Halifax the closest and deepest port] and perhaps even the Port of Churchill, which is part of the Prairie Gateway with ready access to Saskatchewan. Another emerging trend among large ocean carriers is sharing of their container capacity with other ocean carriers to reduce the number of individual landings at congested Ports. This underscores that the main driver of the transportation supply chain is to continuously look for ways to drive down costs and improve efficiency [although not necessarily competition], such as improving the predictability of just-in-time delivery for the big retailers, which in itself is a key global driver. The key point is that Saskatchewan and the Prairie region must also continuously adapt and adjust and to create innovative solutions to improving the access and timely delivery of cargo while, at the same time, continuously driving down costs. The Prairie Gateway project has already gained the attention of the global transportation supply chain because of the efficiencies that could be provided to Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 13

14 the worldwide system. Agrivision was invited and gave presentations at the Intermodal Transportation Institute s tenth annual meeting, University of Denver, October, 2007 and the World Container Forum in Amsterdam in December 2007 The end result of these international trends is that container shipping costs continues to decline or at worst case, is increasing at a much slower rate than for freight moved by the less fuel-efficient truck and air modes. Regardless, in many instances, shipping by container will soon cost less than shipping by bulk to many parts of the world. The Prairie basin cannot ignore this competitive trend and has no option but to look for ways and means of effectively accessing containers in a timely fashion. There are both challenges and opportunities for Prairie exporters arising from these global trends. For example, with the shipping line s emphasis on increasing efficiency and to meet the just-in-time demands of the big-box shippers, they are increasingly reluctant to let their marine containers leave the coastal docks. The result is that fewer and fewer 40 foot and heavy 20 foot marine containers pass through the prairies. This puts additional pressures on Prairie exporters who, if they cannot get marine containers, must than move valuable products to tidewater by bulk, or in 53 foot domestic containers, which must be handled several times before being re-stuffed into marine containers at the ocean ports. This extra handling at such a high-cost location reduces the quality of valueadded products and disrupts any attempt at maintaining the integrity of identify preserved shipping, which customers around the world are increasingly demanding. Currently, the extra handling to move Prairie products to export position adds to the congestion at the coastal Ports, which are already at an intolerable level. The drive by the railways and the ocean shipping lines to operate at maximum efficiency leaves the prairie exporters in a squeeze to get their product delivered in a timely manner and in top quality condition. The key features and benefits of the Prairie-to-Ports Gateway and Inland Port is that it can provide the products and services to meet and exceed the emerging pressures on the global transportation supply chain in creative, innovative and cost-effective ways. 7.0 Project Progress to Date In order for the Prairie-to-Ports Gateway and Inland Port to be operational, a business case must be developed that clearly demonstrates that the prairie global prairie transportation supply chain will provide economic benefits to local exporters, trucking, railway, shipping lines, Canadian ports and the big importing retailers. The current phase of The Prairie Gateway project is to set the stage for demonstrating that the concept is economically sound and beneficial for everyone. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 14

15 The Progress Report of the current Prairie Gateway project, anticipated to be complete by June 30, 2008, will include reports on a variety of important issues including: 1. A development plan for creating Federal tax free zones in the Inland Port region to attract distribution centres, assembly facilities and other port services. 2. A ten-year export volume forecast for the major crops in Canada. 3. Promotion and public relations activities and presentations by Doug Campbell and Agrivision in key transportation conferences, seminars, workshops and other speaking opportunities to promote the Prairie Gateway and gather information from other players in the North American and Global transportation supply chains. 4. Compilation of key drivers for major investor / decision makers to endorse the Prairie Gateway project. 8.0 The Prairie-to-Ports Gateway and Inland Port Solution The challenges of Prairie access to the global transportation superhighway are formidable but not insurmountable for visionary and bold leaders. The best way to conclude this is to outline the positive activities and investments to date that clearly support the further development of a Prairie-to-Ports Gateway and Inland Port. A criticism levelled by skeptics is that some of the constituent elements required of an Inland Port are lacking in Saskatchewan. While there is much to be added, the core elements for a successful Inland Port are in place, including: OBASA Distribution Centre in Moose Jaw has attracted John Deere to establish its Western Canadian distribution centre for small equipment in 2007 Sears Canada Distribution Centre in Regina is Canada s national catalogue distribution centre with plans to relocate its fashion centre from Montreal to Saskatchewan Maple Leaf Mid-West Distribution Centre in Saskatoon serving Northern Ontario, B.C. and the north with fresh and frozen food products Purolator Courier Distribution Terminal at the Saskatoon Airport. Purolator is Canada s largest courier company servicing the Canadian north and North America. CP Rail will relocate its rail yards and container terminal from downtown Regina to the west side of the city, with ready access to the airport. Logistics and freight-forwarding firms, such as Ghost Transportation Services and Container Port of Saskatchewan, an international logistics and freightforwarding firm owned by Yanke Group of Companies. Saskatchewan Trucking Association lists approximately 2,400 trucking companies registered within Saskatchewan employing over 28,000 people Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 15

16 Regina Airport Authority has expanded facilities and capacities to handle the increasing demand for cargo shipments. Saskatoon Airport Authority, as the gateway to the north, is rapidly expanding its capacity to serve passenger and cargo shipments. International Road Dynamics [IRD] of Saskatoon is a world renowned company producing road weighting, scales, security systems, and supplies 80% of the equipment to the US Homeland Security road inspection systems. Northern tier US states of Minnesota, North Dakota and Montana have shown a preference in accessing the global inter-modal supply chain for containers through Winnipeg, Brandon, Yorkton, Regina, Moose Jaw and Swift Current locations. Potash exports are rapidly increasing with a dependency on not only efficient bulk rail movement from Moose Jaw, Regina and Saskatoon terminals, but also increasingly with containers to selected markets. Potash producers are currently engaged in increasing export capacity by 50 percent. High value agri-food products from the Lake Diefenbaker irrigation region will logically use Moose Jaw as a storage and distribution centre for North America Government of Saskatchewan recently announced the twinning of major highways across the province to improve the north-south transportation corridors to the north through Prince Albert and the south to North Dakota and Montana. Government of Saskatchewan held recent consultations with Montana and Alberta in the expansion of 24-hour, commercial Canada-US border points at key locations. Saskatchewan Institute of Transportation and Infrastructure has been newly formed by the College of Engineering, University of Saskatchewan, with a focus on increasing research capacity for systems and logistics planning. Saskatchewan Trade Export Partnership [STEP] is a private-public partnership with international network and the mandate to enhance export growth. Agricultural Manufacturing Canada [AMC] a group of world-class farm machinery inventors and manufacturers, such as Doepker Industries, whose products are exported to dryland agriculture regions in China, Eastern Europe, Africa, Australia, and South America. Parrish & Heimbecker, a Canadian grain handler is sole-supplier of high quality malting barley to many Asian markets from its Saskatoon and Moose Jaw facilities. Saskcan Pulse Trading Inc., a division of Alliance Grain Traders Income Fund, is the largest lentil and pea splitting company in the Americas, with processing plants in Saskatchewan, North Dakota and Australia. [There are many other examples of major Saskatchewan export companies such as Case New Holland, Simpson Seeds, Walker Seeds, Meadow Lake Mechanical Pulp, and others]. Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 16

17 Mustard Capital Inc. based in Gravelbourg will soon be North America s leader in mustard processing for the food ingredient and industrial markets. Currently Saskatchewan supplies 80% of the global trade in mustard, which is the largest traded spice in the world. Saskatchewan s short-line and branch rail system is well positioned to work with the trucking industry and the mainline railways to effectively and efficiently distribute containers within the Prairie regional network. These major companies and services are among the key requirements for the formation of an effective and profitable Inland Port, much the same as the Kansas City SmartPort, as defined in Section 4.0 of this Briefing Paper. 9.0 Final Comment Although it might not have been stated directly earlier in the report, the reader will have already picked up the implicit message that dramatically improved access to the global transportation supply chain is not an option for the continued success of Prairie exporters it is an absolute requirement! A critical success feature of any Inland Port is the ability to match the volume of inbound cargo with a corresponding out-bound cargo. This is important to help address the global imbalance of container and bulk car assets, which negatively impacts the entire supply chain. Ideally, the in-bound & out-bound container and bulk assets would be balanced, consistently, week over week and month over month. For a Prairie Inland Port, this is possible only IF the export and import-oriented sectors work together, and all major cities and distribution points work together, in harmony towards a common goal, to better network with the global supply chain. Finally, the Prairie-to-Ports Gateway and Inland Port project cannot fail. The final result may not look like the concept outlined in this Interim Report, but an alternative of similar or larger magnitude is required if the Prairie export-based economy is to maintain and increase competitiveness in the global market place. We have no choice. It is our future. Special thanks to the following organizations and leaders who, to date, have contributed financially to the project: Moose Jaw REDA Doepker Industries Saskatoon REDA Saskatchewan Trade Export Partnership [STEP] Regina Airport Authority Saskatoon Airport Authority Ghost Transportation Saskatchewan Pulse Growers Saskatchewan Pork International Saskatchewan Association of Rural Municipalities [SARM] Copyright 2008: Saskatchewan Agrivision Corporation Inc. Page 17