The additional storage and upgrades are the result of acquisitions of farmer-owned cooperative grain handling terminals and other facilities in the Prairie Provinces in recent years and record volumes of grain and oilseed crops being grown recently by farmers in Western Canada.
As with other industries at Port Metro Vancouver, Richardson International was faced with very little available land for the three-year terminal expansion project and its need to maintain ship loading operations during the construction made the job even more complex.
Phil Hulina, senior director, Vancouver Terminal Operations, told World Grain the expansion was necessary as the existing terminal was running out of capacity following a number of inland grain terminal acquisitions across Western Canada.
“Those acquisitions obviously captured a significant number of originations from Western producers, and we needed to ensure that the entire pipeline, ending in Vancouver, was strong and large enough to manage that type of growth.”
However, expanding storage space on “a small footprint” was a challenge, he said. “It took a while to understand how we were going to tackle this project,” he said.
While the proposed construction drew complaints from some north shore residents and required crews to work in the cramped quarters between the existing terminal and the waterfront terminal, employees were able to break new records, shipping 5.2 million tonnes of product compared to the usual 3 million tonnes.
The project was carried out by Winnipeg-based FWS Bulk Material Handling, part of the FWS Group of companies.
“We knew that one of the biggest parts of this project was clearly the silos for storage, and they had the expertise to make that happen and they did a phenomenal job,” Hulina said.
In announcing the commencement of construction in the spring of 2013, Curt Vossen, president and chief executive officer of Winnipeg, Manitoba-based Richardson International, said in a statement: “This is a significant investment in our business and the biggest investment in the Port of Vancouver in more than 20 years.”
Canada’s grain transport challenges
Barry Prentice, a University of Manitoba transportation and agricultural economist, told World Grain the grain industry in Western Canada was given a wake-up call in the winter of 2013-14 when grain exports were delayed due to a record crop and severe winter weather. Also, he said, terminals at the port have aged and were due for upgrades.
What is needed now, he said, is the removal of the grain revenue cap that limits the amount Canada’s two Class One railways can earn moving grain. This, he said, discourages the railways from investing in the grain handling network and introducing innovations.
The revenue cap was introduced by Ottawa in 2000 following changes to the Crow’s Nest Pass Freight Rate. An internal government report has recommended removal of the rate over a seven-year period, a move it says would make the transportation system more “commercially grounded.”
However, some farm groups and grain handlers in the west have opposed the recommended removal.
Mark Hemmes, president, Quorum Corporation, a firm that monitors Western Canada’s grain handling and transportation system for Ottawa, said a number of issues are pushing terminal companies to expand the capacity of their terminal and inland networks.
“If you look back 10 years, Vancouver would have been putting through somewhere between 14 and 15 million tonnes a year,” Hemmes said. “But that number has increased rapidly over the past 7 to 10 years. There’s a few reasons for that, not the least of which is that the markets Canadian grain is moving into have shifted significantly from the eastern logistics pipeline where it used to go to Thunder Bay to the West Coast, because the growth that’s happening in the global economy is largely happening in the Asia Region: China, Korea and Japan.
”We used to sell the majority of our grain into Europe and the former Soviet Union. That’s not the case anymore; we’re moving it out of ports that are more logistically oriented to the West Coast.”
But more importantly, he said, production growth in recent years has increased significantly.
“There’s a lot of things happening in the country that are increasing yield rates,” he said. “The number of acres that are under seed every year is growing. For example, if you go back 15 years, the average crop production was ranging between the high 40 millions to the low 50 millions. Now we’ve seen three years in a row where total production has been over 70 million.
“Ánd we’ve got a far greater diversity in the crops that we’re growing. Whereas 15 years ago 85% of what was planted was cereal grains, canola has come along and pulses are incredibly popular, so you’ve got far more stability and you know when you have a drought, like last year, we still had a phenomenal volume of grain that came off the fields.
“So, between diversity, a change in market orientation and increases in yield rates, we’ve seen a lot of growth in volume and just about all that growth in volume moves totally into the export marketplace. When people look at that and say ‘This is where we’re going to sell our grain and this is how we want to move it,’ do we have the capacity to sustain for the next 10 to 20 years? The answer comes back ‘No.’”
Hemmes said that grain companies, after having looked at the situation carefully, have come to realize that if they want to stay competitive nationally and globally they have to do something to increase throughput.
Also, he said while the expansions that are taking place at Port Metro Vancouver seem large for port, they are not large in the overall global context.
Recent Richardson acquisitions
1999 - Acquired Canbra Foods (Oil Processing facility in Lethbridge)
2005 - ConAgra Canada facilities acquired
2007 - Acquired Agricore United facilities
2009 - Capital expansion plan began
2010 - Built Yorkton canola processing facility
2011 - Acquired Innovative Foods - margarine manufacturing facility, Mississauga, Ontario
2013 - Viterra acquisition – 19 country elevators, port terminal in Thunder Bay, 25% ownership in Cascadia terminal in Vancouver, three oat mills in Canada and one in the U.S., and one flour mill in the U.S.
2015 - Acquired Golden Gate Margarine in Oakville, Ontario
2016 - Completed Vancouver terminal expansion