Grain handler group seeks Vancouver port governance overhaul

The WGEA, whose members ship most of Western Canada's grain, complain the port is in a conflict of interest as both developer and regulator

Vancouver, Canada’s biggest port and the most important to Western Canada’s economy, needs major changes in how it operates, the Western Grain Elevator Association (WGEA) says.

As a statutory monopoly the port authority is both a port developer and regulator putting it in a conflict of interest, according to WGEA executive director Wade Sobkowich.

“We are working in a port oversight system that simply lacks proper checks and balances, in contrast to what we have in rail or air transportation where there are tools available to hold people accountable for decisions,” Sobkowich said in a news release Thursday.

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“With marine ports, we have no recourse to an adequate appeal mechanism, no outside dispute resolution, no independent complaint process, and no effective input to (bod of) director nominations. The federal government needs to address these shortcomings in the Ports Modernization Review.”

The WGEA’s members are Canada’s biggest grain companies who handle more than 90 per cent of the nation’s bulk grain exports — most of them through Vancouver.

Why it matters: Most of Western Canada’s grain is exported through the Port of Vancouver; western farmers need the port to run efficiently and to keep costs, ultimately passed back to farmers, in check.

“The Government of Canada needs to act on the major clean-up of marine port governance that was recommended during the review of the Canada Transportation Act back in 2016-17,” Sobkowich said. “This is having a large negative effect on our ability to unlock existing capacity and to grow the agri-food export sector.”

Among the items on the WGEA’s list, it seeks:

  • Adequate recourse to users to challenge and appeal port authority decisions.
  • To address conflicts of interest that arise in port management’s role as developer and regulator/administrator.
  • To make director appointment rules accountable:
  • i) Overhaul nominating committee membership to reflect the users.
  • ii) Remove outside interference with nominating committee decision making.
  • iii) Allow people who actively work in industry to sit on the board.
  • iv) Redesign appointments to adequately reflect provincial economies who rely on the port.
  • To ensure port authorities are actively representing federal government jurisdiction on regulatory issues.

In 2019, 70 per cent of products exported from Vancouver were bulk commodities totalling 99.7 million tonnes — most of that from Western Canada.

Of that, 23.5 million tonnes, or 24 per cent of the total, was grain.

Total exports through Vancouver hit 144 million tonnes. Bulk grain, along with 7.5 million tonnes of containerized grain, accounted for 31 million tonnes, or 22 per cent of all Vancouver exports.

Yet the western provinces only get two seats on the port’s board — one for British Columbia and one for Manitoba, Saskatchewan and Alberta, Sobkowich said in an interview.

“Something doesn’t add up here from our perspective when you have a port that is so important to the western Canadian economy,” he said.

“The nominating committee process (for port directors) gets interfered with by port management. We’ve been trying to get someone on there with a grain background for years.”

The last nominee from the Prairie provinces was a former vice-president with Cargill.

“We couldn’t even get him an interview,” Sobkowich said.

Vancouver also doesn’t allow directors representing port users to be actively working in the industry.

“Vancouver is very unique in that sense because other ports across the world, not only allow but encourage their users to sit on the board of directors,” he said. “Rotterdam, for example, has five users on the board of directors.”

Saskatchewan Premier Scott Moe, in a separate release Friday, said the three Prairie premiers have written to Prime Minister Justin Trudeau “to express a willingness to engage and work with the federal government on the port governance structure.”

“As a group, the western provinces make up 85 per cent of the port’s export value, but only have nine per cent of the representation on the board,” Moe said. “We believe that model does not provide balanced representation for the Prairie provinces and are asking for the (port authority) board to be restructured.”

The Saskatchewan government on Friday called for the board to be made up of two federal appointees, two appointees from each of the four Prairie provinces on the recommendations of port users, and one member representing municipalities that border the port authority’s jurisdiction.

‘Valuable space’

The WGEA is also concerned about what appears to be the port’s bias in favour of promoting a new container terminal, Sobkowich said.

The WGEA also suspects its members who operate grain export terminals at the port are paying for the new container terminal, although it’s unclear due to a lack of transparency, Sobkowich said.

“We believe those who stand to benefit should be the ones that should pay,” he said. “And we don’t feel that a developer, should be a regulator and that’s what is happening here. The same party that is advancing a project without a proponent, which will use valuable space in the Port of Vancouver to do container imports and exports, is being advanced by what is essentially a government entity.

“And that same entity is regulating us — charging us rents, charging us infrastructure fees, making decisions on environmental permit applications, making decisions on land use, making decisions on leases that get renewed or don’t get renewed.”

A review of port regulation began several years ago. In September 2019 Transport Canada released a document on what it heard from stakeholders about possible changes to be made.

“But it doesn’t look like it addressed the issues we have addressed here,” Sobkowich said.

Many of the complaints raised by the WGEA involve requirements under the Canada Marine Act, the Port of Vancouver said in a statement Thursday.

“It’s a complex mandate that requires balancing many opposing interests of a broad range of stakeholders, ultimately having to make decisions in the best interests of Canadians generally,” the port said.

“Many of the issues raised by the WGEA — governance, board nominations, and having to consider the impacts of port operations on local communities — are dictated by the Canada Marine Act, and therefore beyond the control of the port authority.”

To fulfill its mandate the port must to ensure infrastructure is in place to handle growing international trade, the port said. A lot of investment has gone into the port during the last 10 years benefitting all terminals, including for grain, resulting in record grain exports.

“Many of the current projects under way are specifically to build capacity for the grain sector, and others will address the increasing demand for container trade,” the port said. “Interestingly, containers are used to ship a significant amount of grain so those container capacity projects will benefit the agricultural sector. Any fees that we may charge terminal operators for common-use infrastructure improvements are subject to consultation with those operators.”

The port’s biggest challenge is the lack of industrial land, the port said.

“That may require difficult choices with respect to a current tenant, but overall the Port of Vancouver will remain Canada’s gateway for agricultural exports to the world.”

Check next week’s issue of the Manitoba Co-operator for more on this story.

Allan Dawson reports for the Manitoba Co-operator from Miami, Man.

The port’s reply

The Port of Vancouver issued the following statement Thursday in response to concerns raised by the Western Grain Elevator Association on how the Port of Vancouver operates:

As a Canada Port Authority, we have a federal mandate established under the Canada Marine Act, to enable Canada’s trade through the Port of Vancouver, while protecting the environment and considering local communities. It’s a complex mandate that requires balancing many opposing interests of a broad range of stakeholders, ultimately having to make decisions in the best interests of Canadians generally.

Many of the issues raised by the WGEA — governance, board nominations, and having to consider the impacts of port operations on local communities — are dictated by the Canada Marine Act, and therefore beyond the control of the port authority.

In order to fulfill our federal mandate, we need to ensure port infrastructure is in place to handle growing international trade. For more than a decade, there has been an incredible amount of investment in the port and the surrounding gateway to benefit all terminals, including grain terminals. As a result, we have seen record grain cargo through the port in recent years, and many terminals have invested to grow their operations.

In planning for future infrastructure investment, we consider independent forecasts and consult with industry. Many of the current projects under way are specifically to build capacity for the grain sector, and others will address the increasing demand for container trade. Interestingly, containers are used to ship a significant amount of grain so those container capacity projects will benefit the agricultural sector. Any fees that we may charge terminal operators for common-use infrastructure improvements are subject to consultation with those operators.

Our biggest challenge in the Vancouver area is that there is not enough industrial land for all this growth, and so we have to make the best use of what we have. That may require difficult choices with respect to a current tenant, but overall the Port of Vancouver will remain Canada’s gateway for agricultural exports to the world.

CORRECTION, Feb. 18: Typo fixed in paragraph 14 to replace “wouldn’t” with “couldn’t.”

UPDATE, Feb. 19: Updated to include statements from the Port of Vancouver and the Saskatchewan government plus further clarifications.

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