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Prince Rupert Terminal Could Transform Memphis into Global Logistics Hub

By Clifford F. Lynch

Memphis Business Journal, June 22, 2007

For the past year, the name Prince Rupert has become increasingly familiar to the Memphis logistics community. But still, to many it doesn’t mean much unless you happen to be a student of 17th Century Canadian history. If so, you no doubt will be at least remotely acquainted with Prince Rupert of the Rhine – soldier, Caribbean buccaneer, artist and the first governor of the Hudson’s Bay Company.

If you are a frequenter of UFO websites, you may have come across a report on the HBCC Research site of a couple residing in Prince Rupert, who are regularly visited by a UFO every time they explore the UFO subject online.

But if you are neither a Canadian historian nor a UFO wonk, you might legitimately ask what, where, or who is Prince Rupert and what does it mean to Memphis?

900 miles north of Vancouver and more than 3,000 miles from Memphis lies the north coast of British Columbia, a land where whales, eagles, and bears outnumber the people. It is here, just outside the town of Prince Rupert City (pop. 12,815) that the northernmost railhead in North America aligns with the deepest harbor on the continent. And it is here that a new, state-of-the-art container terminal is under construction, with the initial phase scheduled for completion in October 2007. Served by the Canadian National Railroad, this terminal will provide a direct route for containers shipping from Asia to Memphis.

Typically, containers of products from Asia destined for Memphis will move through the ports of Los Angeles and Long Beach where they are transferred to either the BNSF or Union Pacific railroads for the final rail leg of their journey. Once they arrive in this area, they are unloaded at either the Union Pacific intermodal yard in Marion, Ark., or the BNSF yard in Memphis. The capacity here for both railroads is adequate for the time being. The capacity at Marion is 375,000 containers annually; and with the new BNSF facility expansion currently under way, this railroad will be able to handle 650,000, scalable to 1.5 million.

But the destinations of eastbound containers are not where the U.S. problems lie. West Coast ports have become increasingly congested, making it difficult to unload and move containers promptly. While ports at Oakland, Calif., Seattle and Tacoma, Wash., have been able to pick up some of the slack, the most popular port destinations in southern California have experienced continuing problems.

East Coast ports have expanded, or are in the process of expanding, their facilities; and some firms have located distribution centers close to these ports. UTi, for example, operates an enormous 4 million square foot facility in Bayport/Houston, Texas, for Wal-Mart. Products destined for many Wal-Mart stores move from Asia through the Panama Canal to Bayport, bypassing the West Coast altogether.

One would think that the increasing use of alternate ports would solve the problem, particularly in a slowing economy, and indeed it might except for one thing. The new container ships under construction, and even some currently in use, are too large for the Panama Canal. This has spawned another relatively new term for the logistics industry – "Panamax." A Panamax ship is the maximum size that can be moved through the canal.

 

The largest ship currently in operation is the Xin Los Angeles. If this ship sails to the U.S., it must call at a West Coast port, or move through the Suez Canal to an eastern port. Although the country of Panama has approved a $5.5 billion expansion of the canal, this construction will not be completed until 2015.

The Kansas City Southern Railway is moving containers from the Mexican port of Lazaro Cardenas, over its Mexican rail subsidiary, but this route is somewhat tortuous, particularly for products destined for cities not on the direct route such as Memphis.

This brings us back to the most promising option Memphis has seen in recent years – Price Rupert. The first phase of this facility, opening within a few months, will be much less congested and will have an initial capacity of about 500,000 TEU’s (250,000 40- foot containers); and by 2010 will be able to handle about 1,000,000 containers. While the expanded capacity will still be less than that of Los Angeles or Long Beach, it will be an attractive option for Memphis consignees.

In spite of its far north location, the port is ice-free. Its configuration will allow containers to be transferred directly from the ships to Canadian National flatcars and from there to Memphis with no further interchange.

Prince Rupert is almost 1,200 nautical miles closer to Shanghai than Los Angeles/Long Beach, and the sailing time will be about 60 hours less. Combined with the efficiencies at the new port and the direct service by the Canadian National, Memphis consignees will be able to receive their products at least two days earlier than from Long Beach and, in time, possibly sooner.

While cost comparisons will not be available until the new movements actually start, preliminary indications are that a movement from Shanghai through Prince Rupert to Memphis will cost less than a similar movement through the other West Coast ports.

In May of this year, the CN and the China Ocean Shipping Company reached an agreement whereby COSCO will begin calling on the new port on a weekly basis during the fourth quarter of 2007.

Containers destined for Memphis will move into the new CN yard in the Frank C. Pidgeon Park where a further $100 million expansion is scheduled for completion by late next year.

For more than 24 years Memphis has been known as "America’s Distribution Center," but with the assets we already have, plus the new Prince Rupert route, we are on the verge of becoming a truly global logistics hub.

 

 

 

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