Since lots of people seemed to be discussing it and it would have such a large impact on the city I thought the subject of relocating Halterm should have its own thread.
Here is the article from todays Herald to get things going.
On the waterfront, cargo or condos best?
LAST WEEK I read an article in The Chronicle Herald that quoted a U.S.
expert on the marine and port industries as saying it would be short-sighted to relo cate the container terminal out of south-end Halifax. I believe his exact words were: “Some people do not understand the economics of this port, in par ticular, and of the marine indus try in general."
In a nutshell, the expert was surprised to hear some commu nity leaders in Halifax talking seriously about relocating the south-end container terminal to open up some prime real estate for new development. Don Mills and Bill Black, I believe, were two of the proponents that were mentioned. Regardless, I felt compelled to pipe up.
My initial reaction to the port expert’s comment is that he is likely half right: it was short sighted all right, but only to put the port in the south end of the city to begin with. The urban development team that oversaw that obviously did not see the forest through the trees.
Or so it would seem, as I watch giant transport trucks carrying 16-metre containers try to manoeuvre their way through the downtown core.
To be fair, I know that the terminal has been there forever and I am sure that there was sound logic behind locating it there at the time. Further, I am no expert in international ship ping or real estate development, although I do know a thing or two about our port, and a rea sonable amount about Halifax, having lived here for 35 years.
Far smarter people than I have looked at the situation, so forgive my armchair analysis if it is patronizing to some. But I believe that the issue should really be one of opportunity cost, not simply port economics. The fact is that the fiscal rele vance of the terminal to the city of Halifax has dwindled over time as our economy has di versified.
Twenty years ago, for exam ple, there was more container ized cargo moving through our port than there is today. By contrast, our property values on the peninsula have likely tripled, if not quadrupled, dur ing this same time period. At some point, something has to give.
So I believe it is fair to study the economic significance of keeping a terminal in the south end, versus moving it over to say the Shearwater side and developing the 29-hectare prime real estate block that Halterm
currently occupies.
To be honest, I don’t know if it would make sense, but I believe we owe it to ourselves to find out.
To help put things into con text, when Halterm was public it was generating around $40 million per year in revenues and $7 million per annum in profit. Let’s assume for the sake of argument that the implied $33 million in expenses was entirely spent on local payroll, local suppliers, utilities, rent paid to the Halifax Port Author ity, taxes, etc.
Now let’s assume that the terminal is relocated, and the 29-hectare property is put on the development block. Obvi ously there will a significant cost to relocate it, and an associ ated business interruption.
But once complete, we would be left with over three million square feet of real estate. Grant ed, some of that will be taken up by streets, common areas, etc., but factor in the construction of highrises and multi-unit dwell ings, and that block of land could easily provide a multiple of three million square feet in prime, waterfront living space.
So I don’t think I am off my rocker by saying that we could potentially be looking at a bil lion- dollar waterfront devel opment project that would cre ate a ton of spinoffs, not to men tion pull more people onto the peninsula and reduce commut ing times and emissions. I also don’t think that we would jeop ardize the port’s overall profit ability, longer term.
Understand that my objective is not to bash the terminal busi ness. It’s a good business with very capable people operating it. But I believe that a study should be completed so that we can look at things pragmatical ly.
The reality is that neither Halterm nor Ceres Corp. are locally owned. They are con trolled by Australian and Japa nese conglomerates, respec tively. In other words, the prof its that they earn do not neces sarily get retained and reinvested nearby.
Further, terminals, in gener al, are sleepy, throughput busi nesses that arguably don’t gen erate a ton of spinoffs for the local economy.
There is obviously a decent labour component, and some freight forwarding and logistics that take place locally; but in many cases the cargo gets load ed onto a truck or train and shipped somewhere else. On the latter front, CN Rail and related trucking companies benefit, and obviously they would have a presence here.
But in many instances, even locally destined cargo goes to places like Montreal first, then back to Halifax. Food for thought.
Jonathan Norwood is a vice-presi dent and portfolio manager with Louisbourg Investments.
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