1 Welcome to North America’s Leading Edge. PRINCE RUPERT OPPORTUNITY Trade & Transportation...

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Welcome to North America’s Leading Edge

PRINCE RUPERT OPPORTUNITY

Trade & Transportation Seminar - WTCAK

October 2011

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

WHO WE ARE

Canadian Port Authorities

For profit, non shareholder, with mandate from federal government.

Our Mandate - Letters Patent

• - Commercially viable

• - Autonomous and governed by a Board of Directors

• - Steward of Crown’s Assets:

Total Land Holdings 965.60 haOwned Harbour 14,000 haNavigable waters footprint >350 km of coastline

Our Value Add

• - Facilitating and expanding the movement of cargo and passengers

• - Overall planning, development, marketing and management of the commercial port

• facilities.

Our Vision

To be a leading trade corridor ‘gateway’ between North American and Asian markets.5

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

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STRATEGIC ADVANTAGES

• Closest North American Port to Asia

• Deepest natural harbor in North America

• Safe, sheltered & efficient access from international shipping lanes

• Exceptional community & labor support for expansion

• Superior/uncongested rail connection to North American heartland

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STRATEGIC ADVANTAGES • Closest North American Port to Asia

• Deepest natural harbor in North America

• Safe, sheltered & efficient access from international shipping lanes

• Superior/uncongested rail connection to North American heartland

• Exceptional community & labor support for expansion

Closest North American Port to Asia

STRATEGIC ADVANTAGES

North American Conic Equidistant Projection

North American Conic Equidistant Projection

Closest North American Port to Asia

STRATEGIC ADVANTAGESPort, Harbor & Community

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• Closest North American Port to Asia

• Deepest natural harbor in North America

• Safe, sheltered & efficient access from international shipping lanes

• Exceptional community & labor support for expansion

• Superior/uncongested rail connection to North American heartland

STRATEGIC ADVANTAGESExtensive Market Reach with Competitive Transit Times

• Closest North American Port to Asia

• Deepest natural harbor in North America

• Safe, sheltered & efficient access from international shipping lanes

• Superior/uncongested rail connection to North American heartland

• Exceptional community & labor support for expansion

RAIL SYSTEM EFFICIENCY AND PERFORMANCE

• Best crossing of Rocky Mountains from west coast - Rail grade under 1%,

• Trains run longer, faster (less urban congestion)

• Reliable - Fewer weather-related interruptions

• No congestion at port or on main line (<25% utilization)

• CN invested in capacity expansion and upgrades

• Acquisition of complimentary rail systems (EJ&E)

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11,000-foot CN Container Train along Skeena River

RAIL SYSTEM EFFICIENCY AND PERFORMANCE

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Figure 2: Route profile, Prince Rupert to Chicago

Figure 3: Route profile, Los Angeles to Chicago

Figure 4: Route profile, Seattle to Chicago

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

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Ridley Terminals Inc.

• Automated 100 acre terminal

• Unloads trains @ 6,000 tonnes/hr

• Loads ships @ 9,000 tonnes/hour

• 12 million tonne annual shipping capacity

• 1.2 million tonne storage capacity

• Handling coal, pet. coke & wood pellets

• modernization and expansion to 24 million tonnes is underway

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2,000,000

4,000,000

6,000,000

8,000,000

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Prince Rupert Grain Ltd. • Modern high-throughput facility

• 7 million tonne annual capacity

• 4,000 tonne/hr loading rate

• 202,000 tonne storage capacity

• Berth ships to 145,000 DWT

• Grain clean capabilities

Fairview Container Terminal – Phase 1• > 98% marine-to-rail intermodal

• Design capacity: 500,000 TEUs

• 360 meter container quay

• 17.0 meter berth depth (low tide)

• 3 Ultra Post Panamax Cranes

• Container Yard capacity @ 4 high = 9,430 TEUs

• Reefer stacks with 72 plugs

• 7 working tracks (5,500m), 6 storage tracks

(6,100m)

• 4 Radiation Scanning Portals; on-site VACCIS

screening

89 91 93 95 97 99

2001

2003

2005

2007

2009

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

TOTAL PORT-WIDE TRAFFIC (MT)

2010

16,531,000

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

FAIRVIEW CONTAINER TERMINAL UNIQUE SERVICE APPROACH

VELOCITY

Focus: on-dock intermodal

Simplicity of operation

FLUIDITY

Responsive, flexible and adaptable

Cooperation and collaboration of partners

TERMINAL OPERATIONS

MARINE / RAIL INTERFACE Load direct from vessel to unit

train

Build train on terminal

Scheduled rail service

Non stop service to destination

TERMINAL FLOW Minimal truck operation

Scheduled coordination of

trucking with terminal (pick up /

drop off)

Maher train crews

High terminal productivity

PERFORMANCE TO DATE

• Currently three vessel calls per week

• 2008 - 181,000 TEUs handled• 2009 -- 263,000 TEUs, up 45%• 2010 – 343,366 TEUs, up 29.5%• 2011 – 228,793 AugYTD• Short dwell time at the port• Rail leg average to Chicago: 100

hrs• 100% of containers scanned on

system – VACIS and radiation

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20072008

20092010

20112012

0

100,000

200,000

300,000

400,000

500,000

Container traffic through the Fairview Terminal has grown 132% since it’s opening in 2007. It is expected to reach 500,000 TEUs in 2012 or 100% of the Terminal’s design capacity and 71% of it’s operating capacity.

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FAIRVIEW TERMINAL IS SEEING GROWTH IN AN ENVIRONMENT OF DECLINE. GROWTH DURING ECONOMIC RECESSION

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Seatt

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Taco

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Los A

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Prince

Rupert

-100%

-50%

0%

50%

100%

150%

200%

250%

% Change in TEU Volume YoY by Quarter

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

THE PRINCE RUPERT GATEWAYPrince Rupert’s Value Proposition Proof of the Proposition

Speed • 1.5 - 3 days closer to Asia (sailing)• Short terminal / port dwell time• 4 – 8 days savings in total transit time

Reliability • Minimal congestion at port or within rail system • Little to no variability in service• Consistent and reliable transit times into Chicago and Memphis, as well as central Canada

Cost • Service is price competitive• Lower total logistics cost for shipper• Reliability improves supply chain predictability

Flexibility • Logistics – import: transload, re-route, hold back, modify inventory; export: containerize cargo at a natural “eddy”, at the port

DEFINING OUR COMPETITIVENESSdon’t replicate… invovate

• Quantifying our carbon footprint study – SNC Lavalin

• Understand shipper’s needs (Supply Chain focus) – WCL and QCL studies

• Measuring and monitoring performance – KPIs

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Source: SNC Lavalin “Methodology for Estimating and Comparing Carbon Efficiencies of Marine Gateways” 2010

CONTAINER IMPORT LOGISTICS Proof of Concept - Potential Projects

• Supply Chain Issue / Market Opportunity -- Identify and test PR Value Proposition of speed, reliability, cost and identify and quantify the need for “flexibility” of Supply Chain at Port of PR.

• Scope of Proof of Concept – WCL :– Senior Management of 45 of the top

100 Beneficial Cargo owners including 4 of top 10 US importers (Walmart, Target, Sears, Costco, Nike, Toys R Us, Nissan, Dollar Tree) and 13 top 3PLs (including CEVA, UPS, Kuehue & Nagel, OEC, NYK Logistics)

– quantified need of transload, inland ports, visibility, deconsolidation, value added logistics, warehousing, fulfillment centre FTZ.

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BCO’s Likelihood to Increase PPR Imports if Flexibility Options* Were Provided

0%

20%

40%

60%

80%

100%

Highly likely to increase

Likely to increase

No change Don't know

18%33% 28% 21%

* “e.g., transloading, value-added services, team truck expediting, etc.”

51% are likely to increase imports through PPR Corridor if certain new improvements* are made.

Prince Rupert Opportunity -- “51% of BCOs stated that they would “likely” or “highly likely” increase imports through the PoPR if more flexible options were provided”.Conclusion: PoPR’s value proposition “timing, reliability, TL cost” all rate as extremely important supply chain strategy drivers, a new value proposition of “flexibility” rates as very important.

CONTAINER EXPORT LOGISTICS

Proof of Concept - Potential Projects

Supply Chain Issue / Market Opportunity • only one option for Canadian exports; and, • majority of containerized cargo is stuffed at the port (96% of

lumber, 87% of wood pulp and 73% of specialty crops).

Scope of Proof of Concept • QCI Consulting identified:

– Factors affecting export decisions regarding supply chain configuration; – Factors influencing shipping lines’ equipment allocation;– Steps to competitively position the PoPR in the development of

containerized export traffic.

Prince Rupert Opportunity • “companies recognized that the constraints in growth for

Vancouver container port facilities are primareily in the difficulty of coordinating off dock activities in the Lower Mainland. It is congestion in off-dock activities that is seen as limiting Vancouver’s growth…”

Conclusions• “wood pulp and specialty crop shippers identified the

limited capacity available to support container stuffing at the port…issues with lack of competition…were listed by both forest product companies and specialty crop shippers.”

• “Shippers believe that Prince Rupert’s major strength was the lack of congestion at the port and good rail service.”

Prince Rupert Constraining FactorsMagnitude of importance

Lack of access to markets 6

Insufficient capacity for container stuffing / storage at port 4

Lack of competition in existing markets 3

No support for refrigerated services 2

Problems to access traffic from CP origins 2

Lack of container supply 2

Container Business Competitiveness do not replicate… innovate

2011• Customer Satisfaction Assessment• Port of Entry Benchmarking• Supply Chain Model Development• Logistics Planning & Engineering• Transload Operations Model• ’53 Container Flow Study• Supply Chain Leaders Strategy• FTZ• Boarder thinning (US Customs Agents in PR)

Fairview Terminal - Phase II ExpansionTerminal Capital Cost: $650MRail infrastructure Cost: $300MTotal Cost: $950M

Incremental Capacity: 1.5 M TEU’s/yr

Page 4

Phase I

Phase II b

Fairview Container TerminalPhase II

Phase II a

AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

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Ridley Island Development Plan

GATEWAY 2020 DEVELOPMENT VISIONDefining the development opportunities• Guiding principal – Planning in

Common• Existing Terminal tenants• Responding to shippers needs• Creating regional opportunity

• Key strategic themes• Building upon existing underutilized

terminal infrastructure• Maximizing development utility of

limited property• Integrated development clusters• Innovation• Mitigation of potential future activity

conflicts • Create platform for value-added

activities to maximize the economic opportunity for the community and region 35

ROAD, RAIL AND UTILITY CORRIDOR

Common User

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Rail Corridor

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Utility Corridor

39Land bank for growth and diversification of cargo at existing terminals

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Bulk Terminal Cluster

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Bulk Terminal Cluster

Canpotex Development Site

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General Cargoes Cluster

44Logistics Cluster

45Logistics Cluster – Watson Island Integration

46Logistics Cluster – Integration with Fairview Terminal

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AGENDA

Who We AreStrategic AdvantagesFacilities Overview Container Terminal Project & Growth PlansBuilding the Gateway – Ridley Island Development PlansAlaska’s Gateway to Opportunity

CURRENT CONNECTIONS TO ALASKACN Aquatrain

ALASKA OPPORTUNITIES

Containerized cargo

EXPORTS• Reefer traffic to Asia

○ Key seafood market s like Japan ○ Secondary processing

• Reefer traffic to domestic markets in the US heartland• Forest Products in Asia• Mineral concentrates

IMPORTS• Access to Chicago distribution centers• Provisioning