Annual Review 2003/2004

1 Year In Review

During the Gold Rush an influx of sail and steam ships on the Fraser River creates the need for an official port.

Schooner DL Clinch, carrying 60,000 feet of cabinet wood and 50 barrels of cranberries, receives a 13-gun salute as she departs New Westminster as the first vessel with a cargo of BC produce headed for a foreign port.

Captain Angus Grant operates the first snagboat steamer Samson on the Fraser River.

The sternwheeler SS Paystreak steamed along the Lower Fraser between New Westminster and Chilliwack carrying cargo and passengers, until 1920. Over the years there were hundreds of similar vessels.

The first Port Authority's Board of Directors, appointed as New Westminster Harbour Commissioners by the federal government.

1850s 1859 1880s 1900s 1913

Locally, hundreds of businesses depend

on the Port and Port-related activities.

2

raser River Port continues to grow as a These healthy volumes helped Fraser River Port In other efforts to ensure Fraser River Port

strong economic engine to the greatest generate $2.1 billion in local economic output remains competitive and supports its clients

extent ever in the Port's 91-year history and 12,400 direct jobs. Locally, hundreds of efficiently, we examined and challenged the

as a marine transportation asset. businesses depend on the Port and Port-related Port Authority's organizational effectiveness

activities. through an internal process review, and fast-

A record total throughput of 35.9 million tonnes tracked the implementation of recommended

punctuated a year of achievement for Fraser Continued economic growth at the Port also changes. The Port Authority also successfully

River Port. Growth surges in most sectors saw required additional investment in infrastructure. passed a Special Examination of its operation

2003 yield gains of nearly 3.5 million tonnes In order to ensure we managed growth as a requirement under the Canada Marine Act.

over our record performance of a year earlier. efficiently and effectively, we worked with our This strong strategic focus on operational

tenants to ensure proposed changes would effectiveness and staff empowerment has

The Fraser River Port Authority, as a satisfy their needs. brought new vigor into the organization.

conscientious custodian of the living, working

river, has been a partner and a catalyst in the The highlight of those efforts was our strategic As Canada's economy broadens and its ties to

Port's remarkable growth throughout the tripartite alliance with Fraser Surrey Docks Ltd. Pacific Rim trading partners strengthen, its west

2003/2004 fiscal year. And we anticipate this and IDC Distribution Services Ltd., in a $190 coast ports will become even more important to

growth will continue. million phased upgrade at Fraser Surrey Docks the economic well-being of British Columbia and

and the creation of an adjacent intermodal yard the nation.

Driven by our entrepreneurial spirit, we worked to better handle the Port’s growing business.

to enhance the Port's reputation as a vital We remain a vital partner in this remarkable

shortsea shipping corridor for goods and In the context of the Port's ever-increasing growth. Both the Board and Port Authority staff

materials, and as a port to be reckoned with involvement in world trade, global security was are committed to ensuring that Fraser River Port

for rapidly rising international trade. also on everyone's minds. We worked with our remains a key link in the transportation corridor

international terminals and the appropriate and a sustained stimulus to the economy, for

Fraser River Port is the premier fresh-water port authorities to meet our obligations to create the benefit of present and future generations.

complex in Canada; it is the country's largest plans, policies and upgrades for Port safety that

mover of Asian import automobiles and now its would ensure Fraser River Port was compliant

fourth busiest container port. Container traffic with the International Maritime Organization's

volumes soared in 2003 to 252,510 TEUs, over new International Ship and Port Facility Security

250% higher volume than the 100,544 TEUs Code by the July 1, 2004 deadline.

that passed through the Port in 2002.

Through the hard work of many, Fraser River

Domestic shipments, such as general cargo, Port has managed to become very competitive. Malkiat Dhami

logs and wood chips continued to provide Yet the expense of annual channel maintenance, Chair

significant business for Fraser River Port which cost the Port Authority $3.9 million (net)

tenants, reaching a record 29.7 million tonnes, in 2003, remains of particular concern. There is

well above the 19.2 million tonnes of 2002. a critical need for sustainable public funding to

support channel maintenance dredging for its

The Port also played an increased role in foreign inherent flood prevention benefits, and to free

trade, as total international shipments reached up Port revenues. We are encouraged by the

a record 6.2 million tonnes, compared with 4.5 results of our discussions with all levels of

million tonnes a year earlier. This growth was government to date, as we continue to address Allen Domaas, PPM

reflected in deep-sea ship arrivals, which this serious issue. President and CEO

totaled 774 vessels, an increase of 21 ships

over the previous year.

Records mark year of growth

New Westminster's waterfront is improved with a 200-foot extension of its existing dock to make way for increased rail tracks, roads, and wharves.

The SS Margaret Coughlan departs with 5 million feet of lumber, the largest outgoing lumber shipment to leave the Port until then. Meanwhile, the Norwegian ship SS Camilla Gilbert departs with the first shipment of ore from BC.

The West Ivis arrives with the first general cargo from foreign ports in the early years of Fraser River Port - corned beef and corn from Argentina, and coffee beans from Brazil.

A grain elevator is constructed at the Port.

On its maiden voyage the MV Elizabeth Bakke sets a speed record for making the trip from Sweden to Fraser River Port in 22 days, with a 12-hour delay at the Panama Canal.

1919 1924 1929 1929 1937

Competitive Growth3

Growth in containers and breakbulk cargo

volumes has been steadily rising.

4

he removal of sediment buildup from coordination of the Fraser River Estuary There is a critical need for sustainable public

the Fraser River is vital to ensure Management Program. This strategy supported funding to support annual channel dredging,

foreign and domestic vessels have the Fraser Basin Council's hydraulic modeling and to free up Port Authority revenues for

the necessary water depth to transport research, which will provide valuable data on reinvestment into other critical infrastructure

goods through Fraser River Port's designated the efficacy of dredging as a method of flood projects.

shipping channels. protection.

In keeping with an overall approach to

Hydrographic studies suggest that dredging For all of its economic and environmental responsible river management, the Port

also reduces the risk of floods by removing benefits, annual channel dredging imposes a Authority continues to work cooperatively with

buildup from the Fraser's riverbed, which might substantial financial burden on the Port all levels of government, optimistic that a long-

otherwise cause the water to overflow dykes. Authority. Since 1999, dredging has cost the term solution to the challenge of dredging costs

Port Authority an average of $3.25 million a will be found, and Fraser River Port remains a

In addition to monitoring and assessing the year, even after the sale of dredged sand is safe, competitive waterway for world trade.

channel, in 2003 the Port Authority produced a used to offset dredging costs.

comprehensive dredging strategy under the

An open channel for commerce and prosperity

20001999 2001 2002 2003

564

653687

753 774

Ship Arrivals5-Year Growth

20001999 2001 2002 2003

31,921

66,842

50,565

100,544

252,510

Growth of Container Cargo(in TEUs over 5 years)

5-Year Cargo Summary(in thousands of tonnes)

2003 17,396 12,323 2,175 4,048 35,942

32,516

22,240

24,747

25,606

2002 16,465 11,503 1,608 2,940

2001 7,541 11,686 1,348 1,665

2000 9,637 12,246 1,629 1,235

1999 10,682 12,725 1,067 1,132

TotalInbound

TotalOutbound

TotalImports

TotalExports

TotalCargo

5 Shortsea Shipping

The New Westminster waterfront has space for 16 deep-sea vessels with cargoes of metal, lumber, plywood, canned goods, and other materials arriving by rail.

Fraser Surrey Docks opens. New Westminster Harbour Commissioners becomes the Fraser River Harbour Commission after the Harbour Commissions Act is passed.

Fraser Wharves auto distribution centre opens in Richmond.

Annacis Auto Terminals, an automobile distribution centre on Annacis Island with space for 7,000 cars, opens for business.

1946 1973

Innovative solutions are being sought to help distributors

find new and more efficient modes of delivery.

1964 1965 1971

6

unicipalities bordering the banks of The Fraser River Port Authority has been a As more shippers utilize the Fraser River and

the lower Fraser River are under proponent of shortsea shipping for over 90 other waterways, there is potential for

pressure from increased traffic years, recognizing it as a means of boosting municipalities to save millions of dollars in road

congestion that has come with rapid trade and improving the use of its waterway maintenance every year, while reducing traffic

increases in population and commerce. This has capacity. Successful models on the Fraser River congestion.

had a substantial impact on road infrastructure have included Foss barges in the 1980s, the

in these communities. Matson shuttle service, Seaspan's Coastal Shortsea shipping does not replace vital road

Intermodal service to Vancouver Island, and the and rail transport, rather it offers an opportunity

Traffic congestion impedes shipments of goods Sylvan Distribution Centre on the Port's Surrey to maximize the efficiency of the regional

from deep-sea terminals to distribution centres Properties. intermodal supply chain, and addresses the

and markets throughout the region and across growing challenges facing the movement of

Canada. Innovative solutions are being sought Van Isle Barge, which started a daily truck trailer local trade.

to help distributors find new and more efficient barging service to Vancouver Island in April

modes of delivery. 2004, is the latest company to launch shortsea

shipping operations at Fraser River Port. Coast

One solution with great promise for growth is 2000 Terminals also recognized the potential of

shortsea shipping, a relatively new term for the the river to eventually barge containers,

long-standing practice of moving cargo by investing $14.5 million in a new container yard

water, to and from destinations not separated at the Port’s evolving Richmond Properties.

by an ocean.

Demonstrating innovation in transportation

Barge Capacity

One barge carries as much cargo as 65 trucks or 15 jumbo rail cars.

1 Barge 65 Trucks 15 Rail Cars

7 Our People

Fraser Surrey Docks opens a new container dock and installs two gantry cranes, the largest in Canada at the time.

Fraser River Harbour Commission becomes the Fraser River Port Authority.

A third crane for Fraser Surrey Docks arrives fully assembled from Korea.

Fraser River Port Authority celebrates over 90 years on the river.

1974 2003

Between 2002 and 2003, 1700 new direct jobs were created.

Direct employment generates $580 million in wages.

Port Authority announces $190 million investment in Surrey Properties to boost container handling capacity and efficiency.

20041999 2000

8

Board of Directors

Senior Staff

Staff

Auditors

Malkiat Dhami Chair

Juliana Yung Vice Chair

Michael J. Jones

Kim Husband

Jack Matthews

Helen Sparkes

Allen Domaas President and Chief Executive Officer

Gary Brush Vice President, Finance & Administration

Tom Corsie Vice President, Property Development

Ed Kargl Vice President, Business Development

Pat Weber Vice President, Operations

Lori Alexander Wayne Herring-Cooper

Joseph Broš Nures Kara

Peg Brownie Dennis Kirkwood

Dayle Burge Cara Lukie

Nick Burnell Kate Macdonell

Kathy Coller Chris Nilsson

Steve Davis Raija Orava

Sarb Dhut Barb Purrott

Christine Eriksen Donella Robb

Kari Euverman Lorna Scanlan

Vera Euverman Ed Tokarczyk

Faye Fidler Michelle Stadnyk

Carmen Germain Lorna Wolfe

David Hart Joe Zemp

Grant Thornton LLP Chartered Accountants

Sixth Floor, 628 Sixth Avenue

New Westminster, BC V3M 6Z1

The Port Team

As of June 30, 2004

The Fraser River Port Authority has passed its first Canada Marine Act

Special Examination after a 20-month review.

The examination done by Grant Thornton LLP looked at the financial and

managerial control, information systems, and management practices of the

Port Authority.

The examination covered six areas of interest:

Human resources

Dredging

Governance

Urban infrastructure

Internal processes

Property development

Port Authorities are required by law to conduct an examination at least every

five years. The review found there were no significant deficiencies in the

systems and practices used by the Port Authority and that its assets were

safeguarded and well controlled.

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Measuring Up

1 - New York - New Jersey 625,798

2 - Baltimore 543,597

3 - Jacksonville 481,111

4 - Fraser River 445,801

5- Portland 366,383

Top 5 North American Auto Ports 2003

1. Vancouver 1,539,058

2. Montreal 1,108,837

3. Halifax 541,650

4. Fraser River 252,510

5. St. John’s 99,543

Top 5 Canadian Container Ports 2003(in TEUs)

Financial Summary9

Port-related employment generates almost $900 million

in GDP and $2.3 billion in economic output.

5-Year Financial Summary(in millions of dollars)

00 01 02 03 04 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04

Gross Revenue Net Income Earnings Retained Long-term Debt

14.4 14.513.4

16.1

19.0

0.8 0.91.1

1.5

3.4 94.2

90.8

89.3

88.2

87.4

10.4

12.2

13.8

15.3

17.0

10

Year Ended April 30 2003

Revenue $ 15,694,802

Expenses 13,410,421

Excess of revenue over expense from operations 2,284,381

Other Income (expense) (740,106)

Excess of revenue over expense $ 1,544,275

2004

$ 19,077,048

14,993,722

4,083,326

(631,641)

$ 3,451,685

Statement of Revenue and Expenses

Condensed Financial Statements

Year Ended April 30 2003

Operating activities $ 1,739,432

Financing activities (511,472)

Investing activities (5,893,235)

Decrease in cash (4,665,275)

Cash, beginning of year 12,400,812

Cash, end of year $ 7,735,537

2004

$ 3,670,411

(868,790)

(3,919,009)

(1,117,388)

7,735,537

$ 6,618,149

Statement of Cash Flows

Year Ended April 30 2003

Assets

Current assets $ 8,645,650

Restricted assets 6,503,905

Property, buildings and equipment 100,894,834

Deferred charges, net of amortization 487,261

$ 116,531,650

Liabilities

Current liabilities $ 6,597,025

Long-term liabilities

Deposit liability 18,000

Revenue received in advance 3,856,732

Deferred contributions, future expenses 4,778,214

Long-term debt 10,461,470

25,711,441

Net Assets 90,820,209

$ 116,531,650

2004

$ 7,419,178

3,834,674

104,075,302

413,601

$ 115,742,755

$ 6,818,620

12,432

4,559,869

1,411,165

8,668,775

21,470,861

94,271,894

$ 115,742,755

Statement of Financial Position

Approved by Fraser River Port Authority

Chairman Chair of the Audit Committee

July 12, 2004

The complete audited financial statements are available on request.

Fraser River Port Authority

500 - 713 Columbia Street

New Westminster, BC

Canada V3M 1B2

Phone: (604) 524-6655

Fax: (604) 524-1127

E-mail: fraserport@frpa.com

Web: www.fraserportauthority.com

2M / 9-04