New fees at the Port of Vancouver will weaken grain basis levels, according to the Western Grain Elevator Association.
The Vancouver Fraser Port Authority began collecting new gateway infrastructure fees on Jan. 1, 2023, amounting to eight cents per tonne for terminals on the north shore and 40 cents for terminals on the south shore.
Those fees are going to work their way back to growers.
“It’s not as though it’s a deduction on a cash ticket or anything like that,” said WGEA executive director Wade Sobkowich.
“But it’s an added cost to the system just like anything else that a grain company puts into their basis, like transportation costs or property tax or labour.”
Some of the owners of terminals on the south shore, including Viterra ÎÚÑ»´«Ã½ and Parrish & Heimbecker, are taking the port to Federal Court over the fees.
The WGEA is seeking intervenor status in the case as are the provinces of Saskatchewan and Manitoba.
“As a province that depends heavily on exports, Saskatchewan wants to ensure that the full impact of new port fees on key sectors of our economy is taken into consideration,” Saskatchewan’s justice minister Bronwyn Eyre said in a news release.
“These fees could significantly increase costs for Saskatchewan goods moving through the Port of Vancouver and diminish ÎÚÑ»´«Ã½’s overall competitiveness.”
Forty-four percent of all of Saskatchewan’s exports went through the Port of Vancouver in 2020, or $12.2 billion worth of goods. That includes $8 billion in agriculture and agri-food products.
“Port of Vancouver is trying to impose new gateway infrastructure fees that in our view places an unfair and unnecessary burden on bulk terminal operations like grain,” P&H chief executive officer John Heimbecker said in the release.
“Given that a significant portion of those costs will inevitably be borne by prairie grain farmers, it’s only right that the Government of Saskatchewan would intervene to protect their interests and we’re thankful to the premier and his ministers for doing just that with today’s announcement.”
The WGEA has numerous concerns about the fees, including how they are being apportioned.
The port has not made it clear why terminals on one side of the port are paying way more than terminals on the other side.
Sobkowich believes it has something to do with the Roberts Bank Terminal 2 (RBT2) project, a proposed new container terminal located on the south side of the port.
He believes the port wants to charge terminals on the south side more due to anticipated higher traffic volumes and the need for more port infrastructure to service RBT2.
Another problem is that the fees are being apportioned on a per tonne basis rather than per carload.
“The per tonnage formula favours lighter traffic, which really are containers, and disadvantages heavier traffic like grain,” said Sobkowich.
The WGEA is also concerned that projects such as a rail overpass are included in the cost recovery formula, while a new ship loader at a terminal is not.
Both of those projects create efficiencies in the supply chain, yet one is included while the other is not.
“Why is that? That doesn’t make sense,” he said.
Sobkowich said the new fees are an example of a major concern the WGEA has regarding port governance, which is the port’s conflict of interest.
“They’re both a developer and a regulator,” he said.
The RBT2 project is being developed by the port rather than a commercial entity. And the port is collecting fees to help cover the infrastructure costs related to that development.
Bill C-33 is proposed legislation that will amend the ÎÚÑ»´«Ã½ Marine Act. But it does not address the conflict-of-interest problem with port governance, said Sobkowich.
