By IAN ROSS
To market itself as a transportation gateway to the U.S., Sault Ste. Marie must attract big shippers willing to ship large volumes of containers through a highly-efficient intermodal hub, says a York University logistics expert.
Whether small Canadian cities like the Sault can tap into the growing worldwide containerized freight business depends on “location and connectedness,” says Markus Biehl, a professor in supply chain management at the Schulich School of Business.
Biehl says the Sault’s multi-modal initiative has a “fairly decent chance” to succeed if the proponents can manage the myriad of complex variables of inter-modal systems, as well as getting buy-in from the railways.
The city’s logistics study team lead by KPMG LLP are half-way through a four-part study of how the Sault fits into the global scheme of supply chain management.
Local officials want to take advantage of congested southern Ontario border points to siphon off U.S.-bound container freight through the Sault.
The city wants to build a business case to attract the attention of shippers, carriers and freight handlers to use their under-utilized and under-developed Sault Ste. Marie International Bridge.
Before that happens, there needs to be a major track upgrade by the Canadian Pacific Railway (CP).
The study released June 25 attaches a $154 million price tag to address overall gaps in the area’s transportation infrastructure, including a minimum $75 million reconstruction of the deteriorating track between the Sault and Sudbury.
To add an intermodal terminal would require a $28 million investment to expand the International Bridge Plaza with more traffic lanes to handle hundreds of trucks would mean a further $51 million.
A rail-to-road transfer at the Sault is necessary, since a railway bridge spanning the St. Mary’s River does not have enough overhead clearance to accommodate double-stacked container rail cars.
The city is served by both Canadian Pacific and the Canadian National Railway (CN). CP’s line is leased to the Genesee & Wyoming Inc. and its subsidiary, the Huron Central Railway.
CN is against diverting containers from its already established routes. CP will only do it if customers demand it.
Despite the enormous investment required, the Sault’s Multimodal Task Force chairman Bill Therriault firmly believes handling international container traffic offers the best upside. The domestic freight traffic will always exist, says Therriault, “but it’s not something that has huge opportunity for us.”
The consultants say CP management couldn’t justify the expense for the track upgrade based on the line’s low freight volumes and few customers. But the report says the line is rapidly deteriorating with worn rail, defectives ties and broken tie plates among other deficiencies. A CP spokesman was not available for comment.
“That line is not in good shape,” says Therriault, who adds the railway acknowledges it must spend $40-$50 million to keep their existing business.
But with no provincial funds likely for track upgrades, the money must come from the railway.
And building a Sault intermodal terminal needs a private sector champion. Finding that investor needs more study, says Therriault, who adds one undisclosed company has shown some interest.
“This is far from a done deal,” says Therriault, but his group wants to explore the full potential of all the Sault’s transportation options.
The consultants say the whole multi-modal initiative could create as many as 475 direct and indirect jobs, generating $95 million in local economic activity annually.
Intermodal systems work best with mass movements of containers, especially by rail, to major markets, says Biehl. “That’s where rail wins over truck. If you have great distances, it make sense for bulk shipments, then send it container-by-container by truck.”
To overcome that, Biehl says a Sault terminal must demonstrate fast turn-around times in unloading containers and the proponents must guarantee border transit times to clear U.S. Customs.
Biehl says the Sault might have a chance to be a very specialized, low to mid-volume provider “with a very good service level” especially if a deal can be struck with Customs to speed shipments through. “Instead of four to six hours at Customs before the shipment clears, three hours and that’s it.”
Larger intermodal facilities are expensive to build and require “cutting edge technologies” to move and track containers. Some high volume yards use automated guided vehicle systems (mobile robots) to move freight.
The Sault must also find “repetitive traffic” such as auto parts, which are shipped on fixed ‘just-in-time’ schedules to assembly plants. Service and reliability are key, says Biehl.
He adds most major companies use logistic optimization software to help them deal with loading planning, scheduling, distribution and in choosing the best routing.
If the city and its private partners can minimize the variables, Biehl says the software will indicate the Sault concept is a preferred route.
