A container ship is loaded in the Port of Montreal, on Sept.19.Christinne Muschi/The Canadian Press
The Port of Montreal has secured up to $150-million in federal funding for its container terminal expansion project in Contrecoeur, a key piece of transportation infrastructure needed to service markets in Quebec, Ontario and the U.S. Midwest.
Federal Transport Minister Pablo Rodriguez announced the investment Tuesday in Montreal, together with port management. New details were also provided about how the project will be carried out, with the Montreal Port Authority saying it is scrapping the original project delivery model and shouldering a significant piece of the construction work itself.
Prime Minister Justin Trudeau’s government is under growing pressure to improve Canada’s transportation and logistics infrastructure, hit in recent years by a series of disruptions from protester blockades to wildfires and floods. The country’s supply chain is approaching its “breaking point” and easing congestion at ports is a priority, a federal task force concluded in a report last October.
The rapid rise in inflation and higher construction costs have triggered a dramatic jump in the price tag for the Contrecoeur project, The Globe and Mail reported in April. Cost estimates for the new terminal on the southern flank of the St. Lawrence River have ballooned to $1.4-billion, roughly 50 per cent more than the maximum $950-million calculated in 2019 before the COVID-19 crisis.
That new reality has forced a rethink of how the project will be executed. The Port Authority said Tuesday it has cancelled its original procurement process launched in 2021, by which it was seeking a private partner to construct the entire facility and operate it under a so-called design-build-finance-operate-maintain model.
The Port Authority said it will instead proceed with a hybrid model that will see it carry out all of the project’s in-water works with the guidance of a specialized firm, including dock construction and dredging. Work to be done on land, including the container yard and rail line connection, will be carried out with a private partner to be selected after a request for proposals early next year. That private partner will also operate and maintain the terminal.
Executives with the Montreal Port Authority launched negotiations with federal government officials late last year aimed at obtaining additional financing for the project beyond a $300-million loan pledged through the Canada Infrastructure Bank (CIB). Tuesday’s announcement of $150-million is in line with what the port was seeking.
A deal with Ottawa was seen by port officials and industry groups as imperative to finalize funding for the project and begin construction on new container capacity. Despite declining container volumes in recent months, container cargo handling at the port is expected to reach its limit in 2027.
In addition to the CIB, Quebec has pledged $130-million of public money for the new terminal, increasing its commitment by $75-million in its spring budget. The balance of the project financing will come from the port authority’s own borrowing and one or more private-sector investors that have yet to be announced.
East Coast ports such as Philadelphia and Baltimore, Md., have spent billions in recent years to upgrade and expand their container facilities as demand continues to increase. U.S. President Joe Biden’s infrastructure program pledges billions more, including US$6.5-billion exclusively for port programs and another US$27-billion that ports would be eligible to apply for, according to the American Association of Port Authorities.
Montreal is holding its own for now, handling 36 million tonnes of cargo last year, a 5.8 per cent gain from the year before. But Canada’s second-biggest port needs to remain attractive for shippers and analysts have said it will lose business to competing ports if it’s not able to expand and modernize its facilities.
Contrecoeur, located about 40 kilometres downstream from Montreal, would boost the port’s capacity by 1.15 million TEUs (20-foot equivalent units), to more than three million. Plans for the new terminal call for a 675-metre-wide docking platform with berths for two ships, eight loading cranes and a container storage yard.