Montreal port expansion would be ‘unprofitable,’ study finds

A study commissioned by the Society for Nature and Parks (SNAP Québec) argues that the proposed expansion of the Port of Montreal in Contrecœur risks being a “financial burden on taxpayers” and is based, in part, on unrealistic projections.

SNAP Québec, an organization dedicated to the protection of nature and endangered species, plans to challenge the Port of Montreal expansion project in federal court, arguing that it would jeopardize the survival of the copper redhorse, an endangered species of fish.

On Tuesday, the same organization, which is threatening to sue the federal government for authorizing the project, published a study that argues this infrastructure risks being “underutilized, unprofitable, and a financial burden on Canadian taxpayers.”

‘Unrealistic’ projections

The proposed expansion of the Port of Montreal in Contrecœur, which Prime Minister Mark Carney hopes will be approved and expedited under the Building Canada Act, “is based on unrealistic projections of increased container traffic in the St. Lawrence River,” according to Éric Pineault, a professor in the Department of Sociology at UQAM’s Institute of Environmental Sciences.

As an example of these unrealistic projections, the two co-authors of the study published Tuesday morning, Pineault and researcher Henri Chevalier, a doctoral candidate at the University of Waterloo, cited data published by the Montreal Port Authority (MPA) in 2017 in a document justifying the expansion of the Contrecœur port terminal.

At that time, the Montreal Port Authority (MPA) indicated that “container traffic at the Port of Montreal was expected to nearly double between 2016 and 2030, increasing from 1.45 million to 2.47 million TEUs” (Twenty-Foot Equivalent Units), and that the port therefore needed to be expanded.

“Contrary to what the Port projected in its 2017 study, there has been no continuous growth in traffic over the past 11 years,” and the container traffic volume, estimated “at approximately 1.5 million TEUs in 2025,” is not reaching “the levels projected in the 2017 study that justified the Port’s expansion,” note researchers Pineault and Chevalier.

There is indeed a “stagnation in the container market,” argues Jacques Roy, former professor of operations and logistics management at HEC Montréal, who reviewed the study.

However, the retired professor adds, “we have to be realistic,” because “the federal government is counting heavily on diversifying trade,” and finding partners other than the United States for trade “will only happen through maritime transport.” Therefore, according to him, the port expansion “comes at the right time for the government’s objectives.”

Also, Roy adds, “perhaps by opening interprovincial borders, Montreal could serve as an entry point for goods from Europe for redistribution throughout the rest of the country.”

This kind of opportunity “hasn’t been there in recent years,” but it could arise in the future.

St. Lawrence isn’t deep enough

A study commissioned by SNAP Québec highlights that maritime transport is evolving towards a fleet of ships that are “too large” to navigate to Contrecœur.

“Maritime trade trends are working against Montreal: the global fleet is now focused on mega-ships requiring deep-water ports,” while “the shallow draft of the St. Lawrence River prevents Montreal and Contrecœur from accommodating mega-ships.”

Contrecœur would therefore be “uncompetitive compared to hubs like Halifax or New York” and risks remaining “a secondary port, unattractive to major shipping alliances.”

This argument, according to Roy, “deserves some nuance.”

“There are major international hubs, but Montreal has never really aspired to compete with its major ports.” Montreal has a different role, and its port is more of a “port of origin and destination” than a port where “containers are transferred” from mega-ships to smaller vessels.

Furthermore, the analysis by researchers Pineault and Chevalier considers that “climate constraints” weigh on “the future profitability of the terminal,” because climate change “is altering the hydrological regime of the St. Lawrence River, causing chronic low water levels that compromise the navigability and reliability of the maritime corridor.”

Private sector contribution unknown

The Montreal Port Authority (MPA) plans to increase the port’s annual capacity by 60 per cent through the expansion of its terminal in Contrecœur and intends to use this site to increase its container handling capacity. It estimates that up to 1.5 million containers per year could pass through this future terminal, which is partly financed by public funds.

The analysis published Tuesday indicates that the project relies on “primarily public funding: $300 million from Ottawa, $130 million from Quebec, and $480 million borrowed by the Port of Montreal.” Its total cost, the report states, “has jumped by approximately 150%, from $950 million to $2.3 billion.”

The Contrecœur project “presents significant risks of unprofitability despite public funding guarantees, following a pattern observed in several recent industrial and infrastructure projects,” such as Northvolt and Lion Electric, the report’s authors point out.

“If there were no developer, I would say it’s a rather risky project,” says Roy, “but since there’s a private developer willing to invest, that somewhat counterbalances the argument that it’s not profitable.”

The Emirati group DP World will operate the future Contrecœur terminal, but it’s unknown how much money this group is prepared to invest in the project.

“We don’t know the private investments, and I would say that, until that’s settled, it’s perhaps a bit premature to move forward” with the port expansion, explains retired professor Roy.

Biodiversity threat

The port expansion project involves dredging the St. Lawrence River bed within the range of the copper redhorse, an endangered species.

The copper redhorse is found nowhere else on Earth except in a limited section of the St. Lawrence River and a few tributaries, such as the Richelieu River, where it breeds.

Last Thursday, the Port Authority of Montreal (PAM) announced that it had obtained a permit from Fisheries and Oceans Canada (DFO) “for the expansion of the port facilities in Contrecœur and the continuation of construction of the new container terminal,” in the copper redhorse’s habitat.

SNAP Québec intends to challenge the validity of the permit issued.

–This report by La Presse Canadienne was translated by CityNews