Competitive and Efficient Freight Transportation Annette Gibbons Director General, Surface Transportation Policy TBWG Fall Plenary, Québec City, Québec, October 28, 2010 Good morning, everyone! / Bonjour à tous! My name is Annette Gibbons, and I am the Director General of Surface Transportation Policy, at Transport Canada, which includes Highway and Border Policy, Ted Mackay and his team. I was unable to attend the Boston meeting in the Spring, so I’m delighted to be here, today, in Québec City, for my first TBWG Plenary, and to have the opportunity to meet so many of our valued colleagues. 1

Presentation Overview Global Supply Chains & Strategic Gateways Infrastructure & Technology Rail Freight Urban Centres Canada-U.S. Border Looking Ahead This morning, I’d like to discuss the importance of enhancing the movement of commercial freight, both within Canada and across our land border, as a vital component of competitive trade and a healthy economy. I will provide you with a review of Transport Canada’s work in this sector, including strategic initiatives, current projects, and results achieved. So let’s get started. Competitive and Efficient

Competitive and Efficient Global Supply Chains Challenges: Congestion Reliability Infrastructure Capacity In the second decade of the 21st Century, we live in an era of rapidly evolving global supply chains and trading relationships. Consequently, we must have a transportation system that more efficiently connects Canada with its trading partners. In much the same way that Canada's economy has been integrated with the U.S. economy for decades, so the emergence of an integrated global economy means that we must take an increasingly global view of our transportation network to remain competitive. In Canada, the efficiency of our transportation system faces a number of challenges, most notably congestion, reliability, and infrastructure capacity. Our response has been to look at this global picture and develop new strategies for the competitive and efficient movement of freight. Competitive and Efficient

Improving Freight Flows Freight flows that are safe, secure, sustainable, and efficient Our approach includes: Strategic gateways and trade corridors Modern infrastructure New technologies Partnerships It follows that the role of Transport Canada is to facilitate freight flows in a manner that is safe, secure, sustainable, and efficient. This task is best accomplished through a strategic approach, including: our Strategic Gateways and Trade Corridors policy initiatives, which I’ll talk about more in a second; modernizing our transportation and border infrastructure; developing and encouraging the transportation sector’s use of innovative technologies and intelligent transportation systems; and, building and maintaining strong, cooperative partnerships with a wide range of transportation stakeholders, including many of you here today. Competitive and Efficient

Strategic Gateways and Trade Corridors Asia-Pacific Gateway and Corridor Initiative Ontario-Québec Continental Gateway Atlantic Gateway Asia-Pacific Gateway Ontario-Québec Continental Gateway Atlantic Gateway North America's closest major ports to Asia North America's closest ports to Europe and ships transiting the Suez Canal Let’s begin with Canada’s Strategic Gateways and Trade Corridors, a policy initiative with which some of you are already familiar. A key strength of this policy is its shift from entitlement- or population-based infrastructure funding to strategic and merit-based funding. Based on this principle, Transport Canada and its partners have developed three distinct regional gateway and trade corridor strategies: The Asia-Pacific Gateway and Corridor Initiative; The Ontario-Québec Continental Gateway; and, The Atlantic Gateway. So let’s take a closer look at what’s new with these initiatives. Competitive and Efficient

Asia-Pacific Gateway and Trade Corridor APGCI links Asia to Canada via our west coast ports Prince Rupert Port Metro Vancouver New berth at Deltaport increases capacity, reduces congestion Systems analysis table will identify transportation needs We’ll start in the West with the Asia-Pacific Gateway and Trade Corridor, or APGCI. Launched in 2006, the APGCI is a pan-western initiative to improve Canada’s transportation network and to increase trade between North America and Asia, via the ports of Prince Rupert and Port Metro Vancouver, on Canada’s west coast. Key to the success of the APGCI are the numerous infrastructure projects that have been completed, all of which improve freight fluidity. A good example is the new third berth, that just opened in January of this year, at the Deltaport container terminal. This project, as part of Port Metro Vancouver, both dramatically expands container operations, and reduces port congestion in downtown Vancouver, since it is situated at Roberts Bank, in Delta, B.C., well outside Vancouver’s urban core. Currently, a Western Canada Freight Transportation Systems Analysis Table is being developed. The aim of this project is to identify current, and future, physical and logistical transportation needs to support international trade. Competitive and Efficient

Ontario-Québec Continental Gateway & Atlantic Gateway - Updates Federal and provincial governments finalizing both strategies Dedicated merit-based funding for infrastructure: Customs plaza improvements Road improvements and highway twinning Moving eastward, the federal and provincial governments are currently working together to finalize both the Ontario-Québec Continental Gateway, and the Atlantic Gateway. Hopefully, these processes will be completed later this Fall, to be followed by the official release of the two strategies. Our goal is to create a modern, inter-connected, 21st century gateway and corridor system that expedites commercial freight transportation from our Eastern ports into the Canadian and American heartlands. And to further enhance the fluidity of these connected trade routes, Transport Canada has invested in modern infrastructure. Some important projects include: customs plaza improvements at Lacolle, Québec, and the Peace Bridge, the Blue Water Bridge, the Queenston-Lewiston Bridge, and the Sault Ste. Marie International Bridge, in Ontario; and, twinning Highway 1, in New Brunswick, leading to the St. Stephen-Calais border crossing. Since 2007, the federal Government has invested, or committed, 4.2 billion dollars to transportation infrastructure in Ontario and Québec, and 655 million dollars in Atlantic Canada. These investments will improve the freight transportation system throughout Ontario, Québec, and the Atlantic region. Of course, a key component of modern infrastructure is the incorporation of modern technology. Competitive and Efficient

Freight Technology Investments Remote identification of vehicles, trailers, and containers Virtual safety inspections Online licencing and permit systems To this end, Transport Canada is partnering with foreign and provincial governments, private sector companies, and academia to develop and deploy a variety of technology applications to improve freight transportation. Important new systems include: remote identification of vehicles, trailers, and containers, which is the use of Radio Frequency Identification tags that transmit information to electronic readers at specific points in the transportation network, including the border, intermodal yards, and inspection stations; virtual safety inspections, which, through the use of weigh-in-motion scales, cameras, and transponders, capture truck and driver information for inspection purposes, while the truck is in transit, thereby removing the need to pull over for a roadside inspection; and, online licencing and permit systems, which automates the application process for these documents over the internet. These are just a few examples of the many advances in information technologies and telecommunications that have improved the efficiency, reliability, and security of freight transportation, and increased global connectivity. Competitive and Efficient

Measuring Supply Chain Performance and Reliability Transport Canada is developing: Fluidity indicators, to measure total transit time from origin to destination Hong Kong to Toronto = 21.2 days (17 month average, Jan’09 – May’10) Total logistics cost index In order to measure the effectiveness of all of these initiatives and investments, Transport Canada is currently developing performance measures to gage the efficiency of the Canadian segment of global supply chains, and to determine if our gateway strategies are benefiting Canada. Specifically, we are developing system-wide fluidity indicators that will measure the time required for goods to move from origin to destination. For example, from January 2009 to May 2010, an inbound container took, on average, 21.2 days to move from Hong Kong to Toronto, via ship and truck, through BC ports. Transport Canada plans to supplement these fluidity indicators with a broader measure directly related to costs: a measure of total logistics cost. The total logistics cost approach takes a broader look at the time-to-market and reliability/fluidity picture by developing system-wide performance measures. Now, I want to touch briefly on the role of rail within the supply chain. Competitive and Efficient

Improving Rail Freight Fluidity Transport Canada has commissioned a Rail Freight Service Review, by a panel of external experts The Interim Report recommendations: 10-day service change notice Service agreements Dispute resolution process Performance reporting For heavy, bulky commodities, and containers that must travel over long distances, rail transportation can alleviate congestion on Canadian roads, reduce greenhouse gas emissions, and is safe and efficient. Indeed, some bulk commodities can be transported only by rail. To increase efficiency in this important mode, Transport Canada has commissioned a Rail Freight Service Review, conducted by a group of three external experts, to identify ways of improving the effectiveness and reliability of Canada’s rail-based logistics system. An interim report was released earlier this month, and it proposes the following solutions for improving rail efficiency in the supply chain: ten day advance notice for service changes; negotiated service agreements; a negotiated dispute resolution process; and, enhanced performance reporting. We are now gathering stakeholder input on this interim report, and a final report should be completed by the end of this year. Competitive and Efficient

Improving Freight Flow through Urban Centres Another area that Transport Canada is focusing on is the movement of freight in urban areas. As in the U.S., most Canadians live and work in cities, and as a result, population and economic growth has led to urban congestion, especially in Montréal, Toronto, and Vancouver. This is a complex issue. The need for freight haulers to transit urban areas leads to a loss in productive time and competitiveness. At the same time, the presence of large volumes of freight in cities leads to bottlenecks and delays for other road users. Transport Canada has tackled this issue through significant investments in urban transportation infrastructure---over one billion dollar’s worth in 2008-2009. In addition, modern urban transit provides an alternative to driving cars, thereby freeing up space on the road system, which allows for more fluid freight movements. While urban transportation is largely a municipal and provincial responsibility, the federal government actively collaborates in these projects because of our shared interests in trade competitiveness. One such collaborative effort was the Policy Workshop on Urban Goods Movement, held in March of this year, which contributed to an urban goods movement strategy. And now, let’s turn our attention to trade flows across the Canada-U.S. land border. Federal investments in urban transportation infrastructure were over $1B in 2008-09 Urban transit provides alternatives for drivers and relieves congestion on roads TC supports research on urban goods movement Competitive and Efficient

Improving Border Fluidity A vital link between our countries Collaboration is key in border management TBWG creates valued partnerships Because Canada’s most important trading relationship is with the U.S., and 75 percent of that trade is carried by truck, it follows that efficient freight flow across our shared land border is vital. To ensure that this critical link between our two countries, our two economies, operates at its very best, Transport Canada actively supports our shared network of land border crossings, not just by funding infrastructure and technology, as I mentioned earlier, but by collaborating with our partners in border management. Which is why we’re all here today---our key partnership on the Canada-U.S. border is the Transportation Border Working Group. Since 2001, Transport Canada has co-chaired the TBWG with the U.S. Federal Highway Administration, and I cannot overstate how important this collaborative working group is to us, and how much we value our good working relationships with The Federal Highway Administration, CBP, CBSA, the foreign affairs departments of both countries, and provincial and state departments of transportation. Competitive and Efficient

Improving Freight Flows at the Border Prioritize urgent infrastructure needs Integrate gateway and corridor systems Improve information and data exchange Harmonize trusted shipper programs Maximize use of existing facilities Balance security with trade facilitation And it is with our partners that we are addressing the challenges of improving freight flows across our land border. Together, we need to: coordinate the prioritization and planning of necessary infrastructure projects in order to get them completed, including modern customs plazas, new bridge structures, and highway interchanges for key border crossings, specifically: the Detroit River International Crossing; the Blue Water Bridge; the Queenston-Lewiston Bridge; and the Peace Bridge. We also need to: identify remaining bottlenecks at the border; integrate our gateway and trade corridor systems for seamless and secure supply chains; improve information and data exchange; harmonize our trusted shipper programs; maximize the use of existing infrastructure and technology, as we are still experiencing the limitations of fiscal restraint; and finally, balance the need for security with the need for fluid freight movements across the border. Competitive and Efficient

Competitive and Efficient Looking Ahead Challenges: Changes in global trade patterns & supply chains Continued economic uncertainty Enhanced security requirements Need for greener systems Solutions: Strategic Approach Research & Technology Partnerships And so…what lies ahead? We know that future challenges to trade fluidity may well include: changes in international commerce and trade patterns, global supply chains, and cross-border traffic; continued economic uncertainty; enhanced security requirements; and, increased need for greener systems. Therefore, we will need to replicate this same targeted, strategic work on border issues on a larger scale, to improve fluidity across the entire supply chain system. We must continue to work together to develop new solutions, incorporating up-to-the minute research and innovative technologies, to maximize competitiveness. I want to assure you that Transport Canada remains committed to enhancing the fluidity of freight movement throughout Canada---along our supply chains, and across the border---to support Canada’s trade competitiveness on all fronts. -------------------- In closing, I want to highlight the importance of the work done by this group, and the need for continued collaboration between government departments, and with our American friends. This truly is the way forward. It has been a pleasure speaking to you this morning, and I hope you enjoy the rest of our Fall Plenary. Thank you. Competitive and Efficient

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