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CN Rail in bid for Halterm

CN Rail has disclosed that it is bidding with an unnamed partner for the Halterm terminal at the Port of Halifax.

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Halterm is one of two container terminals at the Port of Halifax
Halterm is one of two container terminals at the Port of Halifax

CN has confirmed to Canadian Press that is making a joint bid for the Halterm Terminal in Halifax, Nova Scotia. The lease on Halterm was purchased by Macquarie Infrastructure Partners fund in 2007, and was renewed for a 20-year term in 2014. Macquarie is now looking to sell Halterm, and other port assets in its various infrastructure funds.

 

Halterm operates the south end terminal in Halifax, one of two container terminals in the city. The port performed strongly last year, registering a 16% increase in container volume to 559,242 TEU. Growth has slowed down in 2018, rising 0.7% to 275,839 TEU in the first half of the year.

 

Earlier this year the Halifax Port Authority (HPA) announced it will extend Halterm “temporarily” to enable it handle two large container vessels simultaneously by extending the berth by 135m. At the same time the HPA is preparing a new master plan that will address its future capacity needs.


CN Rail, one of Canada’s two Class I Railroads, is focused on the intermodal business as a growth driver for the company in the coming years. It has not been confirmed, but CN is likely partnering with DP World to make a bid for Halterm.

 

After it was prohibited from purchasing the US assets of P&O Ports on national security grounds, DP World made a series of successful investments in Canada. Starting with the Centerm terminal in Vancouver, DP World subsequently invested in Price Rupert (purchased from Maher Terminals), a three-year lease at Nainaimo on Vancouver Island, and then a 35-year lease at Saint John New Brunswick.

 

Prince Rupert has emerged a successful ‘rail only’ container terminal. CN owns the only rail line connecting to the port, and DP World owns the terminal assets. Almost all of the port’s container volume is moved inland by rail, and there is plenty of discussion in Canada about replicating this model on the eastern seaboard. It would be a logical step for CN and DP World to be joint venture partners in Halterm to pursue this.

 

The news has generated a lot of interest in Nova Scotia, where there are several competing locations vying to be a new gateway to the Canadian and US hinterlands, including Halifax, Melford International Terminal and Novaporte. More recently Quebec City in Quebec has announced plans for a new terminal that would also compete for the gateway role.

 

CN’s move to make a joint bid for the Halterm lease is a clear signal that it sees more potential in investing in Halifax as a future gateway than either the Melford or Novaporte greenfield cites, both of which would connect to the CN network through a short-line rail operator.

 

Melford and Novaporte have yet to move forward to construction. Both have signed up terminal operators in Ports America (Novaporte) and SSA Marine (Melford), but neither has committed to building a terminal without a volume guarantee from a shipping line and/or significant funds from another investor. With CN moving to make an investment in Halifax that prospect becomes more difficult.

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