August 10/17 – Part 1: Fairview, selling the Rupert model



Prince Rupert’s future as a port was in jeopardy in 2003.

Port throughput had read a peak in 1994 with 13.8 million tonnes and then declined to 4.03 million tonnes by 2003.

CEO and President Don Krusel of the Port of Prince Rupert sat down with The Northern View to reflect on the past decade and how the business went from despair to the fastest growing container terminal in North America.

“1988 was our peak year of lumber shipments through Fairview, when we shipped nearly one million tonnes of various forest products,” Krusel said, animated by the rags to riches tale he’s shared many times over.

“I remember it was dangerous to go into the terminal because you’d go into these canyons of lumber and forklift trucks just flying around, three ships at the berth all at once.”

When the downturn hit, they were down to 20,000 tonnes of forest products, and then down to zero by 2002. The port authority began discussing what they could use Fairview for, even considering turning it into a landing strip for an airport, but the length was too short.

“That was the kind of desperation,” Krusel said. “We had a wind up plan for how we were going to close the offices.”

Time had run out and the port authority only had one play left — containerization.

The business concept had been discussed for nearly 10 years, but Krusel said the concept of creating a container terminal at a small report port was laughable in the industry.

“Back then, the industry experts didn’t believe it could be done. There’s a great sense of pride for everybody that actually we saw something that was unique, that Prince Rupert could achieve, and we went against the grain and were successful,” he said.

Design and engineering work into converting Fairview into a container terminal began in early 2004. The port authority hired a consultant and they called it Project Silk — to recreate the silk trade, an ancient route in Asia. Then an economic study was done to see if the project made sense.

“It made sense to ship containers from Asia into the heartland of North America through an uncongested port,” he said.

Traditionally container ports are built in metropolitan areas to service the area and then as a secondary business they will add containers to the west coast to ship east to Chicago or Toronto. But what the Prince Rupert Port Authority was suggesting was to be entirely dedicated to ship products from Hong Kong or Shanghai all the way to Chicago or Toronto.

Krusel and port authority staff travelled around the world with an artist rendering and tried to convince them that Prince Rupert was a viable, if not more efficient, model. But when people realized how far up north the port was they questioned how often the water froze over, and they had to dispel the myth.

The other hurdle was that the port authority was broke and they needed $170 million to build Fairview.

Yet despite the initial challenges, the cards began to stack in their favour. While the port authority was trying to sell its geographically unique business model, China was emerged as a manufacturing giant and there was a sudden surge of consumer products overloading container terminals on the west coast.

“We were back at the dance and suddenly everyone was looking around and all the dance partners who were tired and we finally got some traction. We were able to attract Maher Terminals to come on board, we were able to attract the interest of CN Rail,” Krusel said.

The B.C. government under Premier Gordon Campbell was convinced of the vision and committed to $30 million in funding for the project, the federal government matched the provinces funding, Maher Terminals offered $60 million, CN Rail gave $15 million and then another $10 million for upgrading the northern line. The Port of Prince Rupert put in every last penny it had and borrowed up to $22 million.

On June 13, 2005 the port authority moved ahead with the Fairview conversion.