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The Changing EnvironmentGlobal pressures are creating both opportunitiesand threats for the Halifax Gateway.pressure for further policy and regulatory reform willincrease rather than subside. This will increase thetrend towards globalization and continentalization.Increasing International TradeInternational trade currently accounts for over50% of world GDP, and with the emergence of theChinese and Indian economies, this figure is expectedto grow even more in the future. Increasing worldtrade is synonymous with increasing internationalcargo and passenger volumes, and success will accrueto those gateways that offer the best service quality,value, and prices.Economic GrowthThe global economy is projected to continue growingat relatively healthy rates in 2005 and 2006(4.3% and 4.4%, respectively). Over the longer term,however, two key structural changes are expectedto significantly affect the world’s economic climate.Firstly, future global GDP growth will be significantlyimpacted by the emergence of the Chinese andIndian economies. Secondly, the global economy willbe affected by fundamental changes in the world’s population(population growth will continue to slow, theworld’s population will continue to age, and the shareof the working-age population will fall in advancedcountries and increase in developing nations). Theseprojected demographic changes will have a dampeningeffect on future GDP growth.Several key issues must be addressed if the regional,provincial, and national economies are to takeadvantage of increasing global trade throughimprovements in gateways and corridors.Policy and Regulatory ChangesSince the late 1970s, the removal of regulatory barriershas permitted increased efficiencies in the transportationof goods and passengers. This has benefitedbusinesses and consumers alike across NorthAmerica. As transportation companies becomelarger, more efficient, and more globally focused, theBuilding the Halifax Gateway... A New Vision for the Future7

The Changing EnvironmentIncreasing Security RequirementsThe September 11, 2001 terrorist attacks in theU.S. prompted governments around the world tointroduce new security procedures and regulations.The new requirements have increased transportationcosts and negatively influenced overall customersatisfaction. Moreover, the possibility exists thatadditional security measures could be introducedin the future, particularily for marine and aviationactivities, which could further intensify these effects.While enhancing the nation’s security processes hasmany benefits, these efforts must be balanced tomaintain the free flow of trade and people, whichin turn maintains the competitiveness of Canada’stransportation industries and the country’s economicvitality.Increasing CompetitionGateways operate in a highly competitive environment.As the Halifax Gateway continues to growand prosper, it will undoubtedly compete with otherregions, particularly as it attempts to recapture trafficthat originates or is destined to its market area.New TechnologyNew, larger, longer range, and higher speed aircraftand ships are being developed and introduced intothe marketplace. These new assets will impact marketdeployment, entrench the role of selected gateways,and could cause carriers to further consolidate operations(in order to maximize efficiencies). Looking tothe future, the challenge for Halifax is to emerge as avalued load centre and port of call.West Coast Port CongestionThe rapid rise in trade flows between North Americaand the Asia Pacific region is putting significant pressureon North America’s west coast ports. Shippershave expressed serious concerns about the condition,capability, and future reliability of ports, road andrail services, and infrastructure. To overcome theseconcerns, shippers are explouring all options forshipping goods from Asia to North America, includingshipping product via the Suez Canal and acrossthe Atlantic Ocean to east coast gateways, creatinggrowth opportunities for gateways like Halifax.8 Building the Halifax Gateway... A New Vision for the Future

Realising the VisionAlthough global developments are intensifyingcompetition amongst gateways, they are alsogenerating opportunities for growth by expandinginternational trade. The Halifax region is wellpositioned to take advantage of these emergingmarket opportunities, however, it will need tofocus on several issues and priorities in order tosucceed.In order to become North America’s preferred easterngateway, the Halifax region’s transportationsystem must offer shippers and travelers superiorconnections, at better prices, and with higher servicequality than competing gateways.There are four issues that must be addressed torealize the Gateway’s vision.1. Market development – marketing and businessdevelopment activities will play a critical rolein the continued development of the HalifaxGateway;2. Infrastructure development and funding –Gateway infrastructure must be expanded andimproved to better serve the trade and logisticssectors;Key PrioritiesThe key priorities identified by the Gateway Councilinclude:• Obtaining federal government commitment toincrease marketing and financial support of theHalifax Gateway;• Acquiring and remediating land adjacent to theFairview Cove container terminal;• Building a common-use air cargo facility atHalifax International Airport;• Converting the existing rail cut for truck/commutertraffic and/or building an inland terminalto eliminate truck traffic in the downtown core;• Upgrading the infrastructure at the port’s containerterminals to allow for faster truck turnaroundtimes;• Building a distripark/transload logistics facility;and• Working with the Department of NationalDefence to develop a logistics hub in the region.3. Economic and industrial development –additional economic growth is required in theregion for the Gateway to prosper; and4. Government policy – government policywas identified as a key area that needs to beaddressed in order to expand business throughthe Gateway.Building the Halifax Gateway... A New Vision for the Future9

Realising the VisionMARKET DEVELOPMENTMarketing and business development activitieswill play a critical role in the continued developmentof the Halifax Gateway. These functionsencompass a broad range of activities from generatingGateway awareness/interest to specificbusiness development activities.Aggressive MarketingMarketing is a critical issue for the Gateway. Competitionamongst regions for gateway activity is intenseand strong efforts need to be taken to better positionHalifax in the regional and global marketplaces.Issues to be addressed include market positioning,market awareness, and the development of a strongbrand identity for the Gateway. The latter is particularlyimportant in order for the marketplace todifferentiate between Halifax and the range of otherpossible gateway options. In particular, stakeholdersexpressed strong feelings that a greater committmentwas needed by the federal government to increasemarketing and financial support of the gateway.Incentives and other forms of support were alsoidentified as being needed to boost activity throughthe Gateway.Market PrioritiesMany opportunities exist to significantly increasebusiness through the Halifax Gateway. However,before the region and its partners begin to activelypursue leads, work must first be undertaken toidentify these opportunities, quantify their potential,and prioritize them so that leads can be pursued in asystematic and strategic manner.Improved Competitiveness/Value-PropositionThe transportation industry is very capital intensive.In Canada, capital investment charges and variousforms of taxation account for more than half of theGateway transportation industry cost structure. Thiscost framework is significantly more than at competingU.S. gateways, and undermines the Gateway’sability to modernise infrastructure and equipment,reduces productivity, and reduces the potential todevelop effective public/private investment partnerships.To foster Gateway growth, actions must betaken to improve the cost competitiveness and expandthe value-proposition of the region. Areas cited forimprovement include:• Property taxes – because municipal governmentshave limited sources of revenue, they rely heavilyon property taxes for income. Transportationproviders, in particular, are subject to unreasonablyhigh property taxes when the level of investmentin transportation infrastructure is takeninto account.• Fuel taxes – federal and provincial tax policiesrepresent an enormous weakness and significantlyundermine the competitiveness of Canada’smarine, aviation, and ground transportationindustries. On a comparative basis, Canada’s fueltaxes are much higher than those in neighbouringjurisdictions, and excessive when comparedagainst other industrial sectors of the economy.As a result, continued efforts are required to persuadethe federal and provincial governments tofurther reduce or eliminate remaining transportationfuel taxes.• Government service levels and cost-recoverypolicy – due to fiscal constraints and governmentrestructuring, the costs of several programs andservices previously funded by the federal government(Canada Customs, Immigration, andAgriculture) are now being passed on to users inthe form of cost recovery programs. A review ofthe government’s cost recovery policy is needed,since the continued downloading of services hasthe potential to increase transportation costswithout improving services or efficiency.10 Building the Halifax Gateway... A New Vision for the Future

Realising the VisionGoal #1 – Market DevelopmentUse a coordinated approach to pursue sustainable market opportunities2006 2007 2008 2009 2010ObjectivesDevelop a strong and consistent Gateway brand identityDevelop and implement a gateway marketing strategy to increase marketawareness and demand to/from/through the regionObtain federal government committment to increase marketing and financialsupport of the Halifax GatewayIdentify and prioritise potential Gateway market opportunitiesDevelop marketing/financial incentive packages to assist in attractingbusiness to the GatewayAggressively pursue initiatives to reduce key Gateway taxation (e.g. fueltaxes, property taxes) Promote a review of Canadian agency cost recovery policiesBuilding the Halifax Gateway... A New Vision for the Future11

Realising the VisionGoal #2 – Infrastructure & Development FundingEnsure integrated infrastructure planning and aligned priorities2006 2007 2008 2009 2010ObjectivesDevelop a master plan for the Port of HalifaxAcquire and remediate land adjacent to Fairview Cove container terminalBuild a common use air cargo facility at Halifax International AirportConvert the existing rail cut for truck/commuter traffic use and/or build aninland terminal to reduce truck traffic in the downtown coreUpgrade the infrastructure at the port’s container terminals to allow for fastertruck turnaround timesBuild group staging areas at Halifax International Airport to support cruisehomeport operations.Improve access and widen apron areas at Piers 20-22 to support cruisehomeport operationsUpgrade rail facilities and servicesComplete construction of limited access highwaysObtain community support for the Gateway’s long-term growth objectivesEnsure the protection of airport buffer landsWork with business partners to protect strategic industrial locationsWork with business partners to pursue changes to allow new sources oflong-term investment capital (e.g. tax exempt bond financing)Building the Halifax Gateway... A New Vision for the Future13

Realising the VisionGoal #3 – Economic & Industrial DevelopmentGrow the economy of Atlantic Canada by expanding transportation-relatedbusinesses2006 2007 2008 2009 2010ObjectivesDevelop a master plan for distribution centre activityBuild a distripark/transload logistics facilityWork with the Department of National Defense to develop a logistics hubPromote expansion and development of logistics businesses in AtlanticCanadaEnsure existing plans and resources in Atlantic Canada are aligned to optimisetransportation planning and developmentWork with industry partners to promote a common voice for the Gateway andthe Atlantic Canada regionPromote the development of inter-organisation and inter-agency cooperation,particularly between Gateway Council membersPromote regional cooperation (domestic and cross border) to improve developmentprospects, improve ability to address complex goals, and strengthenpolitical presenceBuilding the Halifax Gateway... A New Vision for the Future15

Realising the VisionGOVERNMENT POLICYMajor opportunities exist to expand businessthrough the Halifax Gateway. In order improvethe competitiveness of the region and capitalizeon these opportunities, the Gateway will requiregovernment policy changes/reform in severalareas.International Air PolicyWhile the recent liberalisation of the Canada-U.S. airservice agreement will improve the flow of people,goods, and services between Canada and the U.S.,Canada’s competitive position in international airtransportation vis à vis the U.S. continues to deteriorateas the U.S. enters into new Open Skies airbilateral agreements with countries throughout theworld. Since 1992, the U.S. has aggressively pursuedOpen Skies agreements with other nations to expandair services and enable its carriers to fully participatein global aviation alliances. To date, the U.S. hasover 70 such agreements, which permit unrestrictedinternational air service between participating countries.By comparison, Canada has signed Open Skiesagreements with just three countries (the U.S., theUnited Kingdom, and Germany).Despite initiatives under the Smart BorderDeclaration and Action Plan, Canada’s BorderInfrastructure Fund, and other programs, delays andcongestion continue to be a significant issue, andone that negatively impacts the Halifax Gateway.The Free and Secure Trade (FAST) program, whichallows for pre-approved truck shipments from registeredshippers, is considered to be a step in theright direction. However, the availability of dedicatedFAST lanes at crossings is limited, negating the timesavingpotential of the program.In addition to new border infrastructure and staffingrequirements, the need also exists to:• Explore new policies to enable the preclearanceof trucks at inland facilities (much like what isdone for rail shipments);• Harmonise entry requirements with an emphasison security regulations;• Promote the adoption of new technologies; and• Promote the Perimeter Clearance concept.Canada - U.S. Border FacilitationSince September 11, 2001, new security and customsrequirements have increased the amount of timerequired for trucks and cars to cross the Canada-U.S.border. The cost of border delays to the Canadianeconomy is estimated to be in excess of $8.4 billionannually. In fact, the Ontario Chamber of Commerceestimates that border delays cost the automotiveindustry roughly $1 million per day. The MontrealbasedInstitute for Research on Public Policy (IRPP)concluded in a recent study that border delays add asmuch as 10 to 15% to truck transportation costs.16 Building the Halifax Gateway... A New Vision for the Future

Going ForwardIt is clear that a fundamental shift in policy isneeded in Canada.Transportation is part of the basic infrastructureof our society. Many economic sectors depend ontransportation every day, and transport costs canmake or break many businesses. As well, citizens relyon transportation to commute to work and to obtainbasic necessities. As a result, greater priority and supportfrom governments will benefit all sectors of oureconomy.With improved market awareness, the right infrastructureinvestments, regional economic growth,new policies and regulations, the Halifax region canindeed become North America’s preferred eastern gateway.The benefits to the community and the economywill be significant.Council, governments, and other stakeholders work aspartners towards the common goal of increasing thecompetitiveness of our international trade and tourismindustries through better transportation.The comprehensive set of initiatives identified abovemust be implemented to ensure that the HalifaxGateway realizes its vision of becoming NorthAmerica’s preferred eastern gateway. As these initiativesare completed, and new challenges and opportunitiesarise, the Gateway Council will update thisplan in conjunction with other industry stakeholders.The Gateway Council invites all stakeholders to participatein the ongoing development and implementationof this action plan to ensure that the Gateway’snew vision is realized.The Gateway Council has been established to:• Provide an effective formal structure for Halifaxbasedorganizations to identify and address keyregional transportation issues of mutual interestin a coordinated, integrated, and strategic manner;and• Provide meaningful input into government policydiscussions in its capacity as a broad-based,inclusive, multi-modal, and multi-faceted transportationand logistics organization.The specific objectives of the Council are:• Improve the competitiveness and efficiency ofthe transportation of goods and people throughthe Halifax Gateway; and• Promote awareness of the Halifax Gateway andits importance to the local, provincial, regional,and national economies.However, the transportation industry cannot do italone. Success can only be achieved if the Gateway18 Building the Halifax Gateway... A New Vision for the Future

Halifax Gateway CouncilMEMBERSHIPThe Gateway Council comprises senior executivesfrom industry and governments who subscribe toa common vision that the Halifax region becomethe preferred eastern gateway for North America.ACKNOWLEDGEMENTSThe Gateway Council gratefullyacknowledges the hard work and expertiseof the Steering Committee involved in preparingthis document.Honorary ChairMinister of Transport, Government of CanadaVoting MembersAtlantic Container LineAir Canada JazzCanJet AirlinesCN RailHalifax International Airport AuthorityHalifax Port AuthorityArmour Transportation GroupChairJames Frost, Halifax Gateway CouncilMembersJill McLean, Halifax Port AuthorityAlastair Cox, Halifax International Airport AuthorityFred Morley/Ruth Blades, Greater Halifax PartnershipBill MacDonald, Atlantic Canada Opportunities AgencyNon-Voting MembersTransport CanadaAtlantic Canada Opportunities AgencyDestination HalifaxGreater Halifax PartnershipHalifax Chamber of CommerceHalifax Regional MunicipalityNova Scotia Business Inc.Nova Scotia Office of Economic DevelopmentNova Scotia Department of Transportation andPublic WorksWritten and Produced on Behalf of the SteeringCommittee by InterVISTAS Consulting Inc.Building the Halifax Gateway... A New Vision for the Future19

For Further Information Contact:Halifax Gateway CouncilPO Box 336Halifax, Nova ScotiaB3J 2P6Tel: 902-426-6484Fax: 902-426-927720 Building the Halifax Gateway... A New Vision for the Future