Canada in 2020 (Trade): From Russia with love

Global warming is good news for companies and politicians looking to build Churchill into a central trading hub.

The Russian vessel Kapitan Sviridov docked in Churchill, Man., after having sailed from Estonia. Its cargo — Russian fertilizer that would be sold to farmers across North America — was the first shipment from Russia that had ever landed at the Port of Churchill, as most ships using the port exported Canadian Wheat Board grain and returned empty. A celebratory reception was held for the incoming ship, with officials from the Russian Embassy, the Port of Churchill, Murmansk Shipping and the government of Manitoba in attendance. Mike Ogborn, the managing director of OmniTrax Canada, the Winnipeg-based company that owns the Port of Churchill and Churchill’s rail link, the Hudson Bay Railway, called the arrival of the ship “a great step forward in showing the world that the Port of Churchill is a two-way port.”

The celebrants at the October 2007 event were hoping this would prove to be a vital moment in the development of the so-called Arctic bridge, a potentially massive shipping route connecting northern Europe to Churchill. Over the past decade, an alliance of business leaders, North American railway owners and Russian and Canadian politicians have collaborated to promote the route. Today, two years after the first arrival of European cargo in Churchill, many feel the prospects for the route are better than ever. If the Arctic bridge does become a reality, it could funnel a massive amount of exports and imports from across North America and Europe through Manitoba, increasing Canada’s overall trade and boosting our prosperity.

Like the long-fabled Northwest Passage, the Arctic bridge seeks to take advantage of the Arctic waterways to shave considerable time from standard routes. While the fertilizer shipment came from Estonia, the main eastern hub of the proposed Arctic bridge would be the seaport of Murmansk, located in the extreme northwest of Russia, just east of Finland. From there, ships would cross the North Atlantic, the ice-filled Hudson Strait and Hudson Bay, landing at the Port of Churchill. Cargo would be loaded onto Churchill’s slow and humpy railway to Winnipeg, which has access to major rail and air-shipping facilities, and is only a day’s drive from millions of American Midwesterners.

Geography and climate will make the Arctic bridge an inevitability, according to former foreign affairs minister Lloyd Axworthy, who is chairman of Churchill Gateway Development, a partnership formed in 2003 to promote links between Churchill and the rest of the world. “The political and business establishment in Canada still thinks along east-west lines,” says Axworthy, who is also currently president of the University of Winnipeg. “But global warming is making Arctic shipping routes more feasible with each year, and freight shipping in North America is destined to take on much more of a north-south orientation.”

The National Snow and Ice Data Center, based at the University of Colorado at Boulder, has tracked Arctic ice since 1978, and it recently announced that, as of September 2009, the Arctic ice pack is 34% smaller than it was on average between 1979 and 2000. With global warming, the Hudson Bay shipping season has lengthened considerably. Fifteen years ago, the first ship usually arrived at the Port of Churchill in late July, and the port closed in October. But nowadays the first ships are usually able to make their way through the ice by early July, and the last ones depart in November. The longer shipping season creates tremendous economic potential, not just for Churchill but for all of the Arctic. Some scientists now believe that the Arctic may be ice free by 2015, and northern countries are preparing for the possibility that the legendary dream of a Northwest Passage is about to come true.

Axworthy says the concept for the Arctic bridge was hatched during his term as foreign minister in the mid-’90s. He says he was motivated to pursue the idea because of his interest in the potential of the North, and the opportunities the Arctic bridge provided for co-operation between the world’s most powerful nations. “So far, you’ve seen nations like Russia and the U.S. staking their claims in the Arctic by running around planting flags and practising gunboat diplomacy,” he says. “But if we establish an atmosphere of co-operation and dialogue on matters of trade and even sovereignty in the North, we’ll be much better at establishing co-operation on issues of international security. It’s important to recognize that the Arctic bridge project isn’t just about garnering business for Manitoba and Canada. It’s also about building a more co-operative world.”

During the Second World War, Murmansk was of crucial importance to the Allies as an importation point for military equipment, vehicles and other raw materials from North America, and Russian officials hope the seaport will reclaim its significance.

The time savings of the Arctic route are substantial: The ocean voyage from Murmansk to Churchill takes only eight days, while the route from Murmansk through the St. Lawrence Seaway to the Great Lakes takes about twice as long. Going to Churchill instead of Thunder Bay would shave 3,700 kilometres off the journey from Oslo, about 1,800 km off the trip from Rotterdam and about 2,680 km off the journey from Murmansk. The Russians are so keen on taking advantage of these efficiencies that they have offered Canada the use of their nuclear-powered icebreakers to keep the Hudson Bay route open year-round. Canada has declined, with the official explanation that federal laws don’t allow nuclear-powered vessels in coastal waters, but according to Axworthy, the government of Canada may also be motivated by national pride. “I suspect that Ottawa is a little touchy about being shown up by the neighbours. Other countries are well ahead of us in gearing up for the development of the Arctic.”

Time is money, and transporting freight by ship is much quicker than moving it by rail or road, so it’s advantageous to get as close as possible to the centre of the continent before loading or unloading ships. Churchill is the closest seaport to the enormous grain-producing regions of Western Canada, and is linked to the continental railway grid and the American Interstate Highway System. After leaving Winnipeg, cargo can be moved to Asia via ports in Vancouver, Delta, B.C., and Prince Rupert, B.C.

According to Churchill’s mayor, Mike Spence, there is long-established resistance to the idea of promoting Churchill as a port, due to historic problems with the ice-clogged shipping route through the Hudson Strait, but also due to regional chauvinism. “Vested corporate interests in Ontario and Quebec don’t like the idea of Manitoba taking business away from the St. Lawrence Seaway,” he says. “But change is inevitable. Ships keep getting larger, and it’s gotten to the point that the Seaway can’t handle ocean-going vessels because they can’t fit through the locks, so freight has to be loaded onto lake boats then offloaded again at the bottom end of the Seaway to be loaded again onto seagoing ships. Our port can handle ocean-going Panamax vessels, which means freight doesn’t have to be handled three times. The Arctic bridge route is a lot more efficient.”

Besides the ice-bound Hudson Strait, the second-biggest obstacle for the Arctic bridge is the rough railway roadbed from Churchill to southern Manitoba. The northernmost section of the railroad runs over muskeg and permafrost, and the track is so uneven that trains have to run slowly. But OmniTrax is working at shoring up the roadbed, and Ogborn says that as the route from Murmansk

to Churchill becomes more viable, the company will continue to improve railway infrastructure. In 2007, the Harper government invested $68 million in the Arctic bridge project, $60 million of which was earmarked for improvements to the railway, and $8 million toward the port. Ogborn says the infrastructure improvements are already making a big difference in the speed and efficiency of trains moving supplies to and from the northern seaport. “We’ve seen a 37% improvement in transit times along the most difficult part of the route. In the next couple of years you’re going to see a major increase in the number of ships coming to Churchill, and we look forward to a shipping season that could soon grow to a solid five months a year, and move more than one million tonnes of supplies.”

Freight would proceed south along the Hudson Bay Railway to Winnipeg, where the private sector and government are spending hundreds of millions of dollars to build CentrePort Canada, a new shipping and handling facility built on 20,000 acres near the Winnipeg airport that will co-ordinate freight shipping by air, rail, truck and sea. In April 2009, Harper’s government contributed more than $100 million in federal infrastructure funds to CentrePort. Because of its central geographic location, Winnipeg over the next 20 years will become a massive transport, trade, manufacturing, distribution and logistic centre.

If the Arctic bridge route succeeds in linking the centre of North America to markets in Europe and Asia, Manitoba could experience the same sort of growth spurt that has occurred in Saskatchewan and other western provinces. Lloyd Axworthy says the balance of economic power in Canada is shifting west, and Winnipeg could be the beneficiary. “In the early years of the 20th century, Winnipeg was the third-largest city in Canada,” he points out. “Promoters called it ?the Chicago of the North,’ because it was such an important freight distribution centre. The Panama Canal put an end to that, but the Arctic bridge route could once again give Winnipeg the economic importance it enjoyed a hundred years ago.”

And what’s good for Winnipeg could also be good for the country. While Churchill might take away some business from Canadian ports in the St. Lawrence Seaway, it would also likely take a chunk of business from the Central American Seaway and coastal ports, boosting Canada’s overall role as a trading centre for the entire region.