VZCZCXRO6050
RR RUEHGA RUEHQU RUEHVC
DE RUEHHA #0059/01 2331800
ZNR UUUUU ZZH
R 211800Z AUG 07
FM AMCONSUL HALIFAX
TO RUEHC/SECSTATE WASHDC 1206
RUEHOT/AMEMBASSY OTTAWA 0460
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHHA/AMCONSUL HALIFAX 1278

UNCLAS SECTION 01 OF 02 HALIFAX 000059 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CAN 
 
E.O. 12958: N/A 
TAGS: EWWT ELTN ETRD EINV ECON CA
SUBJECT: CAPTURING ASIAN CONTAINER TRAFFIC: INVESTORS PROMOTE NEW 
GREENFIELD SUPER-PORT IN NOVA SCOTIA 
 
REF: A. HALIFAX 000055; B. 06 VANCOUVER 1366 AND PREVIOUS 
 
HALIFAX 00000059  001.2 OF 002 
 
 
 
¶1.  Sensitive but unclassified.  Protect Accordingly 
 
¶2.  (U) SUMMARY:  A team of local Nova Scotia investors 
confirmed that they have the financial backing and the right 
partners to build a new world-class container handling facility 
in the Strait of Canso at Melford.  With Asian trade volumes 
booming and lots of U.S. business interest in both the import 
and export potential of the project, the proponents are looking 
at a start-up date of 2010 for the new, 1.5 Million 
twenty-foot-equivalent unit (TEU) facility, a possibility which 
has Halifax officials worried about the impact on their port's 
competitive status.  END SUMMARY 
 
¶3. (U) On August 8, Consul General, FCS Senior Commercial 
Specialist, Pol/Econ Specialist, and CBP Port Director met with 
Paul Martin, President of Melford International Terminal Inc 
(MITI), and his colleague, MITI CEO Bob Stevens, to discuss 
their proposal to build a US$300 million container facility in 
Melford, Nova Scotia.  Melford is an industrial port 190 miles 
east of Halifax on the mainland of the Strait of Canso, which 
separates mainland Nova Scotia from the Island of Cape Breton. 
Martin and Stevens are also principals of Trident Holdings, 
Inc., a Halifax-registered merchant bank and lead investor in a 
group that includes several other Nova Scotia private entities. 
U.S. companies involved in the venture include terminal operator 
SSA Marine of Seattle, CenterPoint Properties of Chicago as the 
primary developer of an adjacent logistics park, and RailAmerica 
as the provider of a new rail spur line to the terminal. 
TransSystems of Kansas City, MO, is engaged in the planning and 
design of the terminal. (A map and a summary of the project are 
available on Canada's Economy and Environment Forum at: 
http://www.intelink.gov/communities/state/can ada/archives/c 
apturing_asian_container_traf.html) 
 
¶3. (U) The MITI principals acknowledged that there were 
tremendous risks involved in building a greenfield container 
facility in a province that already has two underutilized 
container piers in the Port of Halifax (ref A).  Nonetheless, 
Martin told the CG they are convinced that the tremendous 
upswing in Asian cargo through the Suez Canal to North American 
ports makes the project a viable proposition and, given the 
capacity crunch in west coast ports, there would be more than 
enough cargo for both Halifax and Melford.  In fact, Martin and 
Stewart envision the Melford terminal to be a natural complement 
to the port of Halifax as opposed to a competitor. 
 
¶4. (SBU) Martin noted that like Halifax, Melford has many 
geographic advantages such as a deep, ice-free harbor capable of 
handling even ultra post-PANAMAX vessels (which can carry over 
12,000 TEUs), plus the advantage of shorter steaming times from 
Europe and from Asia through the Suez canal than eastern U.S. 
ports.  However, unlike Halifax and other new port developments 
in North America, Melford is a greenfield site. Rather than 
retrofitting or modernizing an existing port facility, the 
developers can take advantage of a surplus of vacant land to 
construct a state-of-the-art container facility capable of 
handling the largest container vessels and an adjacent logistics 
park that would provide distribution and warehouse facilities 
for importers.  Yet another advantage is a skilled labor force, 
which Stevens believes would be inclined to accept a more 
competitive labor agreement than their counterparts at other 
North American ports. 
 
¶5. (SBU) Disadvantages of the project include the absence of a 
rail line to serve the new port and no Canadian and U.S. customs 
inspection facilities.  Nonetheless, Martin indicated that Rail 
America, which operates the short line railway that passes near 
Melford, was committed to expanding its line to link up with the 
port.  Martin indicated that Canadian National Railways was also 
interested in the project.  He described CN as having already 
put its "stake in the ground" by its proposal to build a customs 
clearance facility, which would go a long way in confirming the 
viability of the project 
 
¶6.  (SBU) So far the proponents have spent C$5 million to 
complete their market assessment overview of the proposal (all 
without government help as Martin and Stevens were quick to 
point out).  In terms of customers for the port, Martin said 
they are focusing on those carriers who do not have dedicated 
ports, and targeting those shippers who are looking for a 
variety of ports to ensure uninterrupted service.  For example, 
according to Martin, Wal-Mart is looking for an additional five 
ports of entry in North America through which to bring in its 
merchandise.  Other potential customers are located in the 
Atlantic region, Quebec and Ontario, New England, the Ohio 
Valley and the U.S. mid-west.  Interestingly, Martin revealed 
that the governments of Ohio, Massachusetts, Maryland, Maine and 
 
HALIFAX 00000059  002.2 OF 002 
 
 
Pennsylvania have expressed an interest in using Melford to 
export goods from their states. 
 
¶7. (U) With the marketing overview already complete, the next 
step is the permitting phase (including environmental 
assessments) and detailed design work, followed by the actual 
marketing of the facility.  Both Martin and Stevens are 
confident that they will have no regulatory problems in securing 
the go-ahead for their project and envision starting the 
construction phase in the first quarter of 2008 with a start-up 
date of late 2010.  The likelihood that the project would move 
forward on schedule was increased when, on July 27, the local 
municipal government voted to expropriate three privately-owned 
properties to create an access corridor from the industrial park 
to the Strait of Canso. 
 
¶8. (SBU) Comment:  The Melford International Terminal project 
has been the talk of the shipping community in Halifax for the 
past few months.  Our local industry contacts tell us that the 
MITI principals seem to have the potential customers lined up, a 
feat which they applaud given the highly competitive nature of 
the container business.  However, despite MITI's vision of a 
complementary relationship with the port of Halifax, these 
executives view the new kid on the block as a definite 
competitor, especially since Halifax is struggling to keep the 
customers it already has.  Whether the MITI idea of a 
complementary relationship with Halifax is feasible remains to 
be seen.  Regardless, with their C$5 million already invested 
and an impressive array of investors, partners and prospective 
customers, all indications are that the Melford project bears 
watching as Stevens and Martin implement a risky, but 
potentially lucrative development plan.  END COMMENT 
FOSTER