Canadian Biomass Magazine

Supporting Export Goals

August 2, 2013
By Carroll McCormick

This July, Eastern Canadian wood pellet producers flocked to the first ever workshop organized to discuss the export logistics challenges they face.

This July, Eastern Canadian wood pellet producers flocked to the first ever workshop organized to discuss the export logistics challenges they face. They learned that co-operating to provide high-volume shipments is critical for greasing the supply chain. Players such as CN, Canfornav and ports from Montreal to Halifax, told the participants they want their business.

Nearly 100 participants attended the Eastern Canadian Pellet Logistics Workshop, organized by the Quebec Wood Export Bureau (QWEB) and the Wood Pellet Association of Canada (WPAC). The topic was how to make the logistics of transporting wood pellets, particularly to the European Union market, more attractive to shippers.

Participants first got a reminder of how things are done in Western Canada. Gordon Murray, executive director, WPAC, referred to a spirit of co-operation among western producers. The leadership of the big producers, comingling and economies of scale help account for 1.6 million tonnes of wood pellets being shipped out of Port Metro Vancouver in 2012.

Participants learned that they too could become big exporters if they organize to reduce the cost of transportation by providing attractive volumes to shippers, and by offering high-volume, long-term contracts to European Union customers.


Jean-François Arsenault, principal, CPCS, presented findings from a study that the QWEB and WPAC commissioned. CPCS was tasked with analyzing the transport chain for exporting wood pellets from Eastern Canada, and identifying barriers to implementing an efficient, optimized supply chain. In brief, the study concluded that the market is there for Eastern Canadian producers to export nearly all of their current annual production. The challenge, however, is to determine how to increase volumes and thereby decrease freight rates.

The European Union market consumed 19 million tonnes of wood pellets in 2012, and has a forecasted annual growth of 10 per cent. “There are huge opportunities, for example, 15-20 per cent annual growth in Italy,” Murray noted.

Matthew Griffin, commercial manager, Drax, which owns and operates a 4,000-megawatt power station in North Yorkshire, England, stated, “We believe that Eastern Canada has the potential to be as big as Western Canada, but what has been holding us back is a fragmented supply, which raises our costs.”

The CPCS study calculated that moving wood pellets by rail is almost always less expensive than by truck. That said, Arsenault pointed out that the majority of producers have no access to rail spurs and they would likely have to buy or lease rail cars. Arsenault touched on other issues too, such as the possibility of short sea shipping to move pellets to coastal ports and the need for a dedicated dockside pellet terminal.

Speaking of ships, Knud Jensen, executive vice-president, Canfornav, offered a graphic example of the economy of scale.

“Comingling cargo is in its infancy, but it would help in getting rates down. The freight difference between a 40,000-tonne load and a 30,000-tonne load will be 15-25 per cent.” He added, “We will look at freight rates much differently on a long-term strategy than on the spot-market.”

Uri Szyk, market manager, sales and marketing, industrial products, CN, took the podium to remind listeners that CN was ready to help producers move their pellets to market. CN is interested in exploring capital investment opportunities, including building track infrastructure.

Representatives from four ports – Montreal, Trois Rivières, Belledune and Halifax – presented their credentials for moving wood pellets and their connections to other transportation modes. The Port of Trois Rivières, for example, is in expansion mode. “We are open to suggestions to smaller producers getting together and opening a wood pellet terminal,” noted Matthieu Gauthier, the port’s business development co-ordinator.

Patrick Bohan, manager, business development, Port of Halifax, noted that its grain elevator is used to handling wood pellets. “This is not at the concept stage. It is real and operating 24/7/365.”

Rayburn Doucett, president and CEO, Belledune Port Authority, said, “We are shipping over 100,000 tonnes a year of pellets. We have a terminal dedicated to wood pellets. We can put our product into Europe as cheap or cheaper than any other port.”

Antonio Boemi, vice-president, growth and development, Port of Montreal, said this about the vessels that call at the port: “Vessels do full unload and load [here]. This leads to more balanced trade and better costs.”

Rentech, whose business includes supplying wood pellets to Drax and Ontario Power Generation, spoke of issues ranging from plants to ports, including a deal with Quebec Stevedoring to build handling equipment and 75,000 tonnes of pellet storage space by 2014 at the Port of Quebec, exclusively for Rentech. Rentech extended this offer: “… we are able to consolidate volume and provide a conduit for other producers to the export marketplace.”

Perhaps, suggested Bruce Lisle in a conversation with Canadian Biomass, “Rentech could be a comingling leader.”

Pierre-Olivier Morency, manager, wood pellets, QWEB, and  director, market access and promotion, WPAC, told Canadian Biomass, “Strong interest was demonstrated during the members-only session to work together and develop solutions. I think that WPAC is setting a strong mandate to go forward with a logistics project in Eastern Canada.”

Print this page


Stories continue below