FTZ designation aims to boost Montreal’s international cargo flows

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In the jostle for transatlantic traffic, Montreal has added a foreign-trade zone (FTZ) to its arsenal of incentives to attract business.

The  FTZ designation covers the entire metropolitan Montreal area, allowing companies to import goods for manufacturing or assembly duty-free for up to four years, provided the final product leaving the zone is for export.

Transport interests in Montreal, under the umbrella of CargoM, have vied for FTZ status for the region to generate more international cargo traffic.

“With the foreign trade zone designation, Montreal has acquired another tool to boost  its attractiveness as an international trade hub and gateway to North America,” said Mathieu Charbonneau, executive director of CargoM.

His organisation was formed in 2012 to promote Montreal as a hub for transport, to work towards the sharing of best practices and technologies and “influence the harmonisation and simplification of regulations”. Its members include Aeroports de Montreal, Air Canada Cargo, both national Class I rail carriers and the port of Montreal.

Montreal is the  thirteenth FTZ in Canada. It pulled level with Quebec City and Halifax, its rival Canadian ports vying for international traffic, which already established FTZs. Quebec City obtained FTZ status in September 2017.

The smaller port is pushing hard to get a bigger slice of transatlantic business. It recently signed a joint-venture agreement with Hutchison Ports and CN Rail to build a C$775m (US$585.5m) container terminal with an annual capacity of 500,000 teu.

For its part, the port of Montreal is planning to build a C$500m container terminal with a capacity north of 1.1 million teu, with construction slated to start next year. Port officials hope the FTZ will generate additional interest in, and funding for, the development of new logistics facilities that will be part of the project.

Karl-Heinz Legler, general manager of Rutherford Global Logistics and a director of the Canadian International Freight Forwarders Association, thinks the FTZ concept has been under-utilised in Canada so far.

“I can’t think of one that is humming,” he said.

Interest in FTZs has picked up, though. At the start of 2018 there were nine FTZs in Canada. But the concept is far behind the corresponding programme in the US, where California alone has 17 FTZs (although not all US FTZs are active).

Despite the uptick in interest, Mr Legler is not holding his breath.

“It’s one thing to declare a foreign trade zone, it’s another to implement it,” he said.

However, the port of Montreal has been on a roll. Spring saw the arrival of Cosco Shipping with a weekly service from Antwerp and several other European ports. It marked the third transatlantic service addition in a year for the port, which clocked up 9.2% growth in 2018.

Still, operators are loath to put their eggs into one basket, even CargoM members like Canadian National. On August 8 the carrier announced a new joint intermodal service with CSX to link Montreal and Southern Ontario with the US ports of New York/New Jersey and Philadelphia.