A B.C. boon for Asian cars? New free trade deals could make it so

Wallenius Wilhelmsen Logistics’ Annacis Island auto terminal—Canada’s gateway for Asian automobiles—has seen imports slump over five years. New free trade agreements, with South Korea and other Asian nations, could change that

>> The closure of Fraser Wharves had another positive benefit: the vacant lot offered temporary relief from the port’s industrial land shortage, serving as a sorting site to clear the backlog of containers from the 2014 trucker strike.

>> Motor vehicles are Canada’s largest import and second-largest export. Most of that trade, however, occurs along the Toronto-Detroit corridor, where large automakers like Ford and GM shuttle vehicles from plant to plant.

>> Known as a “RoRo”—or roll-on, roll-off—the large green and blue vessels shown above are designed to carry up to 8,000 vehicles, from auto manufacturing hubs like Nagoya in Japan or Incheon in South Korea to the west coast of North America.

>> The port expects auto volumes to decrease in 2014 and remain flat over the next year, continuing a long-term downward trend. The port imported 45,000 fewer vehicles in 2013 than it did in 2006.

In January, Fraser Wharves closed its vehicle import lot, the entry point for 98 per cent of Toyotas imported into Canada. Blighted by a gradual slip in the number of vehicles brought into this country, the smaller of B.C.’s two automobile import docks went out of business. That was good news for Wallenius Wilhelmsen Logistics’ Canadian division, B.C.’s biggest import dock for automobiles.

Wallenius, 10 kilometres up the river from the former Fraser Wharves, has become B.C.’s sole port of entry for Asian-made vehicles, and stands to profit from a newly minted free trade deal with South Korea. Korea represents roughly one-third of the dock’s business, a figure that’s expected to grow with the deal.

Over the next three years, Canada will gradually phase out its 6.1 per cent tariff on vehicles imported from South Korea, cutting the costs of Korean-made subcompacts and entry-level vehicles. While the trade deal comes as good news for importers and exporters, Canadian automakers have fretted about Kia and Hyundai entering the low end of the auto market, where profit margins can be razor thin.

“There is going to be an adjustment, and the automobile industry has legitimate concerns,” says Eugene Beaulieu, a professor of economics at the University of Calgary. “But in some sense they have time, and we’ll have access to their auto sector.”

Canada’s agreements with South Korea could stimulate further trade deals, such as the prospective Trans Pacific Partnership. “This will help us in our situations negotiating with Japan and India, and hopefully convince other Asian countries that we’re serious about this,” says Beaulieu.