The melting of polar ice could make Churchill, Manitoba a more usable port for Saskatchewan, but there are challenges to its viability.
Climate change is creating challenges and opportunities in the Arctic and Hudson Bay.
Previously ice-bound trade routes are opening. The Northwest Passage is experiencing more traffic, and ice is decreasing on Hudson Bay. The water temperature of Hudson Bay is 4C above normal in 2023, and this warming trend is expected to continue.
For Western Canada, the opening of Hudson Bay to year-round transport could provide a lower cost route to export markets. For example, the route for Saskatchewan potash fertilizer to Africa and Brazil is much shorter via Churchill than through Vancouver and would avoid the expense of the Panama Canal.
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International trade corridors favour the path of least resistance. Governments compete for trade by investing in transportation infrastructure to reduce the cost of trade flows. Infrastructure is necessary for trade, but not sufficient.
A successful trade corridor must attract enough traffic to maintain the infrastructure and to grow. The lack of traffic volume has confronted the Hudson Bay Railway since its beginning. Using rail industry averages, this rail line needs approximately two million tons of traffic per year to cover its maintenance.
The railway has not moved 500,000 tons annually in decades. Climate change benefits shipping on Hudson Bay, but melting permafrost creates a challenge for the Hudson Bay Railway.
While efforts are underway to mitigate the impact of roadbed instability, the success of these measures remains uncertain. Regardless, the railway must attract more traffic to be successful.
Unlike the past when the Hudson Bay trade corridor relied solely on grain exports, the potential exists for more diversified traffic. In addition to grain, the corridor could move potash, sulphur, liquified natural gas/hydrogen, lumber and metal concentrates.
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As well as these raw materials and resources, the Hudson Bay corridor could conduct two-way movements of containerized goods that generally pay better freight rates.
A container terminal on Hudson Bay might provide half the traffic volume needed to make the railway viable. It would also enhance economic development of the Prairie economies by reducing transportation costs and the time in transit.
Currently, containers from Europe travel over a long and expensive rail corridor from Montreal.
The cost of terminal facilities can be measured in billions of dollars. Consequently, they require large volumes of goods traffic to be economically sustainable.
Also, investors must have comfort that these facilities can operate for sufficient years to enable the capital to be repaid. The investment for port terminals is provided by the private sector companies. Governments’ role is to ensure the transportation connections.
The economic feasibility of the Hudson Bay corridor depends on several variables. The first research question is the volume of traffic that could be attracted to the Hudson Bay route. Lower costs stimulate trade, but diversion of freight from other trade corridors is more likely.
An assessment is needed of the competitiveness of the Hudson Bay route versus other corridor routes for various products. Then, there is the amount of investment required to sustain the railway connection, or whether it would be less expensive to build a bypass to avoid permafrost areas.
This requires a study of the possible costs and route options. Also, it would be difficult to build everything at once. Research is needed to plan out sites for specific terminals and to examine any associated infrastructure they would require.
On sustainability, an analysis of carbon emissions, risks and wildlife impacts is needed. Also, an evaluation of the sea route is needed to establish when Hudson Bay becomes open to year-round shipping and under what conditions shipping requires for its use.
The seasonality has limited the competitiveness of the Hudson Bay corridor. A warming climate could change the relative advantage of its location and enhance the economies of the Prairie provinces. Trade routes favour the path of least resistance.
The rail corridor to Hudson Bay is shorter and slopes gently downhill to salt water, whereas rail to the West Coast must climb over a mountain range. Opportunity knocks.
Barry E. Prentice is a professor, and the director of the University of Manitoba Transport Institute, Asper School of Business.
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