3.1 Pre-determined Trends

19 Pre-determined trends are those forces that we can assume are likely to shape the emerging environment of the trade network because we can see them in the current environment. However, while the basic elements of the trends are visible, precisely how they will affect the future environment is not evident. They are the building blocks of the trade network as it develops over time. These pre-determined trends include:

3.2 Critical Uncertainties

24 Critical uncertainties—‘risks’—are those factors that cannot be anticipated but whose impact could be considerable. We see these as the most important:

4.1 Who Are They?

31 There is a classic problem of terminology when players in the market are discussed. One frequent error is the confusion of value chains (as discussed by Porter, 1985) with supply chains. Porter disaggregates the value chain into components, some of which are supply chain activities. We can use the value chain approach to understand the reasons for outsourcing component part manufacturing or back office functions to other parts of the globe, but the fact of the matter is that value chain decisions are drivers of supply chain structure. Therefore that structure will be dynamic over time.

32 There is also a classic notation of the supply chain as being somewhat linear, from end to end, transferring goods from origin to destination via nodes where they may change mode or be transformed or resorted in the process. Such a notion works well in determining total logistics costs as seen in the work of Gunn (2009), or even when we wish to understand competitiveness from a Greenhouse Gas (GHG) perspective, as illustrated by Adams and Quinonez (2009). However, in the current decade we have seen supply chains grow ever more complex, like Japanese keiretsu, as more complex webs of relationships evolve, and companies like Maersk and NYK may not only own suppliers of some of their ‘production’ inputs, but also offer logistics services as agents working on behalf of their lines’ customers! The complex web of possible relationships and partners has already been noted as a feature of the financial world but we have not yet heard of a call for firewalls in supply chain services markets. To deal with such complexity, we may categorize the players into a few groups of participants: Market Players, including Cargo Interests (owners of cargo and their agents), Carriers, Business Networks and Facilitators (including support industries); Government (all levels); and Stakeholders (NGOs, citizens, media, special interests). A simplified graphic of these is provided in Figure 1.

33 For the cargo interests (and their agents), the supply chain process is driven by trade and is all about trade. Numerous studies have shown that this group is much more interested in creating wealth through manufacturing and trading activities and, as the largest group of players, is represented as the largest cog in the supply chain machinery of Figure 1. Because it sees its interests as focused on its own sources of competitive advantage, be that chemical production, the manufacture of consumer staples, and so on, these players often outsource many supply chain activities to service providers including carriers.

Display large image of Figure 1

34 Transportation, distribution and warehousing are service activities provided to meet the needs of cargo interests but form a second location of value creation. In Figure 1, these supply chain interests are represented by ‘carriers’ but perhaps only because it is the carriers (railways, shipping lines, and air cargo operators) that form the largest of the Fortune Global 500 service suppliers.3 The supply of warehousing, cross-docking, local trucking and so on tends to be a fragmented set of players, often local and nimble in meeting the needs of the larger firms.

35 A third set of players, separated in Figure 1, but still providing a service to the cargo interests are the ports. They have been separated here because they play a somewhat different role in the overall supply chain, and they often have government ownership if not management. They may encourage business networks to develop amongst broader groups of players or within groups.

36 Fourth are the facilitators and supporting business networks. They remain unlabeled in Figure 1 because their role is ‘to grease the wheels’ of activity between the other partners. This role is fulfilled by every type of player from the banks that provide credit (or not as has been witnessed lately) through to the shipyards and equipment suppliers to the information technology providers that provide coveted track and trace capability to the carriers and their customers as well as to the government regulators concerned about security.

37 The last two players are the Regulators (governments at all levels) and Civil Society (the stakeholders, media and citizens). They are illustrated in Figure 1 as being potential lubricants to the supply chain or as interfering sticks that may brake the movement of the supply chain. Both are possible outcomes.

4.2 What Do These Players Seek to Gain?

38 We have suggested that a critical difference between the port community of the past and today’s port community is that in today’s world, what participants hope to gain (that is, their ‘interests’ in the port) may differ substantially and may not necessarily focus on traditional goals of increasing freight business and improving port efficiency.

39 We can think in terms of four broad areas of interest:

• Operational goals (and their efficiencies): By this, we mean traditional ‘business’ goals of enhancing profitability by improving operations, by making the system work more efficiently and seamlessly. Profit is derived from more efficient operations that enhance competitiveness.
• Financial goals: The elements in the system can also be viewed as financial assets that can be bought or sold, or leveraged in many ways. These assets may be components of a broader portfolio. Profit may be derived primarily from trading or leveraging these assets, particularly in a shorter time perspective, rather than from long-term investment in efficiency-enhancing improvements.
• Sustainability goals: Increasingly, sustainability goals influence how players view elements of the trading community. Goals are increasingly shaped by demands to improve the environmental impact of the total supply chain, and to do it in a safe and secure way.
• Security goals: In the short term, protecting the integrity of the border, for example, can result in a decrease in a variety of undesirable activities, including, for instance, illegal trade and immigration, terrorism and the spread of communicable diseases. In the longer term, it can also be part of a strategy to claim ownership over disputed resources and geography.

40 The dynamics of the port community focus on the interconnected relationships among the various participants. It is no longer possible (if, in fact, it ever was) to assume that all players share the same interests. For example, what the Chinese government may plan to do in the foreseeable future to encourage more exports or how a major financial institution with a broad portfolio that includes equity in several ports (AIG, for example) will react to economic environment may powerfully influence the dynamic of supply chain relationships. Participants in the supply chain must maintain (or develop) more relationships in this environment, must anticipate possible developments and work harder to understand the interests (and, as we will see, strategies) of other players. Seizing opportunities is not about relationships with immediate suppliers and customers, but about relationships with customers’ customers, suppliers’ suppliers and with governments and other stakeholders.

41 There is no simple relationship between players and interests. Market players may at times be more interested in financial than operational goals. The interests of government agencies and citizen groups may be sharply divide between operational and sustainability goals, creating significant political and/or bureaucratic tension. Moreover, players may seek multiple goals (greater operational efficiency and greater sustainability, for example), which may be reinforcing or conflicting. In looking at players and interests, it is important to ask key questions, such as who has the most leverage and who can bring about change.

5.1 Lesson 1: There May Be New Trade Opportunities but They Need Proactive Effort to Achieve Positive Results

43 Whether it is trying to understand whether there is the potential for increased total trade through the region, as examined in the South America–Ontario trade gravity study (Cyrus, 2009), or more volume possible over existing routings, as may be the case for building an inland terminal at Detroit (Belzer and Howlett, 2009), such development opportunities do not unfold without hard work. To realize more gateway activity, Belzer and Howlett (2009) only indicates a promise from a Halifax–Michigan link, not a reality. To exploit the opportunity, players seeking to participate in the potential still need to identify partners in the supply chain that will invest resources—personnel, time or funding—so that the business case can be explored, the coalitions built, and the determination made about whether the logistics costs on the routing will be favourable. These two projects also reflected that there is a role for supportive university research.

5.2 Lesson 2: Logistics Cost Considerations Are Important to the Reshaping of Global Supply Chains

44 The costs associated with using a particular supply path include much more than the simple costs of transporting the material, such as the costs of carrying the inventory (replenishment inventory itself or that in the pipeline) and the safety stock that must be maintained to buffer against variability in demand and time of replenishment. Other costs include costs of shortages due to inability to supply and cost of excess stock due to market changes during the replenishment interval. Gunn (2009) developed a flexible and readily usable model of the logistics times and costs for alternative routes through the Atlantic Gateway, one that can be used by three types of market players—(1) private sector companies to compare routings in terms of time, costs and time variability and with an extension (Adams and Quinonez, 2009) also GHG emissions, (2) some use by public policy analysts although it would be limited by access to data, and (3) business development analysts to identify marketing opportunities. From a supply chain restructuring perspective, the development of this model would enable individual cargo interests to explore an Atlantic Gateway option as part of their overall supply chain restructuring, including GHG emissions and business development analysts to market the Atlantic Gateway internationally. In the broader context, it also enables governments to use the model to understand other factors, such as GHG impacts, the resiliency cost of a network from a critical infrastructure protection perspective, and the knowledge infrastructure necessary to support various gateways and corridors.

5.3 Lesson 3: GHG Impacts Are Also Relevant to the Development of New Supply Chains

45 From a GHG perspective, ships produce less carbon than airplanes; rail has less environmental impact than trucking; larger ships are more GHG-efficient so trunk routes are more GHG-efficient than feeder routes. Congestion is a key factor; crowded ports with older drayage vehicles generate a lot of emissions and long wait times at border crossings can generate significant GHG emissions. GHG mitigation strategies will have a significant impact on shipper strategies. If minimizing GHG emissions becomes linked with a port’s ‘social license’4 to operate, then embracing GHG reduction strategies earlier on could position a port in a competitive light, particularly if its competitors have failed to respond to these signals and experience higher carbon taxes, operational disruption due to non-compliance, or stakeholder interference (Adams and Quinonez, 2009; Adams et al., 2009). Retail giants like Wal-Mart and Tesco have spoken out in favour of more sustainable supply chains, pushing shippers to be more concerned about transportation impacts. What began with a decision to invest in more sustainable products will likely evolve into close examination of the environmental impact of how goods are moved to market. A public policy focused on more GHG-efficient transportation benefits civil society, and may be the driving force towards ‘low-carbon’ transportation. For example, if European countries impose a carbon tax on all imported goods transported by air and based on the distance traveled from the airport of loading, then this could significantly improve the volumes at air cargo hubs in Atlantic Canada; similarly, carbon taxes on road or rail options could affect routing dynamics and advantage those ports closer to the final market.

5.4 Lesson 4: Environmental Practices of Ports May Also Be Relevant Over the Long Term

46 A key research question for a forward-looking Gateway implementation is: What is the role of environmental performance in port competitiveness? Is it justified for port operators and port authorities to invest in improving environmental performance beyond compliance? Is there a business case to be made for environmental enhancements? A business may invest in improving its environmental performance for three potential reasons: 1) competitive advantage, 2) social licence to operate, and/or 3) corporate conscience. Between 2002 and 2007, major ports were experiencing double-digit volume increases, which resulted in problems with surrounding communities, including increasing congestion, noxious air emissions and safety concerns. Some port projects were halted by local community intervention. The downturn in global trade has diminished some of these pressures and, for the moment, ports are able to continue planning and expansion programs. However, all indications are that world trade will rebound, and we could see a doubling of cargo volumes by 2040, with the resulting community concerns and political problems re-emerging as well. Therefore, it is likely that ports will have to devote more attention to winning community support for their activities. Positive environmental performance may not be seen as a competitive advantage, but not having proactive environmental policies in place could very well be a competitive disadvantage.

5.5 Lesson 5: Funding Transportation Infrastructure May Result in Rebuilding Manufacturing in a Region

47 The Canadian government’s gateway vision has at its core a considerable investment in infrastructure. There is no doubt that the next question then becomes: “investment in what?” In other words, which infrastructure projects should be supported and why? In addition to the usual bridges, highways and border crossing investments are other ones to support inland or air cargo terminals, facilitate supply chain restructuring, and so on. The Belzer and Howlett (2009) working paper confirms that there is an infrastructure funding role in seizing gateway opportunities, and that the investment may result in rebuilding the manufacturing sector in a location.

5.6 Lesson 6: Gateway Development Requires a Player to Become a Concept Champion

48 More important, and specific to the Michigan case (Belzer and Howlett, 2009), there are governance considerations in executing gateway development plans. In the Michigan case, there is a need to re-establish the role of the State in governance, setting priorities and acting to represent all the citizens of the State. Only the State has the authority to act on behalf of statewide interests. This means not abdicating governance to the private sector but ensuring that the State takes on a role of ensuring that parochial interests (of cities, counties, and others) do not overwhelm overall regional economic development interests. Therefore, infrastructure development priorities should result from the definition of the State’s needs, and governance should not be haphazard and conditional on local interests. In the U.S., the funding issue and the roles of various levels of government as well as users have been recently explored (Transportation Research Board, 2009), while in Canada, there has been leadership on the three gateways through budget allocation, but the problem remains of ensuring that players do not wait for someone else to step in first to lead. The federal government has indicated that the private sector needs to come to the table, but without adequate data for opportunity analysis this is sometimes a difficult position. Universities see opportunities but are seldom in a position to lead pre-business case development work. The Canadian situation can, therefore, devolve to all players waiting to see who takes the proactive role of leading a particular initiative.

5.7 Lesson 7: Atlantic Canada Must Cooperate and Coordinate More Effectively to Survive and Grow in this New Context

49 Brooks et al. (2009) argue that the collective aim in the Atlantic Canada region, in the first instance, should be for players, including stakeholders, to cooperate and coordinate more effectively with an eye to increasing the Atlantic region’s share of the overall market. The authors examine formal and informal marketing and business practices, operations, administration and regulation in ports in Atlantic Canada and conclude that the region’s ports do not cooperate or coordinate as effectively along these lines as those in northern European countries do. The paper cites the passenger levels resulting from the activities of the Atlantic Canada Cruise Association, and new business arising from the outgoing and incoming missions (India and Vietnam) to build trade as evidence of the potential gains from increased cooperation in the region.

50 In other words, all stakeholders, not just the ports of Atlantic Canada, must share a vision, agree on the rules, and realize that competition for the market must occur before competition in the market can happen. The key is building the pie to be bigger; coordination along the supply chain is important to gateway development as supply chains compete and so this provides a common beginning point for all players, not just ports.

6.1 Question 1: What is the Value Proposition? Where are the Opportunities?

52 While Levinson’s (2006) example of Mattel’s 1950s decision to establish operations in China, Taiwan and Japan to build that most American invention for baby boomers—the Barbie doll— illustrates the early days of the third wave of globalization5, it has become clearer over the past half century that cheap labour has played an ever-greater role in the restructuring of global supply chains. Throughout the first part of this decade, route competition was crucial for shipping lines and ports competed on time-based competition. However, by late 2008, the economic recession meant competition was more focused on price than on service. In Atlantic Canada, we have the critical infrastructure to exploit a time-based market (Brooks, 2007a; APEC, 2006). In logistics cost models, time provides a financial value arising from a reduction in transit time and associated inventory carrying costs. There may also be a value proposition arising from minimizing GHG emissions but that is a longer-term prospect. The value proposition of the Atlantic Gateway, however, must be identified for each of the players, and communicated to them. If a supply chain manager does not know about Atlantic Gateway options, there is a communication gap deterring the use of the route. As noted by APEC (2006), attracting one big volume shipping line that would turn a discretionary port like Halifax into a hub port is an opportunity. As is clear from the illustration of Savannah in the 1990s, attracting one big box retailer to set up a distribution centre may bring others. The opportunities arise not only from using existing infrastructure to advantage, but also from identifying new options. The examples of plays below illustrate how other locations have seen a value proposition and then taken advantage of it to exploit the opportunities available to them.

6.2 Question 2: What Plays That Are Possible (and Are They Suited to the Atlantic Gateway Context?)

6.3 Question 3: What Government Tools Can Facilitate Gateway Development?

67 Hood and Margetts (2007) describe what governments can do with the four basic resources they possess: nodality, authority, treasure and organization. This section describes in more detail these four resources and considers the constraints and opportunities that governments face in furthering the development of the Atlantic Gateway. Note that these categorizations of resources can at times overlap and, indeed, the discussion on organization in particular will pull together elements of the other three resources.

68 Nodality denotes the property of being in the middle of an information or social network. A node is a junction of information channels. Governments are typically nodal in different ways. They may constitute a central presence in the form of a ‘figurehead.’ They may also constitute a central presence in a more narrowly defined sense—seeing many different cases and thus building up a store of information not available to others. Nodality gives government the ability to traffic in information. The limiting factor is credibility (Hood and Margetts 2007: 6). Government’s capacity to act as an effective figurehead in the Atlantic Gateway faces many constraints. First, maritime shipping is international—it includes numerous players from many different countries and nodes abound. The Canadian gateways generally, and the Atlantic Gateway in particular, are small players on this stage. The under-used capacity in the Atlantic Gateway creates a buyer’s market and further tips the influence away from domestic governments.

69 The ‘big picture’ can also be elusive. The multiplicity of players—financial services, logistical firms, service supplies, equipment suppliers, NGOs and other special interests—makes understanding the dynamics of the system difficult if not impossible. While the government may at times have a broad perspective, a full and exhaustive understanding is likely beyond reach.

70 However, government can still play an important role as an information resource for the Atlantic Gateway. While it may be limited in its ability to be a ‘figurehead’ on the international stage, locally its size and influence can make it, by some margin, an important player in the mix. Moreover, the government has the capacity to enrich the local information pool, for instance by supporting research for which there is no immediate commercial value but which will assist with longer term positioning of the Atlantic Gateway Initiative; examples are the impact of low-carbon routing and different fiscal policies, the potential for new markets and the identification of potential weaknesses in the supply chain.

71 In this sense, the government can combine both elements of nodality—the role of figurehead and the holder of information—to facilitate a strategy process for the Atlantic Gateway initiative.

72 Authority denotes the possession of legal or official power. That is, the power officially to demand, forbid, guarantee and adjudicate. Authority in this sense is traditionally seen as one of the defining properties of government, though its sources, base and level may vary widely. Authority gives government the ability to ‘determine’ in a legal or official sense (Hood and Margetts 2007: 5 and 6).

73 Government authority with respect to the Atlantic Gateway is (paradoxically) far-reaching and quite limited. The government’s legislative responsibilities are vast and growing, reaching into, for instance, transportation, security, taxation, border and the environment. The government has an active policy agenda in all of these areas. As a large stakeholder in the port, for instance, it also has the rights, privileges and responsibilities of ownership as determined by the Canada Marine Act.

74 Still, government’s authority can also be truncated. At a minimum, the highly competitive nature of the industry prevents government from over-regulating lest it put Canadian domestic shipping at a competitive disadvantage. Many legislative and policy initiatives in maritime shipping, such as security and environmental concerns, are arguably motivated not by domestic pressures but by international ones. It is debatable, therefore, that the Canadian government, as a relatively small player globally, has much flexibility within these international parameters. Moreover, within the national boundaries, lines of government responsibility are not always clear. While the federal government has authority over ports, the provinces or municipalities have responsibility for several key aspects of national infrastructure that relate directly to successful management of ports, such as roads, drinking water, policing, and so on. At best, this complexity leads to cooperation and coordination between government agencies; at worst, it leads to confusion, blame-shifting, stalemates and turf wars.

75 Finally, political instability also constrains the role of government. Minority governments are known for pursuing multiple projects simultaneously; they are also known for their limited ability to act decisively. In this context, bold legislative initiatives are unlikely in the near future. This is not to comment on the current Parliament, in particular, but rather to note that the last three elections have resulted in minority governments, and there is reason to believe this may be the beginning of a trend. In this case, in addition to the need for coalition building across four Atlantic Provinces, coalitions would have to form across party lines for such initiatives to gain any legislative momentum.

76 Government interventions typically involve a shift in resources from one group to another. Whether these costs and benefits are concentrated on specific stakeholders or dispersed among many depends on numerous factors, including the preferred policy position of the government and the power of the individual groups involved in the regulation, both for and against (Wilson, 1980). Despite these organizational challenges noted above, there are important and arguably appropriate uses of government intervention in the development of the Atlantic Gateway initiative.

77 Government may wish to address certain market failures. Despite the increased profile they presently enjoy, security and environmental concerns are typically victims of ‘the tragedy of the commons’—a situation in which individuals acting independently, in a self-interested manner and without regulation, deplete a shared resource, which leaves everyone worse off (Hardin, 1968). It is certainly plausible, if not likely, that private companies working in a competitive market will put their survival ahead of longer-term environmental or security concerns. In order to address the potential for this market failure, government will have to stand at the ready to exert its authority to maintain and enforce appropriate standards.

78 Government’s use of power and authority may also be subtle. It will potentially have considerable influence locally in setting agendas (Kingdon, 1995) and appointing members to any formal governance committees. These governance committees will address important questions: Which Gateway challenges will be addressed first? Which region’s requests will be addressed? Who constitutes viable stakeholders for consultation in the process? What is the appropriate balance between private sector and NGO/civil society in the consultation process? What is the appropriate balance between domestic and foreign ownership? How will these projects be funded? Who will be held accountable for public funds? The list goes on. The answers to these questions may not always be shaped by formal government intervention, but government’s capacity to influence the answers can be formidable.

79 Treasure denotes the possession of a stock of moneys or fungible chattels. That means not only (or necessarily) money in the common, everyday sense of banknotes or coins, but anything that has the money-like quality of fungibility—that is, the capacity to be freely exchanged. Treasure gives the government the ability to exchange; it may use it to influence people or buy information (Hood and Margetts, 2007: 6).

80 Government could use its financial resources to address the previously noted, and growing, fragility of supply chains. As organizational interdependence can mean that a failure in one part of the supply chain can bring down the entire supply chain, government can make strategic investments to ensure critical infrastructure in the region is sufficiently resilient that single points of failure will not have a cascading effect, thereby shutting down the entire supply chain.

81 Government could also initiate an arm’s-length and independent development bank for the Atlantic Gateway. The development bank could, for instance, establish a central fund that would make investments and facilitate a coordinated strategy across the Atlantic region. It can opt for more flexible use of zoning practices with Crown land, which could help ensure the efficient transportation of goods through the Gateway; it can ensure rail and roadways have more efficient access to Detroit, Cleveland or other potential hubs and trade routes, for instance. It can also pay to promote the Gateway among key shippers; and it can create financial incentives to entice more traffic to the Gateway. Equally, it could move in the opposite direction—impeding Gateway growth.

82 Organization denotes the access to a stock of people with whatever skills they may have, land buildings, materials, computers and equipment. Organization gives government the ability to act directly; the limiting factor is capacity (Hood and Margetts 2007: 6).

83 At present, as noted in the Brooks et al. (2009) working paper, there are various institutional arrangements that ports of the Gateway belong to: the North Atlantic Ports Association, the Independent Marine Ports Association of Canada, and the Association of Canadian Port Authorities. These organizations are a mix of public and private interests and none is focused exclusively on developing Gateway ports per se. As well, there are various government agencies that have specific policy interests and responsibilities, including gateway development. In many respects these myriad arrangements present an opportunity for useful government intervention. It may also allow government to use its other three resources (nodality, authority and treasure) to better effect. If, for instance, government could create one oversight body that brings all interested parties together, the oversight body could more effectively become a ‘figurehead’ and a more complete repository of information on the Gateway. In other words, it would become a more powerful node. The consolidation of various actors and processes would not only make the governance arrangement more efficient in terms of reducing cost, which would satisfy the treasury component, but also it could result in a more coherent approach to the Gateway project generally. The various and competing views with different responsibilities could negotiate their different positions and reach consensus more quickly.

84 What is perhaps less clear is the impact such a body would have on government’s authority. Opening up a collaborative process between multiple stakeholders requires government, if the process is to be taken seriously, to relinquish some authority to stakeholders. This creates challenges, of course. Committees, which ostensibly strive to be egalitarian, are useful for generating ideas and input but decidedly less successful at making decisions. They are susceptible to splits or breakdowns in organizations as individual interests strive to define themselves (Hood, 1998).

85 Policy decisions shift resources from one group to another and often these trade-offs have been between different economic interests. The rise of environmental concerns among members of civil society, however, will mean that these trade-offs will also have to include social and environmental factors, taking into account, for instance, the needs of future generations, making consensus even more difficult to achieve.

86 While networks and nodes tend to dominate Atlantic Canadian thinking when it comes to most policy discussions today, the region is sufficiently small that it may be able to generate a context that permits a level of corporatism, which favours negotiations with smaller but more powerful players who can speak on behalf of many interests (Schmitter, 1979).

87 There are two important caveats to the use of government tools. First, one body should not attempt to promote and regulate the Gateway; the resulting conflict of interest would unlikely result in neither task being performed particularly well. By sitting at a round table as a partner, government potentially compromises its capacity to play the role of enforcer. Second, corporatism can be less transparent, and can therefore result in (loud) disagreement from ‘outsiders.’ If important policy and management decisions are not seen to be fair and transparent, stakeholders will object and the enterprise will not move forward. The key is to have the right representatives at the table—those with ample support from the relevant social and economic stakeholders—and a shared vision, which can be articulated through a strategy process.

6.4 Question 4: A Vision for Atlantic Canada in 2020 and How Do We Get There?

88 The current vision of the Government of Canada (Transport Canada, 2009) for the Atlantic Gateway is broad and much improved over the articulated vision of 2006 (Bohunicky, 2007), which specified a lump sum of unallocated marketing money but did not yet see any infrastructure funding, and was based on a backwards look at existing volumes and values. That noted, there is still some way to go to improve on the current vision. While the details of its execution are still in development, the Government’s vision of Atlantic Canada’s capabilities as a gateway:

• Has not developed an implementation timeline that is short, intermediate and long-term in execution. The Atlantic Gateway has three components of critical importance: the long-term potential of the trans-Siberian Asia–North America route, the medium-term potential of the South American market (that needs to be defined better), and the immediate potential of the South Asian market where Atlantic Canada has a time-based competitive advantage. This advantage is likely to grow more quickly when transit time regains its competitive advantage after the current economic downturn has been weathered, and (or) when transport fuel costs rise as a result of rising oil costs at source or the incorporation of GHG costs into transport fuel prices globally.
• Has not helped to position the region to exploit the rapidly emerging Brazilian economy. Transit time-based competition indicates that any of Saint John, Halifax, Sydney or Melford could provide faster access to the population at the centre of the continent than either Houston or Savannah if the ocean leg is coupled with a seamless land network.

89 Furthermore, Transport Canada (2009) notes Canadian Tire’s efforts at supply chain balancing has led to additional flows over Halifax, indicating that it is not just about infrastructure but also about the encouragement of the tools needed for supply chain restructuring. An integrated approach to an Atlantic Gateway could significantly enhance Canada’s ability to capture a larger share of growing trade flows between North America and foreign markets.6 We couldn’t agree more.

90 A port-centric view of the Atlantic Gateway seems to focus thinking on the port infrastructure investment play as ‘the silver bullet.’ Such a narrow view restricts the necessary broader thinking we’ve described above. A larger supply chain vision encourages the broader thinking already noted above. Once goods get to the shores of North America, where do they go? What else is needed to enhance the Canadian gateways on the east coast of North America? At the Vancouver Gateway conference, Brooks (2007b) identified three impediments to gateway development on the east coast: (1) port governance and the financing of port infrastructure, (2) regulatory barriers and (3) administrative procedures that influence gateway and corridor effectiveness in global supply chains serving North America. These were developed in greater detail in subsequent research published by the Conference Board of Canada (Brooks, 2007a). While the first has been addressed satisfactorily,7 the other two remain problematic for developing inland corridors to the U.S. In addition, the impediments to developing short sea shipping on the coast were identified in 2003, but there has been little progress on this front. All of these are within the range of government tools (Play Number 4) that can be brought to bear as the government’s contribution to executing on its Gateway vision. In an increasingly connected world, the key will be an integrated approach to physical and policy infrastructure.8

91 While the earlier documents on gateways and corridors seemed to be heavily weighted towards infrastructure investment, the 2009 Framework has expanded the notion to more explicitly recognize ‘policy’ infrastructure. Policy infrastructure is not the low-hanging fruit; it requires hard work to get alignment of interests and legislative change.

92 One coordinated, oversight body for the Gateway can be a central pillar in this policy infrastructure. A united governance structure for the region can be the repository of information and research; it can also lead to the development of a longer term Atlantic Gateway strategy. While the provincial governments of the Atlantic region are to be lauded for having developed a coordinated single transportation strategy document (New Brunswick Department of Transportation, 2008), it is transportation-centric and does not think beyond transportation infrastructure components of the Gateway. The strategy must engage all stakeholders (not just bureaucrats) and make clear the incentives for a cooperative and coordinated approach. It must also work towards removing the barriers to coordination in the region.

93 In order to be successful, a strategy must articulate not only the long-term vision for the Atlantic Gateway, but also the interim steps and outputs that will help to achieve it. (The single transportation strategy noted above is an excellent start.) Whenever possible, these interim steps must be specific and measureable; resources must be dedicated to achieving them; and those assigned responsibility must be held to account for their part. Otherwise, the Gateway initiative risks losing any momentum it might have.

94 On a related note, all players must keep a watchful eye on international trends, particularly the environment and security issues, not in a fearful way, but rather to adjust operations as required and exploit the opportunities and policy windows that present themselves. These trends will have considerable impact on future outcomes. The region must be able not only to adapt to changing circumstances but exploit events and trends to its advantage. First, however, the region must articulate a shared strategic vision; otherwise, it will not able to recognize opportunities as they present themselves nor will it be able to act in a coordinated manner when these opportunities arise.

95 In fact, it is our conclusion that all the plays may be suitable to use in Atlantic Canada, depending on the particular opportunity the players choose to seize in this regional context. Once the choice is made, the champion for the play needs to identify the partners that will help them succeed, secure the coalitions they will need to build (and we believe there is a role for universities here), and seek the social license necessary to execute the plan.

96 Government can provide considerable support. Its role is not limited to the provision of infrastructure funding. It can broker coalitions, assist in identifying niches for exploration, finance pre-business case development as well as research without immediate commercial benefit but for long-term repositioning and marketing of the opportunities. An Atlantic Gateway strategy must then think about coalitions and developing embedded relationships of the variety that build activity in the next generation. For example, support for EduNova, the consortium of Nova Scotia universities and colleges that works to attract foreign students, could form part of a gateway strategy built on the premise that students from key markets like India, Malaysia, Vietnam and Brazil could be encouraged to attend university in Atlantic Canada and build business relationships with Atlantic Canada when they return home.

97 Finally, we need to think about the acquisition of social license. Without transparency and community engagement, community support is difficult to retain. This is a challenge that the Dutch and the Danes have overcome through community education and stakeholder participation; in contrast, this is a vicious deterrent to gateway development in California, where the social license has been severely eroded.