What’s the Potential for Canada’s Northern Port to Expand Trade Opportunities?

News Analysis

A secluded and sparsely populated town known for its profusion of polar bears has taken on more focus as Canada looks at ways to revamp its economy and open up new export routes.

The northern port town of Churchill, on the west shore of Hudson Bay in northern Manitoba, was recently highlighted by Manitoba Premier Wab Kinew as an opportunity for Western provinces to get agricultural, mineral, and energy products to other countries through Hudson Bay.

At the first ministers’ meeting on June 2, Alberta Premier Danielle Smith also reiterated her desire for bringing oil to refineries on the East Coast via Hudson Bay. She said the initiative would require a pipeline to northern Manitoba and icebreakers to enable shipping the oil year-round.

A few years ago, the previous Premier Heather Stefanson said she had other priorities over Smith’s proposal of an interprovincial energy corridor linking Alberta to Churchill. At the time, Smith was pushing for the proposal amid resistance to Alberta oil and gas pipelines from her province to tidewater, from not only other provinces but the feds in some cases.

Under the new realities Canada is faced with, including U.S. tariffs and declining economic indicators, Manitoba is signalling a newfound openness to expanded opportunities for the Port of Churchill.

The Port of Churchill is Canada’s only deep-water Arctic port that is connected to the North American surface transportation network.

While momentum is currently building to explore the potential for these projects, questions remain among transportation and shipping experts regarding whether they are feasible, given that the port’s economic potential has not been realized in recent decades.

Barry Prentice, director of the University of Manitoba Transport Institute, said that with greater government investment and a longer shipping season due to melting ice, the Port of Churchill has the potential to become a key hub for exporting grain, oil, and potash to global markets.

Prentice said Churchill could be a more attractive shipping destination because it can deal with larger ships than can be brought through the St. Lawrence Seaway, and it would be cheaper to import products directly to the port than bringing them to the eastern provinces and moving them by rail to Western Canada.

Jean-Paul Rodrigue, professor at the Department of Maritime Business Administration at Texas A&M University, has a different view. He says he believes the narrow shipping season for Churchill due to ice in Hudson Bay, combined with infrastructure restraints in northern Canada, makes Churchill a less suitable port.

“What a shipping line wants is a regular, full-time type of service, … and therefore the Arctic is never going to be suitable for that,” Rodrigue told The Epoch Times.

“There’s a niche for everything. There’s a niche for Churchill, but it’s not clear exactly what it is.”

History of Churchill

The first permanent settlement that would become Churchill was built in 1717 by the Hudson’s Bay Company to capitalize on the lucrative fur trade. The town faded into obscurity as the fur trade declined, but in the early 1900s, after decades of monopoly by the Canadian Pacific Railway, Western provincial governments negotiated for creating a new northern shipping harbour on Hudson Bay linked by rail to Winnipeg.

The first shipment of grain went out through the port in 1931, and during World War II, it was used to ship goods to allied nations. A U.S. Air Force base built during the war also helped swell the town’s population to 1,700 by 1976, but the base was decommissioned and turned into an airport in the 1980s.

The Hudson Bay Railway (HBR), which opened in 1929, is currently the only land link between Churchill and the rest of Manitoba. The rail line was transferred to the Canadian National Railway (CN) in 1958, which was privatized in 1995. In 1997, American company Omnitrax acquired the HBR and the Port of Churchill, the latter being operated by the federal government at the time, in a deal that saw financial contribution by Ottawa.

The Port of Churchill was abruptly closed by Omnitrax in 2016 and its 70 employees were laid off. The situation for the town declined further in 2017 after flooding washed away a portion of the rail line, leaving the town without rail service for 18 months and only accessible by plane.

Omnitrax refused to pay the cost of up to $60 million to repair the tracks following the 2017 flood, saying it could not afford the cost and had been trying to sell the port and rail line because it was not commercially viable. The company also cited the 2012 dissolution of the Canadian Wheat Board, which had directed grain to the Port of Churchill, as a reason why it was not feasible to continue operating the port and rail.

In 2018, a deal was finalized to sell the railway and port to the Arctic Gateway Group, which is a consortium of investors including local governments, First Nations, financial holding companies, and grain producers. The port began shipping products again in 2024, and exported 10,000 tonnes of the critical mineral zinc concentrate in August that year alone.

While the Arctic Gateway Group is bullish on using the port to ship critical minerals, shipments of grain—which were once the port’s primary export—have declined in recent decades. Grain shipments fell from 710,000 tonnes in 1966, to 621,000 tonnes in 2007, and 186,000 tonnes by 2015. The town’s population has also steadily fallen since the 1980s, reaching just 870 in 2021.

A Potential Resurgence

With U.S. President Donald Trump implementing steep tariffs on Canada beginning in 2025, and the recent federal election being focused on declining economic indicators in Canada, federal and provincial governments began looking for ways to bring down interprovincial trade barriers and ship products to new international markets, as well as ways to bolster the economy.

Manitoba Premier Kinew said on May 7 that he wanted to see a “northern trade corridor” to transport resources from Western Canada to external markets through Hudson Bay. He said he had been working with First Nations to see what the “appetite” was for shipping agricultural, energy, and mineral products through the Port of Churchill.

This came after the province announced in February that it would be investing $36.4 million over two years in port and rail developments for the town, and in March the federal government also announced $175 million over five years to support the operations of the Hudson Bay Railway that links Churchill to the rest of Manitoba.

Alberta Premier Smith also recently said that, given the Quebec government hasn’t supported building a pipeline across Canada through its province to get to the East coast, it may be more feasible to ship the oil to refineries in Atlantic Canada, as well as Europe, via Hudson Bay.

Smith had backed a proposal from Western Energy Corridor Inc. for an interprovincial energy corridor linking Alberta to Churchill back in 2022. She also sent a letter to then-Premier Stefanson about a potential meeting to discuss “a renewed look at the Port of Churchill,” but the Manitoba premier said there were “other more pressing things for us to be dealing with right now.”

Shipping Products

According to Prentice, a professor of supply chain management, the shipping of grains to Churchill “was dead” after the Canadian Wheat Board was dissolved and the government subsidies for moving grain to the port stopped. The railway cars travelling to Churchill also needed to be lighter, which made the port a “very questionable destination for grain.”

Prentice said he did an analysis and determined that the railway to Churchill would need around 2 million tonnes of traffic per year to be financially sustainable, while the record for that railway was around 700,000 tonnes.

However, he said other products like oil, coal, critical minerals, asphalt, and potash can be moved through the port to make it economically viable.

“I would say the more interesting possibility is potash,” he said of the fertilizer ingredient, for which Canada is the world’s top exporter.

“We sell about 20 million tonnes of potash a year. If 10 percent of that went to Churchill, that would be enough to support the rail line.”

Prentice said it would be more feasible to ship potash eastward through Hudson Bay to Europe and South America, as opposed to shipping it by rail to British Columbia ports and then through the Panama Canal in Central America.

Additionally, he said many imports to the Western provinces need to come through the St. Lawrence Seaway to Montreal and then be moved by rail 2,500 kilometres. He also pointed out that the container ships coming to that port are smaller than those that could dock at Churchill due to the shallowness of the seaway.

Melting Ice Offers Opportunity

One issue that the Port of Churchill has long had is its shortened shipping season due to ice, making shipping only feasible from around June to October. But Prentice said he has heard from experts that the melting the ice is adding about one day of extra shipping each year.

Prentice said shipping has been held back by insurers that will only provide coverage for a short seasonal window, but he said this can be changed. He said the building or acquisition of icebreakers could also open up shipping year-round.

Under Canada’s National Shipbuilding Strategy, the Canadian Coast Guard is acquiring two new polar icebreakers to be delivered by the early 2030s. The construction is being done by two shipyards, Seaspan’s Vancouver Shipyards and Quebec-based Chantier Davie Canada Inc. Davie is also building seven heavy icebreakers for the coast guard, which will complement Canada’s current fleet of 17 icebreakers. As of January 2024, there were 243 icebreaking ships worldwide, with 179 of them in service dedicated to clearing and maintaining routes for commercial ships in icy waters.

Rodrigue has a more pessimistic view of the situation. He said while exporting goods through the Port of Churchill sounds good “on paper,” the short window for shipping makes it less feasible, especially for grains that are typically harvested from August to November.

He also said the Canadian Arctic is “composed of a lot of narrow channels which are very treacherous and difficult to navigate” compared to the Russian Arctic, and that the melting ice will “not have much of an impact” on the length of the shipping season for Churchill.

However, Rodrigue noted that Canada is facing a more positive environment for developing infrastructure and export projects. The Liberal government is pushing through legislation to reduce the federal barriers to interprovincial trade barriers and support the development of major projects that align with national interests, while also reducing approval times for projects from five years to two.

Prime Minister Mark Carney has yet to confirm any specific projects that will be approved, but he did mention during a meeting with the premiers on June 2 the possibility of a project such as a “Western and Arctic corridor, which, amongst other things, connects energy critical minerals and trade infrastructure.” Meanwhile, the federal Conservatives are saying that recent efforts are only a small part of what is needed to revive the Canadian economy.

Rodrigue said Canada has “painted itself into a corner” by not building infrastructure for decades, and now “the Arctic appears to be some kind of alternative.” But he noted that railways become more expensive and difficult to maintain the further north they are.

“This one is a tough nut to crack, to say the least,” he said. “I can be spectacularly wrong, and if I’m wrong, I'll be more than happy to be wrong.”