The Port of Churchill: Strategic asset or financial sinkhole? Commentary

Canada’s first Arctic seaport has struggled for decades, but as Christopher Wright reports, it could be on the verge of a remarkable turnaround – thanks in part to Donald Trump.

When it opened in 1931. The Port of Churchill was Canada’s only Arctic seaport and it remained so for almost 100 years. For a time, it played a pivotal role in the development of northern Canada

Today, Churchill is mainly known as a community on Hudson Bay where you can get up close and personal with a polar bear. Some may be aware that it was once a major grain exporting port, but very few may know that the original site for Canada’s Arctic port was on the Nelson River, about 125 miles southeast of Churchill. The port has been, from its inception, more a creature of political compromise rather than economic necessity.

The concept of a Canadian Arctic port was floated in the late 19th century, when Canadian prairie farmers had very limited means of getting their crop to market. At that time, their target market was  Britain and the principal port for grain imports was Liverpool.

Liverpool is around 2,000 nautical miles from Hudson Bay, compared with about 2,700 nautical miles from Montreal. Although the route to Britain is via the Atlantic, it was thought that ships could travel there at least as quickly as they could to Montreal.

By the time construction started on the port, the farmers’ logistical problems had been largely resolved. The 3rd Welland Canal between Lake Erie and Lake Ontario was completed in 1887, and the first consistent set of locks and connecting canals on the St Lawrence River were in place by 1905.

Despite these improvements, prairie farmers and the new Canadian provinces continued to press for a port on Hudson Bay. Plans to build the 4th Welland Canal, gave them the political leverage they needed, and Ottawa agreed to build a port on Hudson Bay in return for the West’s support for the new Welland Canal.

Construction started on the north bank of the Nelson River in 1912, despite mariner’s concerns regarding the suitability of the location. By 1917, when the site was mothballed, the Dominion Government had spent the equivalent of $500 million on the port and railroad at today’s values.

After World War I, with grain prices in the doldrums, the prairie provinces began pushing for the port’s completion. However, a Railway Inquiry in 1917, followed by a Senate Inquiry in 1919-1920, raised serious questions about the port’s location. As a result, a British port engineer was brought in to evaluate the two potential locations. His 1927 report concluded, from both a navigation and cost perspective, that the port should be at Churchill.

In 1931 the first grain cargoes were loaded, and Churchill was open for business at a cost – in today’s terms – of another $500 million for port and rail construction.

The port was taken under the mantle of the National Harbour Board in 1936, which segued into the Canada Ports Corporation (also known as Ports Canada) from 1983 to 1998.

It has never made a profit, and has never truly fulfilled its mandate.

In 1994, the Canada Ports Corp. estimated the port needed 600,000 tonnes of grain a year to break even, its best year was in 1976 when 699,000 tonnes of wheat and barley were shipped.

In fact, the Railway Commission of 1917 opined:
Unless considerable mineral wealth should be discovered in the territory, which this line will open up, it must, we fear, continue to be almost indefinitely a burden upon the people of Canada. And everything that can be done should be done to make this burden as small as possible.

The truth in the Railway Commission found that the port and railroad has needed significant ongoing financial support. In 2025, the federal government noted that it had invested $320 million in the Hudson Bay Railway since 2018.

This didn’t include the $36.5 million that the Manitoba government spent on port infrastructure, nor the roughly $125 million of losses that Canada Ports Corp. incurred from the mid-1980s to the late 1990s.

It also didn’t take into account infrastructure upgrades; or the compensation paid to CN associated with the railroad after its “sale” for a nominal $1 to Omnitrax in 1996, followed by federal support for grain shipments through Churchill (the port was sold to Omnitrax in 1997 for $1).

Apart from being the poor relation in Canada’s port system, there are many reasons for the failure of the port to contribute significantly to Canada’s export-oriented economy. Part of that blame lies with the Canadian Wheat Board, which from 1935 to 2015 was mandated to sell Canadian grains. They interpreted that mandate as selling Free-on-Board (FOB) Canadian port, rather than Cost, Insurance and Freight (CIF) customer port.

The Australians, by comparison, moved up the wheat logistics chain as far as they could, whenever they could, to guarantee a market at a good return. Import cargoes have never developed, although Omnitrax, to its credit, did try with the Arctic Bridge in 2008. However, this effort only produced two 9,000 tonnes of fertilizer cargoes on behalf of a farmer co-operative in Saskatchewan.

If the port had been properly positioned in its first 25 years of existence, it might have survived the loss of the British grain trade as a result of the Chorleywood Baking Experiment in 1961 (which showed that Britain did not need Canadian hard wheat for industrial bread baking). That setback was followed by the European Union Common Agricultural Policy, which eventually put Europe into a grain export position – upending the Atlantic Basin grain trade.

A lot of blame for Churchill’s problems was placed on insurance, but this was not the case. For example, in 1931 (when exports started), the freight from Churchill was 14.35 cents/bushel, of which insurance was 3 cents/bushel. The equivalent rate from Lakehead via Montreal was 10.95 cents/bushel, of which lake freight was 6.36 cents/bushel, leaving 4.59 cents/bushel for ocean freight. The problem therefore was that shipowners (who are pretty conservative) needed financial incentives to sail through ice infested waters to an unknown port. However, by the 1950s, voyage rates out of Churchill were roughly comparable with those out of Montreal.

Another problem for the port is its seasonality. While year-round shipping may not be feasible, Canada could – if it wished – operate an extended season. There are enough ice-capable bulk carriers and tankers in the world fleet to maintain early and late season navigation through Hudson Strait and Bay, provided the cargo was there and Canada could supply the icebreaker support.

Wab Kinew, the Manitoba premier, recently floated the idea of oil shipments through an alternative port to Churchill on Hudson Bay. Although experience with the Primorsk oil terminal shows that it could be done safely, Canada’s past experience with the south shore of Hudson Bay strongly suggests that the only safe location for such a port is Churchill.

In March, the Canadian government gave Churchill a vote of confidence by announcing a $175 million investment in the Hudson Bay Railway and the Port of Churchill. “Now, more than ever, it’s important to make critical investments in Canadian infrastructure to bolster economic development in Canada’s Northern regions,” the government said in a statement.

The investment will give Canada more options when it comes to diversifying its export markets – a key consideration now that the country is in a  tariff war with the Trump Government.

Perhaps now is the time for the Port of Churchill to finally prove itself capable of becoming a strategic asset, rather than continue as a financial sinkhole.

Christopher Wright is the former president of The Mariport Group Ltd, a marine and port consulting company that he formed in 1989. After retiring in 2013, Wright joined WorleyParsons Canada (now Advisian) as a marine logistics specialist.

He has written two books: “Arctic Cargo; A History of Marine Transportation in Canada’s North” (2016) and “Of Penguins and Polar Bears, a History of Coldwater Cruising” (2020).