By Alex Binkley

More emphasis on short sea shipping, better port organization and a renewed Canadian Coast Guard are among the recommendations of the final report of the panel that reviewed the Canada Transportation Act.

There are more than 50 recommendations covering the entire transportation chain contained in Pathways: Connecting Canada’s Transportation System to the World, produced by a six-member panel. Headed by former cabinet minister David Emerson, it spent 18 months assessing the state of transportation and logistics in Canada. While the report was presented to the government before Christmas, Transport Minister Marc Garneau didn’t comment on its proposals until after its release in late February. He said the review “looks ahead, over the next 20 to 30 years, to examine how we can maximize the contribution of our transportation system to support Canada’s economic growth.”

When it came to the maritime mode, the report says the panel received “many submissions and consultations in favour of the status quo, particularly in respect of short sea shipping and pilotage. Although they may be unpopular in the short term, the “Review is proposing changes in these domains that we believe will be in the long-term best interest of Canada and its marine transport system. Our goal in addressing these issues is to transform the delivery, governance, and service requirements for pilotage and other marine services in Canada in order to improve their cost competitiveness, and to set Canada on the right course for the next 30 years.”

Industry reaction to the report included support for some of its proposals and sharp criticism of others. Kirk Jones, interim President of the Canadian Shipowners Association, said in an interview that proposals to take government-imposed costs out of the transportation system and reduce the number of agencies regulating shipping are welcome. So are recommendations to revamp the Coast Guard and increased support for short sea shipping, which has been the focus of domestic operators for years. However, a call to phase out the cabotage rules in the Coasting Trade Act isn’t backed up with economic justification or examination of the impact on Canadian workers in the maritime sector, he added.

Robert Lewis-Manning, President of the Chamber of Shipping of B.C., said in an interview the report’s call to protect transportation and trade corridors would be a top priority on the West Coast. The corridors are vital to Canada’s economic competitiveness but are under pressure from competing land uses and water uses. “There’s a lack of federal co-ordination in protecting these areas.” He applauded the report for “recognizing the Coast Guard needs clear authority and the tools to do the job. On the other hand, he couldn’t see the logic behind the proposed National Pilotage Board. While there are serious issues in Eastern Canada, “we have a good relationship with the industry and pilots on the West Coast.” He also called for a full analysis of the proposal to end the national maritime cabotage program.

Michael Broad, President of the Shipping Federation of Canada (SFC), said the “the report did not shy away from controversial subjects and explored avenues to increase cost competiveness for marine transportation in Canada.” Several of the report’s themes are in line with policies SFC has been advocating, he added. “These include the need to provide funding and a plan for immediate renewal of the CCG icebreaking fleet so as to ensure safe and efficient commercial navigation both north and south of 60, the importance for marine user fees to be set in a manner that reflects commercial discipline and ensures the cost competitiveness of marine transportation, and the need to move forward with the modernization of the Coasting Trade Act. “The Federation looks forward to the consultations on the review’s findings, with the objective of moving on to concrete discussions on the implementation of some of these recommendations.

Jones and Lewis-Manning want the government to move ahead with a consultative process on the report’s recommendations. “The report has started the dialogue very well,” Lewis-Manning said. “Canada requires a more nimble, more responsive marine system … in particular as the country experiences expansion in the North,” the report added. Port Authorities need “the necessary flexibility to adapt to long-term trends and impose private sector discipline.”

The federal government needs to fund new infrastructure or increase services, such as aids to navigation, ice breaking, and gateway and corridor investments. It should also “examine the feasibility and viability of adopting a share-capital structure for Canada Port Authorities, including receiving proposals from institutional investors or private equity investors, accompanied by legislation to enshrine the economic development and trade mandate of ports and to protect the public and national interests.” It should encourage the regional amalgamation of Port Authorities, especially in Eastern Canada and empower the Canadian Transportation Agency to oversee the fairness of their operations. Readers may recall Canadian Sailings advocated similar changes in “Is it time to privatize more Canadian state enterprises? Yes, the sooner, the better!” published on November 9, 2015.

Other recommendations included:

• promoting short-sea shipping in the Great Lakes-St. Lawrence region to reduce greenhouse gas and air pollutant levels;

• modernizing recruiting and training of Canadian seafarers as well as foreigner workers with needed skill sets;

• phasing out the Coasting Trade Act over seven years while aligning regulations governing Canadian-flagged ship operators to put them on a competitive basis with international operators beginning immediately with container services;

• removing all remaining duties on imported vessels within seven years.

The Canadian Coast Guard should be returned to Transport Canada to better align its mandate with the approach taken by other jurisdictions, the Review said. “The Coast Guard is a first-class organization that has insufficient resources to fulfill its mandate and operates a very old fleet. With traffic increasing in all areas, it is time that the Coast Guard be properly resourced and equipped to meet the growing challenges that lie ahead, especially in the Arctic, and monitoring the movement of hazardous and noxious substances.” The Coast Guard should focus on key activities such as search and rescue, environmental response, icebreaking, pilotage, navigation aids, and charting services,” the report said. Its role “in the Arctic should be reviewed and harmonized with the Royal Canadian Navy and the RCMP. The Canadian Coast Guard needs “a clear plan for accelerated fleet renewal and services, including the purchase of a minimum of one polar and two heavy icebreakers.” It should be allowed “discretion in leasing and procurement of foreign vessels to augment capacity.”

The report also called for “the integration of the four pilotage Authorities into one national pilotage board, while maintaining the sound regional stewardship of day-to-day pilotage operations.” Pilotage should take into account technological advances such as electronic charting, GPS and Automatic Identification Systems (AIS), and other innovations.

There is a need to better track vessel movements in the Arctic and provide faster response for vessels in distress.

While Port Metro Vancouver and Prince Rupert are success stories, “the Atlantic Gateway Initiative was less successful: multiple stakeholders from the four provinces complicated the picture and without consensus, a less coordinated approach resulted. The Atlantic ports in particular must articulate a strong strategic vision; otherwise, they may not fully develop, and may not be able to capitalize on the opportunities likely to arise.”

The federal government should work with the provinces to further improve cost competitiveness by ensuring that payments in lieu of municipal taxes required of individual Port Authorities are no greater than for comparable industries.

Some ports face major capital investment decisions that need to be made in a timely manner, the report noted. “Given these pressures and trade growth over the longer term, there is a need to change the governance structure of Ports. … In particular, the need for certain Ports to expand to meet projected demand and to adapt to changing technologies and trade patterns will require ever-higher scrutiny of the returns on investment. The current model limits the activities and access to capital of some Authorities and may inhibit good development ideas.”

Canada’s port infrastructure has slipped from 14th place in the World Economic Forum’s Global Competitiveness Index in 2010-11 to 21st place in 2014-15.

The report also recommended the government maintain a user-pay approach to ensure continued financing for infrastructure and operational needs, while also taking steps to improve cost competitiveness with comparable jurisdictions. The federal government needs to streamline its marine legislation and regulation. Transport Canada has the main role but the CTA and five other departments also have some regulatory involvement in the industry.