By Alex Binkley

The U.S. Coast Guard has proposed to allow a 14 per cent increase in Great Lakes pilotage revenue for 2017, on top of hefty hikes for the last few years, renewing calls for reform to the system. Mike Broad, President of Shipping Federation of Canada, said the proposed increase comes “on top of an increase of more than 30 per cent in 2016. In fact, prior to 2016, the U.S. Coast Guard (USCG) has increased rates by 114 per cent for the previous 10 years.”

Shipper and port groups have “put forth valid comments objecting to the 2016 rate increase, comments which were dismissed by the Coast Guard,” he said. “That is why we had no other choice but to file suit against the Coast Guard in the U.S. courts.” Complainants include Shipping Federation of Canada, U.S. Great Lakes Shipping Association along with shipowners Fednav International Ltd, Canfornav Inc., Polish Steamship Company, Spliethoff Transport, Brochart Shipping and Wagenborg Shipping.

Broad stated that the Agency has turned a deaf ear to industry and allowed “the private pilot companies that operate as monopolies to drive up rate levels. The rates in the U.S. are already well above those of Canadian pilotage rates for the same service in the same area. One has to wonder where the money is going.”

The Chamber of Marine Commerce said the proposed increase adds to the need for “substantive reform of the system of marine pilotage to increase competition, make it less costly, more effective and responsive to the needs of its customers.” American Great Lakes Ports Association said USCG “has increased pilotage rates almost every year for the last decade.” Pilotage costs fall hardest on ocean going ships and U.S. pilotage costs account for 19 per cent of “average voyage costs for an ocean-going vessel,” the Great Lakes Seaway Partnership added.

“When Canadian pilotage costs are added, it becomes clear that pilotage has become a runaway cost for Seaway shipping,” it adds in a statement. “Cynically citing foreign shipping conglomerates as the only impacted parties, the Coast Guard seems tone-deaf to the legitimate concerns raised by ports and shippers.”

The calls for pilotage reform could grow louder with the release of a special examination by the Office of the Auditor General of Canada. The special examination which concluded that the Board of Directors of Atlantic Pilotage Authority, “despite having strong competencies, did not set strategic direction for the Corporation, nor had it reviewed its mission, vision, or strategic objectives since 2003. Strategic direction is integral to ensuring the Corporation’s financial self-sufficiency. For three of the past four years, the Corporation reported operating losses.” More details are expected when the Auditor-General’s report is presented to Parliament this fall.

“Great Lakes pilotage costs have gone up 114 per cent during the last 10 years,” says Will Friedman, President of Cleveland-Cuyahoga County Port Authority. “The Coast Guard wants to increase them another 58 per cent by 2017. These increases are unsustainable and will ultimately erode the viability of international trade through Great Lakes ports.”

Pilotage costs were a hot topic at a recent conference on the potential of Great Lakes in Thunder Bay, Ont. Angus Armstrong, Harbour Master at Port of Toronto, said the existing pilotage system is undermining the competitiveness of the waterway in the industrial heartland of North America. Without an end to compulsory pilotage, ocean going ships will boycott the Great Lakes, he said. Modern ships have navigational equipment which negates the need for pilots.

Blair McKeil, Vice-Chairman of McKeil Marine, echoed the concerns and said pilotage costs are undermining the competitiveness of the St. Lawrence Seaway and Great Lakes. They are among “the dams in the system that hinder our efficiencies and increase our costs, inhibiting our competitiveness in the world-wide markets.”