By Alex Binkley

An overly restrictive definition of shipowner in the bill to approve the Canada-Europe free trade deal will negate much of the potential economic benefit of allowing the repositioning of empty containers between Montreal and Halifax, says Michael Broad, President of the Shipping Federation of Canada. The terms of the trade deal restrict permitted empty container movements “to EU owners only. Asian or South American owners cannot participate in that.”

For years the Shipping Federation has tried to convince the federal government to change domestic cabotage rules to allow European container lines to move empty containers between the two ports, Broad told the Senate international trade committee.

However the bill’s definition of shipowner would only allow the owner of the vessel to reposition its containers and not those of other shipowners with containers on the ship under a vessel sharing arrangement, he said. The wording is “both a missed opportunity and a serious omission.” Currently empty container positioning in Canada is done mainly by rail, he said. Mostly it involves reefer containers going to Halifax to facilitate exports from Atlantic Canada.

Amending the legislation to include all containers on a ship would mean lower costs for Canadian exporters, he said. The only loser from a targeted amendment to the bill will be the railways that move the empty containers.

Kirk Jones, Acting President of the Canadian Shipowners Association (CSA), which has merged into the Chamber of Maritime Commerce, said his members objected to the legislation allowing foreign ships “to supply cabotage activities in Canada without a licence that is normally required.”

Most countries, including the United States, protect their domestic cabotage markets from foreign vessels, he said. The Coasting Trade Act allows for exemptions when there are no Canadian vessels able to perform a service.

While the repositioning issue was a regular topic during the nearly decade long trade negotiations with Europe, Jones said the government “did not consult at all with the Canadian domestic cabotage industry before making the market access offers for cabotage services.”

CSA opposes any further changes to the trade bill because its current wording is consistent with the Coasting Trade Act, of which it is supportive. Also there needs to be an effective monitoring and enforcement regime for container repositioning, he said. “Until such a regime is in place, there will be nothing to discourage non-compliance with the requirements and conditions of the new market access exceptions under the Coasting Trade Act.”

Broad said the targeted change to the trade bill that his organization is seeking represents the best means of ensuring the repositioning of empty containers is “implemented in a way that reflects the realities of how the container shipping industry operates, for the benefit of a wide range of stakeholders, from shipping lines to Canadian importers and exporters, to the supply chain overall.”

The trade deal “will not only generate additional trade in goods but also create new demand for transportation services that will have a positive impact on Canadian ports, trade routes and business overall,” he said. The deal “will create new opportunities for Canadian importers and exporters and increase the efficiency of the logistics network serving Canada’s trade routes.”

In the past, the government said that empty container repositioning between Halifax and Montreal would have no impact on the Canadian shipping sector. There have never been any proposals to expand that repositioning provision to other East Coast ports. Broad said in the past CSA “agreed that it would be practical to allow the empty container repositioning. I don’t see any harm to the Canadian industry at all.”