The U.S. Coast Guard published its final 2018 rates for Great Lakes pilotage services. The new hourly rates are estimated to generate a total of $25,156,442 in revenue for the three Great Lakes pilot companies, representing an increase of $2,830,061 from 2017 – or 12.7 per cent increase in total cost over last year.

The Coast Guard maintains a regulated monopoly structure for Great Lakes pilotage – similar to a utility. The agency revises the hourly rates for Great Lakes pilotage service annually through a federal rule making process. In its initial proposal last January, the Coast Guard recommended a 5.2 percent increase in overall revenue for 2018. Instead, the agency implemented a 12.7 percent increase.

The Coast Guard had originally proposed revising pilot target compensation from its 2017 level of $332,000/year down to $319,000/year for 2018. This adjustment was in response to successful legal challenges to the nature in which the agency had earlier determined the $332,000 compensation level. In its final rule, the Coast Guard failed to follow through and ultimately decided to set pilot compensation at $352,485/year. The new 2018 pilotage rates represent the fourth consecutive year of double digit cost increases implemented by the Coast Guard as shown below:

2018 – 12.7 per cent increase in total cost over 2017

2017 – 14 per cent increase in total cost over 2016

2016 – 24 per cent increase in total cost over 2015

2015 – 20.1 per cent increase in total cost over 2014

In 2014, the total proposed cost of U.S. Great Lakes pilotage was $12.7 million. Four years later, the Coast Guard has doubled it to $25.1 million. All of this cost is recovered from Great Lakes vessel operators in hourly charges for pilotage services. No federal funds subsidize this system.

While pilots provide an important service to ensure safe navigation, skyrocketing pilotage costs threaten the competitiveness of the Great Lakes navigation system. Vessel delays, service problems and customer abuse has been common throughout 2017 and into 2018.