By Michael H. Broad, President – Shipping Federation of Canada

Transport Canada’s effort to develop a long-term transportation agenda for Canada has been a positive development for the maritime sector, and provides the industry with a much-needed opportunity to shape its future in concrete terms.

Transport has organized its stakeholder consultations around a number of key themes which focus on optimizing the ports system in order to support trade, ensuring the competitiveness of the marine transportation sector, and maximizing the system’s safety and security overall. While discussions on the third theme will begin this September, consultations on the first two themes have been taking place through the summer in the form of several ministerial round tables and engagement sessions. The Federation has been actively involved in this process and is now finalizing its written comments for submission to Transport Canada later this month. Our comments will build on a number of issues that we have already brought to the government’s attention over the summer, including the need to adopt a more disciplined approach to marine user fees; the need to invest in essential marine infrastructure; the need to modernize aspects of the coasting trade regime related to the repositioning of empty containers between Canadian ports; and the need to address cost and service issues related to pilotage.

With respect to the first point on marine user fees, we all know that users of Canada’s marine transportation system face a wide range of fees that are on the high end of the cost spectrum vis-a-vis other countries such as the U.S. This includes a significant number of user fees that are mandated by government authorities and over which carriers have very limited control (e.g. pilotage fees, harbour dues and port fees, icebreaking and marine navigation service fees, dredging costs and Seaway tolls), as well as a host of other fees that are not mandated by the government but are nevertheless difficult to negotiate given the size of the Canadian market and the limited number of service options available (e.g. towing, labour, rail, etc.). Indeed, the CTA review panel noted that in 2013-2014, user fees mandated by government authorities amounted to $857 million, and that such fees had been increasing by an average of more than five per cent per annum over the past 15 years.

Given the cumulative impact that these fees have on the system’s competitiveness, our submission to Transport Canada will highlight the need for a more disciplined and systemic approach to the way in which user fees are established and implemented. In very general terms, such an approach should provide a common procedure for the publication of fee proposals by service providers, provide a clear process for submitting input and filing objections by stakeholders, and establish some common principles for assessing the appropriateness of a given fee or fee increase. Although this will not address all our concerns regarding the escalating cost of marine services, it will ensure greater transparency and accountability from service providers who operate in the public realm, and give users some measure of assurance regarding a more stable and predictable fee environment (with meaningful avenues of recourse) in the future.

With respect to the second point on infrastructure investment, a key priority is the need for the government to continue the maintenance and renewal of infrastructure in the St Lawrence Seaway (through the current multi-year asset renewal plan), which is a fundamental component of the continued competitiveness of this key Canadian gateway. Another key priority, and one which we have been requesting for close to a decade – is the increasingly urgent need to renew the Canadian Coast Guard’s aging icebreaking fleet. This fleet plays a fundamental role in making navigation (and trade) possible during Canada’s long and challenging winters, especially in potentially dangerous and ice-laden areas in the Arctic, the northeast coast of Newfoundland, and the St. Lawrence River and Gulf. In order to ensure the long term viability of these important Canadian trade routes, we encourage the government to develop and commit to an investment plan and timetable for renewing its fleet of heavy and medium icebreakers. In the shorter term, we also need the government to explore options for increasing the number of available icebreakers so the Coast Guard can fulfill its service commitments to users. Some such options could include chartering in foreign tonnage and / or building such vessels abroad, as Canadian yards are fully booked for the foreseeable future.

With respect to the third point on the Coasting Trade Act, our submission will highlight the need to modernize Canada’s coasting trade regime in order to increase the efficiency and flexibility of its transportation system. Towards that end, we will recommend that Transport Canada complete its policy work on the repositioning of empty containers so that international marine carriers are able to reposition their empty containers between Canadian ports on board their own vessels. Currently, ocean ships have no choice but to either reposition their empties by truck or rail, or (more commonly) to export their own empty containers from one Canadian port and import empty containers to another – which is clearly not the most efficient way to manage one’s transportation assets. Although CETA (the Comprehensive Economic and Trade Agreement between Canada and the European Union) is a positive step in terms of providing some liberalization of empty container repositioning, its framework is limited to EU enterprises. The Federation is therefore seeking an amendment to the Coasting Trade Act that will allow all international marine carriers – regardless of their flag – to reposition their empty containers between Canadian ports on a non-revenue basis. We have been advocating for such an amendment since 2011, and we very strongly believe that it is time to move forward with this change in order to make Canadian trade routes more attractive for importers and exporters alike.

With respect to the fourth and final point; pilotage, the international ocean carriers are the biggest users of this service and appreciate the skills Canadian that pilots provide to their ships. However, ship owners and operators have also long complained about the system’s high cost and restrictive practices, especially in areas which call for compulsory pilotage over long stretches of water. We encourage the government to look into these costs and restrictions since pilotage, is basically controlled by monopolies operated by private, pilot-owned “corporations” or unions.