OCEAN SHIPPING Enabling a Strong Canadian Economy Meeting with Minister of Transport March 7, 2017 SHIPPING FEDERATION OF CANADA 300 Saint Sacrement, Suite 326, Montreal, QC, H2Y 1X4 Tel: 514-829-2325 www.shipfed.ca
SUMMARY OF CONTENT Introduction - About the Shipping Federation of Canada 1 - Ocean Shipping s Role in the Canadian Economy 2 - Ocean Shipping s Commitment to Continuous Improvement 2 Discussion Points for Transport Canada - Oceans Protection Plan 3 - Pilotage Act Review 3 - Investing in Marine Infrastructure 4 - Repositioning of Empty Containers 5
INTRODUCTION The Shipping Federation of Canada The Shipping Federation of Canada, which was incorporated by an Act of Parliament in 1903, is the voice of the owners, operators and agents of ships carrying Canada s imports and exports to and from world markets. The Federation s members represent over 200 shipping companies which call ports throughout Canada, from the Atlantic to the St. Lawrence and Great Lakes to the West Coast and Arctic, and are involved in all sector of shipping activity. The Federation s overall objective is to work towards a safe, efficient, competitive and environmentally sustainable marine transportation system. MEMBER COMPANIES Aegean Maritime Inc. Mathers Logistics Ltd. American President Lines MCA Marine & Cargo Agencies Anglo-Eastern Ship Management Ltd. McAsphalt Industries Ltd. ArcelorMittal Infrastructures McKeil Marine Ltd Atlantic Container Line Montreal Marine Services Inc Atship Services Ltd Montship Inc Bay Shipping Inc. Navitrans Shipping Agencies Calypso Marine Agency Nirint Canada Canadian Maritime Agency Ltd., North Atlantic Refining Ltd China Ocean Shipping Co. (COSCO ) Norton Lilly International CMA-CGM Canada NYK Line (Canada) Inc. CMC - Currie Maritime Corp. Ocean Group Inc. Colley Motorships Ltd OOCL (Canada) Inc Compagnie Miniere IOC Pacific Northwest Ship & Cargo Cross Marine Inc Poros Shipping Agencies Inc. Evergreen America Corp. Protos Shipping Ltd. F. K. Warren Ltd. Ramsey Greig & Co. Ltd. Fednav Ltd., Montréal, Québec Rio Tinto Fundy Shipping Ltd Robert Reford Furncan Marine Ltd. Scandia Shipping Gibson Canadian Global Agency SMK Tanker Agency Inc Gresco Ltée Svitzer Canada Ltd Hampton Ship Agency Thunder Bay Shipping Inc., Hapag-Lloyd (Canada) Inc. Tormar Inc. Holmes Maritime Inc. Trans-Oceanic Shipping Co. Ltd., Inchcape Shipping Services, Trillium Shipbrokers Ltd., K D Marine Inc Wagenborg Shipping North K Line Canada Ltd. Wallenius Wilhelmsen Logistics, Laden Maritime Inc World Shipping Inc. Lake Superior Shipping Limited Yang Ming Shipping (Canada) Lower St. Lawrence Ocean York Overseas Ltd Maersk Canada Inc. Zim Integrated Shipping Services 1 page
Ocean Shipping s Role in the Canadian Economy Canada s economic priorities are focused on long-term economic growth that benefits the middle class and provides a pathway for those seeking to join it. As noted in both the Speech from the Throne and the 2016 Budget, a key means of achieving such growth is to enhance the competitiveness of Canadian businesses in the international marketplace by breaking down existing trade barriers and identifying and developing new trade opportunities. Doing so necessarily involves the implementation of existing trade agreements such as CETA, as well as the negotiation of beneficial agreements with new partners, and the deepening of trade relationships with large emerging markets including China and India. Ocean shipping, which is the transportation mode that Canada uses for trade with all countries other than the U.S. and Mexico, has a central role to play in helping Canada achieve the above priorities and therefore contributing to a strong Canadian economy by: Developing Canada s natural resource sector by providing exporters and producers with a costeffective means of delivering commodities to new markets and enabling them to be sold where they have the highest value; Increasing the productivity of Canadian manufacturers by providing a competitively priced means of importing the raw materials that are necessary for production; Enhancing the international competitiveness of Canadian businesses, including small and medium-size enterprises, by enabling them to access global value chains; Supporting economic development in the North by providing the communities and developers of Arctic projects with the goods and materials they need and delivering Arctic production to international markets. It is also important to note that ocean shipping is part of a transportation continuum that requires suitable connecting modes and land-based infrastructures in order to operate at maximum efficiency. Consequently, any growth in demand for shipping that flows from an increase in Canadian trade will also translate into growth in demand for related transportation and logistics services, resulting in a net gain for the Canadian economy overall. Ocean Shipping s Commitment to Continuous Improvement As fundamental as trade growth is to the advancement of the government s economic agenda, so too is the need to balance such growth by simultaneously focusing on safety and environmental protection. As noted in the Speech from the Throne, protecting the environment and growing the economy are not incompatible goals but rather, equally important determinants of Canada s future success. Ocean vessels operating in Canadian waters are governed by a strong safety and regulatory framework, and the available data shows that the industry has a record of safe shipping in Canadian waters. Nevertheless, the industry s ability to meet any future growth in demand and to build on the benefits of such growth - can only be assured through a strong and sustained commitment to continuous improvement with respect to marine safety. Our industry views such a commitment not as an option or an objective to be tabled for future consideration, but as an absolute prerequisite for its growth and ongoing social license to operate. 2 page
DISCUSSION POINTS FOR TRANSPORT CANADA 1. Oceans Protection Plan Over the last three months, the government has announced an ambitious and multi-facetted Oceans Protection Plan (OPP) that is largely focused on the objectives of marine safety and responsible shipping. These objectives are shared by the shipowners, operators and agents who comprise our membership, several of whom own and / or operate fleets of modern vessels that are worth hundred of millions of dollars, and for whom the prevention of accidents and oil spills and the need to minimize the environmental footprint of their operations, are day-to-day realities. The data available on the rate of marine-related accidents / incidents and recent reports demonstrate that the industry has a history of safe shipping in Canada that is governed by a strong regulatory and safety framework, and we are pleased to note that this record has been acknowledged by the government in some of its recent announcements on the Oceans Protection Plan (albeit to a limited extent). Given that the OPP is a multi-facetted plan that will take years to fully implement, it is essential that data on the marine industry s safety record become an essential part of the government s communications going forward, with a view to preventing public misconceptions about the risks of ocean shipping in Canadian waters. The fact that ocean vessels transport hundreds of millions of tonnes of oil and petroleum products through ports on Canada s east coast safely and responsibly every year is a prime example of the type of information that should be communicated to the public in this respect. The above being said, all activity involves a level of risk associated with its operations, and our members also embrace the concept of continuous improvement and of consistently doing more to further reduce the risks linked to maritime transportation. In this respect, we note with great interest the most recent announcements on the west coast regarding increased oil spill response capacity in the region, greater co-management with local communities and First Nations, and further work on minimizing the impact of marine traffic on marine mammals. These are important first steps, and we look forward to working with Transport Canada as it develops a roadmap that prioritizes OPP actions on a national basis from coast to coast to coast and includes major maritime trade corridors in the Great Lakes, Saint Lawrence and Atlantic. Question: How will the government prioritize its actions under the Oceans Protection Plan and how can the industry help develop the roadmap to implementation? 2. Pilotage Act Review The government has announced a review of the Pilotage Act starting in 2017. We consider this review to be a priority and will be fully engaged with Transport Canada in assessing whether the current pilotage system provides service in the most cost effective and efficient manner possible. Several of our members have invested hundred of millions of dollars in their fleets and share a primary objective with Transport Canada, the Pilotage Authorities and the pilots in ensuring that pilotage services continue to support safe navigation in Canadian waters. 3 page
The above being said, an equally important focus of the review must be on identifying ways of increasing the efficiency of pilotage services overall and of addressing the costs related thereto. Pilotage fees represent a major portion of a vessel s operating costs while navigating in Canadian waters, and those fees have increased significantly over the years at a rate this is disproportionally high compared to economic indicators such as CPI. In addition to discussing the cost issue, we also look forward to exploring how levels of service have evolved over the years particularly in in terms of pilot availability and delays and whether the current pilotage system provides the right conditions for embracing new technologies and delivering greater efficiencies. The review of the Pilotage Act will provide a much-needed forum for addressing these important issues, all of which are key elements of a strong marine transportation system that is able to support a growing Canadian economy. Questions: Can Transport Canada confirm that the scope of the Pilotage Act review will encompass both the pilotage system s ability to support safe navigation in Canadian waters, and issues related to costs, levels of service and the role of innovation? What is Transport s timeframe for completing the review, given that the government is involved in several concurrent initiatives under the Oceans Protection Plan? 3. Investing in Marine Infrastructure The Fall Economic Update 2016 allocates $10.1 billion to strengthening Canada s trade competitiveness by investing in trade and transportation corridors. Investment in critical infrastructure is an essential component of the competitiveness of Canada s marine-based transportation system, and we strongly believe that decisions related such investment must be made from a gateway / trade corridor perspective if they are to be truly effective and represent the optimal use of available funds. A key and urgent priority in this respect is the renewal of the Coast Guard s icebreaking fleet, which plays a fundamental role in maintaining trade through a number of key Canadian corridors including the St. Lawrence, Great Lakes and Arctic during Canada s long and challenging winters. Despite its importance, the fleet is currently made up of over-aged icebreaking vessels which are very thinly spread over a vast expanse of water. Given that the demand for icebreaking services is expected to remain strong, it is essential that the icebreaking fleet have sufficient capacity and capability to ensure safe commercial navigation for the next several decades. We have raised this issue with both the Canadian Coast Guard and Public Services and Procurement Canada, with a view to ensuring that the government move swiftly in developing a concrete plan for renewing the fleet in the long term. Another investment priority from our perspective is the allocation of funds for 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. In 4 page
addition to being an essential trade route for Canadian producers and manufacturers, the Seaway also provides a significant amount of surge capacity to Canada s marine transportation system as a whole, the importance of which cannot be overlooked given the capacity challenges that often confront the western gateway. Questions: Will renewal of the Coast Guard s icebreaking fleet and renewal and maintenance of the Seaway s infrastructure be part of the government s investment priorities for strengthening Canada s trade and transportation corridors? 4. Repositioning of Empty Containers That Fall Economic Update 2016 highlights the need for stronger, more efficient transportation corridors to international markets to help strengthen Canada's trade competitiveness an objective which involves the identification of inefficiencies at key points along the logistics chain and the development of appropriate solutions. A key example of one such inefficiency is the current inability of oceans ships to resposition their empty containers between Canadian ports because such activity is prohibited under the Coasting Trade Act. As a result of this prohibition, ocean ships will either reposition their empty containers by truck or rail, or more commonly, export their empties from one Canadian port and then import them to another Canadian port. This is clearly not the most efficient way to manage one s transportation assets, and indeed, this inefficiency has a cost for the exporters who need empty containers for their exports. In contrast, US legislation allows ocean ships to reposition their empty containers between US ports, and even extends this ability to the partners in a vessel sharing agreement. Although we are pleased to note that the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union provides some liberalization of empty container repositioning, its framework is restricted to ships operated by EU enterprises and therefore limits the number of carriers who could potentially benefit from such a change. In addition, the language of Bill C-30, the legislation which will implement CETA in Canada, raises serious doubt as to whether the EU partners in a vessel sharing agreement would be able to benefit from the ability to resposition their empties on one another s ships, despite the fact that they all share joint operational control of the vessels in the agreement. Given these concerns, we believe that the liberalization of empty container repositioning should be extended to all foreign ships, regardless of their flag. Indeed, we have been advocating for this for the past several years, and in 2012, we provided Transport Canada with a proposed legislative amendment allowing this activity under the Coasting Trade Act. Such a change would render Canadian trade routes more logistics friendly and competitive, while also providing Canadian importers and exporters with additional opportunities by lowering the costs of using the trade route. 5 page
Questions: Will Transport Canada revisit the work it began in 2012 to amend Coasting Trade Ac to enable all carriers to reposition their empty containers between Canadian ports regardless of the nationality of the entity that owns or operates the ship? Will the ability to reposition empty containers be extended to all the partners in a vessel sharing agreement, as is permitted in the United States? 6 page