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Ports & Terminals

Outcry by Great Lakes stakeholders over proposed rate hike

A proposal by the U.S. Coast Guard to raise Great Lakes pilotage rates by 58% in in 2016 has provoked an unprecedented outcry from a wide range of stakeholders, including U.S. and Canadian marine industry associations, ports, terminal operators, shipping lines, grain shippers and such steel giants as Tata Steel. The drastic increase would coincide with the opening of commercial navigation on the St. Lawrence Seaway next April 1 following the waterway’s annual winter closure.

Although the biggest potential impact will be on foreign-flag operators, critics have expressed strong concern that any drastic rates increase will generally erode the competitiveness of the North American waterway.

The Midwest Shippers Association regretted the timing of the rate proposal after being heartened by new breakbulk services “some northern European shipping lines are trying out in the Lakes.”

Dozens of comments from interested parties on the September USCG Notice of Proposed Rulemaking (NPRM) were sent to the U.S. Department of Transportation (DOT) by a deadline of Dec. 9. In the coming weeks, the USCG will review the comments and it remains to be seen if adjustments could be on the horizon.

“The NPRM, as drafted, is arbitrary, capricious, unsupported by substantial evidence, and otherwise not in accordance with law,” bluntly states a joint commentary submitted by the American Great Lakes Ports Association (AGLPA), the Canadian Shipowners Association, Canfornav Ltd., Fednav International Ltd., Polish Steamship Company, Shipping Federation of Canada, Spliethoff Transport, the United States Great Lakes Shipping Association and Wagenborg Shipping.

The above stakeholders “respectively suggest that USGC withdraw this NPRM, even if to do so requires a minimum one-year extension of the existing methodology.”

“We urgently want the status quo,” Steve Fisher, executive director of the AGLPA, told AJOT.

Under federal law, a U.S. and Canadian pilot is required for all ocean-going vessels operating on the Great Lakes. In the United States, pilotage services are provided by three independent organizations regulated by the USCG. Under this scheme, the agency annually sets rates and charges for pilotage services.

The NPRM proposes a benchmark of US$312,000 for individual target compensation and seeks to render the Great Lakes pilotage compensation levels more comparable notably with Canadian counterparts as well as with pilots in other regions of the United States.

In their joint commentary, the stakeholders challenge the option of using Canadian pilot compensation as a benchmark. “Canada has its own unique social programs, tax regime, and currency. Further, U.S. pilots are self-employed while Canadian pilots are employed by a government corporation.”

They urge the USCG to retain the current benchmark – the compensation of first mates on U.S.-flag Great Lakes vessels.

Between 2006 and 2015, the USCG increased pilotage rates a total of 114 % on the Great Lakes while at the same time shrinking the total workforce.

“The record clearly illustrates that Great Lakes pilotage has become a runaway cost of users of the Great Lakes-St. Lawrence Seaway navigation system,” affirms Madeleine Paquin, president and CEO of Logistec Corporation. “Today, the cost of pilotage exceeds the operating costs of the vessel itself during a Great Lakes transit.”

Former Great Lakes pilot Ian Hurt of Chicago said he was “excited” to learn of new pilot compensation plans – but quickly withdrew his support when learning it would result in an $18,500 increase in pilotage costs per vessel call into the Great Lakes.

Leo Ryan
Leo Ryan

CANADA CORRESPONDENT

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