Seaway stakeholders stigmatize “aberrational” US Coast Guard pilotage rate increase

A broad coalition of stakeholders has escalated its attacks against the U.S. Coast Guard, qualifying as “an aberrational exercise” the latter’s recent decision to impose a sharp increase in Great Lakes pilotage rates effective April 6, shortly after the 2016 commercial navigation season on the Great Lakes/St. Lawrence waterway opens on March 21. The rate increases and additional pilotage training surcharges on vessels using U.S. pilots represent extra costs surpassing 20% for shippers on the St. Lawrence Seaway which last year saw its total cargo volume plunge by 10% to 36 million tons. Foreign-flag carriers will be the most affected. Critics have warned that any major pilotage rate increase will weaken the competitiveness of the North American waterway that has been steadily losing bulk commodity business to competing modes and ports on the east and west coasts in the past decade. The coalition’s latest broadside was contained in a letter dated Match 14 to Rear Admiral Paul F. Thomas. It was signed by Michael Broad, President of the Shipping Federation of Canada, Steve Fisher, Executive Director of the American Great Lakes Ports Association, and Stuart Theis, Executive Director of the United States Great Lakes Shipping Association. Other participants backing the letter included Spliethoff Transport, Wagenborg Shipping, Polish Steamship Company, the Canadian Shipowners Association and Fednav International (largest ocean-going user of the North American waterway). ​The stakeholders call on the USCG to withdraw its Final Rule “for further consideration and apply 2015 pilotage rates during the period of review. We do not question the Coast Guard’s good intentions, but cannot regard the Final Rule as anything other than an aberrational exercise, one not in character with prevailing Coast Guard standards of excellence.” ​In their letter, the stakeholders recalled that over the past decade, Great Lakes U.S. pilotage rates increased by about 115% - despite statutory requirements that the Coast Guard’s rate-setting activities give consideration to “the public interest and the costs of providing the services.” ​The U.S. Coast Guard had announced on March 1 a new rulemaking decision that will increase rates for U.S.-registered Great Lakes pilotage service by 12% as well as “impose a temporary surcharge to offset the costs of hiring and training new pilots.” Factoring in the surcharges, the increased costs for shippers will run to about 23%. On the other hand, Canada’s Great Lakes Pilotage Authority recently indicated its pilotage tariffs will rise by just 2.5% this year and 0.5% in 2017. In an interview, Steve Fisher of the American Great Lakes Ports Association, regretted that “in a nutshell, the agency refused almost every argument we made. With one or two exceptions, the Final rule stubbornly implements the same policy decisions the agency proposed last September. If anything, several modifications were made that will result in even higher pilotage cost several years from now.” The USCG originally proposed a workforce of 50 pilots (from a current 37). “We objected,” said Fisher, “arguing that they were staffing the system to peak traffic demand. They disagreed and will now staff the system at 54 pilots.” Fisher deplored “a policy decision on their part to size manpower to peak traffic demand – something you would not entertain in private industry.”