Vol. 151, No. 12 — June 14, 2017

Registration

SOR/2017-105 June 2, 2017

PILOTAGE ACT

Regulations Amending the Great Lakes Pilotage Tariff Regulations

P.C. 2017-564 June 2, 2017

RESOLUTION

Whereas the Great Lakes Pilotage Authority, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), published a copy of the proposed Regulations Amending the Great Lakes Pilotage Tariff Regulations, in the annexed form, in the Canada Gazette, Part I, on March 11, 2017;

Therefore, the Great Lakes Pilotage Authority, pursuant to subsection 33(1) of the Pilotage Act (see footnote c), makes the annexed Regulations Amending the Great Lakes Pilotage Tariff Regulations.

Cornwall, April 11, 2017

Robert F. Lemire
Chief Executive Officer, Great Lakes Pilotage Authority

His Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 33(1) of the Pilotage Act (see footnote d), approves the annexed Regulations Amending the Great Lakes Pilotage Tariff Regulations, made by the Great Lakes Pilotage Authority.

Regulations Amending the Great Lakes Pilotage Tariff Regulations

Amendments

1 The long title of the Great Lakes Pilotage Tariff Regulations (see footnote 1) is replaced by the following:

Great Lakes Pilotage Tariff Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 Section 2 of the Regulations is renumbered as subsection 2(1) and is amended by adding the following:

(2) For the purposes of these Regulations,

4 Paragraph 3(1)(d) of the Regulations is replaced by the following:

5 Section 4 of the Regulations and the heading before it are replaced by the following:

Apprentice Pilot Training Surcharge

4 A surcharge of 5% for apprentice pilot training is payable on each pilotage charge payable under section 3 in accordance with any of Schedules 1 to 3 for a pilotage service provided on or before December 31, 2018.

6 (1) Subsections 1(1) to (4) of Schedule 1 to the Regulations are replaced by the following:

1 (1) Subject to subsection (2), the basic charge for a passage, other than a movage, through International District No. 1 or any part of it, and its contiguous waters, is $20.93 for each kilometre ($34.83 for each statute mile), plus $465 for each lock transited.

(2) The minimum and maximum basic charges for a through trip through International District No. 1 and its contiguous waters are $1,017 and $4,467, respectively.

(3) The basic charge for a movage in International District No. 1 and its contiguous waters is $1,534.

(4) If a ship, during its passage through the Welland Canal, docks or undocks for any reason other than instructions given by the St. Lawrence Seaway Management Corporation, the basic charge is $65 for each kilometre ($106.82 for each statute mile), plus $397 for each lock transited, with a minimum charge of $1,328.

(2) The portion of items 1 to 15 of the table to subsection 1(5) of Schedule 1 to the Regulations in column 2 is replaced by the following:

Item

Column 2

Basic Charge ($)

1

    
 

(a)

2,450
 

(b)

2,450

2

  

2,619

3

  

1,546

4

  

4,555

5

  

2,619

6

  

1,895

7

  

5,280

8

  

3,400

9

  

2,619

10

  

1,546

11

  

3,427

12

  

3,427

13

  

2,660

14

  

1,546

15

  

1,895

(3) The portion of items 1 to 4 of the table to subsection 1(6) of Schedule 1 to the Regulations in column 2 is replaced by the following:

Item

Column 2

Basic Charge ($)

1

3,464

2

2,900

3

1,304

4

1,304

(4) Subsection 1(7) of Schedule 1 to the Regulations is replaced by the following:

(7) An additional charge of $250 is payable for each embarkation or disembarkation of a licensed pilot at the Detroit pilot boat.

7 (1) The portion of items 1 and 2 of the table to subsection 2(1) of Schedule 1 to the Regulations in column 2 is replaced by the following:

Item

Column 2

Basic Charge ($)

1

    
 

(a)

1,146
 

(b)

1,008
 

(c)

696

2

    
 

(a)

1,091
 

(b)

776
 

(c)

666

(2) Subsection 2(3) of Schedule 1 to the Regulations is replaced by the following:

(3) The basic charge for pilotage services consisting of a lockage and a movage between Buffalo and any point on the Niagara River below the Black Rock Lock is $1,981.

8 Subsections 3(1) and (2) of Schedule 1 to the Regulations are replaced by the following:

3 (1) Subject to subsections (2) and (3), if a pilot is detained for the convenience of a ship at the end of the pilot’s assignment or during an interruption of the passage of the ship through designated waters or contiguous waters, an additional basic charge of $92 is payable for each hour or part of an hour that the pilot is detained.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $2,208.

9 Section 4 of Schedule 1 to the Regulations is replaced by the following:

4 (1) Subject to subsection (2), if the departure or movage of a ship to which a pilot has been assigned is delayed for the convenience of the ship for more than one hour after the pilot reports for duty at the designated boarding point, a basic charge of $92 is payable for each hour or part of an hour of that delay, including the first hour.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $2,208.

10 Section 5 of Schedule 1 to the Regulations is replaced by the following:

5 (1) A basic charge of $1,916 is payable each time there is a cancelled order or cancelled sail.

(2) If there is a cancelled order more than one hour after the pilot reports for duty at a designated boarding point, a basic charge of $92 is payable for each hour or part of an hour, including the first hour, between the time that the pilot reports for duty and the time of the cancelled order. The maximum basic charge for any 24-hour period is $2,208.

(3) If there is a cancelled order after a pilot reports for duty at a designated boarding point, a basic charge is payable in an amount equal to reasonable travel and other expenses incurred by the pilot in travelling from their home base to the designated boarding point and back to their home base.

11 Subsections 8(1) and (2) of Schedule 1 to the Regulations are replaced by the following:

8 (1) If a pilot is unable to board a ship at the normal boarding point and must, in order to board it, travel beyond the area for which the pilot’s services are requested, a basic charge of $551 is payable for each 24-hour period or part of a 24-hour period during which the pilot is away from the normal boarding point.

(2) If a pilot is carried on a ship beyond the area for which the pilot’s services are requested, a basic charge of $551 is payable for each 24-hour period or part of a 24-hour period before the pilot’s return to the place where the pilot normally would have disembarked.

12 The portion of items 1 to 4 of the table to subsection 1(1) of Schedule 2 to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2


Basic Charge ($)

Column 3

Minimum Basic Charge ($)

1

5,242

N/A

2

24.07 for each kilometre (40.05 for each statute mile), plus 670 for each lock transited

1,348

3

939

N/A

4

2,019

N/A

13 Subsections 2(1) and (2) of Schedule 2 to the Regulations are replaced by the following:

2 (1) Subject to subsections (2) and (3), if a pilot is detained for the convenience of a ship at the end of the pilot’s assignment or during an interruption of the passage of the ship through the Cornwall District, an additional basic charge of $175 is payable for each hour or part of an hour that the pilot is detained.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $4,200.

14 Section 3 of Schedule 2 to the Regulations is replaced by the following:

3 (1) Subject to subsection (2), if the departure or movage of a ship to which a pilot has been assigned is delayed for the convenience of the ship for more than one hour after the pilot reports for duty at the designated boarding point, a basic charge of $175 is payable for each hour or part of an hour of that delay, including the first hour.

(2) The maximum basic charge payable under subsection (1) for any 24-hour period is $4,200.

15 Section 4 of Schedule 2 to the Regulations is replaced by the following:

4 (1) A basic charge of $1,998 is payable each time there is a cancelled order or cancelled sail.

(2) If there is a cancelled order more than one hour after the pilot reports for duty at a designated boarding point, a basic charge of $175 is payable for each hour or part of an hour, including the first hour, between the time that the pilot reports for duty and the time of the cancelled order. The maximum basic charge for any 24-hour period is $4,200.

(3) If there is a cancelled order after a pilot reports for duty at a designated boarding point, a basic charge is payable in an amount equal to reasonable travel and other expenses incurred by the pilot in travelling from their home base to the designated boarding point and back to their home base.

16 Sections 1 and 2 of Schedule 3 to the Regulations are replaced by the following:

General

1 The basic charges for any pilotage service provided in a year are the following:

Cancellations

2 (1) A basic charge of $1,272 is payable each time there is a cancelled order or cancelled sail.

(2) If there is a cancelled order, the basic charges set out in paragraphs 1(a) and (b), and a surcharge of 15% on the total of the amounts referred to in those paragraphs to cover administrative and assignment costs, are payable.

Coming into Force

17 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The mandate of the Great Lakes Pilotage Authority (the Authority) is to establish, operate, maintain and administer a safe and efficient pilotage service within designated Canadian waters while ensuring that it operates on a self-sustaining financial basis. Therefore, the Authority is required to adjust its tariffs to eliminate its current accumulated deficit, and to generate revenues to offset significant apprentice-pilot training costs, as well as restructure its tariffs to service the Port of Churchill given the significant decrease in traffic. Other issues relate to providing additional clarity to some sections of the Great Lakes Pilotage Tariff Regulations (the Regulations).

Description: The Authority is looking (i) to increase the general tariff, to eliminate the current temporary surcharge, and to introduce a new “apprentice-pilot training” tariff surcharge to allow the Authority to generate profits in order to eliminate its accumulated deficit by the end of 2019; (ii) to provide clarity on cancellations by defining “cancelled order” and “cancelled sail;” (iii) to replace the term “Canadian pilot” with “licensed pilot” given that the previous term is not defined; and (iv) to revise the tariff structure for the Port of Churchill given the significant decrease in service resulting from the announcement that the port will no longer be receiving grain shipments.

Cost-benefit statement: The cost-benefit analysis indicates that the present value of the costs to the marine transport industry as a result of the changes will be $5.874 million over a period of 10 years. This is equivalent to the present value of revenues received by the Authority. However, the marine transport industry will also benefit from a $17.954 million present value over the same time frame resulting from operating cost savings due to significant reductions in vessel delays caused by a shortage of pilots.

The increase in pilotage tariffs will ensure the financial viability of the Authority, while it invests in training of additional apprentice-pilots and increases the pilot numbers to meet forecasted traffic demands. These investments, and the regular business of the Authority, are in support of providing uninterrupted service while protecting the health and safety of the Authority’s employees.

“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs for business. The small business lens does not apply to these amendments.

Background

The Authority, a Crown corporation listed in Part I of Schedule III to the Financial Administration Act, was established in 1972 pursuant to the Pilotage Act (the Act). The Authority is required by subsection 33(3) of the Act to fix pilotage charges at a level that permits the Authority to operate on a self-sustaining financial basis and is fair and reasonable. The aforementioned issues, however, are threatening the Authority’s ability to return to its self-sustaining basis that was emphasized as a priority in the 2008 Special Examination Report conducted by the Auditor General.

Issues

The Pilotage Act provides that the pilotage tariffs shall be fair, reasonable and sufficient and shall permit the Authority to operate on a self-sustaining financial basis. After analyzing the 2015 financial loss and the 2016 forecasted financial loss, the Authority has determined that it needs to adjust the 2017 tariffs to be financially self-sufficient to be compliant with its mandate.

In its 2008 Special Examination Report, the Auditor General required the Authority to take measures to eliminate its accumulated deficit and to be financially self-sustaining within the next few years. The Authority has been successfully taking measures to control its operating and administration costs and to increase revenues as means of reducing its 2009 accumulated deficit of $5.5 million to $0.4 million at the end of 2014. In 2015, the Authority reported a $0.4 million loss and is forecasting a $1.0 million loss in 2016 that is driven by the high costs associated to the need to train a greater number of apprentice-pilots due to pilot retirements, as well as to properly service the projected traffic demands. The amendments to the tariff rates and surcharge are needed to ensure the Authority remains financially self-sufficient.

Although there are various sections that provide guidelines when cancellation fees are to be charged, there have been some situations where the ambiguity has created differences of opinions as to the appropriateness of the Authority cancellation charges.

The Standing Joint Committee for the Scrutiny of Regulations recently reviewed the Regulations and noticed that the term “Canadian pilot” is not defined.

In July 2016, it was announced that the Port of Churchill will no longer receive any grain shipments. As the current tariffs were established based on a steady flow of grain shipments from July to the end of October, the current tariff structure no longer allows the Authority to recover the pilotage expenditures for such a drastic reduction in demand (approximately three vessels as seen in 2016).

Objectives

The objective of this regulatory amendment is

The tariff amendments are required for the Authority to continue to offer safe, efficient and economical pilotage services while allowing the Authority to fully eliminate its accumulated deficit and be financially self-sufficient for the subsequent years.

Description

General tariff increases

The Authority is amending the following replacement to its previously approved tariff rates: a 14.5% increase in the general tariff rates, instead of the previously approved 2.0% increase for 2017.

Elimination of the temporary surcharge

The Authority is eliminating the previously approved 11.5% surcharge for 2017.

Introduction of an apprentice-pilot training surcharge

Given the training costs for the high number of apprentice-pilots needed, the Authority is introducing a 5.0% surcharge with an end date of December 31, 2018. This surcharge will be re-evaluated with the industry in 2018 to determine the future business needs.

Overall net impact of the tariff amendments

The overall net increases in the tariff rates, a 6.0% increase versus the 2017 approved net tariff rates, will allow the Authority to recover the higher pilot recruiting expenditures to ensure pilot succession planning and to reduce the Authority’s current accumulated deficit, with the ultimate goal of being financially self-sufficient in 2019. The tariff structure is viewed to be reasonable and fair for its customer base, given the Authority’s current financial profile.

Defining cancellations

The terms “cancelled order” and “cancelled sail” are introduced:

The cancellations sections in the Regulations are to be reworded to align with these two terms.

Term alignment

In the following sections, the term “Canadian pilot” will be replaced with the term “licensed pilot:”

Tariffs for the Port of Churchill

The Authority will modify Schedule 3, Pilotage Charges for the Port of Churchill, Manitoba, to replace section 1 with the wording of section 2 to allow the Authority to charge for pilotage services on a cost recovery basis, plus a 15% administration fee given the significant reduction in expected traffic at the Port of Churchill. The operating costs that are to be recovered include the pilot’s salary and wages, travel expenses of the pilot (transportation, meals and lodging), and the cost of the pilot’s use of a pilot boat, helicopter or other means of transportation.

Regulatory and non-regulatory options considered

The retention of the existing tariff rates was considered as a possible option. However, the Authority rejected this status quo alternative, since the increase of tariff rates is necessary to eliminate the Authority’s accumulated deficit as well as to generate the revenue required to hire and train apprentice-pilots to effectively service the current traffic demands. The amendments will ensure that the Authority maintains its financial self-sufficiency.

The Authority consulted extensively with industry in 2016. At these meetings, the Authority took its main stakeholders through its assumptions and forecasted financial results and allowed them to provide input into alternative strategies to jointly solve the Authority’s financial position (i.e. how would a change in the number of new apprentice hires or in volume assumptions, or a change to fees or a specific launch station change the Authority’s ending cash position).

As a result, the Authority agreed to increase the general tariff, eliminate the current temporary surcharge, and introduce a new “apprentice-pilot training” tariff surcharge to allow the Authority to generate profits in order to eliminate its accumulated deficit by the end of 2019.

Further material reductions in operating costs are not deemed to be an alternative, since it could reduce the quality of service provided, including a safe pilotage service. Similar to prior years, approximately 80% of the Authority’s total annual expenditures are covered by either a service contract or collective agreements. The Authority has maintained its administrative expenses at the lowest possible level, in the range of 7% of annual revenues.

Benefits and costs

The development of the assumptions used in the financial analysis is based on the traffic levels of vessels in recent years. These assumptions are then adjusted should industry stakeholders provide feedback of material inaccuracies based on their insight into future traffic.

A cost-benefit analysis on the impact of the general tariff increases and the two-year apprentice-pilot training surcharge was conducted. This analysis covers a 10-year period in comparison to the 2016 fees charged to the Authority customers. It is estimated that the increase in the rates for pilotage services will generate additional revenues of $1.751 million for 2017 and 2018 and $0.504 million in subsequent years. The annualized average is $0.836 million over the 10-year period, with a net present value (PV) of $5.874 million calculated at a 7% discount rate.

The increase in pilotage tariffs translates into equivalent operating costs to the shipping industry. However, this increase in operating costs is considered to be relatively low given the total operating costs of the industry. As the rate increases allow the Authority to increase its pilot numbers, the industry will benefit from a reduction in operating costs of $2.500 million per year (with an annualized average of $2.556 million and a net present value of $17.954 million for the 10-year period). These savings will materialize as the vessel delays due to a shortage of pilots return to the pre-2014 levels, when pilot numbers were properly aligned with the level of traffic. The Authority anticipates that the revised pilot numbers will reduce the vessel delays due to a shortage of pilots by approximately 2 500 hours (at an operating cost of $1,000/hour to the industry).

The increase in pilotage tariffs is required to support the Authority’s financial viability while it invests in its human resources (recruiting and training apprentice-pilots to increase pilot numbers). These investments, and the regular business of the Authority, are in support of providing uninterrupted service while protecting the health and safety of the Authority’s pilots.

The estimated quantified financial and non-financial impacts as well as the qualitative impacts are as follows:

   

Base Year 2017

2018

Final Year 2026

Total
(PV)

Annualized Average

A. Quantified impacts (in Can$ M, 2016 price level / constant dollars)

Benefits

Great Lakes Pilotage Authority

Additional revenue generated

1.751

1.751

0.504

5.874

0.836

Shipping industry

Reduction in costs as hours in vessel delays due to a shortage of pilots will return to pre-2014 levels

2.500

2.500

2.500

17.954

2.556

Total benefits

4.251

4.251

3.004

23.828

3.393

Costs

Shipping industry

The Authority’s increase in revenue is a cost to the industry

(1.751)

(1.751)

(0.504)

(5.874)

(0.836)

Total costs

(1.751)

(1.751)

(0.504)

(5.874)

(0.836)

NET BENEFITS

2.500

2.500

2.500

17.954

2.556

B. Quantified impacts in non-$ (e.g. risk assessment)

Positive impacts

Great Lakes Pilotage Authority

Allows the Authority to proactively address its pilot succession plan strategies given 42% of the current pilots are 60 years and older.

Great Lakes Pilotage Authority

The additional revenue is generated to increase the pilot head count to service pre-2008 recession traffic (as seen from 2014 to 2016). This will allow the Authority to reduce the average number of pilot assignments in accordance with industry standards, which is also part of the Authority’s safety strategy.

Shipping industry

Allows for more flexibility to service demand surges due to extreme weather conditions and to respond to St. Lawrence Seaway infrastructure deficiencies, when they occur.

C. Qualitative impacts

Great Lakes Pilotage Authority

Financial sustainability of the Authority and increased safety of its workforce. The increases are meant to keep the Authority viable and able to fulfill its mandate. The additional pilots will continue to ensure the safety of the platforms the Authority has for pilot transfers.

Shipping
industry

Timely and effective pilotage services in the navigable waters within the jurisdiction of the Great Lakes Pilotage Authority. This regulation change is to cover the costs associated with additional pilots. This is required to improve service and reduce the service delays due a shortage of pilots.

Canadian
population

The Authority contributes to the safe and efficient movement of goods and people for Canadians, while protecting the environment from harm. The economic benefits of the services provided are difficult to measure, as the benefit derived by users is primarily preventative. Pilotage plays a key role in ensuring that ships are not the source of environmental disasters in Canadian waters. The Authority’s effectiveness is dependent on the ability to fulfill its mandate, which this regulation change allows.

Importers and exporters

Possibility for the maritime transport industry to pass on the cost of the increase in the tariff to importers and exporters of the Great Lakes pilotage area. However, it is estimated that the rate increase is a tiny part of the overall costs of the shipping industry and that the cost that is passed on will be negligible.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this amendment, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this amendment, as there are no costs to small business.

Consultation

The Authority’s principal stakeholder is the Shipping Federation of Canada (the Federation), which represents the owners-operators of foreign-flag ships that operate within the Great Lakes system. Foreign-flag ships are under mandatory Authority pilotage services while transiting these waters. Foreign-flag ships represent approximately 85% of the Authority’s business. The Authority met with the Federation on numerous occasions in 2016 to discuss the proposed tariff structures. Presentations were made on the traffic assumptions, which have been substantially greater than what had been discussed when the 2015 to 2017 tariffs had been proposed, the pilot numbers given the anticipated pilot retirements and the currently high levels of vessel delays due to a shortage of pilots. The Authority provided an analysis of the operational implications should the Authority not respect its pilot succession planning strategy. The Authority was also transparent with the Federation on its need to eliminate the $0.8 million accumulated deficit at the end of 2015 as well as its forecasted $1.0 million loss for 2016 mainly driven by the apprentice-pilot training costs. The Authority also provided an insight on its 2017 budget based on the tariff modifications. The Authority demonstrated that the tariff structures only allow the Authority to offset (i) the higher apprentice-pilot recruiting and training costs; and (ii) the forecasted 2016 accumulated deficit. All stakeholders are aware that the Authority needs to respect its objective to remain financially self-sufficient, which it had previously planned and communicated.

The remaining 15% of the Authority’s business pertains to the Canadian domestic fleet represented by the Chamber of Marine Commerce (the Chamber). The Chamber represents approximately 70 Canadian-flagged ships. Most of these ships do not use the services of Authority pilots given that at least one of their regular crew members has a valid Great Lakes pilotage certificate. Approximately 10 ships with the domestic fleet are Canadian tankers that request the Authority’s pilotage services when transiting certain districts within the Authority’s jurisdiction or when the ship/cargo charters require the ship to use the services of a pilot. The Authority met with one of its two main users of the Chamber in December 2016 to discuss the tariff amendments along with other business matters. There was no indication that this user would object to the new tariff rates.

All stakeholders are aware that the Authority needs to respect its objective to remain financially self-sufficient, which it had previously planned and communicated. The amendments to the tariff structure are viewed as being reasonable and fair to its customer base. The Federation has expressed that it would not object to these tariff amendments, while the main Chamber users did not provide any indications that they would object to these tariff amendments.

As required under section 34 of the Pilotage Act, these amendments were published in the Canada Gazette, Part I, on March 11, 2017, followed by a 30-day comment period to provide interested persons with the opportunity to make comments or to file a notice of objection with the Canadian Transportation Agency (CTA). No comments were received and no notices of objection were filed.

Rationale

The ultimate objective is to ensure the Authority will be financially self-sufficient. While being financially self-sufficient is a priority, the Authority needs to continue to invest in its resources to ensure it operates, maintains and administers its pilotage services within the Great Lakes region in an efficient and safe manner according to its mandate. The Authority charges the user, or customer, for its services. The optimal quality of service is one that is completely safe (i.e. a service without shipping incidents, without injury or damage to individuals, vessels, port facilities or the environment) and that is efficient (i.e. without delays caused by pilot shortages). There is an inherent safety risk associated with pilotage services and the potential for an accident is always present. However, based on historical performance results, the Authority has maintained an extremely low level of shipping incidents — being 99.9% incident-free. The Authority determined the necessary tariff adjustments following an analysis of the forecasted financial results.

General tariff increases

Although the low level of general tariff increases for 2015 and 2016 had been expected to allow the Authority to eliminate its accumulated deficit, some unforeseen expenditures in 2015 and significant cost overruns in pilot compensation due to a shortage of pilots and apprentice-pilot training costs have actually increased the accumulated deficit. Thus, the 14.5% increase in general tariffs will allow the Authority to report a small profit while creating a more sustainable base for future profits.

Temporary surcharge

The objective of the “temporary” nature of the surcharge has evolved and changed over the years since it was first implemented in 2008. With the minimal increases to the general tariffs over the last few years, the funds provided by the surcharge are now permanently required by the Authority to offset its ongoing operational expenditures. As a result, the Authority is transferring the previously approved 2017 temporary surcharge to its regular general tariff, thus eliminating this “temporary” surcharge.

Apprentice-pilot training tariff

In accordance with its pilot succession planning assessment, the Authority still needs to hire and train eight apprentice-pilots in 2017 with an additional six in 2018 to replace retiring pilots and increase the pilot numbers to meet current traffic demands. The high level of pilotage demands in the last three years have placed an additional burden on older pilots (whose average age is approximately 60) and, consequently, these pilots are now contemplating an earlier retirement than they had previously planned. This was not the trend when the assignments per pilots were at more manageable levels. Without the introduction of this new surcharge, which will lead to an increase in pilot numbers, the customers will continue to experience a high level of vessel delays due to a shortage of pilots. The overall business financial implications to the customer are much greater than the increase in tariffs that is being amended.

When the decision was made in 2009 to reduce pilot numbers due to the lower traffic levels, the customers were aware that the Authority would eventually need to increase its pilot numbers when the traffic returned to pre-2009 recession levels. The Authority’s optimum level of average assignments per pilot needs to be between 110 and 115 for the nine-month period to ensure a safe and efficient pilotage service. Pilots averaged 136 assignments in 2014 and 2015 and are on track to average even more assignments in 2016. This cannot be maintained indefinitely without creating safety concerns. Pilot numbers need to be increased to maintain the safest and most efficient pilotage service for the Authority and its customers.

Summary

Compared to the previously approved 2017 tariff rates, the 6.0% net increase will generate additional revenues of approximately $1.4 million. The overall net increases in the tariff rates will allow the Authority to mainly recover the higher pilot recruiting expenditures to ensure pilot succession planning and to allow the Authority to eliminate its forecasted accumulated deficit by the end of 2019.

To put these increases in perspective, for a large ship transiting the St. Lawrence Seaway between Montréal and Thunder Bay, the cost based on the previously approved tariffs is approximately $55,600 for a one-way trip in 2017. Should these amendments be approved, the cost will be $58,800 (a 5.75% net increase).

The revenue generated from the amendments will be beneficial as it will enhance the Authority’s ability to comply with its mandate to operate on a self-sustaining financial basis. The amendments will also allow the Authority to continue to provide a safe and efficient pilotage service, by significantly reducing the vessel delays due to a shortage of pilots, in accordance with the requirements of the Act.

Implementation, enforcement and service standards

Section 45 of the Act provides an enforcement mechanism for the Regulations in that a pilotage authority can inform a customs officer at any port in Canada to withhold clearance from any ship for which pilotage charges are outstanding and unpaid. Section 48 of the Act stipulates that every person who fails to comply with Part 1 of the Act, other than section 15.3, or with the Regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000.

Contact

Mr. Robert F. Lemire
Chief Executive Officer
Great Lakes Pilotage Authority
P.O. Box 95
Cornwall, Ontario
K6H 5R9
Telephone: 613-933-2991
Fax: 613-932-3793