Canada’s protectionist foreign flag rule hurting Canadian exporters, Broad tells CILTNA

by Canadian Shipper

Ensuring amendments are made to Canada’s Coasting Trade Act, which currently prevents foreign flag ships from carrying cargo between Canadian ports, will be the top priority next year for the Shipping Federation of Canada, according to its president Mike Broad.

Protecting the market for Canadian flag ships is fine but in the case of empty marine containers, the law is creating inefficiencies for Canadian exporters, particularly those from Atlantic Canada, Broad told a transportation workshop put on by the Chartered Institute of Logistics and Transport North America (CILTNA) in Ottawa yesterday. That’s because Transport Canada lawyers have deemed containers to be cargo and not conveyance.

“Therefore, when our members need to move an overflow of empty containers from one port, say Montreal, to a port in need of empty containers for exports, like Halifax or St. John, they must use rail or truck because Canadian flag ships cannot and/or do not want to handle them for a reasonable price.  Not that rail or truck rates are reasonable.  Therefore, to get empty containers into Atlantic Canada, our members have to re-position them from outside of Canada, like the United States or Europe,” Broad explained.

A change in this legislation could make exports from Atlantic Canada more competitive, he argued.

Another priority for the Shipping Federation, which represents more than 250 international ship-owners from around the world with ships moving between Canadian and overseas ports, is encouraging Transport Canada to move  “faster and higher” on its plans to develop a multi-modal approach to transportation policy, Broad said.

Rather than a marine or rail or truck policy (except for operational issues such as safety or pollution emissions), the Shipping Federation would like to see a freight transportation policy and a passenger transportation policy.  The freight transportation policy would have two components, an international and a domestic freight policy.

The international freight policy would support Canada’s international trade policy; rely on international trade agreements, maritime conventions and customs conventions. It would focus on gateways and trade corridors and offer Canadian importers and exporters an efficient and competitive conveyor belt to and from foreign markets, Broad explained.

A domestic freight transportation policy would support the movement of domestic freight within Canada through the best use of all modes, the goal being to ensure all Canadians and businesses, especially those in more remote areas, have access to an efficient distribution network for goods. 

“This domestic policy could favour domestic service providers, although this would be an industrial rather than a transportation policy requirement,” Broad said.

A third priority for the Shipping Federation is being vigilant on potential government cost downloads. Government agencies have been instructed to cut costs as part of Canada’s belt tightening following the stimulus spending during the recession.  Two key departments that marine carriers deal with, Transport Canada and the Canadian Coast Guard are looking to download costs on to the shipping industry, Broad said.

 “We don’t mind paying a fair share, but there is a need for a direct relationship between fees and the benefits to the user/payer – in other words, the user should only have to pay for the infrastructure or services they need and use and there should be standards with respect to fees and levels of service.  User pay, user say,” Broad emphasized.

Broad wrapped up his remarks by pointing to the Rail Service Review (and the legislation likely to stem from it) as a game changer for the year ahead.

“Not since Hunter Harrison took over as CEO of CN Rail has there been as much competition for our members’ intermodal container business between Canadian ports and inland destinations. Now, I am not saying that it is perfect, but we do see a gradual movement by both CN and CP to expand their intermodal business and a real effort to improve service,” Broad said.

Broad was part of a panel of industry stakeholders which included Mark Feduke, CMILT, director of trade compliance at VLM Foods;  Ian Hamilton,CMILT, vice-president, business development & real estate, Hamilton Port Authority; Elias Demangos, president & CEO, Fortigo Freight; and Bruce Burrows, vice-president, Railway Association Canada. The panel was moderated by editorial director Lou Smyrlis, MCILT, who opened the session with an address on transportation industry trends.

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