Shipping Federation of Canada: The voice of ocean shipping since 1903

Dear Member,

Below are updates as a follow up to our CL 11476 regarding the 2023 Pilotage Service charges for 2023.

Pacific Pilotage Authority

The PPA have published a new Notice of Revised Service Charges on January 19, 2023 proposing to reduce the temporary surcharge from $400 to $250 per assignment effective May 2^nd.  This follows their general service charge increase of 10% which was effective January 1, 2023.  The PPA advised that their justification to reduce the temporary surcharge is based on actual lower inflation rates and revised favourable traffic forecasts.  Members will be reminded the Federation submitted comments to the PPA in October expressing concern with their overly conservative traffic assumptions and inflation rates and requested them to revisit their assumptions.  With this latest proposal, the PPA confirm inflation is 1.6% lower than their initial estimate and they have adjusted their overall traffic forecast by 5% due to the increase in grain shipments.  The Pilotage Committee will review this proposal at the next Committee meeting.

Laurentian Pilotage Authority

The LPA have published an Announcement of Pilotage Charges Revision increasing the overall fees by 5.48% effective February 15, 2023.  The LPA are projecting to breakeven in 2022 and budgeting for a $1.5M profit in 2023 including a reserve of $5.9M.  While the LPA remains in a very healthy financial position, the re-negotiation of their two service agreements will be critical as the large majority of their costs are for pilotage services paid to both corporations. The LPA are currently in arbitration with their District 2 pilots and the contract for the District 1 pilots expires in June 2023.  The Federation submitted comments to the LPA recommending to delay the service charge adjustments until their key cost components are concluded.  Alternately, we recommended a lower increase which would still provide them with a sufficient profit and adequate reserve given their regulated monopolistic position.  The Pilotage Committee will review this increase at the next Committee meeting.

Great Lakes Pilotage

The Great Lakes Pilotage Authority published an Announcement of Revised Pilotage Charges 2023 on January 20, 2023 which increases charges by 2.5% overall effective March 22, 2023.  Following the CTA award in 2021, the GLPA reported a $7.86M profit in 2021 ($5M under the objection from 2020 and only reported in 2021), and forecasted another $1.1M profit for 2022, as assignments were up by 17%.  The 2023 increase is budgeted to provide a profit of $828K and will result in an excessive working capital of $7.3M.  The Federation submitted comments in response to the GLPA proposal strongly opposing this increase due their financial strength. We recommended a break-even budget as more appropriate.  The Federation also expressed concern with ever increasing costs without any corresponding increase to the levels of service and chronic vessel delays.  The Pilotage Committee will review this increase at the next Committee meeting.

US Great Lakes Pilotage

The USCG proposed to adjust the US pilotage rates by 14% for 2023 resulting in increased pilotage of over $422K. The coalition of industry stakeholders issued joint comments focusing on the tariff setting methodology as part of the 5-year review of the tariff setting process. The submission focused on items such as target compensation, expense review, staffing models, etc. The Federation is waiting for the Final Rule to be issued in advance of the Seaway opening in March.

Please direct any questions to the undersigned.

Sincerely,

Chad Allen,
Director, Marine Operations
Shipping Federation of Canada