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8.0  COST IMPACT OF REGULATIONS

Comparative estimated costs of new vessel construction in Canada and the US were prepared, emphasizing the incremental premium cost associated with regulatory requirements imposed by both countries

• The regulatory requirements in Canada increase the cost of new construction here by approximately 5 to 10 percent compared to US-built tugs
  
  
• It is very difficult if not impossible to quantify what the incremental additional costs of regulatory inspection are over and above what would be spent by the proverbial "prudent owner" in simply looking after his equipment
  
  
• The actual cost (shipyard charges, not regulatory costs) of a quadrennial inspection is estimated by local shipyards at between $25,000 and $35,000 for a typical (say 25 metre, 1,800 bhp) west coast Canadian tug
  
  
• There is no justification for ships built for Canadian owners to have different standards of construction or outfit than those built in Europe or the US. Because ships are mobile assets, it makes eminently good sense that all such vessels should adhere to a common or at least comparable set of standards, based on the universally accepted requirements of major IACS members and IMO only
  
  
• Requirements that manufacturers and suppliers must meet unique CSA or TC-SSB standards, rather than simply showing compliance with more universally accepted standards (such as UL, ASTM, DIN, JIS, or various IACS member approvals), causes many suppliers to either charge excessive premium costs for their components in this country, or to simply abandon the Canadian market due to its minuscule size
  
  
• Canadian owners have a much more limited range of approved products from which to choose than almost any other maritime nation. This artificially lowered competition means higher component prices, and less opportunity for Canadian owners to avail themselves of modern advances in marine technology
  
  
• It is the overwhelming opinion of users in the marine industry that individual inspectors have far too much discretionary power to call for sometimes unnecessary and expensive removals and/or overhauls
  
  
• It is difficult to quantify the cost penalty that is incurred by crossing the thresholds where tugs switch from either no inspection to quadrennial (at 15 GRT), or from quadrennial to annual (150 GRT). However there is ample evidence that the industry considers this to be a major penalty as witnessed by the proliferation of vessels at these size boundaries
  
  
• One could surmise that the "free market" system works well in the US without the intervention of government inspectors, and could work equally well in Canada. The ultimate users of tug services, namely the cargo customers, will demand a standard of quality that ensures their cargoes are delivered safely

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