8 MARINE TRANSPORTATION

INFRASTRUCTURE

CANADA'S PORTS AND HARBOURS SYSTEM

Within the national transportation system, Canada's ports and harbours provide crucial links between economic activities and otherwise inaccessible markets. They are vital gateways to the rail and road networks.

The National Marine Policy, announced in December 1995, has been realized through the Canada Marine Act (CMA). With that announcement, the federal government began reorganizing Canada's ports system. Since then, it has implemented a restructuring process to commercialize marine infrastructure. To facilitate this restructuring, three categories of ports are specified by the National Marine Policy: (1) Canada Port Authorities (CPAs), (2) regional/local ports and (3) remote ports.

Under the National Marine Policy, 19 major Canadian ports were deemed vital to Canada's domestic and international trade. The Canada Port Authorities, established under the CMA, have also met criteria for financial selfsufficiency, diversified traffic and intermodal connections. Independently managed, the CPAs are essential links in Canada's domestic and international trade. The 19 CPAs are: Fraser River, Vancouver, North Fraser, Nanaimo, Prince Rupert, Port Alberni, Thunder Bay, Windsor, Toronto, Hamilton, Montreal, Quebec City, Trois-Rivières, Saguenay, Sept-Îles, Saint John, St. John's, Belledune and Halifax. These include former Canada Ports Corporation's major divisional ports and former harbour commissions. The Port of Oshawa is the last harbour commission operating in Canada.

CPAs were incorporated by Letters Patent for the purpose of operating a particular port. They act as agents of the Crown under the CMA for certain purposes. As such, they have the authority to engage in activities related to shipping, navigation, transport of passengers and goods, and handling and storing of goods. They can also engage in other activities that the Letters Patent deem necessary to support port operations. With respect to these activities, however, they are not agents of the Crown.

Although CPAs were granted the right to operate and manage a port, they cannot issue shares. They may be given Crown land to operate and manage, but not to own. They may, however, acquire and own land in their own name. They may also establish fair and reasonable fees for use of the facilities or services provided at the port as a way of covering costs. CPAs may not discriminate among users of the port, but they may differentiate in their fees and services based on the volume or value of goods or on any basis generally accepted commercially.

CPAs must also demonstrate public accountability. As set out in the CMA, each board of directors includes seven to eleven members. (All CPAs have seven members, except for Vancouver, which has nine). Each board appoints the officers of the CPA. A majority of each board is appointed in consultation with port users. In addition, the federal and respective provincial and municipal governments each appoint one director.

Most Transport Canada-owned ports are regional/local ports. These range from ports with a high volume of regional and local traffic to smaller ports with little or no commercial activity. In accordance with the Port Divestiture Program, the federal government is terminating its operational and ownership interests in regional/local ports. This means transferring them to other federal departments, provincial governments or local interests. Local interests include municipal authorities, community organizations and private interests. For remote ports serving as the primary transportation portals for isolated communities, Transport Canada will retain control and administration unless local stakeholders are willing to assume ownership of them.

PORT DIVESTITURE

The Port Divestiture Program was originally scheduled to end on March 31, 2002. As part of the federal government's efforts to modernize Canada's marine system, however, the program was extended by Cabinet until March 31, 2006. As such, Transport Canada will continue to transfer ownership and operations of its regional/local ports to local communities. Local accountability will help create a more effective and efficient port system by instilling commercial discipline and efficiency. In addition, greater autonomy will enable ports to apply more effective business principles while promoting employment and economic growth. Once ports have been transferred, Transport Canada ends its operational role. This includes directly enforcing regulations, collecting user fees, and monitoring port operations.

Before the National Marine Policy came into force, Transport Canada controlled and administered 549 public ports and port facilities. Of these, 462 have been transferred, deproclaimed or demolished, or have had Transport Canada's interests terminated. As of December 31, 2005, 87 sites remained under Transport Canada control. In addition, there are 20 sites where facilities have been transferred but cannot be deproclaimed because the harbour bed has not yet been divested. For detailed port information, see tables A8-1 and A8-2 in the Addendum.

Table 8-1 summarizes the classification of ports as of December 31, 2005.

**TABLE 8-1: PORT CLASSIFICATIONS AS OF DECEMBER 31, 2005**
Federal Agency Ports
	Federal	Provincial	Local	Total
Canada Port Authorities	19	N/A	N/A	19
Harbour Commissions	1	N/A	N/A	1
Ports Operated by Transport Canada
Regional/Local	61	N/A	N/A	61
Remote	26	N/A	N/A	26
Ports Transferred¹
From Transport Canada	65	40	120	225
Status of other former Transport Canada Ports
Demolished	8	N/A	N/A	8
Interests terminated	18	N/A	N/A	18
Deproclaimed²	211	N/A	N/A	211

Notes: N/A = Not available.

Additional detailed information on ports is presented in tables A8-1 and A8-2 in the Addendum. This includes summaries of the provincial distribution of the ports Transport Canada administered from 1996 to 2005 and the divestiture status of regional/local and remote ports on a regional basis.

Includes 18 sites where facilities have been transferred but harbour bed has not yet been deproclaimed, 64 sites that were transferred to Fisheries and Oceans Canada and one site that was transferred to Health Canada.
Public harbours deproclaimed between June 1996 and March 1999.

Source: Transport Canada

As of December 31, 2005, 65 sites had been transferred to other federal departments and 40 had been transferred to provincial governments. Another 120 sites were divested to local interests. In addition, 26 sites have either been demolished or have had Transport Canada's interest terminated through lease or licence terminations.

Since the Ports Divestiture Program began, 271 public ports have been deproclaimed. Of these, archival research identified another 26 harbours beyond the original 549 port sites listed in the National Marine Policy. Transport Canada continues to administer 61 regional/local ports and 26 remote ports nationwide.

FINANCIAL PERFORMANCE

For detailed financial information, see Addendum tables A8-3 to A8-6.

In 2004, the operating revenues of the CPAs totalled $310 million, up 3.4 per cent from 2003. Vancouver and Montreal accounted for 55 per cent of this amount. Twelve of the 19 CPAs reported greater operating revenues, ranging from increases of $0.05 million to $1.9 million. Montreal and Quebec City had the greatest increases, at $1.9 million (2.8 per cent) and $1.7 million (12.8 per cent), respectively.

Operating expenditures increased by $10.6 million, with individual increases ranging from $0.02 million to $4.1 million. Only five CPAs reported lower expenses, ranging from $0.03 million to $1.0 million decreases. The ports reported $11.3 million in total gross revenue charges, up 3.7 per cent from 2003. The port authorities spent $110 million on capital projects in 2004.

The ratio of operating expenditures as a percentage of operating revenues for the CPAs averaged 84 per cent in 2004. Individual ratios ranged from 60 per cent to 180 per cent. The overall return on assets was 3.4 per cent. In 2004, the net income of all port authorities totalled $48 million. Six CPAs reported higher net incomes ranging from $0.02 million to $3.2 million increases, while four reported net losses ranging from $0.2 million to $4.8 million.

Based on some preliminary data, tonnage handled at CPAs increased from 228 million tonnes in 2003 to 237 million tonnes in 2004. Five CPAs accounted for 69 per cent of total cargo by volume: Vancouver (31 per cent), Saint John (11 per cent), Montreal (10 per cent), Quebec City (9 per cent) and Sept-Îles (7 per cent). The revenues per tonne decreased from $1.34 in 2003 to $1.31 in 2004, while expenses per tonne remained the same at $1.1 for 2003 &2004.

Transport Canada's Port Programs incurred a total net loss of $42.7 million in fiscal year 2004/05. This total was derived from $13.6 million in gross revenues minus $26.9 million in expenses, $11.6 million in capital expenditures and $17.8 million in grants and contributions for port divestiture transfers. For details, see Table A8-6 in the Addendum.

PORT TRAFFIC

Preliminary data indicate that Canada's ports handled approximately 456 tonnes of cargo in 2004, up about three per cent over 2003. Statistics Canada data was unavailable for 2004. Therefore, these estimates were derived from CPA sources and historical data.

Preliminary data from CPA Web sites shows that CPA ports handled approximately 237 million tonnes of cargo in 2004, representing 52 per cent of total cargo.

Figure 8-1 shows estimated traffic shares by port groups in 2004.

FIGURE 8-1: TRAFFIC SHARES BY PORT GROUPS, 2004

Includes Fisheries and Oceans Canada, provincial and municipal governments, and private facilities.

Source: Statistics Canada

The 2004 tonnage breakdown for CPAs was: Vancouver, 73.6 million tonnes; Saint John, 26.3 million tonnes; Montreal, 23.6 million tonnes; Quebec, 21.8 million tonnes; Sept-Îles, 17.5 million tonnes; Halifax, 13.8 million tonnes; Fraser River, 13.9 million tonnes; Hamilton, 12.0 million tonnes; Thunder Bay, 8.5 million tonnes; Windsor, 5.3 million tonnes; North Fraser, 5.1 million tonnes; Prince Rupert, 4.4 million tonnes; Trois-Rivières, 2.3 million tonnes; Belledune, 2.2 million tonnes; Nanaimo, 2.0 million tonnes; Toronto, 1.9 million tonnes; St. John's, 1.6 million tonnes; Port Alberni, 1.0 million tonnes and Saguenay, 0.39 million tonnes.

Tonnage at Transport Canada ports is expected to remain steady based on the consistent revenues collected for 2004.

SMALL CRAFT HARBOURS PROGRAM

Fisheries and Oceans Canada

Within the Fisheries and Oceans Canada (DFO), the Small Craft Harbours Program (SCH) operates and maintains a national system of harbours to provide safe and accessible facilities for commercial fishers and recreational boaters. SCH's mandate is to keep harbours critical to the fishing industry open and in good repair. DFO's long-term objective is to retain a network of approximately 750 core, locally managed fishing harbours. All non-essential harbours (i.e., recreational harbours and fishing harbours with low or no activity) will be divested.

Fishing harbours

The SCH program has supported the creation of local harbour authorities (HAs) since the late 1980s. The harbour authorities manage the commercial fishing harbours within their own communities. Typically, they are local, non-profit organizations composed of fishers and other harbour users that lease the harbour from the SCH and provide services, maintenance and harbour management. As of December 30, 2005, harbour authorities managed 682 core fishing harbours across Canada. This amounts to about 91 per cent of the SCH program target. Usually, low or no-activity fishing harbours with a negligible impact on the commercial fishing industry or the community at large do not generate enough community interest to form harbour authorities. Such harbours will be divested or, if necessary, demolished. To date, 291 fishing harbours have been divested and 90 are in the final stage of divestiture.

Table 8-2 shows the number of fishing harbours remaining in the SCH portfolio as of December 31, 2005, by region and type of management.

**TABLE 8-2: SCH FISHING HARBOURS BY MANAGEMENT TYPE AND REGION, AS OF DECEMBER 31, 2005**
	Harbour Authorities	Small Craft Harbours	Regional Total
Pacific¹	72	76	148
Central and Arctic	33	37	70
Quebec	51	32	83
Maritimes and Gulf	281	44	325
Newfoundland and Labrador	245	133	378
Total²	682	322	1,004

Totals include 47 mooring buoy sites in British Columbia.
There are no harbour authorities in Northwest Territories, Nunavut or the Yukon.

Source: Small Craft Harbours, Department of Fisheries and Oceans

Recreational Harbours

The SCH program intends to divest all its recreational harbours. Since 1994/95, 661 (or 78 per cent) of all SCH recreational harbours have been divested or are in the final stages of divestiture. The SCH disposal strategy was approved by Treasury Board in 1995. It permits disposals at a consideration of $1.00, subject to conditions. One condition is the requirement to maintain public access for at least five years. Prior to transfer, environmental assessments and reasonable repairs are completed to ensure facilities are in a safe condition before being transferred. Recipients are mainly municipalities, local non-profit organizations, First Nations or other federal departments. If no public body is interested in acquiring the facilities, they are offered at market value to the general public. As a last resort, when neither public nor private parties show interest in the facilities, they are demolished. The recreational harbour divestiture program is expected to continue for several more years.

Tables 8-3 to 8-5 summarize, by region, the status of the SCH recreational harbour divestiture program, recipients of harbours divested, and management type of remaining SCH harbour sites, respectively.

**TABLE 8-3: SCH RECREATIONAL HARBOUR DIVESTITURES BY REGION AS OF DECEMBER 31, 2005**
	Fully Divested 1995 – 2004	Fully Divested 2004/05	Final Stage of Divestiture	Total Divested	Remainder to be Divested	Regional Total
Pacific	54	0	4	58	7	65
Central and Arctic	273	9	17	299	146	445
Quebec	204	11	9	224	29	253
Maritimes and Gulf	74	5	0	79	1	80
Newfoundland and Labrador	1	0	0	1	1	2
National Totals	606	25	30	661	184	845

Source: Small Craft Harbours, Fisheries and Oceans Canada

**TABLE 8-4: RECIPIENTS OF DIVESTED SCH RECREATIONAL HARBOURS AS OF DECEMBER 31, 2005**
	Province¹	Municipality	Private Sector	Other²	Total by Region
Pacific	51	1	1	5	58
Central and Arctic	19	204	21	55	299
Quebec	3	186	2	33	224
Maritimes and Gulf	4	19	4	52	79
Newfoundland and Labrador	0	1	0	0	1
Total	77	411	28	145	661

Many of these properties were subject to provincial reversionary interests.
Refers to sites that have been transferred to local non-profit organizations, First Nations or other federal departments, as appropriate.

Source: Small Craft Harbours, Fisheries and Oceans Canada

**TABLE 8-5: SCH RECREATIONAL HARBOURS BY MANAGEMENT TYPE, AS OF DECEMBER 31, 2005**
	Managed Under Lease	Small Craft Harbours	Other¹	Total by Region
Pacific	1	0	6	7
Central and Arctic	99	36	11	146
Quebec	3	26	0	29
Maritimes	0	1	0	1
Newfoundland and Labrador	0	1	0	1
Total	103	64	17	184

Refers to a variety of management and non-management situations. Some infrastructure, such as shoreline reinforcement or breakwaters, are largely stable and do not require ongoing management. Some facilities are part of a larger development (i.e., a marina, and managed as part of that development). In other cases, facilities no longer exist at the site and there is nothing to manage.

Source: Small Craft Harbours, Fisheries and Oceans Canada

Passenger Transportation

Freight Transportation