8 MARINE TRANSPORTATION

INDUSTRY STRUCTURE

A fleet of Canadian-flag operators, which provides domestic and transborder shipping services, is part of Canada's marine industry. International trade is served largely by foreign-flag operators calling at Canada's major ports.

DOMESTIC SERVICES

The majority of domestic shipments of bulk materials on the Great Lakes and along Canada's coastline is carried by the Canadian merchant fleet. By the end of 2005, the fleet, which is defined as self-propelled vessels of at least 1,000 gross tons² flying the Canadian flag, included 184 vessels and 2.4 million gross tons.

In 2005, the dry bulk fleet was made up of 61 vessels and included straight-deck bulkers dedicated mainly to grain transportation, and self-unloading vessels carrying various bulk commodities. Although these carriers are declining in number, they remain the backbone of the Canadian merchant fleet, accounting for 46 per cent of tonnage and 33 per cent of vessels in 2005. By comparison, while the number of tankers decreased from 35 in 1985 to 27 in 2005, their capacity share increased from 11 to 31 per cent of total gross tonnage, due to the addition of larger units. In the last 20 years, the capacity of ferries vessels has also increased (from 10 to 17 per cent of total gross tonnage).

At the domestic and international level, an extensive fleet of tugs and barges was also in operation. In 2005, the Canadian Transportation Agency estimated that the Canadian fleet of tugs and barges included 309 tugs (121,000 gross tons) and 835 barges and scows (905,000 gross tons). Approximately eight per cent of the tug population had tonnage greater than 1,000 gross tons and were used in offshore supply.

Table 8-13 shows the transport capacity of the Canadian-registered fleet by type of vessel in 1985, 1995 and 2005.

**TABLE 8-13: CANADIAN-REGISTERED FLEET BY TYPE, 1985, 1995 AND 2005**
Type of carrier	1985	1995	2005	1985	1995	2005
Type of carrier	Gross tons (Thousands of tons)			Number of vessels
Dry bulk	1,812	1,300	1,088	109	74	61
Tankers	269	186	743	35	27	27
General cargo	82	91	105	19	15	17
Ferries	264	344	398	56	60	73
Other	97	33	38	6	7	6
Total	2,524	1,955	2,373	225	183	184

Note: Self-propelled vessels of 1,000 gross tons and over, including government owned ferries; excluding tugs used in offshore supply.

Source: Canadian Transportation Agency and Transport Canada

EASTERN CANADA

A fleet of dry bulk vessels (straight-deck and selfunloaders), tankers, general cargo and other vessels provides freight services in eastern Canada, including the Arctic. The three largest operators in the Great Lakes–St. Lawrence region are Algoma Central Corporation, Upper Lakes Group and Canada Steamship Lines. Seaway Marine Transport, a partnership of Algoma Central Corporation and Upper Lakes Group, manages the largest fleet of self-unloading vessels and gearless bulk carriers on the Great Lakes, St. Lawrence River and waters of eastern Canada.

WESTERN CANADA

On the west coast, a large tug and barge fleet provides domestic marine cargo services. While most operators are involved mainly in the domestic trades, some also trade between Canadian and U.S. ports.

Washington Marine Group controls several of the largest tug and barge operations, including: Seaspan International Ltd., the west coast's largest Canadian tug and barge operator; Cates Tugs; Norsk; and Kingcome Navigation Company. Rivtow Marine Inc. (a SMIT Company) is the second-ranked tugboat company in British Columbia.

NORTHERN CANADA

In the western Arctic, Northern Transportation Company Limited (NTCL) is the main marine operator for the Mackenzie River Watershed (including the Mackenzie River and Great Slave Lake), the Arctic coast and islands, and Alaska. Utilizing a fleet of tugs and dual-purpose barges, NTCL's principal concerns are bulk petroleum products and dry cargo for communities, defence installations, and oil and gas exploration sites across the North. Working with the Government of the Northwest Territories, NTCL chartered a tug and tank barge in 2005 and brought petroleum products from Vancouver into the Western Arctic via Point Barrow.

In early 2001, responsibility for the eastern Arctic sealift for dry cargo and bulk fuel was transferred from the Canadian Coast Guard to the Government of Nunavut. Since then, all Government of Nunavut departments, corporations, agencies and contractors are required to use the contracted carrier. All other shippers using this service may ship under the same terms and conditions of the contract.

Under multi-year contracts, Nunavut Sealink and Supply Inc. (NSSI) and Nunavut Eastern Arctic Shipping (NEAS) continued to supply dry cargo sealift for the Eastern Arctic during the 2005 season. NSSI, a partnership between Transport Desgagnes and Arctic Cooperatives Ltd., served the seven Kivalliq communities and four Baffin Island communities. NEAS served the remaining 10 Baffin Island communities. The cargo was shipped from Montreal. As the option to extend the current Resupply Agreement to 2008 was not exercised in 2005, the current contract will expire in 2006. In December, the Government of Nunavut issued a request for proposals to secure marine transport for dry cargo beginning in the 2006 season.

The Woodward Group and NTCL, also with multi-year contracts, continued to deliver bulk fuel to the region. Utilizing two tankers travelling from Montreal and Churchill, the Woodward Group serviced the Baffin and Kivalliq regions in 2005. NTCL served the Kitikmeot region.

In addition to the Arctic sealift for Nunavut communities, resupply services to the Nunavik region are managed by the Quebec Ministry of Transportation. The James and Hudson Bay Cree are served out of Moosonee, with cargo originating in the Toronto region.

Beginning in 2004, Gardewine North, Hudson Bay Railway, The Port of Churchill and Moosonee Transportation Limited formed an alliance to provide sealift transportation to the Kivalliq. Moosonee Transport, located in James Bay, leased two barges from NTCL to resupply seven Kivalliq communities with dry cargo in July and August. Shippers are offered one single thru-rate for freight that encompasses a combination of truck, rail and marine transportation modes from either Thompson or Winnipeg (Manitoba) to the Kivalliq Region in Nunavut.

Mining operations in the Arctic regions also have vessels calling with supplies inbound and carrying zinc and lead concentrates to world markets outbound.

INTERNATIONAL SERVICES

Marine freight transport at the international level includes bulk shipping and liner shipping.

Bulk shipping is the transport of large volumes of homogeneous cargo, often in shiploads. These services are provided under time charters (short-term and longterm contracts) and short-term "spot" or "tramp" contracts, generally for a specified number of voyages or days, or for a given quantity of cargo. The bulk shipping industry operates in a competitive market. Most of Canada's international bulk trade is carried under time charter arrangements on foreign-flag ships. Types of Canadian bulk cargoes include coal, iron ore, grain and potash.

Liner shipping is the transport of many individual consignments of cargo, at fixed prices for each commodity, on ships that operate regularly among ports of call on a scheduled basis. Liners often use standardized containers that can easily be transferred to trains or trucks for transport away from the port to carry the cargo. Large fleets of specialized container vessels operating on major trade routes around the world dominate liner shipping.

Shipping lines that call at Canadian ports provide liner services either independently or as members of shipping conferences that adhere to rates and/or conditions of service under a conference agreement. These practices are exempt from certain provisions of the Competition Act by the Shipping Conferences Exemption Act (SCEA), which was amended in 2002.

Independent shipping lines (also called non-conference carriers) contribute to a competitive international shipping industry by offering rates and services comparable with those of conference operators. Shipping lines sometimes choose to be a conference member on certain routes and an independent operator on others.

Most of the Canadian-controlled international fleet operates under foreign flags and employs foreign officers and crews.

SERVICES AVAILABLE TO CANADIAN SHIPPERS

In 2005, the Canadian Transportation Agency had 15 shipping conference agreements on file. Conferences are no longer required to file their tariffs with the Agency.

Five of the conferences operate between eastern Canada, northern Europe and the Mediterranean. Atlantic Container Line, Canada Maritime Ltd., Hapag-Lloyd Container Line, P&O Nedlloyd, Mitsui O.S.K. Lines and Orient Overseas Container Lines are among the major lines serving Canada as conference members.

Table 8-14 lists the 15 conference agreements on file with the Canadian Transportation Agency.

**TABLE 8-14: SHIPPING CONFERENCES SERVING CANADA IN 2005**
Canadian Continental Eastbound Freight Conference (E) Canada–United Kingdom Freight Conference (E) Continental Canadian Westbound Freight Conference (E) Australia–Canada Container Line Association (E & W) Mediterranean Canadian Freight Conference (E) Canada/Australia–New Zealand Association Carriers (CANZAC) (E &W) New Zealand–Canada Container Lines Association (E &W) Canada Transpacific Stabilization Agreement (E & W) Mediterranean North Pacific Coast Freight Conference (Canada) (W) Canada/Australia–New Zealand Discussion Agreement (E & W) Canada North Atlantic Westbound Freight Conference (E) Canada Westbound Transpacific Stabilization Agreement (E) Joint Mediterranean Canada Service Agreement (E) Canadian Pacific/Latin American Freight Service (W) Columbus/Maruba Working Agreement (W)

Notes: E = East Coast; W = West Coast

Source: Canadian Transportation Agency

Due to provisions on independent action under the SCEA, shippers benefit from competition between conference and non-conference carriers as well as from competition within conferences. Under these provisions, individual conference members are allowed to offer rates or services that differ from those found in the conference agreement. And, with the 2002 SCEA amendments, conference members now have to give only five, rather than 15, days' advance notice to other conference members if it intends to take independent action.

The 2002 SCEA amendments also allow a conference member to sign service contracts with shippers without having to disclose the contract terms and conditions to other conference members. It further allows a conference and a shipper to negotiate and sign confidential, conference-wide service contracts. These contracts must, however, be filed with the Canadian Transportation Agency in order to comply with the SCEA.

In 2005, the Canadian Transportation Agency accepted filings for only five service contracts,³ down from 15 in 2004 and 25 in 2003. The contracts applied to both inbound and outbound traffic and to origins and destinations on both the east and west coasts of Canada.

² Gross tonnage is the capacity in cubic feet of the spaces within the hull and of the enclosed spaces above the deck of a vessel, divided by 100.
Thus 100 cubic feet of capacity is equivalent to one gross ton. However, capacity of a cargo carrying ship can also be expressed as dead-weight tonnes(1000 kg) required to immerse the hull at a particular draught (usually the maximum summer draught). Return

³ Service contracts are pro-competitive provisions designed to maintain Canadian conference legislation in balance with Canada's major trading partners and support the recent trend toward a greater reliance on the marketplace. Return

Passenger Transportation

Freight Transportation