8 MARINE TRANSPORTATION

INFRASTRUCTURE

CANADA’S PORTS AND HARBOURS SYSTEM

Canada’s ports and harbours are an integral part of the national transportation system. They are crucial links in our domestic and international economic activities and vital gateways to the rail and road networks serving both Canada and the whole of North America.

As a trading nation, Canada’s ports are key to ensuring our current and future economic prosperity and competitiveness in the global market –– the vast majority of goods transported overseas to or from Canada are moved through ports. Emerging economies in Asia, Eastern Europe and South America, and the increased global economic activity they will create, will magnify the importance of Canadian ports. In order to compete in the global economy, Canada’s ports and harbours will be relied on to ensure that the flow of goods to and from the country is completed seamlessly and efficiently.

Domestically, ports and harbours facilitate the distribution of goods to Canadian markets in a costeffective and environmentally friendly manner while reducing strain on the country’s road and rail infrastructure.

The National Marine Policy, announced in 1995, laid out a comprehensive program to change the policy and legislative framework for major elements of the transportation system that were government owned and operated. A key element of the policy was to bring a greater level of commercialization to the marine sector through a variety of measures. These include increasing transparency; giving users a greater say in services offered and the costs of those services; improving the efficiency of management structures; eliminating outdated regulations/legislation; and, where feasible, letting the private sector deliver certain services.

To facilitate this restructuring, the National Marine Policy specified three categories of ports: (1) Canada Port Authorities (CPAs), (2) regional/local ports and (3) remote ports.

To achieve the objectives of the policy, a new, comprehensive law governing the marine sector, the Canada Marine Act (CMA) was adopted by Parliament in 1998. The ports comprising the National Port System, which includes former Canada Ports Corporations and harbour commissions, would operate under a new business and governance model as CPAs. In addition to strategic and economic criteria listed in the CMA, CPAs were also expected to have links to intermodal connections and diversified traffic.

Nineteen ports were given CPA status under the CMA: 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.

CPAs are responsible for the business operations of the port within the policy framework set out by the CMA and further defined through Letters Patent established for each CPA.

CPAs were incorporated by Letters Patent for the purpose of operating a particular port. The Letters Patent set out, among other things, the geographic limits of the port and related navigable waters, the governance structure, the annual stipend (the gross revenue charge) to be made to the federal government, the extent to which a port authority may undertake certain activities, maximum lease terms, and borrowing limits.

CPAs act as agents of the Crown under the CMA for certain purposes. They have the authority to engage in activities related to shipping, navigation, transporting passengers and goods, and handling/storing goods. They can also engage in other activities deemed necessary to support port operations, as outlined in their respective Letters Patent; however, with respect to these activities, the CPAs 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. To help cover costs, CPAs may also establish fair and reasonable fees for use of the facilities or services provided. 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.

In addition, the CMA requires that each CPA make available to the public its audited financial statements. These should consist of, at the least, a balance sheet, statements of retained earnings, income and expenses, changes in financial position and remuneration paid to directors and senior management. Each CPA must also hold an annual meeting open to the public and provide adequate prior notice of these meetings.

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.

^{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.}

^{1 Includes 18 sites where facilities have been transferred but the 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. Return}

^{2 Public harbours deproclaimed between June 1996 and March 1999. Return}

^{Source: Transport Canada}

FINANCIAL PERFORMANCE

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

In 2005, the CPAs had operating revenues of $309 million, down 0.4 per cent from 2004. Vancouver and Montreal accounted for 57 per cent of this total. Of the 19 CPAs, 12 reported increases in operating revenues ranging from of $0.04 million to $2.5 million. Montreal and Sept-Îles had the greatest increases, at $2.5 million (3.2 per cent) and $1.7 million (3.4 per cent), respectively.

Operating expenditures decreased by $15.2 million, with individual decreases ranging from $0.01 million to $8.1 million. Eight CPAs reported higher expenses, ranging from $0.07 million to $1.2 million increases. The ports reported approximately $11.3 million in total gross revenue charges, the same as in 2004. The port authorities spent $112 million on capital projects in 2005.

In 2005, the ratio of operating expenditures as a percentage of operating revenues for the CPAs averaged 76 per cent. Individual ratios ranged from 47 per cent to 147 per cent, and the overall return on assets was four per cent.

All port authorities had a total net income of $55 million. Seven CPAs had increases in net income ranging from $0.2 million to $2.4 million increases, while 12 had net losses ranging from $0.07 million to $4.2 million.

Based on some preliminary data, CPAs handled 249 million tonnes in 2005, up from 237 million tonnes in 2004. Five CPAs accounted for 70 per cent of total cargo by volume: Vancouver (35 per cent), Saint John (11 per cent), Montreal (10 per cent), Quebec City (9 per cent) and Sept-Îles (9 per cent). Revenues per tonne were $1.24, down from $1.31, while expenses per tonne were $0.94, down from $1.1 in 2004.

PORT TRAFFIC

In fiscal year 2005/06, Transport Canada’s Port Programs had $12.2 million in gross revenues. Combined with $17.2 million in expenses, $3.4 million in capital expenditures and $58.7 million in grants and contributions for port divestiture transfers, this left a total net loss of $67.1 million. For details, see Table A8-6 in the Addendum.

Figure 8-1 shows estimated traffic shares by port groups in 2005.

FIGURE 8-1: ESTIMATED TRAFFIC SHARES BY PORT GROUPS, 2005

1 “Other” ports represents locations owned and operated by Fisheries and Oceans Canada, provincial and municipal governments, or private facilities.

Source: Port Websites; Economic Analysis, Transport Canada

Following is the 2005 tonnage breakdown for CPAs: Vancouver, 76.5 million tonnes; Saint John, 27.5 million tonnes; Montreal, 24.3 million tonnes; Quebec, 22.7 million tonnes; Sept-Îles, 22.4 million tonnes; Halifax, 13.7 million tonnes; Fraser River, 15.9 million tonnes; Hamilton, 12.4 million tonnes; Thunder Bay, 8.2 million tonnes; Windsor, 5.5 million tonnes; North Fraser, 4.2 million tonnes; Prince Rupert, 4.4 million tonnes; Trois-Rivières, 2.5 million tonnes; Belledune, 2.2 million tonnes; Nanaimo, 1.9 million tonnes; Toronto, 2.4 million tonnes; St. John’s, 1.4 million tonnes; Port Alberni, 1.0 million tonnes and Saguenay, 0.31 million tonnes. See Table A8-7 in the Addendum for the total tonnage handled by Canada’s port system in 2004 – 2005.

SMALL CRAFT HARBOURS PROGRAM

Fisheries and Oceans Canada

The Small Craft Harbours (SCH) Program within Fisheries and Oceans Canada (DFO) provides commercial fishers and recreational boaters with safe and accessible facilities through the operation and maintenance of a national system of harbours. Keeping harbours that are critical to the fishing industry open and in good repair is the SCH’s mandate. Its long-term objective is to retain a network of approximately 750 core, locally managed fishing harbours. It is expected that all non-essential harbours (i.e. recreational harbours and fishing harbours with low or no activity) will be divested.

Fishing Harbours

Since the late 1980s, the SCH program has supported the creation of local Harbour Authorities to manage the commercial fishing harbours in their communities. Harbour Authorities are typically local, not-for-profit organizations composed of fishers and other harbour users. They lease the harbour from SCH and provide services, maintenance and harbour management. As of December 31, 2006, Harbour Authorities managed 687 core fishing harbours across Canada, about 92 per cent of the SCH program target. Fishing harbours not generating enough community interest to form harbour authorities are expected to be divested or, if necessary, demolished. Such harbours usually have low or no activity, and these divestitures have a negligible impact on the commercial fishing industry or the community at large. To date, 299 fishing harbours have been divested and 82 are in the final stages of divestiture.

Table 8-2 reports the fishing harbours remaining in the SCH portfolio as of December 31, 2006, by region and status.

^{1 Totals include 47 mooring buoy sites in British Columbia. Return
2 There are no harbour authorities in Northwest Territories, Nunavut or the Yukon. Return}

^{Source: Small Craft Harbours, Department of Fisheries and Oceans}

^{Source: Small Craft Harbours, Fisheries and Oceans Canada}

^{1 Refers to sites that have been transferred to local not-for-profit organizations, First Nations or other federal departments, as appropriate. Return}

^{Source: Small Craft Harbours, Fisheries and Oceans Canada}

^{1 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 on-going management. Some facilities are part of a larger development (e.g. a marina) and managed as part of that development. In other cases, facilities no longer exist at the site. Return}

^{Source: Small Craft Harbours, Fisheries and Oceans Canada}

Major Events in 2006

Infrastructure

Marine Politage

Industry Structure

Passenger Transportation

Freight Transportation