8 MARINE TRANSPORTATION

INDUSTRY STRUCTURE

Part of Canada’s marine industry includes a fleet of Canadian-flag operators providing domestic and transborder shipping services. International trade is served largely by foreign-flag operators calling at Canada’s major ports.

DOMESTIC SERVICES

Canada’s merchant fleet is made up of self-propelled vessels of at least 1,000 gross tons² flying the Canadian flag. It carries the majority of domestic shipments of bulk materials on the Great Lakes and along Canada’s coastline. By the end of 2006, the fleet included 182 vessels and 2.2 million gross tons.

The dry bulk fleet includes straight-deck bulkers dedicated mainly to grain transportation and selfunloading vessels carrying various bulk commodities. In 2006, this fleet was made up of 62 vessels. Though these carriers are declining in number, they remain the backbone of the Canadian merchant fleet. In 2006, they accounted for 51 per cent of tonnage and 34 per cent of vessels. Tankers, on the other hand, increased their capacity share from 11 to 24 per cent of total gross tonnage despite a decrease in the number of tankers from 35 in 1986 to 24 in 2006. This increase in capacity share was due to the addition of larger units. In last 20 years, the capacity of ferries vessels has also increased, from 12 to 19 per cent of total gross tonnage.

An extensive fleet of tugs and barges was also in operation both domestically and internationally. In 2006, the Canadian Transportation Agency estimated that the Canadian fleet of tugs and barges included 309 tugs (122,000 gross tons) and 836 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 1986, 1996 and 2006.

^{Note: Self-propelled vessels of 1,000 gross tons and over, including government-owned ferries but excluding tugs used in offshore supply.
Source: Canadian Transportation Agency and Transport Canada}

EASTERN CANADA

In eastern Canada and including the Arctic, freight services are provided by a fleet of dry bulk vessels (straight-deck and self-unloaders), tankers, general cargo and other vessels. 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

Freight services on the west coast are provided in large part by an extensive tug and barge fleet operated by a few well established companies that serve the forest products and construction industries. While most operators are involved primarily in domestic trade, 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. Smit Marine Canada (formerly Rivtow Marine Inc.) is the second ranked tugboat company in British Columbia. To a lesser degree, freight services in the region are supplied by freight ferries and general cargo vessels.

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.

In the eastern Arctic, Nunavut Sealink and Supply Inc. (NSSI), Nunavut Eastern Arctic Shipping (NEAS), and NTCL provided sealift service for the Arctic re-supply of dry cargo in the Nunavut regions with services from Churchill and Montreal. While NSSI and NEAS utilized general cargo and roll-on roll-off vessels, NTCL operated tug and barge combinations. Also with services out of Churchill and Montreal, the Woodward Group delivered bulk fuel to the Nunavut region using tankers.

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. Liner shipping, on the other hand, is the transport of many individual consignments of cargo, often at fixed prices for each commodity, on ships that operate regularly among ports of call on a scheduled basis.

Bulk services are provided under time charters (shortterm and long-term 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. Canadian bulk cargoes include such commodities as coal, iron ore, grain, potash and crude petroleum.

Liner shipping is dominated by large fleets of specialized container vessels operating on major trade routes around the world. The containers are often standardized so that they can be easily transferred to trains or trucks for transport away from the port.

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.

Competition in the international shipping industry is increased by independent shipping lines (also called nonconference carriers) that offer 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 2006, the Canadian Transportation Agency had 13 active shipping conference agreements on file. Conferences are no longer required to file their tariffs with the Agency.

Table 8-14 lists the 13 conference agreements on file with the Canadian Transportation Agency.

TABLE 8-14: SHIPPING CONFERENCES SERVING CANADA IN 2006

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 Pacific West Coast South America Agreement (W)
Australia–Canada Discussion Agreement (E & W)
Canada Transpacific Stabilization Agreement (E & W)
Canada/Australia–New Zealand Discussion Agreement (E & W)
Canada North Atlantic Westbound Freight Conference (E)
Canada Westbound Transpacific Stabilization Agreement (E)
Canadian Pacific/Latin American Freight Service (W)
AMPAC Cooperative Working Agreement (formerly Columbus/Maruba Working Agreement) (W)

^{Notes: E = East Coast; W = West Coast}

^{Source: Canadian Transportation Agency}

Independent action provisions under the SCEA enable shippers to benefit from competition between conference and non-conference carriers as well as from competition within conferences. These provisions allow individual conference members to offer rates or services that differ from those in the conference agreement. And, with the 2002 SCEA amendments, a conference member now has to give only five, rather than 15 days’ advance notice to other conference members if it intends to take independent action.

Under the 2002 SCEA amendments, shippers could use two types of confidential service contracts. The first is a contract between the shipper and a conference member where the terms and conditions are not disclosed to other conference members or filed with the Canadian Transportation Agency. These individual service contracts are comparable to the individual, confidential service contracts a shipper may negotiate with an independent or non-conference liner shipping operator. The second type is a contract between the shipper and the conference for a conference-wide service contract that, while also confidential, must be filed with the Canadian Transportation Agency in order to comply with the SCEA.

In 2006, the liner shipping conferences filed two conference-wide service contracts with the Canadian Transportation Agency,³ down from five in 2005, 15 in 2004 and 25 in 2003. This decline in conference-wide service contracts should not be interpreted as a decline in the overall importance of service contracts in liner shipping. Most liner shipping cargo is reportedly carried under individual service contracts negotiated between shippers and shipping lines that do not need to be filed with the Canadian Transportation Agency.

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 deadweight 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

Major Events in 2006

Infrastructure

Marine Politage

Industry Structure

Passenger Transportation

Freight Transportation