8 MARINE TRANSPORTATION

INDUSTRY STRUCTURE

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

Domestic Services

The Canadian merchant fleet carries the majority of domestic shipments of bulk materials on the Great Lakes and along Canada's coastline. The fleet is defined here as self-propelled vessels of 1,000 gross tons² and over flying the Canadian flag. At the end of 2002, it stood at 183 vessels and more than 2.3 million gross tons.

Dry bulk carriers remain the backbone of the Canadian merchant fleet, accounting for 50 per cent of tonnage and 36 per cent of vessels in 2002. The dry bulk fleet was made up of 65 vessels in 2002, composed of straight-deck bulkers dedicated mainly to grain transportation and self-unloading vessels carrying various bulk commodities. By comparison, the number of tankers decreased from 41 in 1982 to 24 in 2002, while their capacity share increased from 11 to 24 per cent of total gross tonnage, due to the addition of larger units.

An extensive fleet of tugs and barges was also in operation at the domestic and international level. In 2002, the Canadian Transportation Agency estimated that the Canadian fleet of tugs and barges included 325 tugs (117,000 gross tons) and 1,236 barges and scows (almost 1.2 million gross tons).

Table 8-12 shows the transport capacity of the Canadian-registered fleet by type of vessel in 1982, 1992 and 2002.

Note: Self-propelled vessels of 1,000 gross tons and over, including government owned ferries.

Source: Canadian Transportation Agency and Transport Canada

Eastern Canada

A fleet of dry bulk vessels (straight-deck and self-unloaders), tankers, general cargo and other vessels provides freight services in eastern Canada, including the Arctic. Algoma Central Corporation, Upper Lakes Group and Canada Steamship Lines are the three largest operators in the Great Lakes-St. Lawrence region.

In 2002, Canada Steamship Lines acquired the three remaining operational bulk vessels of N.M. Paterson & Sons Limited, as Paterson withdrew from shipping operations on the Great Lakes. This continued the trend toward consolidation in the domestic Great Lakes fleet.

Western Canada

On the West Coast, domestic marine cargo services are provided by a large tug and barge fleet. Most of the operators concentrate on the domestic trades but some also trade internationally between Canadian and U.S. ports.

The Washington Marine Group, owned by Montana businessman Dennis Washington, controls several of the largest tug and barge operations, including Seaspan International Ltd., the largest Canadian tug and barge operator on the West Coast; Cates Tugs; Norsk; and Kingcome Navigation Company, formerly owned by MacMillan Bloedel. Rivtow Marine Ltd. is the second-ranked tugboat company in British Columbia.

Northern Canada

In the Western Arctic, Northern Transportation Company Limited (NTCL) is the principal marine operator in Northern Canada for the area encompassing the Mackenzie River Watershed and the Arctic coast and islands. Its operations cover the Mackenzie River, the Western Arctic, Alaska and Great Slave Lake. NTCL handles bulk petroleum products and dry cargo for communities, defence installations and gas exploration sites across the North. It also provides tug and barge operations from the Port of Churchill to service communities in what is now the Kivalliq region of Nunavut.

In the Eastern Arctic, the Government of Nunavut now has responsibility for the Arctic Sealift. The N3 Alliance was awarded a two-year contract for 2001/02 covering all aspects of the Sealift. The N3 Alliance is a joint venture between NTCL, Nortran Inc. and Nunavut Sealink and Supply Inc. (NSSI).

In addition to the Arctic Sealift to the Baffin Region of Nunavut and the NTCL service to the Kivalliq Region out of Churchill, resupply services to the Nunavik Region are managed by the Quebec Ministry of Transportation, and the James and Hudson Bay Cree are served out of Mooseney (cargo originates in the Toronto region).

Mines such as Polaris and Nanisivik also have vessels calling with supplies inbound and carrying zinc and lead concentrates to world markets outbound. Fednav, the owner of the MV Arctic, is active in this market.

International Services

International marine freight transport can be broken down into bulk and liner shipping.

Bulk shipping pertains to marine freight carried as single cargoes and in large volume. Canadian cargoes carried as bulk include coal, iron ore and potash.

The bulk freight industry operates in a competitive market composed of time charters (term contracts) and "spot" or "tramp" carriers that operate on the basis of short-term contracts for a specified number of voyages or days or for a given quantity of cargo. Most of Canada's international bulk trade is carried under time charter arrangements on foreign-flagged ships.

Liner shipping pertains to the carriage of high-value containerized cargo moved under published rates and on specific fixed itinerary trade routes.

The international liner trade is dominated by large fleets of specialized container vessels operating on major trade routes around the world. The majority of the Canadian-controlled international fleet operates under foreign flags and employs foreign officers and crews. Shipping lines calling at Canadian ports may provide conference or non-conference liner services. Ocean carriers (i.e. individual lines) providing liner services on a common trade route often elect to form a shipping conference and to adhere to rates and/or conditions of service under a conference agreement. Such practices are exempted from certain provisions of the Competition Act by the Shipping Conferences Exemption Act (SCEA).

Independent shipping lines, referred to as non-conference carriers, offer rates and services that are comparable with those of conference operators and contribute to a competitive international shipping industry. A shipping line may choose to be a conference member on certain routes and an independent operator on others.

Services Available to Canadian Shippers

In 2002, the Canadian Transportation Agency had 14 shipping conference agreements on file, 12 with filed tariffs and 2 non-tariff filing arrangements.

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 some of the major lines serving Canada as conference members.

Table 8-13 lists the 12 tariff-filing Conference Agreements.

TABLE 8-13: SHIPPING CONFERENCES SERVING CANADA IN 2002

1. Canadian Continental Eastbound Freight Conference (E)
2. Canada-United Kingdom Freight Conference (E)
3. Continental Canadian Westbound Freight Conference (E)
4. Australia-Canada Container Line Association (E & W)
5. Mediterranean Canadian Freight Conference (E)
6. Canada/Australia-New Zealand Association Carriers
7. (CANZAC) (E & W)
8. New Zealand-Canada Container Lines Association (E & W)
9. Canada Transpacific Stabilization Agreement (E & W)
10. Mediterranean North Pacific Coast Freight Conference (Canada) (W)
11. Canada/Australia-New Zealand Discussion Agreement (E & W)
12. Canada North Atlantic Westbound Freight Conference (E)
13. Canada Westbound Transpacific Stabilization Agreement (E)

Notes: E = East Coast; W = West Coast

Source: Canadian Transportation Agency

Shippers benefit not only from competition between conference and non-conference carriers but also within conferences through the independent action provision contained in the Shipping Conferences Exemption Act (SCEA). The provision permits individual conference lines to offer a rate, or services, different from those found in the conference tariff. Under the 2001 SCEA, an independent action by a conference line can take effect after 5 days of notice, as opposed to 15 in the old Act.

Also under the 2001 SCEA, an individual conference line is allowed to sign service contracts with shippers without disclosing the contract terms and conditions to the conference. A conference and a shipper may also negotiate and sign conference-wide service contracts. These contracts are confidential, but to comply with SCEA they must be filed with the Canadian Transportation Agency.

In 2002, the Canadian Transportation Agency accepted filings for 51 service contracts,³ 47 fewer than in 2001. The contracts applied to both inbound and outbound traffic and to origins and destinations on both the east and west coasts of Canada. The average duration of the contracts was one year.

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 in tonnes (1000 kg) required to immerse the hull at a particular draught (usually the maximum summer draught). Back to text

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. Back to text

Major Events in 2002

Infrastructure

Industry Structure

Passenger Transportation

Freight Transportation