Summary of stakeholder engagement – Toronto, Ontario

Pilotage Act Review Roundtable – Toronto, Ontario

March 22, 2018

• Participants
• Summary of discussion
• Purpose and principles
• Governance
• Labour
• Safety
• Tariffs
• Other comments

Participants:

• Stéphane Bissonnette, Great Lakes Pilotage Authority
• Fulvio Fracassi, Laurentian Pilotage Authority
• Simon Pelletier, Canadian Marine Pilots’ Association
• Tristan Laflamme, Canadian Marine Pilots’ Association
• Mike Burgess, Canadian Marine Pilots’ Association
• Mark Boucher, Canadian Merchant Service Guild
• Michael Broad, Shipping Federation of Canada
• Chad Allen, Shipping Federation of Canada
• Bruce Burrows, Chamber of Marine Commerce
• Wes Newton, Algoma Central Corporation
• Jim Morgan, Marine Recycling Corporation & Raw Materials Company Inc.
• Mike Riehl, PortsToronto
• Bill Fitzgerald, Hamilton Port Authority
• Debbie Murray, Association of Canadian Port Authorities
• Larry McCabe, Association of Municipalities of Ontario
• Jean Aubry-Morin, St. Lawrence Seaway Management Corporation
• Marc Grégoire, Chairperson
• Angela Pati, Analyst

Summary of discussion:

The participants presented their concerns and views on the Pilotage Act and potential areas for reform. We have grouped the comments under the following themes:

Purpose and principles

• Shipping Federation of Canada suggested that self-sufficiency not be included in the purpose or principles section of the Pilotage Act, but instead be in the tariff-setting section.
  • Too much emphasis on self-sufficiency; concern that tariffs are set without being cost efficient.
  • Algoma Central Corporation also raised concerns that including self-sufficiency would allow tariffs to continually rise.
  • Want measurement of key performance indicators to be included in principles.
• Chamber of Commerce asked why there needs to be a preamble added to the Act.
  • Concern about interpretation.
  • Why does the Act prohibit competition?
    • Canadian Marine Pilots’ Association noted there was no evidence that competition improves safety or lowers tariffs.
• Algoma Central Corporation asked about introducing limited amounts of competition, such as having pilotage groups bid for work.
  • Could argue that pilotage is only a loosely regulated monopoly, which leads to less economic efficiency.
    • It was clarified that the Chair would be making a strong recommendation against competition, although there is an interest in having more flexibility.

Governance

• Association of Municipalities of Ontario asked if the merger of the Laurentian Pilotage Authority and Great Lakes Pilotage Authority would be set in legislation or done another way.
• Great Lakes Pilotage Authority wondered what was the merger’s driving force
  • KPMG’s report showed no real benefits with a partial merger of the Pilotage Authorities
    • It was clarified that the driving force is to create consistency and harmonize the network. The two have distinct structures and practices; a merger will bring them together.
  • Cost, pay equity between employee and contract pilots, and benefits of proceeding with a merger must be considered before it happens.
• Laurentian Pilotage Authority favoured a merger with the Great Lakes Pilotage Authority
  • Beneficial because of similar system and ships transit through both areas.
  • Potential for economies of scale, cost savings; more efficient and effective.
  • Employee/contract pilot issue is navigable: Laurentian Pilotage Authority used to have employees and contract pilots, and Pacific Pilotage Authority currently uses both.
• Canadian Marine Pilots’ Association is neither for nor against the merger but would like more information on cost and labour impacts.
• Association of Canadian Port Authorities wondered if the certificate process used in the Great Lakes Pilotage Authority would be applied to the Laurentian Pilotage Authority.
  • Algoma Central Corporation and Chamber of Marine Commerce noted that the Great Lakes Pilotage Authority’s process works well: industry saves millions of dollars because of this certificate program.
    • It was clarified that the certificate processes have to be harmonized, but it is currently unclear what model will be used for the merged Pilotage Authority.
  • Great Lakes Pilotage Authority noted that they collect statistics on incidents with certificate holders and don’t have safety-related concerns.
  • Laurentian Pilotage Authority was open to hearing how they can improve their certificate program.
• Shipping Federation of Canada raised the idea that maybe there shouldn’t be retired pilots and industry members on the Boards of Directors.
• Shipping Federation of Canada and Canadian Marine Pilots’ Association support the idea of a neutral Board.
• Chamber of Marine Commerce wondered if administrative support for the National Advisory Council would come from Transport Canada.
• Canadian Marine Pilots’ Association supports the National Advisory Council; notes that regional advisory committees work well on a voluntary basis and this model could be used.

Labour

• Association of Canadian Port Authorities wondered how the labour model would change with a merger of the Great Lakes Pilotage Authority and Laurentian Pilotage Authority
  • It was clarified that, initially, there would not be any changes.
• Toronto Port Authority raised concerns about higher salary costs after a merger.
  • There is a risk of higher salaries being negotiated, but it was noted that there is already pressure to increase salaries based on these differences.
• Shipping Federation of Canada wondered if there is a recommendation to make service contracts between Pilotage Authorities and pilot corporations fully public.
• Laurentian Pilotage Authority noted that one of the pilot corporations is hesitant to release some provisions, but it makes sense for industry to know the costs they are paying.
• Shipping Federation of Canada and Chamber of Marine Commerce asked how safety clauses will be removed from existing service contracts?
  • After a legislative change, regulations would take precedence over service contracts.
  • Before the legislative change and until existing service contracts expire, safety provisions would need to be removed on a voluntary basis through mutual agreement between the two parties.
  • If any safety clauses in service contracts are not reflected in the regulations, they need to be brought in.
  • Currently, the Minister can only retrieve information from the Pilotage Authorities; he can request information from pilot corporations but they are not mandated to provide it.
• Canadian Marine Pilots’ Association noted that the service contract links the Pilotage Authority with the pilot corporation, while the regulations link the Pilotage Authority with its users.
  • Issues only arise when the Pilotage Authority does not follow the regulations.
  • This should be made transparent so costs and requirements are clear.
• Laurentian Pilotage Authority would like to hire employees in the same districts as contract pilots to have in-house pilotage expertise, especially when making difficult decisions.
  • Would continue to consult pilot corporations and industry, but need this expertise to make the best decisions for the Pilotage Authority.
  • Understand need for clear dispatch rules and to avoid creating competitive conditions.
• Canadian Marine Pilots’ Association is still opposed to a dual labour model in the same districts.
• Great Lakes Pilotage Authority wondered what is the objective of a dual labour model?
  • Expertise should come from the management team.
  • Having employees in addition to contract pilots requires the Pilotage Authority to deal with a second organization (i.e., union, bargaining agent), which creates more management difficulties.
  • Not clear what this model achieves in the long run.
    • It was clarified that the information provided by pilot corporations is perceived to be biased because of their business model.
    • The number of employees hired by Pilotage Authorities in an area serviced by a pilot corporation is likely to be limited due to economic factors.
• St. Lawrence Seaway Management Corporation emphasized that it is critical to have the right kind of information and expertise in management and employee structure.
  • Recognize the benefit of a dual labour model.
• Canadian Marine Pilots’ Association noted that, when there is opposition between two pilots, fallback should always be the safest option.
• The Canadian Marine Pilots’ Association stated that the final offer selection process would not be viewed as a problem if the pilot corporation had lost the arbitration ruling.
  • Feel this concern has been raised based on a small number of rulings that did not go in the favour of the Pilotage Authority.
• Chamber of Marine Commerce suggested that the Act’s purpose and principles should guide the arbitrator.
  • Canadian Marine Pilots’ Association, Shipping Federation of Canada, Algoma Central Corporation and Laurentian Pilotage Authority also supported this.
  • There was some concern from the Shipping Federation of Canada and Algoma Central Corporation about too much emphasis on self-sufficiency in the Act’s purpose and principles, and that this may skew arbitration rulings.
• Chamber of Marine Commerce raised concerns about the loss of captains to the pilot community.
  • Algoma Central Corporation noted that pilotage fees are not a force of the market since the monopoly sets the tariffs, the tariffs have been rising, and pilot salaries are a function of this system.
  • Shipping Federation of Canada suggested that if Pilotage Authorities can’t attract new pilots, salaries will keep getting higher.

Safety

• Chamber of Marine Commerce expressed concern about whether Transport Canada has or could build capacity to take over the regulations.
• Shipping Federation of Canada wondered if the Pilotage Authorities would be able to maintain regulatory powers over local issues.
  • It was clarified that the recommendation is high-level and is meant to be gradually implemented as capacity is built over time.
• Laurentian Pilotage Authority noted that regulation-making is a useful tool for Pilotage Authorities, and it would be important to have them keep regional regulations.
  • No issue with Transport Canada taking over national regulations where national standards make sense.
  • Considering the practices and procedures that Port Authorities use would make the Pilotage Authorities more comfortable about repatriation of regulations back to Transport Canada.
• Toronto Port Authority emphasized that risk management is important to the ports, but would like to make costs more fair.
  • Wondered if there are compulsory areas where pilots are not needed and how this can be determined.
  • How can bias be eliminated or reduced from risk assessments?
• Chamber of Marine Commerce asked about Transport Canada’s role in risk assessments.
  • It was clarified that Transport Canada would be involved in regulation and where impasses arise.
• Laurentian Pilotage Authority noted that they would like to integrate the voyage plan into the bridge systems (as the Great Lakes Pilotage Authority already does).
• Shipping Federation of Canada wanted to see a recommendation that requires new technology to be tested.
• Canadian Marine Pilots’ Association highlighted that there are legal implications with new technology.
  • Transport Canada regulations cannot trump the conventions of the International Maritime Organization (IMO).
• Algoma Central Corporation noted that risk assessments should link back to the purpose and principles of the Act.
  • There needs to be balance, not just a strict focus on safety and the environment.
  • Need a clear definition of what constitutes “safe” and how “safety” is determined.
    • It was clarified that safety must be the overarching objective of risk assessments and the pilotage system in general.
• Laurentian Pilotage Authority agreed that the primary goal is safety; through risk assessments, the Pilotage Authorities determine the most cost-effective way to achieve this.
• Both Algoma Central Corporation and Chamber of Marine Commerce emphasized that industry is focused on safety and invests in training to ensure it, especially given that the cost of potential risks falls on shippers.
• Great Lakes Pilotage Authority stated that certificates in their region only have the name of the certificate holder, not the vessel.
  • Office of the Auditor General Special Examination raised a concern about lack of certificate program monitoring.
  • Wondered if, with the repatriation of some functions to Transport Canada, the Pilotage Authorities would be responsible for monitoring certificate holders.
• Canadian Marine Pilots’ Association highlighted that 310 of the 318 certificates for the Great Lakes Pilotage Authority were grandfathered.
  • Frustration with certification misinformation between the Laurentian Pilotage Authority and Great Lakes Pilotage Authority, and in general.
  • There is a maintenance program for certificate holders.
• Great Lakes Pilotage Authority wondered how the expanded certificate program would apply to international waters of the Great Lakes.
• Canadian Marine Pilots’ Association did not support opening certificates up to international seafarers.
  • Wondered if the pilot endorsement program used by the United States could be applied to the certificate issue in the west coast.
  • How can certificates be justified for international seafarers but licenses are not?
  • A Canadian company with an international captain may run into problems if the captain becomes a certificate holder and is viewed as a non-resident replacing a Canadian pilot’s job
  • This problem wouldn’t happen if the requirement to be a regular complement of the crew was maintained.
• Chamber of Marine Commerce felt the Laurentian Pilotage Authority’s certificate program could benefit from being merged with the Great Lakes Pilotage Authority.
• Laurentian Pilotage Authority noted that they’re trying to demystify the certification process in the region.
  • Understand the difficulty around language competency but acknowledge that a full mastery of both French and English isn’t required.
  • Would like to develop a training plan.
  • Not hearing where there are limits to entry.
• Algoma Central Corporation highlighted that not all qualified captains become certificate holders despite doing regular routes every year.
  • Concern that shippers pay millions of dollars for pilotage costs despite having captains with significant expertise.
• Canadian Marine Pilots’ Association suggested that captains aren’t applying because they don’t want to go through a thorough examination on paper.
  • Laurentian Pilotage Authority noted that the Board of Examiners determines the exam for certificates, not the Act or its regulations.

Tariffs

• Shipping Federation of Canada wondered how fair notice for tariff adjustments would be given if the tariffs aren’t in the regulations.
  • Also noted that the Canadian Transportation Agency occasionally requires 120 days to make decisions for appeals.
• Great Lakes Pilotage Authority wondered if tariffs could be implemented even if appealed, with the ability to return payment if overturned.
  • Delayed tariff increases have caused a financial issue for Pilotage Authorities in the past.
  • It may require the Pilotage Authority to raise the tariff in the next year to recoup loss.
  • Wondered if the tariff process would need to be tabled.
    • It was clarified that the recommendation is to remove tariffs from the regulatory process, so the process doesn’t need to be tabled.
• Chamber of Marine Commerce expressed concern about limiting appeals.
  • Don’t want to invoke unintended consequences.
    • It was clarified that appeals would apply to anyone affected by pilotage.

Other comments

• Chamber of Marine Commerce wondered if there was a recommendation on how future Pilotage Act reviews should be done, or if this would be left to the Minister’s discretion.
• Shipping Federation of Canada felt the Pilotage Act should be reviewed at the 5-year mark, and then at the 10-year mark.
  • This would help ensure that any changes made as a result of the current review work well.
  • Chamber of Marine Commerce emphasized that industry would like a review every 5 years, to check in with any changes made.
  • Algoma Central Corporation noted that this review’s recommendations could lessen that need.