Evaluation report outlining results of the assessment of the Ferry Services Contribution Program.
On this page
- Executive summary
- Introduction
- Program profile
- Contributions
- Evaluation approach
- Evaluation findings
- Conclusion
- Annex: References
Executive summary
Under the Ferry Services Contribution Program (the Program), the Government of Canada provides financial contributions for inter-provincial ferry services in Eastern Canada. The funding is used by private operators to provide ferry services and maintain Transport Canada's ferry vessels and ferry terminals, which are leased to the operators by Transport Canada.
The Program supports the following three ferry services:
- Service between Îles-de-la-Madeleine, Quebec/Souris, Prince Edward Island operated by Coopérative de Transport Maritime et Aérien (CTMA) with the MV Madeleine
- Service between Caribou, Nova Scotia/Wood Islands, PEI operated by Northumberland Ferries Limited (NFL) with the MV Holiday Island and the MV Confederation
- Service between Saint John, New Brunswick/Digby, Nova Scotia operated by Bay Ferries Limited (BFL) with the MV Fundy Rose
These ferry services are also known as the Eastern Canada Ferry Services.
This evaluation was conducted to comply with the evaluation requirements of the Financial Administration Act (The Act) and the Treasury Board's Policy on Result (2016) (The Policy). The Act and the Policy require that the relevance and performance of on-going transfer payment programs of $5 million annually or above be evaluated every five years.
In recent years TC has conducted extensive policy analysis examining the Program's operations, impacts and challenges, seeking an alternative approach to deliver the Eastern Canada Ferry Services. Given the availability of this analysis, the evaluation has adopted a 'calibrated evaluation approach' which focused on key aspects of the performance of the ferry services. This approach allowed the effective use of evaluation resources while meeting the information needs.
The evaluation has found the following:
Relevance
Under the National Marine Policy(NMP), Canada supports constitutionally mandated ferry services and those required by remote communities. The funding contribution for the Îles-de-la-Madeleine – Souris ferry services is aligned with the NMP, as it supports access to a remote community. The contributions for the Wood Islands-Caribou and Digby-Saint John services remain inconsistent with the NMP, as these services do not serve a remote community nor are they constitutionally mandated. On the whole, the contribution program is in line with government priorities to support the services that are important to communities and regional economies.
Performance
Safe and reliable ferry services were delivered, meeting the performance targets set in the contribution agreements and to the satisfaction of users. The vehicle and passenger traffic has been relatively stable since 2009 across all three ferry services. The deck-utilization fluctuated throughout operating seasons and varies reflecting the demand for each route during high and low seasons.
In general, public ferry services operate with some degree of subsidy due to the high costs of operating vessels in a marine environment. The services are also challenged by increasing maintenance and repair costs associated with operating aging vessels. Recently, Transport Canada has introduced new measures to strengthen its oversight of vessel maintenance. The results of these measures were not yet available.
Map of the ferry services in Eastern Canada
*CTMA Traversiers is Coopérative de Transport Maritime et Aérien
Text description
This is a map showing the routes of the three ferry services in eastern Canada that Transport Canada supports through its Ferry Services Contribution Program: the route between Îles-de-la-Madeleine, Quebec (QC) and Souris, Prince Edward Island (PEI) (operated by Coopérative de Transport Maritime et Aérien (CTMA) with the MV Madeleine); the route between Caribou, Nova Scotia and Wood Islands, Prince Edward Island (operated by Northumberland Ferries Limited (NFL) with the MV Holiday Island and MV Confederation); and the route between Saint John, New Brunswick and Digby, Nova Scotia (operated by Bay Ferries Limited (BFL) with the MV Fundy Rose)
Abbreviations
- CTMA
- Coopérative de Transport Maritime et Aérien
- BFL
- Bay Ferries Limited
- NFL
- Northumberland Ferries Limited
- TBS
- Treasury Board Secretariat of Canada
- TC
- Transport Canada
Introduction
This evaluation was conducted to comply with the evaluation requirements of the Financial Administration Act and Treasury Board Secretariat's Policy on Results (2016). The Act and the Policy require that the relevance and performance of an on-going transfer payment program that pays $5 million annually or above be evaluated every five years.
Program profile
The Ferry Services Contribution Program provides financial contributions for the following ferry services:
- Service between Îles-de-la-Madeleine, Quebec (QC) and Souris, Prince Edward Island (PEI) operated by Coopérative de Transport Maritime et Aérien (CTMA) with the MV Madeleine
- Service between Caribou, Nova Scotia and Wood Islands, Prince Edward Island operated by Northumberland Ferries Limited (NFL) with the MV Holiday Island and MV Confederation
- Service between Saint John, New Brunswick and Digby, Nova Scotia operated by Bay Ferries Limited (BFL) with the MV Fundy Rose
To support the Program, TC leases four vessels and six terminals to the ferry operators. The Program provides funds through contribution agreements to the ferry operators to cover operating deficits, including the costs to maintain the vessels and terminals.
TC periodically negotiates renewals of the contribution agreement with each ferry operator. The agreement sets out the terms and conditions of the ferry services, including eligible expenses. Each fiscal year, TC negotiates a contribution amount based on the operator's projected operating deficits (revenues minus eligible expenditures), up to a maximum annual amount prescribed by the program's terms and conditions.
TC-owned vessels and terminal facilities are leased to the operators for a nominal annual amount ($1 per vessel and $500 per terminal). The operators are responsible for on-going maintenance and major repairs of the vessels and terminals, while TC is responsible for capital expenses.
TC's Programs Group Atlantic regional office negotiate contribution agreements and oversee the delivery of the agreed-upon ferry services supported by TC headquarters (Air, Marine, and Environmental Programs Directorate within the Programs Group.
Contributions
For the evaluation period (2009-2010 to 2017-2018), the Program provided the following funding contributions:
| $ millions | 2009-2010 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 |
|---|---|---|---|---|---|---|---|---|---|
| CTMA | 8.9 | 11.4 | 12.9 | 14.5 | 13.0 | 14.8 | 14.0 | 14.7 | 17.9 |
| NFL | 6.8 | 9.7 | 10.1 | 11.6 | 10.3 | 10.1 | 10.2 | 16.0 | 12.4 |
| BFL | 7.2 | 3.3 | 3.3 | 6.7 | 5.1 | 7.7 | 7.4 | 9.9 | 8.4 |
| Total | $22.9 | $24.4 | $26.3 | $32.8 | $28.4 | $32.6 | 31.6 | 40.6 | 38.7 |
These are actual, federal contributions as per Public Accounts of Canada. In addition to federal contributions, Transport Canada receives contributions from New Brunswick and Nova Scotia ($1 million per year from each province since 2006) for the Saint John – Digby service. The funds in Table 1 do not include provincial contributions. The contributions in Table 1 also do not include terminal and vessel capital investments undertaken by TC, other operating costs (e.g., dredging and surveying), and TC program salaries. In 2010-2011, these additional costs amounted to approximately $6.5M or 21% of total costs of the program.
The Program's contributions have increased over time. The total contributions provided to the three operators over the last nine years rose from $22.9 million in 2009-2010 to $38.7 million in 2017-2018. The increased contribution to NFL in 2016-2017 was due to unexpected repairs to the MV Holiday Island. Contribution funds support a range of specified maintenance and repair work for the vessels and terminals, including regular inspections and a dry-docking required for passenger vessels.
Chart 1: Federal contributions for the ferry services, 2009-2010 to 2017-2018
The figure displays line graphs over time. There are four lines. Three lines show contributions provided to each of the three operators and one line for the total funding provided to all three operators. The lines illustrate changes in the annual contributions from 2009/10 to 2017/19 as provided in Table 1. Total contributions rose from $22.9 million in 2009/10 to $38.7 million in 2017/18; CTMA contribution rose from $8.9 million in 2009/10 to $17.9 million for the same period; NFL contribution rose from $6.8 million to $12.4 and BFL contribution rose from $7.2 million to $8.4 million for the same period.
Evaluation approach
The evaluation covers the period of 2009-10 to 2017-18.
The Program was evaluated in 2003 and 2009. In 2015, TC's Marine Policy Group conducted a review of the Eastern Canada Ferry Services. The review included consultations with stakeholders and an analysis of options for future delivery of the ferry services. Given this extensive review, a 'calibrated evaluation approach' was adopted to ensure effective use of evaluation resources, focusing mostly on the performance of the ferry services.
- Level of usage of the ferries
- Efficiency of operations
- Reliability of services
- Client satisfaction
In addition to the above, the evaluation examined the safety of the ferry services and the maintenance of ferry assets in view of the Program's objective and the Departmental Results Framework.
- Safe ferry services
- Protection of ferry assets
To examine these aspects, the evaluation reviewed program documents and information from the Programs Group officials through meetings, in line with a calibrated evaluation approach.
Evaluation findings
Relevance
Finding 1: The federal funding provided for the les-de-la-Madeleine – Souris ferry service operated by CTMA is aligned with theNational Marine Policy as it supports transport-access for remote communities. Federal funding for the Wood Islands-Caribou ferry services operated by NFL and the Digby-Saint John ferry services operated by BFL remains inconsistent with the Policy.
The 1995 the National Marine Policy replaced the Water Transport Assistance Policy (1976) and limited subsidies for ferry services to constitutional obligations and services to remote communities. Financial support for the three services is not the result of a constitutional obligation. In 2000, TC re-designated the port at Cap-aux-Meules in the Magdalen Islands from a regional local port to a remote port, which means that the service supports a remote community. While air transport options are available to the Magdalen Islands, the ferry service remain the most cost effective option (e.g. ability to transport supplies) for the community.
The other two ferry services are neither remote-community services nor constitutionally mandated services as specified in the National Marine Policy. The opening of the Confederation Bridge in 1997 has provided a fixed link between PEI and the mainland. The Digby-Saint John ferry connects southern New Brunswick and southwestern Nova Scotia across the Bay of Fundy. While the East Coast region is generally well served with road networks, the ferries provide convenient, additional transportation-options for the communities.Footnote 1 The ferries are considered vital transportation links and as well as essential services for local communities, tourism and the local economy.
The past two evaluations have addressed the policy inconsistency concerning two of the three ferry services and recommended that TC develop an approach to align the Program and the TC policy framework.
Finding 2: The Ferry Services Contribution Program is in line with government priorities to continue supporting the ferry services in the region.
The federal funding support for the ferry services has continued over decades going back to as early as 1940s. Funding was renewed periodically as needs developed and with varying terms and conditions. During the period examined, the government flowed funding, renewing funding for ferry operators in 2011, 2014, and 2017.
The government has also made significant investments in its fleet of vessels. In 2015, the government replaced an aging vessel for the Digby-Saint John ferry services with the MV Fundy Rose; and significant repairs were made to the MV Holiday Island in summer 2016. This vessel is one of two vessels used on the Wood Islands-Caribou route.Note de bas de page 2
The costs of maintaining the ferry vessels have been placing additional pressure on the Program. In recent years, the government explored new ways to deliver the ferry services, while ensuring service continuity to local communities using the current approach. The current contribution agreements are set to end on March 31, 2020.
Performance
The evaluation examined the performance of the ferry services by focusing on the following areas:
| Performance area | Indicators |
|---|---|
| Level of usage of the ferries | Passenger traffic level Vehicle traffic level |
| Efficiency of ferry operations | Deck utilization level Cost recovery rates |
| Reliability of ferry services | Completed trips as scheduled |
| Client satisfaction of ferry services | Client satisfaction survey results |
| Protection of ferry assets | Activities to protect the ferry assets |
| Safety of ferry services | Reportable safety-related occurrences |
Summary statement
Vehicle and passenger traffic for the three ferries has been relatively stable since 2009. Safe and reliable ferry services were delivered, meeting the performance targets and to the satisfaction of users.
The ferry services continued to incur sizable operational deficits. Maintaining an aging fleet is the primary reason for the increase in the contribution funding. In recent years, strategic measures have been introduced to maintain the ferry assets. The outcomes of these measures were not yet available for this evaluation.
Level of usage
Passenger traffic
Finding 3: Passenger traffic continued to make up most of the overall traffic in all three ferries. Overall, the passenger traffic levels remained relatively stable since 2009.
The passenger traffic level across the three ferries reached 327,760 passengers (one-way ridership) in 2017-2018, up from 278,472 in 2009-2010 (see Table 2). This indicates about a 2.1% increase per year over nine years. The traffic however grew at different pace on the three routes. Traffic on the Saint-John-Digby route grew at a pace of 3.3% annually, while traffic on the Wood Islands-Cariboo and Îles-de-la-Madeleine and Souris grew at 1.8% and 1.7% respectively. NFL continued to be the largest carrier, with its passenger traffic reaching approximately three times the passengers traffics of BFL or CTMA. On the whole, the three services had a relatively stable level of passenger-traffic load over the last nine years (Chart 2).
| 2009-2010 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | |
|---|---|---|---|---|---|---|---|---|---|
|
Passengers (one-way ridership) |
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| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| Total | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
Chart 2: Passenger traffic, 2009-2010 to 2017-2018
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Vehicle traffic
Finding 4: Vehicle traffic has been relatively stable since 2009. There was far more passenger vehicle traffic than commercial vehicle traffic. During the review period, the three ferries moved, on average, 120,000 passenger vehicle annually.
The three services moved far more passenger vehicles than commercial vehicles (Table 3). About 80% to 90% of vehicle traffic was passenger vehicles. Each year, the three services combined moved on average 106,847 passenger vehicles and 13,783 commercial vehicles between 2009-2010 and 2017-2018.
NFL remained as the largest mover of vehicle traffic, with its passenger vehicle traffic load reaching three times the passenger vehicle traffic load of CTMA or BFL and with its commercial vehicle traffic reaching two to three times the commercial vehicle traffic of CTMA or BFL (Chart 3a and Chart 3b).
| 2009-2010 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | |
|---|---|---|---|---|---|---|---|---|---|
| Passenger vehicles | |||||||||
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| Commercial vehicles | |||||||||
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
Chart 3a: Passenger vehicle traffic, 2009-2010 to 2017-2018
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Chart 3b: Commercial vehicle traffic, 2009-2010 to 2017-2018
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Reliability of ferry services
Completed trips as scheduled
Finding 5: All three operators provided reliable ferry services.
Providing trips as per published schedules is one of the performance measures under the contribution agreements. As part of the annual budgeting process, TC sets targets for the completion of scheduled trips and the operators report on the actual number of crossings in monthly traffic reports.
In the three period between 2015-2016 to 2017-2018, all three operators met or exceeded their targets for the completion of scheduled trips (see Table 4). In the preceding years (2011-2012 to 2014-2015), the operators had completed all or almost all (89% - 100%) of the scheduled trips. Each year, the three operators combined deliver approximately 4,000 trips. Given the large number of sailings they make, the operators maintained highly reliable services.
The leading factors for trip cancellations are adverse weather condition and vessel mechanical issues. In 2016-2017 the MV Holiday Island was removed from the service for emergency repairs leaving only the MV Confederation, to provide service on this route. As a result, there was a decrease from the planned 2984 planned number of trips to 2404, the actual number of trips.
| 2009-2010 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | |
|---|---|---|---|---|---|---|---|---|---|
| Number of scheduled trips completed (2-ways) | |||||||||
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| Ferry reliability rates (%) – completed trips as % of scheduled trips | |||||||||
| CTMA | - | - | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | - | - | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | - | - | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
Chart 4: Ferry reliability rates (%), 2011-2012 to 2017-2018
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Client satisfaction
Finding 6: The ferry services were delivered to the satisfaction of users.
Customer satisfaction surveys are part of the annual reporting required under the contribution agreements. The operators are required to conduct a client satisfaction survey by an arm's length firm, during peak operating season and present the results to TC. The survey covers areas such as service before arriving at the ferry terminal; service at the terminal; service on board; service for loading and unloading; and the overall ferry service experience, as well as value for money of ferry fares.
All three operators have achieved a high level of customer satisfaction, typically around 95% or higher (see Table 5). Specifically, CTMA's client satisfaction rate was {ATIP removed} on an annual average whereas BFL's and NFL's and were in the range {ATIP removed} (Chart 5).
| 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | Average | |
|---|---|---|---|---|---|---|---|---|
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| Note: the collection of client satisfaction data began as of 2011. | ||||||||
Chart 5: Passenger satisfaction rates (%), 2011-2012 to 2017-2018
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Efficiency of ferry operations
Deck utilization level
Finding 7: While all three operators met their annual targets for deck utilization set out in the contribution agreements, the annual average deck utilization for the routes that BFL and NFL operates were approximately {ATIP removed} respectively, whereas the average annual deck utilization for the route that CTMA operates was {ATIP removed}.
Vessel space utilization is a concept used for a variety of purposes in marine transportation – e.g. vessel stability, efficiency in capacity utilization. Ferry vessel-space utilization is monitored to explore operational changes - such as adjustments to ferry schedules to optimize departures, loading, traffic processing at peak times, and other aspect of ferry operations.
The capacity utilization of a ferry vessel is measured though the utilization of its vehicle decks ('deck utilization'). It is calculated per sailing, based on vehicle-deck spots filled (in Automobile Equivalent Unit - AEU) divided by the total available AEU.
Deck utilization level varies throughout the operating period, typically higher in peak summer season and lower in off-peak seasons, including the shoulder seasons. While annual-average measures obscure the changing deck utilization levels within a year, they are used to monitor year-to-year changes. Between 2011-2012 and 2017-2018, the average deck-utilization of the three ferry services combined each year was within the range of 53% to 60% each year.Footnote 3 There are however continuing differences between the three ferries in deck-utilization. Historically, the deck utilization of the CTMA ferry was higher than that of the two other ferries. This is not surprising because the ferry service between Iles-de-la-Madeleine and Souris is effectively the community's trans-Canada highway. This difference continued throughout the review period, as seen in the annual-average deck-utilization levels of the CTMA ferry at 80%, the BFL ferry at 52% and the NFL ferry at 40%.
NFL had a deck utilization at an annual average of 40%. This level is quite low, compared to the deck utilization levels in other ferry services. For example, BFL maintained the deck utilization at above 50% in most of the years reviewed (Table 6); the deck utilization of CTMA in high season was typically in the range of 90% or higher. This difference is in part due to a highly seasonal nature of the NFL's route. NFL starts and ends service on the Wood Islands (PEI) – Caribou (NS) route using a single vessel service and then uses two vessels for approximately 4 months of the operating season, including peak summer season (overall, the service operates for eight months of the year). Traffic on this route is seasonal, driven by summer tourist traffic. When the summer season is over, deck utilization would drop to as low as 22% in November.
Although the three operators each met their deck-utilization targets set in the contribution agreements, it is noteworthy that BFL and NFL ferries operated with generally half or less than half of capacity – i.e., on average 52% and 40%. {ATIP removed}.
| 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | |
|---|---|---|---|---|---|---|---|
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
- Annual deck utilization was not available for 2009-2010 and 2010-2011.
- CTMA provides a range of deck utilization by season.
- BFL provides two sets of deck utilizations by two vessels – MV Princess of Acadia replaced by MV Fundy Rose in July 2015. The two vessels have different vehicle deck layout and capacity.
Chart 6: Deck utilization (%), 2011-2012 to 2017-2018
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Cost recovery
Finding 8: The three operators function with operational deficits, on average, in the range of 37% to 45% of route-operating costs, but meet cost-recovery targets. Far greater deficits are incurred from maintenance and repair costs of ferry vessels and terminals.
The operation of the ferry services has two sets of cost factors: (i) route-operating costs such as fuel, wages, insurance, administration and marketing; and (ii) repair and maintenance costs of vessels and ferry terminals. The profile of these costs was unavailable for this evaluation. The cost recovery data available for this evaluation are aggregated route-operating costs in relation to revenues – i.e. ratio of revenues to operating expenses.
Operating costs
Revenues of ferry operations are mostly from fares. Ferry operations may also have some residual revenues from other sources. The extent to which the operators meet the costs of ferry operations from revenues is measured in the ratio of revenues to operating expenses.
Table 7 shows these ratios over the nine years examined. Note that the operating costs factored in Table 7 represent only a small fraction of total costs of the ferry operations, as it excludes maintenance and repair costs of the vessels and terminals and other specified costs. {ATIP removed}
| 2009-2010 | 2010-2011 | 2011-2012 | 2012-2013 | 2013-2014 | 2014-2015 | 2015-2016 | 2016-2017 | 2017-2018 | |
|---|---|---|---|---|---|---|---|---|---|
| CTMA | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| NFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
| BFL | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} | {ATIP removed} |
{ATIP removed}
The variations in cost recovery as observed in Chart 7a are attributable in part to the service outage (thus revenue loss) associated with the aging ferry fleet. Given the reality of the aging ferry fleet, the ferry operations will likely continue to be in an unpredictable course for meeting route-operating costs with fare-box revenues.
Chart 7a: Revenues-to-operating expenses (%), 2009-2010 to 2017-2018
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Each year, TC set performance targets for operating-cost recovery ratios in the contribution agreements. {ATIP removed}. All three operators met or exceeded the targets set for cost recovery over this period.
{ATIP removed}
While the costs of repairs and maintenance of vessels and terminals are included in the contribution funding, they are accounted for separately from route-operating costs. As the owner, TC oversees the maintenance of the vessels and terminals through annual inspections and repair plans, and funds the related costs, as specified in the contribution agreements.
To understand to what extent repair and maintenance costs weighed on the Program funding, we examined the growth of contribution funding against the changes in operating costs, as well as the Consumer Price Index (CPI). As Chart 7b shows, compared to the rapid growth of the contribution funding, the changes of operating expenses-to-revenues ratios from the base year (2009-2010) were relatively stable over the last nine years. This appears to underline that the rapid growth of the contribution funding is attributable in part to the rising costs of maintenance and repairs of the aging vessels and terminals. The issue of aging vessels is discussed in greater detail in the next section.
Chart 7b: Growth of contribution funding and operating costs-to-revenues from the base year (2009-2010)
The figure displays line graphs over time. There are three lines. The lines each are denoted as CPI, Operating expenses-to-re venues, and Contributions. The graph examined the growth of contribution funding against the changes in operating costs, and the Consumer Price Index (CPI) from the base year (2009/10). The bars illustrate that contribution increased 1.80 times the base-year level. For the same period, the CPI increased less than 1.20 times the base-year level. Compared to the rapid growth in the Contribution funding, changes of operating expenses-to-revenues ratios from the base year were relatively stable, within the narrow range of 0.90 to 1.15.
Preservation of ferry assets
Finding 9: Two out of four ferry vessels demonstrated increased need for repair and preventative maintenance. Recently introduced measures to maintain the ferry assets could not be assessed as the results of these measures have yet to materialize.
Responsibilities to maintain the ferry assets are shared between TC and the operators. TC, as the owner of vessels and terminals, is responsible for capital investments which may involve replacements and upgrades. For example, TC replaced MV Holiday Island's main engine in 2013 and purchased the MV Fundy Rose (with an investment of approx. $45 million) in 2014 to replace the MV Princess of Acadia for the Saint John-Digby route. The operators carry out routine and major non-capital maintenance work related to wear and tear and safety of the vessels and terminals as per the contribution agreements. This would involve, for example: engine and gearbox overhauls, lube oil and filter replacements in the case of vessels; and maintenance of loading ramp, passenger walkway and other shore-based equipment in the case of terminal facilities.Footnote 4
The activities to maintain the ferry assets are integrated in the Program. TC conducts annual inspections of vessels, and the operators undertake the routine and major maintenance work identified in the inspection reports. The Program validates the completion of the required maintenance through the 'Maintenance and Repairs Plan and Status Report' and 'Certifications of Maintenance Repairs' (in the Schedules of contribution agreements) as part of the annual contribution-funding process. All work is to be done in accordance with the Canadian regulations and industry standards – i.e. maintenance to the standards of Classification Societies, International Maritime Organization, the Canada Shipping Act (2001) and regulations. The Program funds the eligible expenditures for repairs and maintenance, including out-of-water maintenance service (dry docking) for vessels.
Based on the Program information, two of the vessels are nearing the end of their useful lives. The oldest one being MV Holiday Island (48 years old; built in 1971), followed by MV Madeleine (38 years old; built in 1981).
Following the unexpected repairs to the MV Holiday Island in summer 2016 TC introduced new measures to strengthen its program oversight. These activities include: “(i) a new team to manage, prioritize and advance all vessel capital projects as well as oversee operator maintenance; (ii) a preventative and proactive approach to health and safety related capital projects; (iii) increased and regular on-site visits by technical advisor with action logs of required maintenance to be completed by operators; (iv) comprehensive third-party vessel surveys will be conducted at least once every four years in order to plan and prioritize future maintenance projects; and (v) clarifying expectations for operator maintenance, including new operator attestation in the contribution agreements that they are meeting the requirement for vessel maintenance.
The Program cost-pressures are to a large extent arising from the maintenance of the aging fleet. TC is making efforts to maintain these assets, while working on a long-term approach.
Safety of ferry services
Finding 10: Overall ferry operations were safe.
Ensuring the safety of Canada's transportation system is TC's foremost core responsibility. The Program sets out extensive safety requirements for ferry operations and maintenance of vessels and terminals in the contribution agreements. The operators are required to manage, operate and maintain the ferry services in a manner that is in compliance with the requirements of the Canada Shipping Act 2001. This entails meeting regulatory requirements for: vessel, machinery and equipment; operation of vessel; work of the Master and crew; emergency procedures; safety training of the crew; and on-board safety information for passengers. This is validated through TC's inspections and the operator's annual certification of compliance with the Canada Shipping Act 2001 and aforementioned certifications for vessel and terminal maintenance and repair. The operators also must notify reportable occurrences, incidents and/or deficiencies identified to the Transportation Safety Board. Based on the Program information, regulatory inspections were conducted; and safety issues were addressed through the agreement frameworks.
Reportable safety-related occurrences
During the evaluation period, the ferries had six reportable occurrences. Transportation Safety Board's data showed the following records:
| Name | Accident | Incident | Description |
|---|---|---|---|
| MV Holiday Island | 1 | - | Grounding (July 2009) |
| MV Fundy Rose | 1 | - | Striking (November 2015) |
| MV Confederation | - | 1 | Risk of collision (May 2017) |
| MV Princess of Acadia (replaced by MV Fundy Rose in 2014) |
1 | 2 | Grounding (November 2013) Total failure of machinery/technical systems (April 2009; August 2009) |
| Source: Transportation Safety Board, as of October 2018. A marine accident is an occurrence that involves serious consequences such as fatalities, injuries or sinking or grounding of the ship. A marine incident involves occurrences such as a person falling overboard, a risk of collision, or a total failure of the navigation equipment. For details, see Occurrence Classification Policy of the Transportation Safety Board. | |||
During the same period, there were a total of 100 occurrences involving ferries in the Atlantic Region (Chart 8). The six occurrences that the Program's ferries had accounted for 6% of the total occurrences in the Atlantic Region over ten years. The four ferries made, on average, more than 4,000 trips each year. Considering the level of service offered by the Operators, the ferry operations had relatively robust safety records.
Chart 8: Ferry occurrences in the Atlantic Region, 2009 to 2018.
The figure displays stacked bar graphs over time. There are nine stacked bars for nine years from 2009 to 2018. Each bar shows the number of incidents stacked on the number of accidents, the combined number indicating the total number of reportable safety occurrences. In 2009, there were 22 occurrences in the Atlantic Region, including 15 accidents and 7 incidents. Of these, 1 accident and 2 incidents were attributed to the Program's ferries. Between 2009 and 2018, there were a total of 100 occurrences in the Atlantic Region. The six occurrences were attributed to the Programs' ferries as provided in Table 8.
Conclusion
Evaluation and Advisory Services conducted this evaluation primarily to comply with the Financial Administration Act and Treasury Board Policy on Result (2016) requirement to evaluate at five year intervals programs that continuously provide annual transfer payments in excess of $5 million. We therefore adopted a calibrated approach. Our rationale was that the fundamental issue related to this program is well-known and well-documented, and our evaluation would not generate additional findings. In the last decade, the cost of delivering the program has significantly increased (nearly three-fold) almost entirely due to having to maintain an aging fleet of vessels and terminals owned by TC. There is a high degree of likelihood that these costs will continue to increase. It is also well documented that a long-term, sustainable approach to supporting these services is needed.
Against this backdrop, our evaluation focused mostly on the performance of the ferry services. We also examined the relevance of the program – as this is a Financial Administration Act requirement.
In terms of relevance, we reiterate the finding already flagged by the last two evaluations that the funding program does not align well with TC's policy framework, as two of the three services currently being funded are neither remote nor constitutionally mandated.
On the performance side, data shows the traffic levels have remained more or less stable during the evaluation period. Similarly, there has been little change in the traffic patterns of seasonal fluctuations. The ferries deliver agreed-upon crossings regardless of traffic levels and patterns. Deck utilization levels hence fluctuate throughout the years.
All three services operate with sizable operational deficits. As stated above, the ferries also deal with the costs of vessel maintenance and repairs which are significant and have been continuously rising. Despite these challenges, data shows that the ferries continue to provide reliable and safe services to the satisfaction of users.
Annex: References
- National Marine Policy, Transport Canada, 1995
- Transportation Infrastructure Performance Information Profile, Transport Canada, 2017
- Evaluation of the Ferry Services Contribution Program, Transport Canada, 2009
- Performance Review of the Efficiency of BC Ferries, British Columbia Ferry Commission, 2015
- Contribution Agreements
- A Long-term and Reliable Approach for the Eastern Canada Ferry Services (News Release), Transport Canada, 2017
- Ferry traffic data compiled by the Ferry Services Contribution Program
- Deck utilization data compiled by the Ferry Services Contribution Program
- Financial data compiled by the Ferry Services Contribution Program
- Ferry trips data compiled by the Ferry Services Contribution Program
- Client satisfaction data compiled by the Ferry Services Contribution Program