Summary of stakeholder engagement – Ottawa, Ontario

Pilotage Act Review Roundtable – Ottawa, Ontario

November 9, 2017 – 9:00 am – 4:45 pm

• Summary of Discussion
• Governance
• Safety
• Labour
• Tariffs and Economic Concerns
• Enforcement

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:

Governance

• It is necessary to agree on the purpose and principles of the Act. For example, whether it should include concepts of independence, safe navigation, and local knowledge, as well as, competitiveness, a viable, effective and economical transportation system similar to other marine legislation.
• Many issues and problems have been solved within the scope of the existing framework.
• Safety and efficiency are part of the existing dual mandate. All stakeholders agree that safety is important. Some do not feel that efficiency has received enough focus within the existing structure. There are times when the pilots and industry have come together to work and find productive solutions to existing problems.
• As shipping operates in a global industry, some stakeholders
  • Spoke about the need to improve efficiency and manage costs,
  • Felt:
    • the current pilotage system cannot control costs and does not meet some users’ needs.
    • the pilot corporations operate under a ‘for profit’ unchecked model.
  • Compared costs i.e., cost of pilotage versus crew, masters. 
  • Made reference to in the costs of pilotage increasing much faster than inflation.
• Marine pilotage needs greater transparency and accountability.
• Legislation should provide a maximum amount of flexibility to achieve public policy goals. For example, to be able to respond quickly to the rapid pace of technological change.
• Stakeholders sense that any attempts to amalgamate would reduce regional responsiveness.
• Most accepted that amalgamation is not cost driven.  While there would likely be some savings, the main driver is to provide consistency in approach, with standardized policies, procedures and best practices.
• One way to achieve this standardization would be to include more matters within the scope of the General Pilotage Regulations. This would allow:
  • the Minister to regulate in areas that require standardization, and
  • the Authorities to regulate in certain areas which require regional responsiveness.
• Since it could be difficult to separate the regulatory and service delivery functions, another idea to consider is to develop national standards.
• Some suggested analyzing the differences between the various regulations and operating standards. One authority proposed to take this on and make it available in a few weeks.
• While some felt Transport Canada being responsible for the regulatory function would ensure objectivity; others felt Transport Canada doesn’t have the capacity to undertake this function.
• One remaining questions is whether the Board of Directors should reflect a more commercialized structure. Section 116 of the Financial Administration Act addresses potential of conflict of interest, but relates only to active contracts or direct business with the Authority. Reviewing other legislation could provide examples for modernization.

Action Item – Undertake additional work related to a gap analysis for the current regulatory framework.

Safety

• The number of incidents has greatly declined from 1998 to 2016, despite a significant increase in vessel size. The current pilotage safety record is excellent.
• Technology has helped modernize the industry. For example, there are now post-panamax ships that come into port, which would have been impossible in the 1990s.
• Double-pilotage has evolved, as the requirements used to be in place earlier in the winter season. The second pilot often manages interactions between ships, and some stakeholders expressed that this is the sole purview of the pilot on board.
• Each Authority has developed fatigue standards or rules across the country, and there was some discussion on the need for different standards.
• Some points of discussion included:
  • the safety record of those that hold a pilotage certificate is equal to or better than the safety records of licensed pilots in the Great Lakes region.
  • in some areas, the Authorities have made significant efforts to improve the certification program.
  • The Great Lakes Pilotage Authority-type certification program, which is based on an approved training program and onboard training and evaluation should be expanded to other regions and is a better test of competency and given its proven safety record. 
  • Certification programs cannot be applied on the West Coast.
• Improving risk assessments could address concerns about objectivity.
• Transport Canada could oversee an overall navigation risk assessment approach that would consider all risk mitigation measures, and address potential conflicts of interest.
• The United States Coast Guard may have some risk assessment models that could be useful in a Canadian context.

Labour

• An unrestricted pilot’s license requires about eight years of training and experience. Call-backs (overtime) can drive the costs up, but point to pilots’ goodwill and strong shipping.
  • Stakeholders discussed that the shipping industry loses approximately 15-20 masters per year to pilotage recruitment efforts. Pilotage can be seen as an attractive profession as it provides mariners with the opportunity to be close to home. The salary disparity between pilots and vessel crews make retention of masters and senior navigation officers an enormous challenge.
• One idea was advanced - compensation could be made available to the industry.
• The group discussed the idea of cadet programs, which would allow an applicant to spend 10 years in shipping, and then move to pilotage in a structured manner. This would not deprive the industry of the longer-term employee. Many countries are struggling with recruitment issues as there are few pilotage candidates on the horizon given projected shortages in shipping.  There was discussion of whether there could be some provision in the legislation to allow for the development of these types of recruitment programs.
• Some proposed that shipowners/companies should be able to use their own officers who hold pilotage certificates and deploy them throughout their fleets as needed, not restricted to a particular vessel. There was discussion regarding whether this would be introducing competition within the pilotage system.
• Finally, some stakeholders feel that the pilot service contracts should be made publically available. There was discussion on what should/could be in a contract or labour agreement.  Contracts/labour agreements can cover many areas that conflict with regulatory requirements, have substantial cost and operational impacts on industry. One solution identified for addressing this was to include a provision that didn’t allow such areas to be covered in contracts. There was discussion and some consensus that pilot corporations should be accountable, transparent and with greater oversight. 

Tariffs and Economic Concerns

• Pilots are conducting significantly longer assignments, and have seen a 36% increase in the amount of cargo moved, which signifies that pilotage makes an important contribution to the Canadian economy.
• Modernization is a good way to control costs. Pilots have ideas with regard to potential cost-controls.
• The way that the legislation is written does not encourage costs savings or modernization, as all of the costs are passed through to the shippers through the tariff.
• In contrast, there have been instances where the Authorities have effectively returned a surplus to the industry through no or limited tariff increases.
• Some stakeholders see the Act as allowing modernization. In the some areas, the pilots have been able to increase the number of assignments per year. In this regard, the Act does allow the necessary modernization to occur, and support technological advancements that allow an increase in assignments. The group clarified that the concept of modernization did not extend to shore based pilotage at this time.
• With regard to centralizing services as a cost control measure, dispatch services used to be centralized and this was changed as it was ineffective. Lessons learned should be considered carefully before making firm decisions to centralize shared functions such as dispatch.  
• The tariff formula could potentially be revisited, but it is not clear whether this would yield any cost reductions. The tariff formula has a strong objection mechanism through the Canadian Transportation Agency and this was seen as an important aspect of the system.
• There is always competition between shipping and other transportation modes. The current research contracts would not provide an accounting of all of the costs in the supply chain. It is difficult to get this information as it is not widely distributed due to commercial sensitivities.

Enforcement

• Fines must be meaningful. At the current level, the fines in the Pilotage Act are not viewed as a deterrent as they are often lower than the tariff.
• There was some discussion related to raising the liability amount, but no consensus reached as it may result in increased costs to industry if pilots have to carry more insurance.  
• A suggestion was made that the ability to place a lien on a ship for unpaid tariffs could be considered under this theme.

Other issues: Suggestion for more roundtables with this group.  There are specific trends that will occur within the next 10-20 years, and this group would be well-placed to discuss these challenges. If there are more meetings, a suggestion was made to organize the issues into three tiers – housekeeping; consensus issues; and other issues that may require more study and efforts.