Thank you. Good morning, Madam Chair, and thanks for the opportunity to appear before the standing committee on Bill C-49, the transportation modernization act.
My name is Karen Kancens. I'm here with my colleague Sonia Simard on behalf of the Shipping Federation of Canada, which is the voice of the owners, operators, and agents of foreign-flag ships that carry Canada's imports and exports to and from world markets.
Our members represent more than 200 shipping companies whose vessels make thousands of voyages between Canadian ports and ports overseas every year, carrying hundreds of millions of tonnes of commodities, ranging from dry bulk commodities such as grain and coal, to liquid bulk such as crude oil and oil products, to containerized consumer and manufactured goods.
These ships play an essential role in the Canadian economy by facilitating the movement of Canada's international trade, and they do so safely, securely, and efficiently day in and day out. Indeed, ocean shipping is one of the world's most highly regulated industries, and foreign-flag ships are subject to a stringent regime of safety, environmental, and crewing regulations when sailing in Canadian waters, which are enforced by Canadian authorities as part of Canada's port state obligations.
Like many of our colleagues who have spoken before us, we also have a strong interest in Bill C-49's rail provisions, as we believe that the development of a more efficient rail freight system will have a positive impact on all of the elements of the logistics chain, from carriers in the rail, marine, and trucking sectors, to ports and marine terminals, to inland distribution centres and warehouses, and beyond.
That being said, we'd like to focus our comments today not on Bill C-49's rail provisions but on its maritime provisions, which we believe will also have a beneficial impact on the fluidity of the trade chain overall.
We're especially interested in clause 70 of Bill C-49, which proposes to allow all foreign-flag ships to reposition their empty containers between Canadian ports on a non-revenue basis, which is an activity that has been closed to them up until now due to the prohibitions of the Coasting Trade Act.
It's worth just backtracking a bit and noting that this isn't a new or a revolutionary concept. It's actually something that our container carrier members have been asking for and that our association has been advocating for over the last decade.
Indeed, discussions on this subject between the government and our industry had advanced to such a degree that, in 2011, Transport Canada was on the verge of introducing an amendment to the Coasting Trade Act to allow for the repositioning of empty containers by foreign-flag ships. However, those discussions were subsequently placed on hold when empty container repositioning became a negotiating item in the CETA between Canada and the European Union.
Now that those negotiations are over, Bill C-49 essentially seeks to complete the discussions that were placed on hold in 2011, when we had reached general agreement, including from some domestic ship owners, that empty container repositioning should be open to all ships regardless of flag or ownership.
Why is this issue important? It's important because a significant aspect of the container shipping industry involves moving empty containers from locations where they are not needed, or where there is a surplus, to locations where they are needed or where there is an exporter who needs empties so that he can load them with cargo for an overseas customer.
Because up until now the Coasting Trade Act has prohibited foreign-flag carriers from using their own ships to carry out this activity, they have had no choice but to employ alternative solutions such as moving the empty containers by truck or rail, or more commonly, importing them from overseas. However, none of those solutions represents the most productive use of the carrier's transportation assets, and all of them come at a price not only for the carrier but also for the exporter in the form of a less cost-efficient transportation option, as well as for the logistics chain in the form of reduced fluidity and overall efficiency.
The maritime provisions of Bill C-49 would address these issues by giving carriers the flexibility to use their transportation assets, their ships, and their empty containers in the most productive and cost-effective manner possible for the ultimate benefit of everyone in the supply chain.
Although we very strongly support Bill C-49's provisions on the repositioning of empty containers, we have a concern that the actual wording the bill uses to define the party that is eligible to reposition empty containers may be too narrowly focused and that this may make it difficult to achieve the full benefits of liberalizing this activity.
More specifically, subclause 70(1) of Bill C-49 provides that the party that may reposition its empty containers is the owner of the ship, which is defined in subsection 2(1) of the Coasting Trade Act as the party that has the “rights of the owner” with respect to both the ship's possession and its use. We see a potential problem in how this definition will be applied in cases involving vessel-sharing agreements, in which a number of container carriers enter into an agreement to share space on one another's ships and which are used extensively in the container shipping industry.
It's not clear to us at this point how the partners in such an agreement would have the rights of the owner with respect to the ship's possession other than in cases where it's their ship that's being used to reposition the empty containers. Indeed, depending on how the ships in a given vessel-sharing arrangement are allocated, a ship owner may only have the ability to reposition its empty containers on every fourth or fifth voyage, which would reduce the significant potential benefits of liberalizing this activity.
We believe that if Bill C-49's provisions on the repositioning of empty containers are to be fully and effectively implemented for the benefit of all parties, then it must be made clear that any partner in a vessel-sharing agreement may reposition its own empty containers, as well as those of the other partners in the agreement, using any of the vessels named in that agreement. Although there may be various ways of achieving this, including through additional guidance and clarification from Transport Canada, it's our view that the optimal solution is to amend subclause 70(1) of Bill C-49 to clearly indicate that the party that is eligible to reposition empty containers encompasses not only the ship owner, as defined in subsection 2(1) of the Coasting Trade Act, but all the partners who share operational control and use of that vessel as part of a larger vessel-sharing agreement.
We believe that the introduction of such an amendment represents the best means of ensuring that Bill C-49's maritime provisions are implemented in a way that reflects the realities of how the container shipping industry operates, and this for the benefit of all stakeholders, from shipping lines to Canadian importers and exporters to the supply chain overall.
We thank you for your attention and look forward to any questions you might have.