Transport Committee on Sept. 13th, 2017

[Martin Fournier]

There was no consultation on Bill C-49.

As we mentioned, there were consultations about the economic agreement with Europe from the time when it was signed. Before it was signed, there was no national consultation with industry. We know that international companies were consulted, but not the industry in Canada. So we can say that there was not really any consultation in that respect.

Once the agreement was signed, a working group met for almost two years. Almost everyone involved took part. Certain things that we asked for on a number of occasions appeared in Bill C-30. However, the main request was to establish this single body, and that was completely forgotten.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you.

Jean, you mentioned four firms that are interested in operating in Quebec. Where are they based? What country are they based out of?

[Jean-Philippe Brunet]

It's all the same. They're Belgian and Dutch, and not only in Quebec. It's all over Canada.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Sarah, you were saying there's a bit of divergence in pay between a Canadian operator, a captain, $15,000, and a Dutch one would be $7,000. Can you paint a picture of your overall operating expenses? I know you were saying you are trained in firefighting. So can you give us an idea of the metrics that add to your operating costs?

[Sarah Clark]

Our crew costs are about a third of our costs. Fuel is another third, and everything else would be thrown into the last third.

So when I gave you the numbers, this is information that this industry has been sharing, we're actually giving you the more optimistic number around what's being paid. Jim is probably painting a better picture of what's actually paid. So when we say crew costs are about a third of ours, they're actually probably less than a third of ours in a lot of cases.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

My last question is do you have contracts outside of Canada?

[Sarah Clark]

At present we don't. We work across Canada.

[Jean-Philippe Brunet]

We do. We have contracts in the Dominican Republic, Mexico, and the British Virgin Islands.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

And then when you operate outside of Canada, are you still operating at Canadian standards?

[Jean-Philippe Brunet]

Yes, with Canadian crews.

[Sarah Clark]

Here's the problem for Canadian dredgers and the reason we're discussing reciprocity. We both have vessels that could work. Ours formerly went all over the world. Our problem is that our markets are so far from us. We can't work in the United States because of the Jones Act. For Jean-Philippe on the east coast, there was no opening of any European market for him other than under CETA, so we have to go to South America, Australia, or New Zealand.

Our mobilization costs are so high that it's very hard for us to get to other markets and be competitive, and it gives the companies a lot of time, because these dredgers are not cheap. They are very expensive to buy. Our cost would be between $30 million and $60 million for the size of vessels we have, and the ongoing annual maintenance is high. When you're planning your business, you don't want to just base it on the contracts as they arise in Canada, but it's very hard for us to be able to travel to other places as well.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you. I don't know whether there's any time left.

[The Chair, Liberal, Judy Sgro]

There remains two minutes.

[David Graham, Liberal, Laurentides—Labelle, QC]

I can start with that.

I've heard on a couple of occasions today that ships are more environmentally friendly. I would like to know whether you could back that up, especially given the use of bunker oil.

[James Given]

I'll talk about the Canadian domestic fleet. For our domestic fleet there has been a newbuild program ongoing now for a few years. I look at Canada Steamship Lines, or at Algoma Central, or Groupe Desgagnés. They have all updated their fleets, and they have all gone to cleaner-burning fuel. They are all now looking at fitting some of their older tonnages with scrubbers. It's a known fact that is backed up by I think everyone when it comes to transportation that ships are the more environmentally friendly way to transport cargo.

[David Graham, Liberal, Laurentides—Labelle, QC]

You have expressed concern that flagged ships from all over the world are going to come to move empty containers. These are non-revenue moves. Companies are only allowed to move their own containers. You can't show up and move somebody else's containers. Is that correct?

[James Given]

When I look at the language, I don't know whether that has been clarified yet when it comes to sharing agreements for charter, for ownership, for all of those different things. You have to get a really good explanation of what “non-revenue basis” means. They still talk about $400 and $500 and still talk about certain other things, so you have to dig a little deeper.

Foreign ships always come in. They come in and out. When it comes to import and export, this has been happening since Christ was a cowboy, and it will continue to happen. But those are different movements. They come in, they don't do any domestic trade, and then they go back out.

What they want to try to do now is probably pick up something in the middle, because they are not going to leave the ship here: the season's too short; the seaway closes; they have to get the ship back out. They want to try to pick something up in between their movements, in order maybe to pay for fuel or do something.

What's “revenue”? Is revenue covering costs? Is revenue not covering costs? Maybe you can answer that one for me, because I don't know.

[David Graham, Liberal, Laurentides—Labelle, QC]

I would, but they don't give me any time.

[The Chair, Liberal, Judy Sgro]

Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much. I hope that's not any of my time.

I have a few questions that have come to mind throughout some of your testimony. They may not be directly linked one to the other, but I am going to follow up on something my colleague Mr. Sikand asked regarding labour costs and the wages that are paid.

I guess I've always believed that we have similar safety standards and labour costs to Europe's. Can you provide any insight for me as to why those wages are so different? Why does a Canadian captain earn $15,000 and someone from Europe earn $7,000? How can they operate so cheaply?

[Martin Fournier]

I can give you a simple example. A study conducted two years ago by Ernst & Young and Innovation maritime gave the example of a Danish crew that could, under the economic agreement, come to Canada to engage in cabotage. The Danish vessel could have a Danish captain and a crew from the Philippines, Ukraine, or wherever, because the flag on the vessel allows it. In Canada, the crew would have to be completely Canadian. So it is impossible to compete with them. The Danish captain might have a level of remuneration that is comparable to what is offered here. But the rest of the crew would be paid under different conditions. It is as simple as that.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Earlier today we heard that most empty shipping containers are moved from port to port by train or truck and not by sea. Would you confirm that? If this is the case, how does Bill C-49 impact Canadian seafarers' jobs?

[Martin Fournier]

Yes, most empty containers are moved by train, not by ship. The problem with Bill C-49 is that it is widening the crack that was opened with the economic agreement with Europe. Even before that agreement, we had discussions and we were asked what we thought about the possibility of allowing empty containers to be shipped on foreign vessels. We said no to that. It was all forgotten, then the question came up again with CETA. Then there was the agreement on shipping empty containers, on bulk shipping, on loaded containers between Montreal and Halifax, and on dredging. Now there is talk about the shipping of empty containers being open to everyone. In some ports, questions have been asked about the fact that it is just between Montreal and Halifax and why it is not possible for other ports, like Quebec City and Sept-Îles. In addition, other countries are asking why shipping empty containers would not be open to them as well, now that it is open to the Europeans.

As you can see, the crack is being opened, one change at a time. That's exactly what is happening. That is what we were afraid of at the outset when the issue of transporting empty containers was raised for the first time.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I have another question that came to mind. Maybe you've already touched on this and I missed it. Are there tangible safety concerns that you have for allowing expanded cabotage?

[James Given]

Absolutely.

As I said earlier, I was fortunate enough—and I still am—to be involved with the ITF and to inspect foreign-flagged vessels that come into Canada and travel around the world. There is absolutely no comparison. You have 5% of the owners who run foreign-flagged vessels who are good owners—I'll stretch it to 8%—and then you have that great big group who aren't, and there is no control.

You have a ship flagged Panama that never goes to Panama. Who's inspecting it? Who's making sure that the safety regimes and everything are in place? If the ship comes to Canada, port state will control for Canada, thank God. Transport Canada, which does a great job, will go down and inspect it under the international conventions. It may still not be up to the Canadian standard, but it may pass the international standard.

If you look at the database for Transport Canada on ship inspections, you will see a list hundreds of ships long and how they've been detained when they come to Canada for no firefighting, no pollution control, no food, no this, no that. They get caught when they come here, but flagged Panama, flagged everywhere, there's no inspection regime; the ship never goes there.

I'm not a geography major, but I know a ship flying the Marshall Islands flag has a heck of a time getting to Reston, Virginia. The controls aren't there. I make light of it and I shouldn't, because it's a very serious situation.

In Australia just recently, there was a foreign-flagged vessel running in their cabotage with two crew members dead, because they couldn't get medical care. It happens all the time, all around the world, and I don't think it's something we want to be a part of.