Chair and CEO Scott Streiner addresses the Association of Canadian Port Authorities' on September 8, 2016
Speech delivered by Scott Streiner, Chair and CEO, at the Association of Canadian Port Authorities' annual conference in Thunder Bay, on September 8, 2016
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I'm pleased to have the opportunity to speak with you today about the roles the Canadian Transportation Agency plays in helping to keep marine transportation running smoothly, and the steps we're taking to modernize our toolkit.
Canada's history, prosperity – indeed, some would say, its very existence – are inextricably linked to marine transportation.
The reasons start with geography.
Our vast country is surrounded by three oceans. Our coastline is the longest in the world.
Transporting goods and people across water – with ports and harbours as the points of connection between land and sea – has been vital to Canada at every stage. Think of:
- indigenous peoples moving and trading across lakes and rivers for millennia before Europeans first ventured across the Atlantic Ocean;
- York boats carrying the furs traded between Indigenous and European communities;
- the million plus immigrants who arrived at Pier 21 in Halifax to start a new life; and
- the development of the St Lawrence Seaway – the longest deep-draft navigation system in the world.
Today, massive ships have replaced canoes and, in place of pelts, millions of tonnes of cargo – from canola oil to cars, coal to computers – flow through our ports every year.
And just as the marine transportation sector and ports have developed in response to Canada's evolution as a country, the Canadian Transportation Agency has developed in response to the needs of the transportation sector.
The Agency was established in 1904 as the Board of Railway Commissioners, making us Canada's longest standing independent tribunal and regulator.
Throughout its 112 years of history, the Agency has evolved in response to the economy, national priorities, and technologies.
Today, the Agency has three core mandates:
- to keep the national transportation system running smoothly and efficiently;
- to protect the fundamental right of persons with disabilities to accessible transportation; and
- to provide consumer protection for air travellers.
To deliver these mandates, the Agency has three types of tools at its disposal:
- setting ground rules through binding regulations and voluntary guidelines, codes of practice and interpretation notes;
- resolving disputes that arise between transportation service providers on the one hand and their clients and neighbours on the other; and
- providing information on the national transportation system and the services we offer.
The Agency has several specific roles related to marine transportation.
One that will be familiar to many of you is grounded in the Coasting Trade Act, which sets out limits and conditions for the provision of marine transportation services in Canadian waters with a foreign flagged vessel.
As part of the process for reviewing applications under that Act, the Agency will determine if a suitable Canadian vessel is available – or in the case of passenger ships, if an identical or similar marine service is available.
The Agency receives about 100 coasting trade applications each year. About 5 of those applications will generate an offer of a Canadian vessel, requiring an Agency determination.
We also have a role to play under several laws in resolving marine disputes, including some related to fees charged by port authorities.
Complaints about user fees can also involve:
- pilotage authorities;
- the St. Lawrence Seaway Management Corporation;
- the Seaway International Bridge Corporation; and
- the Jacques-Cartier and Champlain Bridge Inc.
In essence, the purpose of the Agency's dispute resolution mandate in each of these cases is to ensure that fees charged by authorities with significant market power are fair and reasonable while still allowing them to be self-sustaining.
Finally, the Agency has responsibilities that relate to the movement of petroleum in a state of emergency and to shipping conference agreements.
Trends in marine transportation
A range of forces of change are affecting marine transportation and your operations and, by extension, ours.
Sometimes the innovations that generate change are astonishingly simple – innovations like shipping containers.
As you may know, we have a frustrated trucker to thank for containerization. As Malcolm McLean waited for cargo from his truck to be loaded, piece by piece, onto a ship, it occurred to him: this is a waste of time and money.
Back then, a cargo ship could spend as much time in a port being loaded and unloaded by workers as it did travelling to its destination.
Eventually McLean bought a shipping company and the first ship carried 58 containers from Newark to Houston... just 60 years ago. It cost only 16 cents per tonne to load, compared with $5-6 per tonne for a standard ship with loose cargo.
It was a change that led to lower costs and greater efficiency. And it enabled the just-in-time production and elaborate global supply chains that are now taken for granted.
In fact, some research suggests that the simple shipping container has driven globalization more than all trade agreements from the past 50 years.
Today's largest ships carry over 19,000 TEUs.
The Panama Canal expansion has just been completed, doubling the capacity of the canal and potentially changing how cargo moves around the world.
Loading and unloading containers is increasingly handled by remote crane operators sitting in an office and using joysticks to control as many as three cranes at once.
These developments have contributed to shorter dwell times, faster delivery, and greener operations – all of which have both driven and been driven by the globalization of production and trade.
New trade deals, such as CETA and, if it is ratified, the Trans-Pacific Partnership, will reinforce these trends. By some estimates, CETA will translate into another 250,000 containers per year in Canadian ports. And it will modify the cabotage limitations under the Coasting Trade Act also by allowing EU-registered and -flagged vessels to move empty containers between Canadian ports on a non-revenue basis, transport international cargo between the ports of Montreal and Halifax, and provide dredging services
But the winds of change are not all blowing in one direction.
The Baltic Dry Index, which tracks the cost of shipping bulk commodities and is seen as a barometer of economic health, hit record lows earlier this year. It has since partially recovered, but that dip reflects the current softness and unpredictability of global economic activity generally, and marine transportation specifically.
An aside: I learned recently that the name of the index reflects its history. The Baltic Dry Index is named after a coffee shop in London where merchants and ship owners would gather. The coffee shop was known as the Virginia and Baltic, reflecting a couple of the more valuable goods traded at the time – tobacco from Virginia and tallow from the Baltics.
Marine shipping has always ebbed and flowed with international commerce, and anticipating future needs can be a mug's game. The world fleet doubled in size between 2010 and 2013, but as the global economy remained sluggish, demand didn't rise at nearly the same rate.
Scrapping ships has been one solution. In other cases, rates have been slashed so low that they produce "zombie ships" whose returns are just enough to cover the interest on operators' debts, but not capital investments.
To cope, marine shipping companies have consolidated or established far-reaching alliances, taken on massive debt… and in some cases, shut down. Hanjin's entry into receivership just last week was the latest, and a particularly worrisome, symptom of distress in the global marine shipping industry.
So we are looking at a global shipping industry that faces tremendous opportunities – in the form of new ships, new markets, and cutting-edge technologies – and serious tests. We will all need to keep a careful eye on these developments.
Meanwhile closer to home, Canada's ports are increasingly expected to operate with high levels of transparency, demonstrate environmental sustainability, and engage local communities – even as they tackle issues around aging or inadequate infrastructure.
These challenges, of course, are not only financial, but also social.
Many cities developed around, and still depend on, the ports you run. But as Canadians' traditional deference has given way to greater assertiveness, your clients and neighbours have become more vocal and don't hesitate to express concerns about issues like rates, noise, pollution, and in the case of Indigenous peoples, land and consultation rights. Responding effectively is essential to ports' continued success and the country's prosperity.
All these trends – from the expansion of vessels to the decline in rates to expectations around accountability – have implications for public policy and administration. The Agency needs to keep pace. Let me share a few of the ways we're doing so.
Responding to change
One of my priorities as Chair and CEO was to make sure that the Agency is ready to meet the challenges before it.
On April 1, I implemented a new organizational structure with three aims: strengthening capacity in key areas, improving efficiency, and focusing on delivery.
- gathered functions that are more strategic in nature into a new Analysis and Outreach Branch;
- clarified the division of roles between our two operational branches: one of which focuses on regulatory determinations and compliance, the other of which does dispute resolution; and
- created a specialized team within the Dispute Resolution Branch that focuses on facilitating and mediating rail- and marine-related disputes.
These adjustments will help make the Agency agile and engaged – qualities that are key to our ability to deliver our mandate effectively in a fast-moving world.
Another area of change may be on the legislative front.
As you know, a report on the Canada Transportation Act was tabled last year. The Minister of Transport is reviewing the recommendations and completing discussions with stakeholders.
The Agency is ready to provide the Minister and Parliamentarians with whatever information and analysis would be helpful.
Of course, as the organization with primary responsibility for administering the Canada Transportation Act, the Agency has some observations on what's currently working effectively and what isn't.
Among the steps we think are worthy of careful consideration, based on our experience, are those that would give the Agency the ability:
- to look into issues on its own motion, if there's evidence of a problem;
- to make general orders to resolve systemic issues across a sector and ensure a level playing field; and
- to collect, analyze, and more widely share performance data.
Regulatory Modernization Initiative
But it's not the only legislation that needs to be periodically reviewed. The same is true of regulations. That's why we're taking action to look all the regulations that the Agency administers, some of which haven't been updated for two decades of more.
Our Regulatory Modernization Initiative aims to ensure:
- that regulatory provisions are clear and consistent with current business practices;
- that the regulatory obligations imposed on parties are only as heavy as needed to achieve public policy goals; and
- that updated regulations will allow us to easily identify and correct instances of non-compliance
Our timelines are ambitious: we intend to complete consultations with stakeholders and the public and draft new regulations in 2017. We intend to have the regulations approved and in place in 2018.
Most of the regulations we're examining relate more directly to the air and rail sectors than to marine transportation. But some of the regulations touch some of your operations as well – such as those that cover accessibility requirements where passengers pass through your facilities.
In addition, other stakeholders could call for new regulatory provisions covering marine transportation. And of course, broader changes affecting the national transportation system may have implications for ports, even if those effects are indirect.
So I encourage you to follow our modernization initiative and provide your input on regulatory reform options.
Providing mediation services
While I'm being encouraging, I also want to encourage you to consider using our dispute resolution services.
The Agency has a range of options for resolving disputes related to the national transportation system.
One is adjudication. During the adjudication process, parties present arguments and evidence to a Panel of Agency Members. The Members are like judges. They'll make a decision that's final and binding, and have all the powers of a superior court.
Like a court case, adjudication can take months, involve significant cost, and affect relationships. This doesn't mean that adjudication doesn't have a place, but it shouldn't necessarily be a first resort where parties have a disagreement.
Less formal, more collaborative approaches can help resolve disputes more quickly and creatively. Mediation is potentially one of our most powerful (but currently under-utilized) tools.
Mediation could, for example, be used to address an issue between a port and a railway company, with the agreement of both sides.
The Agency's expert, neutral mediators assist in the search for a mutually satisfactory solution that meets the needs of each party and reduces frictions. Their services are free of charge and all discussions in the context of a mediation are strictly confidential – even if a dispute remains unresolved and proceeds to adjudication.
Engaging with stakeholders
Not everyone knows that the Agency provides these sorts of services.
That's why we're making efforts to be more visible. We want to ensure that stakeholders, and the public, know the Agency exists and is there to help.
We're open for business and we're committed to doing our job in a way that's impartial, evidence-based, innovative, and engaged.
Like Malcolm McLean waiting impatiently for his cargo to be loaded onto ships, you no doubt have insights into issues with the national transportation system.
If you have ideas on how we at the Agency can keep the system functioning smoothly, I want to hear them.
I hope you'll provide input on how we can modernize our regulations. And I hope you'll contact us on any matters of concern to you.
Together, we can ensure that marine transportation continues to thrive in Canada – even through turbulent times – and to contribute to the prosperity and well-being of Canadians. Just as it has since the first birch bark canoe was placed in Canadian waters, perhaps not far from here.
Thank you for your attention.