Comments on U.S. Coast Guard plan for 2017 increase in pilotage pay available for review

A coalition of industry representatives filed official comments challenging the U.S. Coast Guard’s proposed 14 percent increase in U.S. Great Lakes pilotage rates for the 2017 navigation season. The coalition consists of the American Great Lakes Ports Association, the Shipping Federation of Canada and the U.S. Great Lakes Shipping Association.

The Coast Guard adjusts pilotage rates annually through a formal federal rulemaking process. A rulemaking to set rates for the 2017 shipping season was initiated by the agency October 19. A 60-day public comment period was allowed. The proposed 14 percent increase follows a 24 percent increase in 2016 and a 20 percent increase in 2015. While the coalition filed a similar objection in 2016, the final rule rejected virtually all of the ratepayers’ concerns.

According to the coalition’s comments in USCG Docket ID: 2016-0268: “Since 2014, the Coast Guard has presided over rulemaking processes that have raised pilotage rates for the Great Lakes dramatically. Hourly pilotage rates, however, tell only part of this story of ineffectual government regulation of the U.S. pilotage monopoly. The governing statute directs the Coast Guard to set rates “giving consideration to the public interest and the costs of providing the services.” 46 U.S.C. § 9303(f). Coast Guard-imposed rates and charges for U.S. pilotage on the Great Lakes in this same period have, in some instances, tripled shipowners’ pilotage costs (as opposed to pure hourly rate). For ratepayers, these substantial increases have not been accompanied by commensurate benefits to the efficient movement of commerce on the Great Lakes. The current system is the worst of all regulatory worlds for the ratepayers—no choice of providers, government-imposed fees and costs that are arbitrarily out of proportion to the costs of providing the service and apparent lack of concern by the rate-setting authority for the impact of those costs on ratepayers.

“Shipping is a particularly cost-sensitive activity. International rate levels for all vessel types trading to the Great Lakes from abroad are currently depressed and have been for some time. Operators of foreign vessels entering the Great Lakes through the Seaway or U.S. vessels operating on register must take a pilot and there is no competitive option for obtaining pilotage services. The only hope for shipowners is that the rotation formula agreed to between the governments of the United States and Canada grants them the good fortune of receiving a Canadian pilot, thus saving the owner approximately 74 percent in pilotage costs. The negative economic impacts of enormous government-imposed pilotage costs extend beyond the vessel owners and operators to their customers, the shipper/cargo interests and the maritime communities that provide services and facilities that support shipping in the Great Lakes.”

For more comments from the docket, click here.

Maritime Editorial