Canada’s aging fleet of Great Lakes vessels could soon be getting a much needed upgrade.
The federal government has proposed eliminating a long-standing 25 percent duty on imports of certain types of foreign-built vessels, including Great Lake bulkers that carry grain.
If approved, it could lead to new vessels to replace some of the 35- to 40-year-old ships that now carry farmers’ grain through the St. Lawrence Seaway.
A decision is expected in spring.
Officials with both the Canadian Shipowners Association and the Canadian Wheat Board welcomed the proposal.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
“This is very good for farmers,” said Rick Steinke, director of logistics for the CWB.
“This will result in significant savings for shippers and producers.”
New vessels will be cheaper and more efficient to operate, with lower maintenance costs, improved technology, design and materials.
“We’re at the point now where it’s costing a lot of money to run these old ships and those costs get built into the rates paid by shippers and farmers,” he said.
“This will help the overall cost structure in the seaway.”
Bruce Bowie, president of the CSA, said the 25 percent duty is a “punitive tax” that has prohibited shipowners from ordering new vessels.
The duty was originally put in place many years ago to protect the Canadian shipbuilding industry, but the Canadian industry is no longer in a position to build lakers.
“We haven’t built a new ship in Canada since 1985,” he said.
“They don’t have the capacity or expertise to build the kind of ships we need.”
If the duty is removed, he expects there will be a number of orders for new vessels placed quickly with ship builders in China and South Korea.
He added that while it used to take three or four years to get a booking to build a new vessel, the downturn in the global economy means slots are available.
The cost of building a new laker ranges from $30 to $50 million. They generally take about 18 to 24 months to construct.
Steinke said in an interview in late December that while it’s likely the government will eliminate the duty, it’s not a sure thing.
“The probability of it happening is high, from what we’ve heard, but there are some dissenting voices from shipbuilders.”
He urged farmers to get in touch with federal politicians and express their support for eliminating the duty.
