Polar Shipping: The ethical case for shipping in the Arctic
Resources: A partnership in potash
Dry Bulk: Insight from CN on Canada’s dry bulk market
BC SHIPPING Commercial Marine News for Canada’s West Coast.
Volume 8 Issue 4
NEWS
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May 2018
Tanker Moratorium Can Eagle Spirit succeed where Northern Gateway failed?
Industry Insight Peter Amat, Pacific Basin Shipping (Canada) Ltd.
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CONTENTS May 2018 Volume 8 Issue 4
NEWS
7
EDITOR’S NOTE
8
IN BRIEF
12
INDUSTRY INSIGHT
18
By Jane McIvor
Industry traffic and news briefs A pulse on the dry bulk market Peter Amat, General Manager, Pacific Basin Shipping (Canada) Ltd. Peter’s experience puts him in good stead to provide an overview of the West Coast dry bulk market as well as the bigger picture of the West Coast shipping industry.
HISTORY LESSON
Vestige of the North Preserving the St. Roch By Lea Edgar
Cover Story
21 RESOURCES
26
A partnership in potash By Amanda Schuldt
24 SHIPPING
LEGAL AFFAIRS
40
HAZARDOUS GOODS
26 29
DRY BULK
Insight from CN on Canada’s dry bulk market With Doug MacDonald
INTERNATIONAL TRADE
Are Canada’s businesses sufficiently prepared for trade disruption? By Candace Sider
32
SHIPPING FEDERATION Balancing priorities By Michael Broad
33 PORTS 34
Interprovincial transport of oil Wine or wine not? By Karissa Kelln It’s in the can Containerized cargo: Hazardous and noxious substances risk By K. Joseph Spears, Kiley Sampson and Darryl Anderson
44 ENVIRONMENT
GreenTech 2018 makes underwater noise a key focus By Manon Lanthier
46
Vancouver welcomes NORDEN
Nanaimo Auto Terminal planned for Nanaimo Assembly Wharf
12
38
POLAR SHIPPING
A polar paradox The ethical case for commercial shipping in the Arctic By Jeffrey Smith
49 FINANCE
Protecting your business from fraud By Andrew Kostiw
51 SAFETY
Fast patrol craft reaching for better boat handling
52 SAFETY
Canadian Lifeboat Institution Delta Lifeboat has an early start on activity
52
TANKER MORATORIUM
Can Eagle Spirit succeed where Northern Gateway failed? By Captain Stephen Brown
On the cover: The Daiwan Champion (photo: BC Shipping News); above: grain being loaded (photo from the archives of Dave Roels); right: the Delta Lifeboat assisting with this year’s herring fishery (photo courtesy John Horton); left: Peter Amat
May 2018 — BC Shipping News — 5
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Proud member of: 300 – 1275 WEST 6TH AVENUE, VANCOUVER, BC V6H 1A6 T: 604-893-8800 / F: 604-708-1920 E: JANE@BCSHIPPINGNEWS.COM 6 — BC Shipping News — May 2018
International Sailor’s Society Canada
EDITOR’S NOTE
Photo: Dave Roels
A powerful roster of writers
T
o say I’m excited about this issue of BC Shipping News would be an understatement. The writers that are featured in this edition as so powerful, I can’t even begin to tell you how impressed I am with the content and the knowledge these leaders in the industry possess. While I have become accustomed to receiving high-quality submissions from Captain Stephen Brown, infused with a deep understanding and insight of the issue at hand, his look at the tanker moratorium in general, and Eagle Spirit Pipelines in particular, is simply the best he’s written for the magazine. Not to be outdone, Joe Spears, Darryl Anderson and Kiley Sampson tackle an issue that begs for further follow up as the industry comes to grip with the reality of
shipping hazardous and noxious substances. While environmental groups focus on the threat of oil spills, wait till they realize what else is moving around the world without much notice. In terms of knowledge of the dry bulk sector, Peter Amat (Pacific Basin) and Doug MacDonald (CN) are in a league of their own. Both know this sector inside out and both were more than willing to share their wisdom with readers. Another article that takes on a big issue is that of Candace Sider (Livingston International). Candace has written for BC Shipping News in the past but she has truly outdone herself with this article, taking on the weighty and fluid issue of whether Canadian companies are prepared in the event of a trade disruption. It’s a must read if you are at all interested in the potential
impacts global trade agreements can and will have on your business. And then there is Jeffrey Smith’s article which promises to make you take pause for consideration. Jeff posits that commercial shipping in the Arctic should be carefully considered as it would reduce transit distances and result in less emissions. The logic is sound and is backed by an argument that only one with as much knowledge as Jeff could write. Just because I’ve run out of space, doesn’t mean that the articles from our other writers are any less interesting or relevant. Each has gone above and beyond in their efforts. Seriously, I think this is one of the best issues we’ve ever pulled together. I hope you enjoy. — Jane McIvor
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May 2018 — BC Shipping News — 7
INDUSTRY TRAFFIC
BV extends digital portfolio with ‘PSC Ready’
B
ureau Veritas has announced the release of ‘PSC Ready,’ a digital application to help ships’ crews to prepare for port state control (PSC) inspections. The app is freely available to all in the industry for use on mobile, laptop and desk top applications. This latest application adds to the extensive portfolio of BV’s digital applications meeting clients’ needs BV’s ‘PSC Ready’ assists ship managers and their crews in planning and ensuring readiness for port state control inspections. ‘PSC Ready’ is a cloud-based and secure application, downloadable for both IOS and Android. The application helps ensure that ship owners are able to focus on all the requirements needed to be ready for PSC inspections. The benefits of ‘PSC Ready’ include: • Helping to ensure compliance with applicable requirements • Enhancing ship maintenance by developing crews’ awareness of safety,
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• Training crews to detect, correct and avoid deficiencies • Access to statistics, data and news on PSC developments • ‘Check offline, report online’ functionality recognizing that data connections cannot always be available on-board The application enables PSC awareness to be shared across a company’s fleet, the sharing and analysis of records and performance with management and clients and the promotion of awareness of specific PSC concentrated inspection campaigns — all with access to the latest information about PSC areas of focus and interpretation. Laurent Leblanc , Vice President and Marine Operations Director, BV said: ‘We wanted to ensure that shipowners and their crews know what Port State Inspections require and to help them manage those requirements — all with a practical, digital, tool. This application provides the most upto-date route to manage PSC planning and performance, enabling data and best practice to be shared on-board and across fleets.’ ‘Port state control is a major operational factor for shipowners and the bottom line is both safety and preventing unexpected operational loss of time and cost.’ ‘PSC Ready’ was developed and refined in pilot projects with shipowners world-wide. The version released today reflects their guidance, input, advice and feedback. It is available for download at Google Play and Apple’s Apps Store.
NEWS BRIEFS
Seaspan Shipyards opens new office
S
easpan Shipyards (Seaspan) officially opened its new state-ofthe-art office in North Vancouver, B.C. Located at the foot of Pemberton Avenue on the south western spit of the property near Seaspan’s current offices, the new 7,800-square-metre office provides ample space for approximately 390 employees. The building will serve primarily as a collaborative space for Vancouver Shipyards to execute preproduction work as a strategic partner to the Government of Canada under the National Shipbuilding Strategy. Designed with a number of environmentally friendly features in mind, the building includes, as examples, passive heating and reduced water use. Funded entirely by Seaspan, the office will enhance Seaspan’s ability to deliver on its commitments to Canadians under the NSS and for various commercial clients. Thanks to the long-term and predictable nature of the NSS, Seaspan Shipyards
was able to make significant and planned investments in its people, processes, and facilities. The new office builds on those earlier investments. “Today is yet another important milestone for our company, employees, and industry,” said Brian Carter, President & CEO – Seaspan Shipyards. “The new
building ensures that our dedicated employees are able to work together under one roof, in an environmentally friendly workplace. Our investment is further evidence of Seaspan’s commitment to the National Shipbuilding Strategy and our role as Canada’s long-term strategic partner for non-combat vessels.”
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For more information: 604-889-6741 www.amsbc.net May 2018 — BC Shipping News — 9
NEWS BRIEFS
ClassNK releases guidelines for use of drones in class surveys
L
eading classification society ClassNK has released its “Guidelines for Use of Drones in Class Surveys.” These guidelines incorporate the applicable range and procedures for use of drones in class surveys, the technical considerations for safe operation and the requirements for drone service suppliers. Because drone-related technologies are improving at an extremely rapid pace, application in diverse fields is increasingly expected. In the maritime industry as well, efforts aimed at utilization in the field of inspections and surveys are being carried out.
At the International Association of Classification Societies (IACS), discussions on the use of Remote Inspection Techniques (RIT) including drones in class surveys are already underway, and IACS Rec. 42 (Guidelines for Use of Remote Inspection Technics for Surveys) was revised in June 2016. A revision of the related IACS Unified Requirements has also been completed and will take effect in January 2019. On the other hand, when flying a drone in places such as the cargo hold or ballast tank of a ship, it is important to take into consideration the possibility that the drone
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may not function properly due to being in a closed space surrounded by magnetic material which may interfere with some of the sensors of the drone (GPS and magnetic compass) which are closely related to flight stability. In regards to this situation, ClassNK established a R&D Roadmap in September 2017 which described efforts related to drones in the item “Survey Technology Innovation,” one of its Four Focus Areas of R&D. In January 2017, the Society began a full-scale study of the use of drones in class surveys and has conducted various types of verifications by carrying out basic performance experiments and experiments to test flight inside ship tanks and cargo holds. Combining the technological knowledge in connection with drones accumulated by these efforts and the know-how in class surveys amassed by ClassNK over its long history to date, the applicable range and procedures for applying drones to class surveys along with the technical considerations for safe operation and the requirements for drone service suppliers were arranged in these Guidelines. ClassNK will continue to actively work with innovative technologies, like drones, and will continue to make efforts to contribute to the further development of the maritime industry. The guidelines are available to download free of charge via ClassNK’s website www.classnk.com for those who have registered for the ClassNK “My Page” service.
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NEWS BRIEFS
Interferry highlights three key topics in call for conference papers
G
lobal trade association Interferry has launched a call for papers on safety, security and the environment ahead of its 43rd annual conference taking place in Cancun, Mexico, this October. CEO Mike Corrigan stresses: “The core themes of this year’s conference are issues of ever-increasing importance not just to the worldwide ferry industry but across society as a whole. We welcome papers from both within and outside the industry that can bring unique perspectives to these topics.” Two keynote speakers have already been confirmed — Robin Silvester, President and CEO, Vancouver Fraser Port Authority, and Mark Sutcliffe, Director of the CSO Alliance of maritime company security officers. Interferry has also approached a multinational authority for a keynote presentation on global terrorism trends and the potential impact on ferry operations, which will be further reviewed by the association’s newlyformed Security Committee. Interferry’s Domestic Safety Committee will present an update on its work focusing on improvements in the developing world. Papers are invited from suppliers with available safety-orientated technologies that could be implemented easily and costeffectively in developing nations. In addition, the session will include a review of
the association’s work regarding fire safety — largely through its IMO consultative status – and relevant suppliers are likewise invited to submit presentation proposals. On environmental issues, Interferry is encouraging operator case studies on initiatives other than electrification and LNG as alternative fuels, which were covered at last year’s conference.
The call for papers on safety, security and the environment has a deadline of May 8. Submissions should be sent to mike.corrigan@interferry.com with a short bio of the speaker and a 300-word abstract. Speakers will be notified by June 15. Interferry is set for October 6-10, 2018 in Cancun, Mexico. More intormation: www.interferry.com.
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INDUSTRY INSIGHT
A pulse on the dry bulk market
Peter Amat General Manager, Pacific Basin Shipping (Canada) Ltd.
T
here is no denying the importance of the dry bulk shipping sector for Canada’s farmers, miners and other resource producers when it comes to getting product to market. For BC Shipping News, there is no better authority for providing insights into that industry than Peter Amat, General Manager, Pacific Basin Shipping (Canada) Ltd. Not only does Peter’s role with Pacific Basin put him in good stead to provide overviews of the West Coast bulk market, but his participation in organizations like the Institute of Chartered Shipbrokers and the Chamber of Shipping gives him a perspective on the bigger picture of the West Coast’s shipping industry. BCSN: Let’s start with a brief overview of the steps you took to your present position. PA: I started in the shipping industry in 1994 as a port agent in the Bristol Channel. This was just after getting my Master’s Degree in Transport Economics Maritime from Cardiff University. I then joined with Gearbulk Shipping in 1996 and worked with them for roughly 12 years in offices in London, Jakarta, New Zealand, Vancouver and Shanghai. When I moved from Vancouver to Shanghai, my family stayed here in Vancouver, so following a year overseas, I came back here and started with Pacific Basin. 12 — BC Shipping News — May 2018
Our brand is our key — we’ve built long-term relationships with many of our customers and they’ve come to rely on our ability to deliver. BCSN: Tell me about Pacific Basin, and specifically, about operations on the West Coast. PA: Pacific Basin Shipping (PB) is one of the world’s leading owners and operators of Handysize and Supramax dry bulk ships. With our corporate headquarters in Hong Kong, we have a fleet of over 200 ships and operate worldwide with about 3,000 seafarers and 300 shore-based staff in 12 locations around the world, including Vancouver. Our largest market is Asia, followed by North America and South America but we also have a significant presence in Australia/New Zealand and Europe. About eight per cent of our activities are in India, the Middle East and Africa. In 2017, we carried 66.2 million tonnes of dry bulk cargo — everything from sand and gypsum, salt, coal, wood pellets, grains, fertilizer, sugar to logs and forest products, steel and cement as well as concentrates and other metals and ores. We have a diverse portfolio of cargoes and customers which provides for great flexibility — if a commodity is down or if
a region is down, we can pick up another commodity or move the vessel to another region in the world. Pacific Basin is really defined by our customer focus and our reputation for reliability and flexibility. We spend time understanding the operations of our customers and tailor our services to their needs. And, because many of our customers will have operations in more than one place, we make sure that they are able to contact any PB office and receive the same service. Our brand is our key – we’ve built long-term relationships with many of our customers and they’ve come to rely on our ability to deliver. I should mention that we’ve won a number of awards over the years from global competitions like Lloyd’s List, Seatrade Asia, Marine Money, and the International Bulk Journal in categories like safety, ship management, environmental performance and corporate social responsibility to name just a few. Looking specifically at the Vancouver office, we handle commercial and operational activities from Alaska to the
INDUSTRY INSIGHT Photo: From the archives of Dave Roels
Panama Canal. The office opened in 2005 with two people — today, we have 17 staff. That’s indicative of the kind of growth we’ve seen in this region. Of the 66.2 million tonnes of cargo carried by PB worldwide, we are responsible for about 15 million tonnes of it. Similar to other PB offices, we have roughly 10 nationalities represented (company-wide, staff represent over 30 nationalities). Currently, our Vancouver office employs more women than men and we also take in a lot of young trainees from UBC and BCIT. We’ll bring them in, train them and see them relocate to other offices around the world. BCSN: Could we delve a bit deeper into the fleet? In reviewing your website, I see that it’s a very young fleet. PA: Yes, that’s correct. The average age of our core fleet of owned and longterm chartered ships is 8.2 years. We own and operate the world’s largest modern Handysize dry bulk fleet but we’re also a significant owner and operator in the Supramax segment. We own 103 Handysize and have another 23 on charter,
Peter (bottom row, second from left), currently serving on the Board of the Chamber of Shipping is pictured here along with the 2017 board (bottom row): Donna Spalding, Dave Hill, Dave Bedwell, Peter Swanson; (top row): Richard Chappell, Kim Christensen,Garth Mitcham, Marc Fellis and Oscar Pinto. one of which is a new build to be delivered this year; in the Supramax class, we own 25 and have 10 more on charters; we also have two Post-Panamax vessels.
We are continually investing in the fleet. Over the last two or three years, we’ve built 12 Handysize and eight Supramax vessels as well as been active in the second-hand
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INDUSTRY INSIGHT In terms of trends, we’re seeing more construction material being brought in — cement and steel mostly. That applies to the whole West Coast, not just Canada. market but going forward, our focus will be more on second-hand ships. We see more value in that market right now. BCSN: Why is that? PA: There’s uncertainty around the best way to meet emission control regulations so it makes new builds less attractive — you don’t know what to build at this point. That’s the question more for the dry bulk industry versus the tanker or container
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14 — BC Shipping News — May 2018
industry — they know where the vessel will be going for the majority of its life. Dry bulk is a bit trickier. Our ships could end up anywhere and we need maximum flexibility so it’s a big challenge for the bulk carrier fleet. Take just this region as an example, we stop in at Prince Rupert, Nanaimo and Crofton — you can’t buy fuel there. Now magnify that on a global scale, there’s so
much uncertainty and difficulty in choosing what to do. If we opt for scrubbers, for example, and say we spend $1 million per ship for a refit, that’s well over $100 million to invest by January 2020. That’s a lot to spend with so much uncertainty. Or if we decide to use IFO fuel, there is no guarantee that sufficient volumes will be reliably available. And even if it was available, it would likely entail a longterm contract for production and storage — and that’s not a feasible option. BCSN: What about the ballast water regulations? Have you had any issues? PA: That’s more straightforward now. It’s just a process we’re working through with every dry dock and we’re confident we can meet all the regulations by the time they’re in place. BCSN: Are there other regulations or issues that create challenges for you? PA: There are a few minor ones. For example, there are issues around getting documentation for entry to Canada in a timely manner. We had a ship stuck here in Vancouver for a week while it waited for the Captain to gain entry into Canada from the Philippines. Immigration is an issue for us. Those trainees we take in from UBC and BCIT, once they’ve gone through the system, they’ll often get the opportunity to work in offices around the world — and vice versa, we have staff from overseas looking to work in our office. The process is very time consuming and there’s no guaranteed outcome. We experience delays and problems with immigration in Canada that we don’t have in other countries or jurisdictions around the world. Another issue we have, especially for our young trainees, is the cost of living in Vancouver. BCSN: Earlier you touched on the types of cargo that Pacific Basin carries worldwide. Could you provide some insights into the local West Coast market and trends you’re seeing with commodities here? PA: For the West Coast, we’ll bring in salt, some grains, sugar, steel and cement. Then the vessels are cleaned — Tidal Transport has been providing us with that service for over 10 years and they are very good at it — before loading for the outbound service, mostly grains, wood pellets, fertilizers, potash and logs.
INDUSTRY INSIGHT We also work with Tidal for log loading in Prince Rupert and on the Island. We do log parcelling. That’s a good example of being responsive to the customer’s needs. A few years ago, there were a lot of small shippers looking to get their cargo to market and so now we parcel the logs for them. We provide that service to support them. We also do steel parcelling. In terms of trends, we’re seeing more construction material being brought in — cement and steel mostly. That applies to the whole West Coast, not just Canada. That business has picked up in the last couple of years which is a good barometer of the strength of the economy. We’re also seeing increased volumes of grain and potash — another good barometer, especially for the global economy. Forest products have been steady. I should point out that locally, we could use another breakbulk facility. We have three — Lynnterm, Squamish and Fraser Surrey Docks — and ships will be waiting as much as a week to get to berth. The wait adds to costs and makes us less competitive in this market.
A common theme that is raised during discussions and presentations is the need to ensure Canadian ports remain competitive. BCSN: There are a few additional issues I wanted to touch on but would like to do it within the context of the Institute of Chartered Shipbrokers and the annual conference you host. I understand you’re the Conference Chair. PA: Yes, that’s correct. I have been involved with the ICS for many years — previously as a board member and past President but currently as the Conference Chair. Our 2017 conference was very successful and we’ll be following a similar format for 2018. We take a holistic approach to reviewing the issues facing the dry bulk sector. For example, in 2017, we had shipping lines, ports, terminals, resource analysts and representatives from companies like K+S Potash Canada and Pinnacle Renewable Energy, as well as from rail and bunker supply. (Editor’s
note: Captain Stephen Brown provided a very succinct summary of the 2017 Dry Bulk Conference which can be found at www.bcshippingnews.com/shipping). For 2018, we have started planning for the November event. We’ll be looking at emissions and bunker fuel availability as well as addressing some of the challenges we face as an industry locally. And again, we’ll be providing overviews of the market and bringing in representatives from the commodity sector to provide forecasts and highlight issues they face. The conference has really grown over the past few years. It’s becoming an international industry event that is attracting more and more out-of-town attendance. BCSN: Are you able to identify some of the issues that will be highlighted within the presentations?
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INDUSTRY INSIGHT
Peter works closely with Ron Brinkhurst, President of Tidal Transport, who provides vessel cleaning services as well as log loading in Prince Rupert and on Vancouver Island. PA: While most of the attendees are looking for information on the market and the forecasts for the coming year, we do look at issues — especially those affecting the local industry: low sulphur fuel availability; vessel speed slowdowns; environmental regulations challenges; anchorages; the Pilotage Act Review, to highlight just a few. A common theme that is raised during discussions and presentations is the need to ensure Canadian ports remain competitive.
About Peter Amat
A
fter obtaining his Master’s Degree from Cardiff University in Wales in Transport Economics Maritime, Peter started his career in the shipping industry in 1994 when he went to work as a port agent in the Bristol Channel for a small agency. In 1996, he joined with Gearbulk Shipping’s London office where he worked for three years before moving to their office in Jakarta, Indonesia. Still with Gearbulk, Peter moved to the New Zealand office in 2003 for one year before coming to Vancouver in 2004. His next move was to Gearbulk’s Shanghai office where he stayed until 2007. In 2008, Peter joined with Pacific Basin (Canada) Ltd. to secure a position in Vancouver where his family had remained.
In addition to serving on the Board of the Institute of Chartered Shipbrokers — and filling the role of President for a number of years — Peter continues his involvement with the organization in the capacity of Conference Chair. He also currently sits on the Board of the Chamber of Shipping. Peter lives with wife Kerri and children Rhoan (11), Imogen (9), and Romily (7). When not working, Peter enjoys soccer, rugby and travel. 16 — BC Shipping News — May 2018
All of the issues noted above will have an impact on costs and we all — i.e., the entire supply chain (from the farm to the ship and everyone inbetween) has a duty to find efficiencies so that the entire industry — and hence, the entire country — benefits. BCSN: The Federal Government recently announced a Port Modernization Review. Do you think that will help with maintaining our competitiveness? PA: I hope so. I’d like to see the entire supply chain reviewed — not just the ports. In addition, a benchmark should be established that compares ports like Vancouver to other world-class ports — Rotterdam, Hamburg, Shanghai, for example — and how they are attaining greater productivity. Here, we have a shortage of land so our only option is to gain efficiencies on the land we currently have. Seeing how places like Rotterdam achieve greater throughput would greatly assist in our own development plans. BCSN
About Pacific Basin Shipping
P
acific Basin Shipping Ltd. is one of the world’s leading owners and operators of modern Handysize and Supramax dry bulk ships. Their shipping business is customer-focused, providing over 400 industrial producers, traders and users of dry bulk commodities with a high-quality, reliable and competitive freight service under spot and longterm cargo contracts. Pacific Basin is headquartered and listed in Hong Kong and operates globally. Their fleet of over 200 ships trades worldwide and employs 3,000 seafarers and 330 shore-based staff in 12 key locations around the world. With a vision to be the leading ship owner/operator in the minor-bulk shipping space, and the first-choice partner for customers and other stakeholders, PB aims to truly know their customers’ needs, looking for ways to make it easier to do business and stressing the value of long-term relationships over short-term gain. With more regional offices than anyone else in the dry bulk sector, PB’s chartering and operations staff are positioned close to customers and key markets. This enables their teams — comprising 30 nationalities — to know and understand their customers’ businesses and needs better than any other Handysize or Supramax operator, and to offer a superior, more tailored and localized service in a local time zone.
For more information about Pacific Basin: www.pacificbasin.com.
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HISTORY LESSON Vestige of the North Photo: Dave Roels
Preserving the St. Roch By Lea Edgar Librarian & Archivist, Vancouver Maritime Museum
A
s of 2018, the St. Roch has been preserved beside the Vancouver Maritime Museum for 60 years. The City of Vancouver, Parks Canada and now, the Vancouver Maritime Museum, have been working tirelessly to preserve, interpret, and provide access to this historic Canadian vessel. The St. Roch is a symbol of exploration, RCMP history and Canadian Arctic sovereignty. But some may wonder why its permanent home is Vancouver and why it needs to be saved. A challenging artifact to maintain, the ship has been managed by multiple entities and has overcome many preservation hurdles through the decades. This is the story of how a little Arctic vessel came to rest permanently on the shores of Vanier Park. The St. Roch was designed and built in Vancouver in 1927. But by 1948, the St. Roch was nearing the end of her working life. She spent nearly 30 years patrolling, assisting residents, and asserting Canada’s Arctic sovereignty. On October 19, 1948, she arrived in Vancouver and was then laid up in the naval dockyard in Esquimalt. However, her skipper, Henry Larsen, thought she still had some life left in her yet. So, in 1950, she was fitted with the
A challenging artifact to maintain, the ship has been managed by multiple entities and has overcome many preservation hurdles through the decades. latest navigational equipment and sent to Halifax through the Panama Canal. This trip meant that the St. Roch had successfully circumnavigated North America. Despite this accomplishment, upon arrival in Halifax it was determined that she was obsolete for Arctic work. Henry Larsen knew that if she remained in Halifax, where her history and accomplishments were not recognized, the St. Roch would ultimately be scrapped. Vancouver, her home base and the place where she was built, would be the best permanent home for her. Larsen stated, “In Vancouver … the St. Roch was almost a legend, for although registered in Ottawa, Vancouver was her home port and a warm welcome had always awaited her on her return there from the Arctic.” A plan was hatched and Larsen worked with then City Archivist Major J.S. Matthews and Thomas Howarth to bring the ship home. The RCMP decided to offer the citizens of Vancouver the St. Roch for
The St. Roch being towed into Vancouver in 1958. (Parks Canada St. Roch Photograph Collection, item numbers HSUS-50-06 & SR-7.0-1.) 18 — BC Shipping News — May 2018
$5,000 (the cost of moving her back to the West Coast). Those involved in bringing the ship back insisted that Larsen himself navigate her back to Vancouver. So, in July 1954, the vessel left Halifax and travelled back through the Panama Canal to arrive in Vancouver in October that same year. The St. Roch received a warm welcome. She was escorted by the RCN icebreaker Labrador along with two helicopters. Many local vessels dipped their ensigns as she passed. A navy band played to the large crowd waiting for her at the wharf. Members of the 1928 crew were also on hand: Olsen, Parsloe, Kells, Foster, Parry and Sealey. The City of Vancouver officially adopted her in a ceremony the following day. It was a fitting end to her career indeed. Larsen presented Major Matthews with her ensign and a campaign of preservation began. From 1954-58, the St. Roch unfortunately languished at the Gore Avenue Wharf while authorities decided what to do with her. During this time, former crew member Rudolph Johnson served as watchman. Everyone acknowledged she should be preserved, but how? Luckily, the British Columbia Centennial was imminent and with it came some major building projects in Vancouver. Included was a dry dock for the St. Roch and a neighbouring Maritime Museum. The City of Vancouver decided to remove the deckhouse and restore the ship to her 1928 configuration. On April 8, 1958, the St. Roch was pulled ashore using a heavy winch into a cradle and put into a drydock at Vanier Park. Meanwhile, the new Maritime Museum was completed, but the St. Roch was merely placed in a concrete drydock and left open to the elements. Her slow degradation began.
VANCOUVER MARITIME MUSEUM A museum ship is always a challenging artifact to preserve. Larsen looked to Norway where Amundsen and Nansen’s ship, the Fram, was preserved in a full enclosure. Finally, in 1962, the Historic Sites and Monuments Board of Canada designated her a National Historic Site. The City of Vancouver then sought Federal assistance to operate and interpret the St. Roch. A deal was struck for the Federal Government to assume operation and ongoing funding. The A-frame shelter we see today was constructed in the early 1960s to help preserve the ship. On June 23, 1966, Mary Larsen cut the ribbon to mark the opening of the new shelter. Parks Canada ultimately took responsibility of the ship and disagreed with the City’s decision to present her in the 1928 configuration. They set out to restore her once more to the 1944 appearance. This reconstruction, which took place from 1968 to 1974, was also one of the first efforts at preserving her. A large part of the deck was replaced; rotten wood was sealed and, in some places, replaced with
The vessel next to the Vancouver Maritime Museum before the shelter was built (right). (Parks Canada St. Roch Photograph Collection, item numbers HSUS-50-06 & SR-7.0-1.) fibreglass. In 1974, she re-opened in her Second World War configuration. During the 1970s, only regular maintenance was conducted on the St. Roch while Parks Canada offered tours and interpretation. Unlike today, the Maritime Museum was originally run completely separately
from the St. Roch National Historic Site. But in 1975, the Museum and St. Roch complex reopened in an integrated facility. Nevertheless, they still maintained the separate management of each facility. The vessel didn’t experience major preservation issues until the 1980s. At
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The iconic A-frame shelter constructed to house the St. Roch. (Parks Canada St. Roch Photograph Collection, item number SR-7.0-15.) this point, leaks in the A-frame re-activated dry rot that began back when the ship was open to the elements. In fact, leaks in the structure continue to be an issue to this day. By 1990, Parks Canada also noticed that the original cradle supporting the ship was putting pressure on the ship’s hull, causing it to warp. The cradle was never in fact intended to be permanent, and this was beginning to become clear. From 1991 to 1992, the wooden cradle was replaced by a steel support which allowed the ship to settle back into shape. Also in 1992, the A-frame received a new roof,
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which helped to stop some of the leaks. However, water always found its way in and dry rot continues to be an issue. In 1995, Parks Canada, due to federal cutbacks, decided to close the St. Roch National Historic Site. Luckily, temporary grants were received to keep the vessel open until 1997. However, this event brought up questions about long-term preservation and the need for a new shelter. Ultimately, Parks Canada decided to return management of the St. Roch to the City of Vancouver in 1995. The City agreed and planned to merge it with the adjacent Vancouver Maritime Museum (VMM). The VMM board and staff were not invited to participate in the turnover negotiations. In the end, the Museum received two $75,000 per annum Federal grants and the City provided an additional $8,000 and a one-time capital grant for necessary changes to prepare for limited access to the ship. These changes reduced the annual operating costs to 25 per cent of Parks Canada’s operation. The City informed the VMM that the operating grant would return to 1995 levels at the end of the two-year Federal grant period. Starting in 1997, the VMM looked into raising funds for the St. Roch’s ongoing maintenance. As part of a re-enactment of the ship’s Arctic and North American voyages, under the auspices of the “St. Roch Voyage of Rediscovery,” a preservation campaign was created to raise a $3.5 million endowment fund. By the end of 2000, and the culmination of a 24,000-nautical-mile voyage through the Arctic and around North America, the Museum had reached a worldwide audience. In mid-2001, the voyage — which faced large financial hurdles — had not brought significant monies to the preservation fund. Nonetheless, it had covered its own costs and brought the Museum a national profile. The challenges in funding the ship’s preservation continue. Today, several factors affect the ship’s preservation. Leaks continue to occur in the aging shelter. In 2013, several of the windows were replaced in the shelter. However, recently the skylights have started to leak. Another challenge is the fact that the shelter is still, in essence, subject to weather changes as it is not a sealed structure. Soon, environmental controls will need to be installed to slow the ongoing dry rot and other preservation concerns. Another concerning factor is the rising of sea levels. The drydock housing the St. Roch is actually below sea level and is pumping out water 24 hours a day. Eventually, if the waters keep rising, it will be impossible to keep the structure dry. One additional preservation concern for the ship is simply the wear and tear from the thousands of visitors she sees each year. Already, we are seeing boards being worn down with constant use. The very fact that the St. Roch was identified as historically significant and preserved for the past 60 years is a major heritage preservation accomplishment for Canada. She is one of the only historic vessels of her size that visitors can actually board and experience. She is a physical, touchable, even smellable, vestige of the North — a place where many Canadians will never experience. Her ongoing maintenance and preservation is important so that Canadians, and people from around the world, can learn not vonly about this significant moment in Canadian history, but about a large and often misunderstood region of our country. Lea Edgar started her position as Librarian and Archivist for the Vancouver Maritime Museum in 2013. She can be contacted at archives@vanmaritime.com.
RESOURCES
Photo: Dave Roels
A partnership in potash By Amanda Schuldt
C
anada is one of the world’s leading suppliers of potash, producing approximately one-third of the world’s supply. As a nutrient-rich fertilizer used in the growth of crops, its significant role in food production should not be underestimated as global populations increase. “Potash is one of the main nutrients for plant growth. Next to nitrogen and phosphate it is considered to be one of the big three,” said Mathias Welzel, Senior Manager of Logistics and Transportation for K+S Potash Canada during an interview for BC Shipping News. With shipments of potash from the K+S Group’s Bethune mine (previously known as the Legacy Project) in Saskatchewan, now moving through Pacific Coast Terminals via CP Rail, it’s an opportune time to look at business.
Background
The K+S Group is an international resources company with more than 14,000 employees worldwide, headquartered in Germany. It is the biggest producer of salt in the world. K+S, derived from the German words “Kali” and “Salz.” The historical basis of potash mining lies in Germany, with first
With shipments of potash from the K+S Group’s Bethune mine now moving through Pacific Coast Terminals via CP Rail, it’s an opportune time to look at operations. reserves found there in the late 1800s. While some German deposits have lasted 30 to 40 years, Canada holds new sources of the nutrient — primarily from mines in Saskatchewan which boasts some of the largest global reserves of a mineral that cannot be manufactured artificially in a synthetic form. K+S Potash Canada (KSPC) is a subsidiary of the K+S Group with a logistics and operations office in Vancouver and at the Bethune mine in Saskatchewan. Collectively, both locations have 460 employees. Mathias Welzel has over 12 years of experience (including one year in Singapore) with the K+S Group. Mathias arrived in Vancouver with his wife and young daughter in February 2018, coinciding with the first snowfall and winter conditions along the CP Rail route that KSPC potash takes from mine to port. Welzel provides insight into some of the significant milestones achieved by KSPC and its
Mathias Welzel, Senior Manager of Logistics and Transportation for K+S Potash Canada. transportation partners, as well as some of the challenges faced in the early stages of mining and distribution of potash to a global market. In March 2011, K+S acquired a small company (“Potash One”) that owned
The Daiwan Champion at Pacific Coast Terminals waits for the rain to stop before loading the first shipment of potash from the Port Moody facility.
May 2018 — BC Shipping News — 21
RESOURCES
Left: The K+S Potash Canada team celebrate the ground-breaking ceremony at Pacific Coast Terminals to officially signify the start of construction on the new potash storage facilities. Right: Lorne Friberg, President and CEO of Sultran Ltd. and Pacific Coast Terminals; Dr. Andreas Radmacher, former Member of the Board of Executive Directors, K+S AG; Dr. Ulrich Lamp, President and CEO of K+S Potash Canada; and Wade Leslie, Vice President and General Manager of PCT. the mineral rights of some land in Saskatchewan. From this first small milestone, activity sprouted and by June 2012, there was a ground-breaking ceremony to celebrate the first potash mine in Canada in about 40 years. Commissioning of the mine began in the summer of 2016 with nearly 4,500 workers preparing the site. By May 2017, KSPC held their grand opening of the mine. Unlike conventional mining where workers are underground, potash is sourced using a solution mining method. Holes are drilled up to 1,600 metres deep and solution is sent in to wash the potash
out for processing. By June 2017, the first tonne of potash had been produced, “representing a multi-billion Canadian investment to become the single biggest investment in K+S history,” said Welzel.
Partnerships
In a partnership agreement with CP Rail, KSPC leased a fleet of about 1,000 railcars to transport potash over a distance of 1,800 kilometres to Pacific Coast Terminals (PCT) in Port Moody, B.C. Welzel noted that the railcars vary in length between 45 and 47 feet to be able to maximize the load being shipped and to fit the needs of their
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different destinations, being Vancouver for export business or domestic service to Canada and the U.S. Providing that critical link between rail and ship, PCT receives the railcars which are then unloaded into the 260-metre-long storage shed that has the capacity to hold 160,000 tonnes of product. The conveyor belt system and the stacker/reclaimer allows the railcars to be unloaded directly into the sheds for storage and potash piles to be formed. Welzel is enthusiastic about the K+S partnership with PCT, noting that, “We are looking forward to having a contract and beneficial and trustful partnership with PCT for the upcoming decades.” PCT’s ship loader has three chutes, one for each product: white potash, pink potash and sulphur (albeit this last cargo is not from KSPC). The ship loader has loading rate of up to 5,000 tonnes per hour, allowing for a capacity of up to 50,000 tonnes that can be loaded on a vessel in less than two days.
Vessels
In mid-October 2017, the Daiwan Champion arrived to take on the first load of potash — about 30,000 metric tonnes. KSPC currently loads two to three 50,000tonne vessels per month at PCT now and anticipate that, by 2020, this will increase to three to four Handymax, Supramax or Panamax vessels per month once the mine is operating at full capacity. While the vessels are not modified in any way to carry the two potash products,
RESOURCES they are inspected prior to loading to ensure there is no residue or loose rust in the holds. Welzel noted that sometimes, a geared bulk carrier is required for unloading at the final destination. “We try to avoid part cargo loading,” he said, “and fully loaded vessels of dedicated KSPC cargo is always the goal.”
Distribution
Most K+S potash is distributed to China, SE Asia, India and South America (specifically Brazil). There is also demand within Canada and the U.S. for use in growing wheat and corn.
Weather and distance
Potash is a weather-sensitive cargo and therefore, during periods of heavy rain, loading must cease and vessel hatches must be closed as the moisture “degrades the potash.” Despite the West Coast rain, Welzel explained that this does not interfere heavily on the loading schedule at PCT. For example, a 33,00035,000-tonne vessel can be loaded in less than a day with 24-hour loading. (On particularly rainy weeks, there may
Providing that critical link between rail and ship, PCT receives the railcars which are then unloaded into the 260-metre-long storage shed that has the capacity to hold 160,000 tonnes. be discussions with sulphur vessel operators and requests for them to anchor and allow the sulphur to be loaded first, since this cargo is not compromised by the rain.) Comparing the logistical differences between operations in Germany and Canada, Welzel noted that in Germany, 100 trains per week carrying 1,300-1,800 metric tonnes are moved across a much shorter route. “K+S Potash Canada sends two to three trains per week carrying 14,000-18,000 tonnes of product across a much longer distance — 1,800 kilometres — with more severe conditions in winter like heavy snow, freezing temperatures and avalanche hazards.” With shipping schedules based on train schedules, the knock-on effect of delays due to trains being stuck or late is a tremendous hurdle. “For example, if only two of the four trains arrive on time, the
ship might leave short of product if we are running low on stocks at PCT. When the ship is not fully loaded, the financial burden falls to KSPC.” Despite KSPC’s success to date, Welzel said that operations at PCT are not yet at 100 per cent but expects to see this in 2018.
Expansion plans
While still in the primary mining phase, the Bethune Mine is not yet at maximum output. And while there remain some challenges to be worked through, Welzel said that KSPC is planning to produce two million tonnes by 2019. Given the importance placed on potash as a key nutrient in growing the world’s food supply, KSPC and their distribution partners are playing an integral role in securing the future of vital food production in an ever-growing global demand for food.
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SHIPPING
Vancouver welcomes NORDEN
V
ancouver’s local marine community is rolling out the welcome mat for NORDEN A/S who not only announced the opening of a new office recently but also chose Vancouver’s Kinder Morgan terminal on the North Shore as the first stop for the Nord Pacific, a brand new Supramax dry bulk carrier just out of the Oshima Shipbuilding Company in Japan.
Background
Dampskibsselskabet NORDEN A/S was founded in 1871, making it one of Denmark’s oldest internationally operating shipping companies. Operating both tanker and dry cargo vessels, the company has a fleet of 257 Supramax, Panamax, Handysize and Post-Panamax ships, and a total of 54 Handysize, MR and LR1 product tanker vessels. Headquartered in Hellerup, Denmark, NORDEN has nine offices (including Vancouver) worldwide with over 300 onshore employees and another 650 on company-owned vessels. While NORDEN’s corporate group structure is organized by region as well as vessel type, there are essentially three segments of the NORDEN business — Dry Operator, which focuses on global transport solutions for dry bulk customers; Dry Owner, which manages the cyclical market exposure to the dry bulk market (i.e., managing owned vessels and long-term charter contracts); and Product Tankers, which
24 — BC Shipping News — May 2018
provides transport services and cyclical market exposure in the product tanker market sector. The company’s 2017 Annual Report shows an active and focused organization that is meeting its targets in all areas of operational growth and fleet management, including the best result since 2011 for its 2017 dry cargo activities. Driven by higher economic activity levels in China resulting in an increase of commodity imports (for example, 2017 saw Chinese coal imports grow by six per cent over 2016) as well as positive global economic conditions, NORDEN performed particularly well in the third and fourth quarters last year. In looking forward to the remainder of 2018 and beyond, NORDEN analysts expect global conditions to continue with further growth for dry cargo. “Continued demand from power generation in India and countries in South East Asia is expected to keep the coal trade above pre2017 levels,” it reads. “China, however, is not expected to continue the same level of support to vessel demand as in 2017 as Chinese growth is expected to weaken slightly in 2018.”
Increased focus on the West Coast
According to Christian Vinther Christensen, Head of NORDEN’s Dry Operator business, “NORDEN has a strong presence with many port calls on
the West Coast. We expect the new office in Vancouver to provide a deeper service to existing customers and create new relations. The office will also strengthen the growing Americas/Asia business and nicely link our three offices in Asia with our now four offices in the Americas.” Mark LaFrankie, Head of Dry Cargo for the West Coast of North America, noted that NORDEN Shipping (Canada) is building on a good foundation already in place. “We expect to see the North American West Coast grow with expanding markets in Asia and Latin America,” he said. “It’s a great bulk-commodityrich area with talented people looking to do things responsibly. Yes, we’re here to grow the market but we are also here to improve our stature and keep learning in the existing marketplace.” The Vancouver office consists of both operational and commercial expertise. LaFrankie, along with Jesse Watson, will be assisting customers from California northward through B.C. According to LaFrankie, he expects NORDEN ships to make between 80 and 100 port calls this year, carrying grain, fertilizers, petcoke, coal and other agricultural and forest products. When asked about the decision to set up in Vancouver versus other destinations, LaFrankie said that while “locations south of the border might have been easier administratively, when we sat back and actually imagined being stationed in the
SHIPPING operational savings, having eyes on the scene. And of course, attracting Canadian talent for both commercial and operations is very important. NORDEN is a great place to work.”
The MV Nord Pacific
The NORDEN team in Vancouver to celebrate the arrival of the Nord Pacific. U.S., it was fairly clear that we would have been travelling north to Vancouver for the lion’s share of customer face-time.” He went on to say that “In terms of things to do operationally, I would say it’s about a 50/50 split between Oregon/ Washington and B.C., but when it comes to actual customers being in town, Vancouver is the right choice.” Looking at the future, LaFrankie believes this region will do well. “If global
dry-bulk demand growth is roughly three per cent year-on-year, I think this region will out-perform that growth by a mile, between both export and import demand, especially if the logistical and regulatory bottlenecks are smoothed out.” For the time being, LaFrankie said the focus is on customer relations and operational staffing. “Right now, it’s about customer focus and the quick-hit improvements in market knowledge and
Upon leaving the Oshima Shipbuilding Company in Japan, the Nord Pacific’s first stop was Kinder Morgan’s terminal in North Vancouver where it took on a load of grain destined for Asia. The Supramax bulk carrier is 199.92 metres in length, 32 metres in width and with a gross tonnage of 35,035 (61,221 DWT). While berthed, Mason Agency organized a welcome ceremony where Port of Vancouver’s Doug Mills, Senior Account Representative, Trade Development, presented a plaque to Captain Danilo Quero, commemorating the visit. NORDEN thanks Mason Agency for a well planned and executed ceremony. After taking on its cargo, the Nord Pacific left Vancouver Harbour in early April, destined for the Chinese port of Huangpu. BCSN
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DRY BULK
Insight from CN on Canada’s dry bulk market
I
n seeking out an expert who could provide insight into Canada’s dry bulk market, I was pointed in the direction of Doug MacDonald, Vice President of Bulk for CN. Lucky for BC Shipping News readers, MacDonald turned out to be a wealth of knowledge when it comes to this sector. Focusing on three main commodities — coal, potash and grain — he not only outlined trends for each but also highlighted the ways in which CN is working with customers to get products to market.
Coal
There is a resurgence being seen in export coal markets. The price is very stable. Mines have come back online in British Columbia and there are new mine start-ups coming in the next year in Alberta, so overall, the trend is up. For CN, their primary export terminal is Ridley Terminals (RTI) in Prince Rupert, with CP shipping mainly to Vancouver’s two coal terminals, Westshore and Neptune. Noting the “feast or famine” cycles of the coal industry, MacDonald was hopeful that the current trend was going to last into the long term. “Ridley Terminals is effectively sold out with their current infrastructure. However they have a large scale expansion plan in front of the government that calls for new wharfage to handle more ships as well as an increase in their footprint to handle more coal and other commodities (propane being a new one).” While Westshore Terminals has experienced in a few hiccups to their supply chain while expansion work is ongoing, the terminal’s significant increase in capacity will see them do very well, especially with U.S. coal. Neptune Terminals is also coming forward with an expansion plan that was announced at their Investor Day in early April. MacDonald pointed out that better coal mining techniques and advances in technology are lowering the cost of coal production to allow greater resiliency from market swings. He used Conuma Coal Resources (which operates Brule, Willow Creek and Wolverine Mines in the Chetwynd/Tumbler Ridge area) and 26 — BC Shipping News — May 2018
The main news for the bulk grain sector is the three new terminals that are all scheduled to be up and running in time for the 2019-2020 grain season. Cutlass Collieries (which is opening Coalspur Mines in Alberta in Q1 2019), both moving their coal through RTI, as good examples of companies who have reduced costs to be on par with Australian producers.
Potash
Potash is also looking stable. While CN moved 100 per cent of their export market share with Canpotex in 2017 and Q1 2018, their numbers were actually down a little due to changes in the Canpotex supply chain. “But the overall market is good and they’re expecting another strong year,” MacDonald said, anticipating numbers to pick up and hit a record for shipping out of Vancouver’s Neptune Terminals, Canpotex’s primary low-cost export facility. Canpotex ships potash through two other terminals: one in the Portland, Oregon, which has just undergone a major upgrade; and the third in Saint John, New Brunswick. “A lot of the volume has gone to the Portland terminal,” MacDonald noted, “with the remainder going through Saint John, but it is the most costly port to use due to distance from the mines.” There are some future projects in the works in Saskatchewan. In addition to BHP Billiton’s Jansen project (full commercial production has been put on hold while waiting for better market conditions), there are a number of start-ups with Chinese funding looking at much smaller mines (a half to one million tonnes at most). “We’re talking with them all but it’s still early days.” And while exclusive to CP, MacDonald rounded out his look at the potash market by commenting on K+S Potash Canada which ships out of Pacific Coast Terminals in Port Moody. “They are growing and we expect to see that continue.”
Grain
Even with challenges from weather and volumes, CN recorded their third best year
Doug MacDonald, Vice President of Bulk for CN. ever for Q1 grain movements. “We had a very strong March which made up for a very weak February,” said MacDonald. “Vancouver should stay very strong, as will Prince Rupert Grain (PRG), right through to August.” PRG will be undergoing some maintenance in Q2 to enhance throughput on rail unloading. The main news for the bulk grain sector is the three new terminals that are all scheduled to be up and running in time for the 2019-2020 grain season. Fibreco, on the North Shore, is scheduled to start on a small scale later this year with some direct train-to-vessel shipments while they build silos for storage. And also on the North Shore, G3 — described by MacDonald as “a Cadillac high-efficiency terminal” — will be able to take in three unit trains at a time. “They’re great partners. They’ll have a capacity of at least eight million tonnes but might even be able to go higher.” At Fraser Surrey Docks, Fraser Grain Terminals is currently more of a direct-hit model. With work currently being done on permitting, followed by construction of the elevators, MacDonald estimated that
DRY BULK they would be up and running by the 2019 season as well with grain storage and a loop track system. Grain continues to increase in volume every year by an average of two to three per cent. MacDonald attributed the increased crop yields to advances in technology (for example, crops that can stand up better to droughts) as well as increases in the amount of acreage being planted. “Farmers don’t have to wait for land to recover and allow nutrients to rebuild,” MacDonald said, “and with climate change, there are more crops being planted in acreage that wasn’t able to sustain it every year. It’s not a huge number — only about one or even a half per cent, but along with the yield uptick, it starts to add up.” He further noted that most of the grain companies find the best profit margins in shipping west. “There used to be a dividing line that was in the middle of Saskatchewan — crops west of that line would go west, and crops east of it would go to Thunder Bay, Montreal or Quebec City. Now that line has shifted eastward to Brandon, Manitoba. So it’s a dramatic change in the overall profitability of the sector, highlighting the fact that Asia is a bigger market over Europe.” MacDonald was less optimistic about specialty crops. While there was a decent harvest, the problem with the market will start to have an impact on prices. “India has been the primary market for lentils but they have essentially banned lentils (a full ban is expected anytime now). You’ll see prices decline and profitability decline and a lot less lentils being planted.” Peas are doing well but, once again, issues with the Indian market will create some uncertainty. He expected most pulses to have a tough year. On the other hand, soybean producers may benefit from the trade disputes between China and the U.S.
North Shore rail access will become a serious concern if federal funding isn’t secured soon.
With most terminals on the North Shore already at or near capacity ... companies all along the dry bulk supply chain are worried about the bottlenecks that loom. Canadian Transportation Agency (CTA) interswitching regulations, CN gets paid a regulated rate at a variable cost so there is no contribution to infrastructure. Working with the Vancouver Fraser Port Authority and customers, a proposal has been put forward to the federal government for funding to remove some of those bottlenecks. The proposal calls for funding of siding extensions, some tunnel clearance and some small bridge coordination issues. “The submission doesn’t ask for a new bridge,” MacDonald said, “but if volumes keep going up the way they have been, that will become a concern at some point in time.”
MacDonald also estimated that it would take at least three years to make the changes and upgrades, and noting that the federal government hasn’t yet allocated funds — and has not given a timeline as to when that might happen — the lines to the North Shore will be constrained by September 2019. “It means that instead of being able to move all the business, we will have to parcel it out among the customers based on regulations that call for a fair and equal allocation.”
Services
In a continual effort to ensure an efficient supply chain, last year, CN introduced car
North Shore access
With most terminals on the North Shore already at or near capacity — and additional expansion plans and new terminals in the works — companies all along the dry bulk supply chain are worried about the bottlenecks that loom. Because roughly 70 per cent of CN’s North Shore business is done under May 2018 — BC Shipping News — 27
DRY BULK “We’re very much focused on making sure that the supply chain works with the customers and that we’re efficient in all areas — not just on the rail... supply agreements for grain customers. “Customers can now contract annually for their car supply,” MacDonald explained. “It’s based on a ‘take-or-pay’ reciprocal penalty offer and we’ve had great uptake on that. We’ll be modifying it again a little bit this year but it looks like we’re going to sell out our fleet.” The initiative allows for grain companies to know exactly how many cars they will get every week to allow for better planning. “If we don’t supply the cars, we pay a penalty; if the grain elevator doesn’t use them, they pay a penalty,” said MacDonald, adding that the only downside is that there’s not a lot of ability to scale up. While farmers want the railways to hold another 5,000 to 10,000 cars in case there is a big crop, Macdonald said that grain elevator companies are now able to contract for additional equipment. “It’s a sharing of the risk,” he said. “CN supplies the power and
crew and the companies purchase cars and add them into the fleet.” MacDonald also highlighted additional services from CN that cater to different industries. For example, Ray-Mont Logistics’ stuffing facility that opened last year in Prince Rupert. Of the three major stuffing facilities — Ray-Mont (with locations in Prince Rupert, Vancouver and Montreal), Columbia Container Services in Vancouver Harbour, and Global — Ray-Mont is the largest. “They’re doing very well. They were the only unit train receiver for a pulse crop container stuffing facility until recently when Columbia Services completed expansions and can now do unit trains.” CN works with all three companies to be able to offer alternative shipping options for the pulse crop sector, recognizing the need for additional services to allow these companies to get their product to market.
Conclusion
Despite variables at the geo-political level — especially with trade agreements and trade disputes — overall, MacDonald was positive about the remainder of the year. As noted earlier, January and February had many challenges all along the supply chain but with the worst of winter over, CN moved well over 5,000 cars per week in March and expects the strong numbers to continue. To manage and coordinate trains in and out of customer locations across the country and all the way to the port and back, MacDonald highlighted the efforts of the bulk logistics team in Edmonton. “We’re very much focused on making sure that the supply chain works with the customers and that we’re efficient in all areas — not just on the rail but also at the terminals and at the product’s origins. It’s a group of professionals who every day look for what we can do better, keep everything moving, make sure we hit vessel schedules in Vancouver. It’s complicated because we have a lot of moving parts but they do an excellent job.” BCSN
INTERNATIONAL TRADE
Are Canada’s businesses sufficiently prepared for trade disruption? By Candace Sider, Vice President
Government and Regulatory Affairs, North America, Livingston International
C
anadian companies that rely heavily on cross-border or global trade could be forgiven for feeling somewhat anxious these days. The world of trade has experienced profound disruption over the past 18 months. From the bankruptcy of sea carrier Hanjin and the subsequent revamping of sea carrier alliances to the initiation of anti-dumping and countervailing duties against Canadian softwood lumber, to the renegotiation of NAFTA, the tense talks over Brexit and the introduction of tariffs on steel exports to the U.S., it seems as though global trade is in constant flux. Add to this a rise in trade protectionism in the United States and elsewhere and it appears there’s scant cause for celebration. Yet, despite the constant shifts in the trade landscape, Canadian businesses have remained resilient and resolute in their trade activity. Exports have climbed steadily, peaking in May 2017 at $48.5 million — the highest monthly total in almost two generations — before dipping during the summer lull and bouncing back in Q4. Imports have been following a similar trend, hitting a record high of $50 billion in November 2017 before tapering off over the past few months.
The volatility in global trade will most certainly continue for the foreseeable future and there are real risks for Canadian businesses that aren’t considering how changes ... could affect their business. outcome of the NAFTA negotiations, had considered how their businesses might be affected, and were actively making contingency plans. Meanwhile, 47 per cent said that while they were concerned about the negotiations, they haven’t quite considered the impact to their businesses and had not begun contingency planning. Another 29 per cent said they weren’t sure how to feel about the outcome of the negotiations but weren’t making plans for a post-NAFTA world either way. This is troubling data. While the NAFTA negotiations remain ongoing at the time of writing and recent developments are cause for optimism, a number of critical impasses remain between the parties. These include raising North American content requirements for autos from 62.5 per cent to 85 per cent; dispute resolution mechanisms; a proposed sunset clause that would see the terms
of the agreement reviewed and possibly altered every five years; not to mention U.S. demands for access to Canada’s dairy industry; and proposals that Mexican labour policies be refined to make investment in Mexico less attractive. Canadian officials remain hopeful that an agreement can be reached, but continue to state that a mutually agreeable outcome is far from imminent despite U.S. demands to conclude negotiations as soon as possible lest they be politicized by the Mexican presidential election in July and the U.S. mid-term elections in November. In the event the U.S. does choose to withdraw from the agreement, Washington is only required to provide six months’ notice — hardly sufficient time to revamp a supply chain, even one that isn’t terribly complex. Businesses that aren’t considering today how a U.S. withdrawal could impact them and that aren’t making contingencies
Balancing a fine line
While trade flows in and out of Canada remain steady — and there’s good reason for a sanguine outlook on trade — it’s critical that businesses’ optimism doesn’t transform into inertia. The volatility in global trade will most certainly continue for the foreseeable future and there are real risks for Canadian businesses that aren’t considering how changes to international trade agreements, regulatory policy and public sentiment could affect their business. In a study conducted by Livingston International earlier this year of businesses that currently use NAFTA, only six per cent of Canadian businesses indicated they were concerned about the potential May 2018 — BC Shipping News — 29
INTERNATIONAL TRADE Canadian businesses will want to begin exploring the new trade prospects available ... to ensure they’re well equipped to deal with the particulars of a revamped trade deal. will be vulnerable to a broad range of disruptions — from border delays and operational hiccups, to reduced cash flow, the loss of suppliers and even reduced market share. Mitigating these issues will require a more generous timeline than six months and businesses that wait until an announcement of withdrawal has been made public could be putting themselves at risk.
Disruption isn’t a four-letter word
It’s worthwhile to note that planning for the future isn’t just about preparing for a worst-case scenario. For example, the NAFTA negotiations are tackling a number of contemporary issues that will serve to modernize the 24-year-old trade pact, assuming the parties are able to reach an agreement. These include provisions
around intellectual property protection, the digital economy and e-commerce, trade in services and workforce mobility. There’s also tremendous progress being made on harmonizing regulatory policies so that businesses working on both sides of the 49th parallel are able to streamline product-approval processes from government partner agencies. These changes will create new opportunities for businesses to expand their market, explore e-commerce solutions that previously seemed too onerous to consider, and reduce their administrative burden, saving time and money. However, much like the original trade deal, the opportunities embedded within a “New NAFTA” are likely to come with some level of administrative complexity. Canadian businesses will want to begin exploring the new trade prospects available to them as early as possible to ensure
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they’re well equipped to deal the particulars of a revamped trade deal. These potential modifications to NAFTA would be complemented by ongoing efforts at the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CBP) to automate the customs process and crossborder regulatory approvals so that businesses on both sides of the Can-Am border can enjoy expedited clearance at border crossings. CBP’s implementation of the Automated Commercial Environment (ACE) remains in transition and CBSA’s Single Window Initiative (SW) is set to begin its implementation within the next year. Once employed, these efforts will allow for the expedited release of cargo, which has become critical in the age of e-commerce and just-in-time shipping. Businesses will be able to deal with the administrative aspect of cross-border transport in a far more transparent, automated and seamless manner, reducing the amount of time they spend on traderelated tasks and allowing them to focus their energy on improving their business.
INTERNATIONAL TRADE Where there’s risk, there’s also opportunity
While the potential withdrawal of the U.S. from NAFTA may be a hovering storm cloud, the emergence of new agreements such as the Comprehensive Economic & Trade Agreement (CETA) with the European Union and the anticipated signing of the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP) open new windows of opportunity for Canadian businesses looking to expand their global footprint and/or reduce their reliance on the U.S. market. CETA, ratified early in 2017 and implemented last summer, eliminates tariffs on 98 per cent of merchandise goods traded between Canada and the EU while liberalizing trade in services and giving Canadian businesses access to bid on a wealth of EU government projects. However, those businesses who take advantage of CETA should be mindful that Brexit talks between the U.K. and EU are ongoing and the outcome of those talks could affect the cost-efficiency and efficacy of trans-Atlantic supply chains, particularly those that use the U.K. as their entry point into the EU. B.C.-based businesses should be closely watching developments in the ratification of the CPTPP, the successor to the TransPacific Partnership, the 12-nation trade pact that many believed to be defunct after U.S. President Donald Trump signed an executive order to withdraw from it on his third day in office. However, the agreement was resurrected last year and a recent study by the CanadaWest Foundation showed Canada’s GDP could stand to gain even more with the U.S. excluded from the agreement. The 11-nation CPTPP, which Canada signed in principle in early March, will give Canadian businesses more seamless and cost-effective access to key markets in Asia, such as Japan, Singapore and Malaysia, as well as Pacific-Rim nations, such as Australia, New Zealand and several others. The trade deal will allow Canadian businesses that have existing trade relationships in CPTPP markets to reduce their costs and improve trade flows while also giving them the opportunity to establish more expansive and sophisticated international supply chains to improve global competitiveness.
The 11-nation CPTPP ... will give Canadian businesses more seamless and cost-effective access to key markets in Asia ... as well as Pacific-Rim nations... Planning ahead
With so much change taking place in international trade, the world has become a kind of giant chess board, where the introduction of new trade agreements, tariffs or countervailing duties can have repercussions on other trade agreements, trade blocs and economic alliances. Each moving part has the potential to disrupt trade lanes, increase landed costs and create operational headaches. Strategically thinking business leaders should be watching each development closely to ensure they’re able to
understand how each change might affect how they currently use trade to improve their business and to determine how best to mitigate any ill effects or capitalize on new-found opportunities. Those who wait until the finer points are all sorted may find themselves struggling to make sense of all the change and to keep up with it. Candace Sider is Vice President, Government and Regulatory Affairs, North America, at trade services firm Livingston International.
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SHIPPING
Balancing priorities By Michael Broad, President Shipping Federation of Canada
A
s we enter the second quarter of 2018, it is clear that marine transportation will continue to be a priority item on the government’s agenda for the balance of this year and beyond. As the representative of international shipping — the ocean-going ships that carry Canada’s imports and exports to and from world markets — the Shipping Federation of Canada strongly supports the government’s efforts to further increase the safety and environmental sustainability of shipping activity through large-scale and ambitious initiatives such as the Oceans Protection Plan. Indeed, we view such efforts as being essential to ensuring the industry’s continued social licence to operate. At the same time, we believe that efforts to mitigate the impacts of shipping activity must be carefully balanced with the need for a fluid and efficient transportation system. The need for such a system is particularly important given the government’s forwardlooking trade agenda and its ongoing efforts to identify and develop new markets and opportunities for Canadian exporters, producers and manufacturers. The provisional implementation of the CETA
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trade deal this past fall and the recent signing of the revised TransPacific Partnership are very positive developments in this respect, and we look forward to similarly positive outcomes from other initiatives that are currently underway, including the MERCOSUR negotiations, exploratory AESEAN talks, and discussions on a potential free trade agreement between Canada and China. Success on these fronts should translate into significant growth in the volume of trade moving through Canadian ports and greater demand for marine and other transportation services. It will also create additional pressure on the government to deliver on its marine safety and coastal protection commitments and to provide assurance to the public that trade growth and marine safety need not be viewed as mutually exclusive objectives but as goals that can be achieved as part and parcel of the same process. In this respect, we very strongly support a number of initiatives that are currently underway, including Transport Canada’s review of the Pilotage Act which represents an unprecedented opportunity to address concerns regarding the efficiency and cost-effectiveness of a service that has already proven its value from a safety perspective. The ongoing review of the St. Lawrence Seaway — a key transportation asset — also presents an important opportunity to optimize Canada’s transportation network, as does the recently announced review of the ports system and the proposed amendments to Bill C-49 (the Transportation Modernization Act) to improve accountability on the rail service side of the supply chain. We are also active partners in the development of measures to mitigate the impacts of interactions between ships and marine mammals which is an issue of strong interest in both eastern and western Canada. If such measures are to be effective in the long term, it is essential that they achieve protection of the species in question while minimizing impacts on key transportation corridors. As far as the Oceans Protection Plan itself is concerned, it is only this past fall that we started to see the plan take concrete shape as the government launched consultations on a number of major initiatives, including a series of regional assessments on the cumulative effects of shipping; establishment of a realtime Maritime Information System to share data on marine traffic with local and indigenous communities; and implementation of a concept of proactive vessel management whereby issues of concern could be discussed and addressed at the local/regional levels. As we delve more deeply into each of these projects over the coming months, it will be essential to ensure that the resulting decisions and actions are evidence-based and reflective of the marine transportation industry’s strong safety record in Canadian waters and make a tangible contribution to the safety and efficiency of the marine transportation system for the benefit of all Canadians.
PORTS
Nanaimo Auto Terminal planned for Nanaimo Assembly Wharf This innovative “marine highway” would create a new, highly efficient and reliable international gateway...
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infrastructure and available industrial land will attract new business, create more jobs and lead to additional revenues for the local and regional economy. Nanaimo Assembly Wharf improvements will provide modern and efficient dock space with associated facilities and infrastructure for off-loading, processing, storage, and transshipment of automobiles. A terminal of significance with multimodal connectivity serving a variety of commercial and industrial users. This project leverages industrial lands that have been historically used as a marine terminal. It does not represent a new marine or port facility. Deploying an all-water transport route alleviates land-bridge constraints in the finished vehicle logistics chain serving British Columbia and Western Canada.
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anaimo Port Authority (NPA) is partnering with Western Stevedoring (Western) and their affiliate organization, the Auto Division of SSA Marine (SSA) to design, build, finance and operate a multipurpose break bulk terminal with an initial focus on European automobile import and processing at NPA’s Nanaimo Assembly Wharf (NAW). Ewan Moir, Nanaimo Port Authority, President & CEO comments, “The project has the potential to transform Canada’s import automobile supply chain by addressing the significant existing transportation bottlenecks, vulnerabilities and congestion while providing several compelling logistical efficiencies and environmental benefits. The project will also provide sustainable economic development opportunities for Nanaimo and Vancouver Island.” Brad Eshleman, President of Western Stevedoring states, “Western is very excited to be expanding our operations in Nanaimo with this new and highly efficient auto terminal operation. Founded in Nanaimo in 1949, Western operated the Nanaimo Assembly Wharves for several decades and we are very pleased to be bringing the Vehicle Processing Centre and Auto Terminal Operations to the Port of Nanaimo. The auto terminal operations will create jobs and economic growth for the region, benefiting the City of Nanaimo, Vancouver Island and British Columbia.” A customer commitment and lease agreement for use of the NAW was signed, design components are expected by August 2018 with construction completed and first vessel call in January 2019. Consultations, regular announcements and Open Houses will provide project progress throughout 2018. European Automotive Original Equipment Manufacturers (OEMs) are experiencing significant capacity constraints and other issues with the existing east-west land bridge route. Currently, the land bridge stretches from Halifax to Vancouver, the latter which serves as a hub for OEM customers throughout western Canada. In response, the project partners wish to develop the first all-water global logistics service for European automobiles to a British Columbia port. This innovative “marine highway” would create a new, highly efficient and reliable international gateway featuring short-sea shipping from Nanaimo to the Lower Mainland. The project has the potential to transform Canada’s import automobile supply chain by addressing significant existing transportation bottlenecks, vulnerabilities and congestion while providing several compelling logistical efficiencies and environmental benefits. Imported vehicles will arrive on Pure Car/Truck Carriers (PCTCs), which are Roll-on/Roll-off transport ships purpose-built for overseas vehicle transport. The imported vehicles will be processed for delivery to Lower Mainland dealerships on conventional car carrier trailers using short-sea shipping options currently serving Vancouver Island. The project would also provide sustainable economic development opportunities for Nanaimo and Vancouver Island. Benefits, both locally, regionally and nationally, include: • A commercially accessible marine terminal with modern
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TANKER MORATORIUM
Can Eagle Spirit succeed where Northern Gateway failed? By Captain Stephen Brown West Pacific Marine
I
n May 2017, under the umbrella of the Oceans Protection Plan, the federal government introduced Bill C-48, the Oil Spill Moratorium Act, thereby delivering on the Prime Minister’s campaign promise to introduce a crude oil tanker moratorium on British Columbia’s North Coast. If approved by parliament, the Bill will prohibit oil tankers carrying crude and persistent oils as cargo from stopping, loading or unloading at ports or marine installations in northern B.C., stretching from the border with Alaska southwards to the point on B.C.’s mainland adjacent to the northern tip of Vancouver Island, also including Haida Gwaii. In order to not interrupt the existing supply of essential products to coastal communities and dependent industries, tankers carrying less than 12,500 metric tonnes of crude or persistent oil as cargo will continue to be permitted within the geographical scope of the moratorium. The Bill includes provisions for penalties of up to $5 million for contraventions and is currently before the Standing Committee on Transport, Infrastructure and Communities which has heard a great many submissions for and against.
Formed in 2012, Eagle Spirit aims to promote its vision of a First Nations-managed energy corridor across northern British Columbia...
Bill C-48 — scope of proposed tanker moratorium.
Proposed routing of Eagle Spirit Oil Pipeline.
34 — BC Shipping News — May 2018
By way of background, this globally unique, tanker-specific legislation was designed to put the final nail in the coffin of the $7.9 billion Northern Gateway project to build a 1,177-kilometre, 36-inch-diameter pipeline to carry 525,000 barrels/day of diluted bitumen from Bruderheim, Alberta, to the Port of Kitimat in tandem with a 20-inch pipeline to carry natural gas condensate in the other direction. Following an exhaustive National Energy Board review and recommendation to cabinet for approval subject to 209 conditions, the project was ultimately approved by the previous federal government, subject to meeting the described conditions. However, the project was long opposed by the current government while in opposition along with environmental groups and a number of First Nations. The difficulty of converting “approval to build” into actual construction was further compounded by a decision by the Federal Court of Appeals in June 2016 to overturn “approval to build” on the basis that the company did not fulfill its duty to consult with First Nations. Shortly afterwards, in July 2016, the NEB suspended a review of the company’s request to extend its permit for the construction of the pipeline after Northern Gateway and 31 Aboriginal Equity Partners filed an application for a three-year extension to allow time to fulfill the NEB’s conditions. While not a deal breaker, it also didn’t help that the unofficial referendum held in Kitimat in 2014 on the Northern Gateway Project resulted in a 58 per cent majority vote against the project.
TANKER MORATORIUM At the time, Kitimat was confident it would land a number of LNG export projects which, as we now know, have not yet materialized. I share this background, purely to provide context for an alternative proposal known as the Eagle Spirit Energy Project whose history precedes the demise of Northern Gateway but which, as a consequence, has assumed a much higher profile. Formed in 2012, Eagle Spirit aims to promote its vision of a First Nationsmanaged energy corridor across northern B.C., carrying everything from fibre optic cables, electrical and water lines to pipelines moving LNG and up to one million barrels/day of oil. The project is comparable to the Alyeska pipeline between Alaska’s Prudhoe Bay and Valdez, built and operated with involvement from the state’s indigenous population. There is also a commitment to spend $500 million on spill prevention preparedness, including tugboats, barges and training, with First Nations assuming the role of watchmen over both land and water. Chairman and President of Eagle Spirit Energy Holding Ltd. is Calvin Helin. Calvin is a lawyer, businessman, author and writer on aboriginal topics who is a member of the Tsimshian First Nation in northwestern B.C., having originated from the Tsimshian village community of Lax Kw’alaams. Significantly, the coastal territory covered by the proposed moratorium is solely in the traditional territory of the Lax Kw’alaams. However, the Nisga’a Nation has aligned with the Lax Kw’alaams on account of Bill C-48 being seen as a violation of their own treaty with British Columbia which took effect in May 2000. For its part, the Haida Nation is strongly supportive of Eagle Spirit “provided it’s done right” according to Roy Jones, a Haida Gwaii hereditary Chief, when we spoke. Of note, in 2016, Calvin Helin was voted No.39 among Canada’s most powerful business people. It was therefore rewarding to speak with Calvin on the current status and prospects for the 16-milliondollar project which has the support of the Aquilini Investment Group and several major oil producers. Calvin sees Eagle Spirit as a demonstrable step towards First Nations in Northern B.C. and Alberta being allowed to determine their own
future along the proposed energy corridor. He is particularly incensed by the tolerance given to the well-documented groups financed by U.S.-based foundations that were behind establishing the Great Bear Rain Forest and which thus far have been successful in restricting the development of Canada’s energy sector. He is dismissive of Bill C-48 and thoughtfully points to the fact that while U.S.-based interests are working full time to strangle the Canadian energy sector, the U.S. itself has exponentially expanded the production and export of oil over the past five years while also rapidly becoming one of the world’s largest exporters of LNG. Calvin also points to the 2014 decision in the Supreme Court of Canada (Tsilhqot’in Nation v. British Columbia) whereby the
Calvin Helin, Chairman and President, Eagle Spirit Energy Holding Ltd.
May 2018 — BC Shipping News — 35
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limitations of governmental power over lands encumbered by Aboriginal title were clearly defined. A further concern, and one which we must assume that decision makers are treating seriously, is a report prepared by the U.S. House of Representatives Committee on Science, Space and Technology which was made public on March 1, 2018. The report alleges that Russia has gone well beyond election meddling and is now targeting the North American energy sector and related environmental policy through social media platforms. In addition to inciting fear over pipeline projects and oil spills, Russia has been aggressively targeting the proposed Keystone XL Pipeline, even going so far as to promote the abandonment of fossil fuels in favour of alternative energy sources. All this comes at a time when Russia is desperately leveraging its own oil and gas industry to support an otherwise moribund economy. A Financial Post report on this topic, copied by the Vancouver Sun on March 3, makes for thoughtful reading. Frustrated by the government’s apparent determination to push ahead with the moratorium, in January this year, a 35 First Nations Chiefs Council, representing 30 First Nations from Alberta to the B.C. Coast, announced that it will sue the federal government on the grounds of an absence of consultation but also citing the 1978 (then Federal Environment and Fisheries Department) report which concluded that on every measure, the northern ports now to be captured by the moratorium, represent the least risk for tanker traffic. Of note, Grassy Point just to the north of Prince Rupert would be Eagle Spirit’s preferred site for construction of a marine terminal and refinery. Seriousness of purpose was further demonstrated with the recent launch of a GoFundMe campaign with the objective of raising $1 million to fight the moratorium through to the Supreme Court of Canada if need be. Further, a Civil Claim was issued by the Lax Kw’alaams Indian Band on behalf of the nine tribes of the Lax Kw’alaams as Plaintiffs in the Supreme Court of British Columbia on March 22 this year. The writ names the Attorney General of Canada and the Crown as defendants. Section 34 of the Claim seeks to capture a key argument in the Claim:
“The said action by Canada was taken in the knowledge that a plan had been developed for an energy corridor from Bruderheim, Alberta, to Grassy Point near Lax Kw’alaams and that this plan had received social licence from all the First Nations along the proposed route. The said action by Canada was therefore taken deliberately to thwart this plan and the ability of the plaintiffs to create economic support for their community based on the development of an oil export facility.” However, project proponents are leaving nothing to chance should it become necessary to circumvent a moratorium. In January this year, the project entered into an MOU with Roanan Corp., a prominent private Alaskan landowner, to relocate from Grassy Point to a site just 25 kilometres over the U.S. border in the old gold rush town of Hyder. The site can be accessed via the disputed waters of Dixon Entrance (claimed by both Canada and the United States) and the Portland Canal. There is undoubtedly strong First Nations enthusiasm for the project with some 90 per cent of partners along the pipeline route having declared support, but there is also opposition. Of note, U.S. foundations financially supported Tides Canada, Coastal First Nations and a plethora of ENGOs to continue to pull every lever in opposition to all Canadian energy development proposals, the most recent casualty being TransCanada’s, $16 billion, Energy East project which would have carried more than one million barrels of oil per day from Alberta and Saskatchewan across the country to be refined or exported from facilities in New Brunswick and Quebec. This is despite the fact that two-thirds of the pipeline is already in existence and would merely have required conversion from gas to oil. However, when it comes to Eagle Spirit, Calvin Helin is of the opinion that First Nations’ business sense will eventually win over critics, and partners will receive compensation “of a completely different order” than proposed by the Northern Gateway Project. He has also commented that “from the indigenous point of view, they have constitutionally protected rights, are sick and tired of being dependent on the government and want to be able to move their communities forward with non-transfer payment funding. This is one
TANKER MORATORIUM
The proposed route from Hyder, Alaska to sea — an option that would allow Eagle Spirit to circumvent the moratorium. of the biggest projects in the history of their communities that would deliver more benefits in terms of employment, business opportunities and revenues, and cannot be duplicated from government programs they are seeking to escape.” It might also be noted that in 2012, Transport Canada conducted a TERMPOL safety review of the marine transportation components of the Northern Gateway Project involving the export of diluted bitumen from the Port of Kitimat. The scope of the review was to determine whether the project could be executed within acceptable risk levels that were consistent with Canada’s regulatory regime, safety standards and industry best practices. Transport Canada concluded as follows: • The review has not identified any regulatory issues or gaps or the need to consider any new regulatory requirements at this time. • The existing international and Canadian marine laws and regulations, complemented by the enhanced safety measures the proponent is committed to implementing and monitoring will
provide for safer shipping in support of the Northern Gateway Project. • The proposed shipping routes are appropriate for the oil tankers that will be used at the proposed terminal. • While there will always be residual risk in any project, after reviewing the proponent’s studies and taking into account the proponent’s commitments, no regulatory concerns have been identified for the vessels, vessel operations, the proposed routes, navigability, other waterway users and the marine terminal operations associated with vessels supporting the Northern Gateway Project. Commitments by the proponent will help ensure safety is maintained at a level beyond the regulatory requirements. The proposed moratorium therefore appears set to overlook the advice of the professional marine industry, including those of the International Chamber of Shipping, but also the advice of the very public servants charged with responsibility for marine safety across Canada. We know of no precedent. We might also consider the words of Jonathan Wilkinson, Member of Parliament for North Vancouver, in the March 16, 2018, edition of the North Shore News when referring to Kinder Morgan’s TransMountain Project. “A number of advocacy organizations have made the claim that the TransMountain expansion would make an oil spill in the Pacific Ocean all but inevitable, and all but guaranteed, but have offered little to substantiate these claims. That’s why objective risk analysis is so critical here — the kind of clear-headed assessment that cuts through the social media distortion that is shaping the reality of some on this issue.” Perhaps there is still time “for a clearheaded assessment” when it comes to Bill C-48. Captain Stephen Brown spent 21 years at sea where he served as Master for the last five years with Gearbulk Shipping. After coming ashore, he worked in various levels of operational management before going on to serve as Chamber of Shipping of BC Director and then President. Captain Brown is currently the owner of West Pacific Marine Ltd., Marine Consultancy. For more information, visit: www.westpacificmarine.ca. May 2018 — BC Shipping News — 37
LEGAL AFFAIRS Interprovincial transport of oil
Wine or wine not? By Karissa Kelln
A Vancouver Lawyer with Bernard LLP
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he interprovincial transport of oil has been a controversial topic in western Canada. In January 2018, the British Columbia government announced plans to develop additional measures to protect the provinceâ&#x20AC;&#x2122;s environment from a heavy oil spill. At that time, it said it would consult with British Columbia residents on issues such as spill response times and response plans, but most controversially, it raised the possibility of an interim ban on increased diluted bitumen exports flowing from Alberta through the Kinder Morgan Trans Mountain pipeline expansion until the behaviour of spilled bitumen is better understood and there is certainty regarding the ability to adequately mitigate spills.
It would appear that, constitutionally, the federal government has the clear right to legislate and approve projects in regards to interprovincial pipelines and interprovincial trade... Premier Rachel Notley of Alberta immediately claimed B.C. was outside of its jurisdiction by proposing to control oil flow through an interprovincial pipeline and launched a moratorium on the importation of B.C. wine in retaliation. Alberta did away with the moratorium after a couple of weeks when Premier John Horgan promised to refrain from further action related to the interim ban until the courts can rule on whether British Columbia has the authority to restrict
increased amounts of oil from coming into the province through the pipeline. As of the time of writing, no relevant court action has been initiated. The federal government, through Prime Minister Justin Trudeau, has continually and emphatically affirmed that this pipeline â&#x20AC;&#x153;will be built.â&#x20AC;? The battle lines have been drawn. One is left to speculate on how this might unfold. The legal framework surrounding the interprovincial transport of oil is as
Westridge Terminal. Photo from the archives of Dave Roels
LEGAL AFFAIRS follows. Section 91 of the Constitution Act, 1867 (the “Constitution”) assigns various powers to the federal government while section 92 of the Constitution lists the powers of the provinces. The relevant provision with respect to provincial jurisdiction is section 92(10)(a), which assigns to the provinces exclusive authority to make laws in relation to “Local Works and Undertakings” other than such classes, including “Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province. “ With respect to federal jurisdiction, subsection 91(29) of the Constitution states that the classes of subjects assigned to the federal government include those expressly excepted in the enumeration of classes of subjects assigned exclusively to the provinces. The result is that the federal government has exclusive authority in relation to the items enumerated in paragraph 92(10)(a) above as if that paragraph had been included among the classes of subjects enumerated in section 91 of the Constitution. Other federal heads of power relevant to this discussion include section 91(2) of the Constitution which empowers the federal government to regulate trade and commerce; and section 91(10) which gives the federal government power over navigation and shipping. In regards to section 91(2), the federal government has exclusive authority to regulate international and interprovincial trade — the regulation of goods, persons, capital, or services crossing provincial or Canadian borders for a commercial purpose. The federal authority over navigation and shipping is quite broad and clearly includes the regulation of ship-sourced pollution and the protection of the marine environment. It would appear that, constitutionally, the federal government has the clear right to legislate and approve projects in regards to interprovincial pipelines and interprovincial trade, including incidents of shipping related thereto. The rationale behind federal jurisdiction over interprovincial trade and navigation and shipping under s. 91 of the Constitution was to ensure the full and free access of the provinces
Short of B.C. attempting to rewrite the Constitution, the province lacks sustainable legal grounds on which to pursue a court action. to national and international markets, and to preclude individual provinces from impairing the trade, navigation and shipping rights of other provinces. This underlying rationale for the federal power over trade, navigation and shipping should support a reasonable expectation of access to the sea by the landlocked provinces of Alberta and Saskatchewan. Trade protections, without the ability to move the respective province’s products to the coast for shipping, would be meaningless. This is the constitutional deal. Short of B.C. attempting to rewrite the Constitution, the province lacks sustainable legal grounds on which to pursue a court action. This may well be the reason that no court proceeding has been launched by Premier John Horgan’s government to date. The central focus is whether perceived environmental concerns should impair established constitutional rights and expectations of access and whether such decisions should be made by the federal government, the provincial government, or individual citizens through acts of protest and potential civil disobedience. To suggest that only British Columbia is concerned about the marine environment may be politically expedient but is factually incorrect. The federal government’s commitment has been backed by the Oceans Protection Plan and 1.5 billion dollars in funding. Having said that, the politics of oil transport are far from consistent at either the federal or provincial (British Columbia) level. Both sides cite tanker safety concerns. None of these concerns are backed by actual data, which clearly show a worldwide near elimination of major tanker incidents; a spotless 60-year history of tanker traffic in southern British Columbia; and increased measures being taken to make B.C. far above world-class in terms of safety. The federal and provincial governments both snuffed the Enbridge Northern Gateway pipeline project (which would have moved oil from Bruderheim, Alberta to Kitimat, British Columbia). The federal
government is instituting a tanker ban (Bill C-48), which would exclude tankers carrying more than 12,500 metric tonnes of oil (12,500,000 litres). It is inconsistent that the northern coast is worthy of special protection but the southern coast is not. No one, including the provincial government, First Nations or environmental protesters has commented negatively on the 12,500-tonne limit — this is a lot of oil. In addition, that amount of oil is carried in smaller ships that statistically worldwide have a higher incidence of accidents. The uncertainty that this debate creates also has a direct effect on the investment decisions of those considering Canada, and particularly British Columbia, as a place to do business. Having obtained federal approval for the expansion of its existing pipeline, Kinder Morgan now faces an amorphous obstacle, thrown up by the B.C. government whose real tactic may well be to create enough uncertainty that Kinder Morgan simply abandons the project. That tactic may have hit pay dirt with the decision in April of 2018 by Kinder Morgan to halt unnecessary expenditures pending resolution of the dispute. The B.C. government, and others who might applaud this move as a victory, should be cognizant of such on the future development of a still resource-based economy. They should also be aware of the potential effect of how governments and citizens view the Constitution. The Constitution protects all Canadians in many ways, most of which have nothing to do with pipelines. The problem with adopting an ad hoc approach to constitutional structure and adherence is that it undermines the legal firmament that holds us together as a nation and, through the Charter of Rights and Freedoms, protects us as individuals. Abandoning the Constitution or thwarting its provisions with non-legal tactics for short-term political gain will become increasingly easier every time we do it. Karissa Kelln is a Maritime Lawyer with Bernard LLP and can be reached at kelln@bernardllp.ca. May 2018 — BC Shipping News — 39
HAZARDOUS GOODS It’s in the can
Containerized cargo: Hazardous and noxious substances risk K. Joseph Spears, Kiley Sampson, Darryl Anderson
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ontainer ships are growing in size as evidenced by the introduction of ultra-large container vessels. Ports that cater to these ships, such as Vancouver and Prince Rupert, have become load centres where container traffic volume has become concentrated. These new generation ships have been designed and developed with economies of scale in mind. The risk has always been there as dangerous goods have been shipped by this method for many years. However, the volume per container vessel is now greater as the size of vessel has increased. This article explores the potential hazards posed by containerized dangerous goods and hazardous and noxious substances.
Hazardous and Noxious Substances (HNS) marine risk
The carriage at sea of dangerous goods has been the subject of an evolving international oversight for many years. As a result of International Maritime Organization (IMO) agreements, flag states have adopted standards to handle new and emerging risks.
Canada recognizes the marine risk posed by hazardous and dangerous goods and has sought to develop an HNS response and liability regime. The IMO’s International Dangerous Goods Code (IMDG Code) provides vessel operators and cargo interests with a comprehensive system of identifying dangerous substances and how they are to be handled and placarded. This is accepted worldwide and integrates into Canada’s regime of land-based transportation of dangerous goods. However, there has been no movement with respect to liability and compensation on the hazardous and noxious substances front. This is to be contrasted with the mature oil pollution liability and compensation that was developed in light of marine oil spills. The IMO has sought to develop a formalized and coherent approach for HNS and drafted the Protocol on Preparedness, Response and Cooperation to Pollution Incidents by Hazardous and Noxious Substances, 2000 (OPRC-HNS Protocol). A key element includes developing emergency plans for vessels and facilities, a
national contingency plan and exercise program along with a minimum level of prepositioned equipment and arrangements for coordinated HNS response. Canada has not yet ratified this agreement, but it has been signed by 33 countries. HNS cargoes often do not occupy a full container, and a lot of specialized cargoes are in bullet tanks within a TEU frame. Nevertheless, it is a requirement of cargo loading that HNS cargo containers are separated by a certain distance from other interactive HNS cargo containers. Some HNS cargo containers are required to be placed on deck. On a container vessel, problems usually arise due to bad rigging practices coupled with bad weather, leading to container movements and physical damage. Container rigging is usually done by the dock stevedores and not ship’s crew, so when there is pressure to sail on schedule this can sometimes lead to improper completion or incorrect rigging.
Photo: www.shipspotting.com
The Hanjin Seattle lost dozens of containers overboard in the Strait of Juan de Fuca in November 2016. While no major consequences were realized, it does raise the need for an HNS response regime. 40 — BC Shipping News — May 2018
HAZARDOUS GOODS HNS risk continues to be an issue both globally and regionally. For example, the ultra-size container ship Maersk Homan, carrying 7,000 containers, became disabled in the Indian Ocean in March of this year. The fire burned for four days. Unfortunately, five crew members were killed. The Maersk Homan was subsequently taken under tow and eventually proceeded to a port of refuge in Oman. It had to wait offshore for some time before permission was granted for it to enter a safe harbour. The ship’s cargo holds contained a toxic brew of intermix chemicals used in the fire suppressants. In addition to a container fire at Vancouver’s Centerm in 2015, more recent incidents off Canada’s Pacific Coast include the loss of containers from the Hanjin Seattle in the Strait of Juan de Fuca in November 2016; and in early February this year, the MOL Prestige required a tow after a major engine fire left her disabled and adrift. Canada recognizes the marine risk posed by hazardous and dangerous goods and has sought to develop an HNS
response and liability regime. This is mirrored at the IMO which has been working on this subject for some time. Consensus is difficult to achieve because of the broad spectrum of hazardous and noxious substances that are carried both in bulk and in packages shipped in containers. Development of a Canadian regime is one of the projects under Canada’s Ocean Protection Plan.
HNS response challenges
The risks posed by hazardous and noxious substances were examined by the Tanker Safety Expert Panel led by Gordon Houston. The chemicals, if not handled properly, can be very harmful to human health. Thus, they are cause for concern when on board a ship, or while being loaded or discharged at marine terminals. Captain Houston and his fellow panelists produced a well thought-out report with 17 recommendations. The research concluded that there was a significant amount of HNS cargoes being moved in containers and an enhanced response regime was required.
HNS incidents raise very real public safety and environmental issues in and around specific port facilities. Thankfully, the historical frequency of HNS incidents is low. These incidents can potentially have high consequences if they occur on land and near populated centres, as we witnessed when 173 people were killed and hundreds injured at the Port of Tianjin, China, when two major explosions occurred at a container storage facility in August 2015. Tianjin highlights the serious nature of HNS response and the need for an adequate marine response. There are over 6,000 items on the HNS list contained in the International Maritime Dangerous Goods Code (IMDG), covering a broad spectrum of goods carried in either packaged or bulk form. The stowage, volume and individual characteristics of so many different chemicals make it impossible to develop a uniform marine response. Container ships with multiple cargoes of packaged HNS goods create special challenges, especially with respect to damaged containers or those lost overboard.
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HAZARDOUS GOODS Problems can arise when chemicals are mixed together in trace amounts. The challenge in determining the contents of containers based on shipping documents and stowage aboard the ship was highlighted in the Houston Report. It is often a real puzzle to determine the actual stowage location of HNS cargoes on container vessels in order to plan an HNS response. Complex chemical reactions and explosions can develop under elevated temperatures or when there is a mixing of chemicals. The Tanker Safety Expert Panel stated, “Given that interactions between certain substances can result in a highly
42 — BC Shipping News — May 2018
volatile and/or toxic reaction, the presence of hundreds of different HNS may present a severe hazard not only to potential respondents but also to surrounding populations.” The 2015 Tianjin incident has proved that the Panel’s words were timely. HNS cargo spilled on water could float, mix, sink or evaporate and/or explode, or all of the above. There is often no means to recover and secure the HNS cargo. In Canada, there is presently no existing HNS response regime for vessels. Transport Canada administers the Dangerous Goods and IMDG Code program, but it is not integrated into the
marine response domain. The Panel found that it was important over time to build preparedness and capacity for an HNS response. Response preparedness requires training, funding, capacity and Canadian Coast Guard leadership. HNS response also requires a partnership between the public and private sectors which would require an ongoing review of the adequacy of preparedness and response capacity. Response to an HNS incident differs from oil in that responders need to make a rapid assessment of the situation. Effective response requires detailed knowledge from an array of data sources.
HAZARDOUS GOODS Consequently, response can be a somewhat labour-intensive process where responders must deal with inadequate information. Response strategies set out in the Tanker Safety Expert Panel’s report for HNS also include limiting entry into the environment, forecasting spill trajectories and monitoring. The panel made a series of 17 recommendations with respect to HNS cargoes. One of the major issues was obtaining timely cargo information from vessels and the development of an HNS response plan for both the vessel and facility, to be shared with first responders and other interested parties. One of the most important issues was the sharing of cargo manifest and stowage plans in the event of an HNS incident. Information sharing is critical for an effective response. HNS response is an important part of Canadian port operations. For example, in the Port of Vancouver, the operations department reached out to a variety of first responders to test their capacity. On April 6, 2018, an exercise at Canada Place was held. The insights from this exercise
Effective response requires detailed knowledge from an array of data sources. Consequently, response can be a somewhat labour-intensive process... will lead to a robust and resilient marine response capability for HNS. Vancouver Fire Rescue Services is no stranger to marine response. The organization has taken a very forward-leaning stance on this subject even though it is not technically within their jurisdiction. The VFRS has obtained two new fire boats and have trained 60 firefighters in shipboard firefighting. Added to this, 14 firefighters are trained with Transport Canada marine certification. This step builds the solid cadre to deal with HNS risk in Vancouver.
Conclusion
As our ocean governance regime evolves, we need to start looking at the very real risk of HNS incidents. The Tanker Safety Expert panel recommended that Canada ratify the OPRC-HNS Protocol. Development of an HNS marine
response regime will be a major challenge for the marine community. Nevertheless, integrated response thinking and dialogue are essential risk management tools. Canada’s marine authorities, including Transport Canada, Canadian Coast Guard, port authorities and marine first responders need to work hard to ensure the risks remain in the can. Kiley Sampson, Principal at Halthorn Marine, with a career of 35 years encompassing, onboard chief engineer, surveyor, expert witness, valuations, project management, ship building, vessel operations, policy and marine operations. Kiley is a graduate of the Canadian Coast Guard College. He has worked throughout the world in various capacities including senior executive positions and is actively involved in multiple projects in the area on green shipping specializing in ship efficiency and propulsion systems.
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RAstar 4000-DF
Dual Fuel Offshore Terminal/Escort Tug Pax
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May 2018 — BC Shipping News — 43
ENVIRONMENT
GreenTech 2018 makes underwater noise a key focus By Manon Lanthier, Green Marine
U
nderwater noise will be a major topic at Green Marine’s 11th annual conference this May 30 to June 1 at the Vancouver Marriott Pinnacle Downtown Hotel. Already a priority issue for Green Marine as the focus of two of the environmental certification program’s new performance indicators (for ships and ports respectively), it will be the subject of one of GreenTech 2018’s plenary sessions. Krista Trounce of the Vancouver Fraser Port Authority, Richard Huey at the Washington State Ferries, Leslie James with British Columbia Ferry Services, Lee Kindberg at Maersk Line, along with Michael Jasny from the (U.S.) Natural Resources Defense Council and Michelle Sanders of Transport Canada will offer their expert perspectives on reducing underwater noise and its impacts on marine mammals.
The data was then processed to identify each vessel and analyze its noise level using a method closely conforming to the American National Standards Institute (ANSI) standard for measuring ship noise. Initial deployment of the listening stations took place from July 6 to September 8, 2017, and the second deployment occurred from September 8 to October 26, 2017, to obtain source level data for comparison from prior, during and after the trial slowdown. Data from these temporary deployments were collected and analyzed following a methodology developed for the ECHO Program’s
Trial slowdown
Trounce will discuss the Enhancing Cetacean Habitat and Observation (ECHO) Program that assessed various potential mitigation measures to reduce underwater noise in the Salish Sea two years ago. ECHO identified a trial slowdown of vessels through the Haro Strait as a priority for reducing the noise affecting southern resident killer whales. The ECHO team requested piloted commercial vessels to slow down to 11 nautical miles through this corridor for two full lunar months starting in early August 2017. Summer is when southern resident killer whales typically gather in this geographically constrained area to forage alongside a busy and often noisy shipping lane. The slowdown helped the ECHO research team to use strategically placed hydrophones to analyze how reduced speeds altered vessel noise, especially ambient noise reaching the waters at Lime Kiln State Park on the western shore of San Juan Island in Washington State —an important gathering area for southern resident killer whales. The ECHO team and port authority worked with the Chamber of Shipping, Shipping Federation of Canada, the Pacific Pilotage Authority (PPA), British Columbia Coast Pilots Ltd., and other industry representatives to coordinate the voluntary slowdown. SMRU Consulting and JASCO Applied Sciences were contracted to collect and analyze the acoustic and whale data before, during and after the trial period. Both vessel speeds and their corresponding acoustic signature had to be benchmarked in the trial zone before the slowdown to be able to determine the relative change in noise emanating from vessel sources. Two listening stations were temporarily deployed in the inbound and outbound shipping lanes within Haro Strait. Each station consisted of a single hydrophone and recorder to directly measure the acoustic signature of passing vessels.
44 — BC Shipping News — May 2018
Infographic from the Vancouver Fraser Port Authority explaining the process of the vessel slowdown trial.
GREEN MARINE Strait of Georgia Underwater Listening Station (ULS) which has been measuring vessel source levels on the approach to the Port of Vancouver since 2015. In addition to the measurement of vessel source levels, the ECHO Program has been supporting the recording and analysis of total ambient underwater noise near Lime Kiln State Park since early 2016. This data allowed for a statistical comparison of how the slowdown trial affected total ambient noise in a key killer whale foraging habitat. Both acoustic detections and visual observations were made from Lime Kiln for a general evaluation of killer whale presence before and during the trial period. Evaluating the potential changes to whale behaviour from passing vessels during the slowdown trial would be very challenging. As such, in order to assess the potential benefits to the whales from the slowdown trial, an existing behavioural response model was used to evaluate the differences between potential “lost foraging time” during average traffic conditions and slowdown trial conditions. The complete trial findings will be published in May 2018 and shared at GreenTech 2018. The ECHO team and its consultants are still working to finalize all the underwater noise data collected from the trial, but the findings indicate that: • Vessel underwater noise is reduced at slower speeds. The noise reduction is greatest in ships that normally travel fastest and, therefore, have to make the largest reduction in speed to achieve 11 knots. • The Lime Kiln hydrophone, which is located away from the shipping lane, registered less overall noise during the trial. • Killer whale behavioural response modelling indicates the amount of impacted foraging time resulting from vessel noise, is reduced when vessels transit more slowly. • While slowing vessels generate less noise, they remain in a given area for a longer period of time. The quieter times between vessel passes under normal vessel speed conditions are therefore reduced in duration and are less quiet during slowdown conditions.
The slowdown helped the ECHO research team to use strategically placed hydrophones to analyze how reduced speeds altered vessel noise and overall ambient noise... of Chinook salmon stocks that was also observed is thought to be a contributing factor. This preliminary assessment is being further analyzed and Trounce is anticipated to share the final results as part of her GreenTech presentation, as well as the planned next steps that include working with regional stakeholders to evaluate the efficacy and feasibility of vessel slowdowns as a potential long-term mitigation as a seasonal measure or based on real-time whale presence assessments. Potential methods to inform marine pilots and commercial vessel captains of the presence of killer whales in the Salish Sea will also be explored. Underwater noise is one of several pressing or emerging environmental issues being addressed at Green Marine’s annual conference this year. Other key topics include the prevention of biofouling, sustainable development in times of traffic growth, and advanced technologies for low carbon transportation. A good part of the conference will also deal with improving public engagement through more effective communication strategies and tools. For more information about GreenTech 2018, or to register for the conference, visit www.green-marine.org/greentech.
Participatory success
From a participation standpoint, this voluntary project is already deemed a success. The nine-week trial — running August 7 to October 6, 2017 — had an overall vessel participation rate of 60 per cent. The PPA reported that 578 of 951 piloted vessels participated in the voluntary slowdown trial. Vessel speeds were validated using AIS average speeds within the slowdown area. A pilot’s report of “yes” for participation, i.e., a vessel slowing to 11 knots, was compared with that vessel’s average measured speed over the slowdown area. In all, 44 per cent of all piloted vessels achieved a speed through water of less than 12 knots; 55 per cent of vessels slowed to less than 13 knots. Last summer turned out to be a unique year in terms of the southern resident killer whale presence. The killer whales typically occupy the waters near Lime Kiln frequently over the summer months. Their presence was visually recorded from Lime Kiln on 45 days between June and October in 2016. However, they were observed on only 13 days during the same period in 2017, which is a 70 per cent reduction in their presence. The poor return May 2018 — BC Shipping News — 45
POLAR SHIPPING A polar paradox
The ethical case for commercial shipping in the Arctic By Jeffrey Smith
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he winter of 2017-18 is now a receding memory. Much of Canada experienced the season’s weather in the usual, even traditional, way. After the forest fires and floods of recent years, a kind of climate normality has apparently returned — but not in the Arctic. A sustained period of warming left the polar ocean’s ice cover at its second lowest extent on record, yet more proof of human-created atmospheric warming; climate change. While it may be more than a decade before the Arctic Ocean is sufficiently ice free to allow multi-season passage for commercial shipping, a reckoning of that prospect is now at hand. No great marine trading route was built in a day. Making a decision to prefer the Arctic as a route for commercial shipping has arrived. In this article, I contend that an opening of the Arctic to commercial shipping is an ethical imperative. In other words, the public and environmental utility of promoting commercial shipping in the polar north outweighs the disadvantages of increased shipping traffic, including those sometimes resulting from shipping as a transportation activity, and particular risks to the region itself. Arctic shipping in the face of a retreating sea ice cover has several justifications, of course. An obvious one is economic development for ports and local communities, while acknowledging that, for now, the future use of the Arctic is thought of in terms of transit shipping, and only limited trading activity in the region itself. A second justification is the anticipated role of shipping in bringing the region’s resources to market. Such a rationale was reduced by an agreement between Canada and the United States in 2016 to prohibit seabed petroleum exploration in the two states’ Arctic areas, and in a minor way by a 2017 agreement of 10 states for a moratorium on fishing in the central polar area. Shipping traffic for the Arctic will predictably remain limited in the coming years, no more than hundreds of voyages annually. None of this is to deny the considerable benefits, even on local scales, of ocean trade. However, opening the Arctic to greater commercial shipping is a particular ethical obligation. The reason is simple. The region offers shorter navigation routes than those traditionally used in the north Atlantic and north Pacific Oceans (and especially between Asia and Europe). In dealing with the problem of climate change, reducing the use of petroleum fuels and thereby greenhouse gas emissions from ships, shorter — more efficient — navigation routes need to be preferred. This is the basis of an ethical case for commercial shipping in the Arctic. The challenge of ethical behaviour, however, is less in recognizing an imperative to act and more to understand the responsibilities of those involved and identify risks. The Arctic exemplifies both these challenges. That is because the region is relatively new when it comes to shipping in general — consider the recent arrival of summertime passenger cruise ships — and 46 — BC Shipping News — May 2018
In dealing with the problem of climate change, reducing the use of petroleum fuels and thereby greenhouse gas emissions from ships, shorter — more efficient — navigation routes need to be preferred. the prospect of transit shipping. The responsibilities of the various interested parties — coastal and flag states, the industry, the International Maritime Organization (the IMO), and local peoples — remain incompletely understood and unreconciled. The core ethical problem of what can be called this distributed responsibility is that no single interested party has the imperative to foster Arctic shipping, and avoid risks when pursuing such shipping. This recognition (or identification) problem can be found on a grand scale in the global response to climate change. No single
Arctic shipping routes in the month of September for the years 2040-2059, under a predicted scenario of extensive loss of sea ice-cover. Blue lines show the fastest routes for non-ice strengthened ships, while red lines are optimum routes for ships of Polar Code 6 category hull construction. (From Smith & Stephenson, “New Trans-Arctic Shipping Routes Navigable by Mid-Century,” Proceedings of the National Academy of Sciences, 2013)
POLAR SHIPPING state, industry or organization has an explicit duty — ethically or in law — to act first to reduce greenhouse gas emissions. The result after the 2015 Paris Agreement on climate change has been the phenomenon of free-riding by most states, and difficulties for governments to credibly convince their citizens to consider the problem of a warming ocean and atmosphere, and to modify their behaviour. This is also the experience of the global commercial shipping industry. It is the IMO which is to prescribe the means of reducing greenhouse gases in the industry, not states. However, because of the considerably different interests of states responsible for decision-making in the IMO, tangible measures in the industry to address the problem of global warming are less than a decade old and may now be insufficient. A part of this problem of identifying those responsible to ensure the use of the Arctic for commercial shipping can be answered by the law of the sea — but not much. The basic principle since the time of Hugo Grotius in the 1600s and the emergence of the modern, so-called Westphalian state is that the seas must remain open to unrestricted commerce. No coastal state can (without strong cause) restrict the passage of shipping, not even — providing a ship is proceeding innocently — through territorial waters. When it comes to the Arctic, this precept is sometimes cited as a reason for Canada to claim historic or internal water status over the straits of the North West Passage. Readers of international law know that such an historic waters claim is without foundation. An extensive or even heavy regulation of North West Passage shipping is one thing. Denying passage is something else entirely. In this setting of freedom of the seas, states must not restrict commercial shipping. Correspondingly, however, there is no basis for them to promote transit shipping. States have historically pursued shipping and new navigational routes from self-interest: export trade, and gaining market advantage for domestically flagged shipping. There are four kinds of interested parties when it comes to Arctic shipping, namely: (i) the governments of coastal states — Canada, Greenland (Denmark), Norway, Russia and the United States; (ii) the industry itself (and therefore flag states); (iii) those seeking carriage of goods (and people) by more direct routes; and (iv) those concerned with reducing greenhouse gas emissions from human activities. It is this constellation of interests that must be brought together to effectively realize shipping in the region. The first three of these parties have an evident economic interest at stake: Arctic shipping is less costly for them. However, the involvement of the fourth is a paradox. Why should those concerned with greenhouse gas reduction want to foster more use of emergent navigational routes? The answer is that climate change and its causes are globally distributed, and that a net reduction in the overall consumption of petroleum fuels is desirable. But those who would contend the answer lies in simply reducing global shipping traffic may not be won over so easily. Two responses can be offered to them. The first is the hard fact that ships for more than local and coastal voyages will rely on petroleum fuels — be it LNG, HFO or MDO — into the foreseeable future. The second, more persuasive response is that shipping is to be preferred over aviation and road transport for its comparatively lower greenhouse gas emissions. These two responses need careful consideration by the shipping industry and its supporters: coastal states, flag states, trade interests and others. The continuing necessity
An opening Arctic. Peak winter ice coverage in the polar ocean since 1981. (National Snow & Ice Data Centre, Boulder, Colorado. See: <www.nsidc.org>)
The continuing necessity to use petroleum fuels ... means persuading others of the economic and climate change benefits of doing so. to use petroleum fuels in a significant part of a globally trading industry means persuading others of the economic and climate change benefits of doing so. The discussion of Arctic shipping is a useful test of that persuasion. The scales of ethics are balanced by benefit and by risk. So we must ask if a growth in Arctic shipping — whether for transit passage or local trade — will bring unacceptable risk even as it contributes to reducing greenhouse gas emissions. There has arguably never been a more regulated ocean area because of a now binding IMO Polar Code and, in the North West Passage (Canada) and the Northern Sea Route (Russia), schemes for vessel position reporting and navigation routing control. The Polar Code is the apex of a comprehensive safety regime operating through the SOLAS-MARPOL-STCW framework of ship design, construction, performance, crewing and environmental standards. Complying with the Polar Code means an ability to get much of the basics of safe shipping right. But does regulation translate to actual safety? This is the essential consideration of examining the risks of increased shipping in the Arctic. The risks include marine pollution (casual and catastrophic discharges from ships), and the problem of distance and adequate resources for search and rescue. The eight countries of the Arctic Council have started to address such things, although actual collective efforts — for example the staging of joint-use pollution response materials or a scheme of common designated emergency response vessels — are for the future. The greatest short-term contribution of states around the Arctic basin to reducing risk is surely navigational safety. This means many things, among them crew competence (to the extent a coastal May 2018 — BC Shipping News — 47
POLAR SHIPPING
The MV Clipper Adventurer aground in Coronation Gulf on August 29, 2010. (Photo courtesy of the Canadian Coast Guard)
state can assure that for foreign flagged vessels), sound traffic management arrangements and, above all, accurate marine charts. Once again, international law only prescribes a weak obligation. Under Article 24 of the UN Convention on the Law of the Sea, a “coastal State shall give appropriate publicity to any danger to navigation, of which it has knowledge, in its territorial sea.” The 2010 grounding of the cruise ship Clipper Adventurer in Coronation Gulf and resulting litigation between the ship’s owner and the government of Canada — in a case disposed of by the Federal Court of Appeal in February — suggests this duty to warn is limited. Completing the demanding and expensive work of accurate cartographic and hydrographic surveys, arguably overdue, is clearly the most important task for Arctic states at the present time. Humanity’s effort to limit (and perhaps reverse) human-caused global warming is at a critical juncture. That is because alternatives to petroleum fuel are only beginning to have widespread adoption; because there may be technical (and cost) limits using new forms of energy (including for ship propulsion); and because the pace of necessary measures doesn’t seem fast enough. It seems logical to suggest that the response to global warming should include some shipping being redirected to the Arctic, even as it may never have more than modest benefit given the scale of worldwide shipping. The suggestion reveals a paradox: To an Arctic with important functions for the Earth’s climate and which is experiencing pronounced changes from global warming, we are contemplating bringing ships which emit greenhouse gases. The paradox is resolved when we remember that ethical decisions turn on a balancing of benefits, of achieving the most ideal result for the greatest number of people — and the environment. Jeffrey Smith is professor of law in the Norman Paterson School of International Affairs at Ottawa. His research includes evaluating the effectiveness of shipping safety regulation and responses to climate change in the marine industry. A former RCN chief engineer and a Fellow of the Canadian Institute of Marine Engineering, he is a frequent contributor to BC Shipping News.
48 — BC Shipping News — May 2018
FINANCE
Protecting your business from fraud By Andrew Kostiw, Director Treasury Management, TD Bank
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aving worked in the financial services industry for over 20 years, I can confirm that the topic of fraud and fraud prevention has never been a more hotly discussed issue with my clients. There is not a week that goes by without a client telling me about fraudulent activity, or an attempted fraud, to their business. Every year, thousands of Canadians fall victim to credit card and debit card fraud, telemarketing scams, identity theft, online fraud and insurance fraud.
A common story
I often hear of stories where emails were received, always of an urgent nature and claiming to be from the CEO or senior management, requesting a money transfer be sent immediately to an unknown destination. Often done at a time when companies are busier than usual and operating with fewer employees (around holidays, for example), catching staff off guard. Fraudsters have become so sophisticated and targeted that they often use tools, like various social media channels, to determine when key executives from a company are away. There is no doubt that employees strive to do the right thing, and sometimes that thing is as simple as taking a pause and asking yourself the following questions: Does this email match what my CEO or manager would normally ask me to do? Does it seem suspicious? Should I call to verify? Some examples of the types of frauds we are seeing more frequently include: wire fraud, invoice fraud, cheque fraud and business email compromise (BEC). Unfortunately, these examples only represent some of the types of fraud that are out there. Remaining vigilant and aware of the threat is an important piece of the prevention process. I have learned a lot from
Every year, thousands of Canadians fall victim to credit card and debit card fraud, telemarketing scams, identity theft, online fraud and insurance fraud. delivering fraud-prevention seminars to my clients. I have learned about different types of fraud attempts and I am increasingly shocked at how creative and sophisticated they have become. It is becoming increasingly difficult to detect potential fraud and protect your business. That is why it is critical that businesses constantly think about fraud prevention techniques and discuss this topic with their employees on a regular basis.
So what can we do?
The following is a list of fraud prevention techniques that I have shared with my clients over the years. By no means is this an exhaustive list but it does touch on some of the key areas that businesses should consider when combatting this threat. Reconcile, reconcile and reconcile — Reconcile all your business banking transactions daily. This data can be quickly and easily accessed using your online Cash Management portal and will give you same day insights into your accounts and transactions. Remember when fighting fraud, early detection is an important component in any recovery effort. Manage or reduce those cheques — The good news is that cheques are declining in usage, the bad news is that they continue to be a primary payment method for many businesses and the primary target for fraud attempts. Cheque fraud has been around for many years, so if your company needs to issue cheques, it’s important to take steps to help prevent it from impacting your business. Some prevention techniques to consider include: centralize cheque issuing, use the latest security features on cheques like chemical protection, padlock icons
and always use Magnetic Ink Character Recognition Serial Numbers (MICR) on business cheques. If cheques must be issued, consider adding a fraud protection service such as Positive Pay or Payee Match to help mitigate cheque fraud exposure. Validate payment instructions — Exercise caution when receiving emails containing instructions appearing to be from, or on behalf of, an executive who requests urgent processing of a wire transfer. Verify such requests through another channel (such as a call back) to confirm authenticity. Payment authorizations — If your company makes online payments (EFT, wires), consider the number of approval levels in place before that payment leaves your bank account. Does it match the signing authority on your bank accounts, is there a separation of duties between payment creator to payor and is there a payment verification process in place for online payments? Many clients for example, are now moving to dual approvers on all electronic payments. Check your surroundings — Inspect Point of Sale equipment regularly including serial numbers, wires and cables. If any equipment looks unfamiliar, appears altered, or is missing, notify your merchant solutions provider immediately. Check ceilings, walls or shelves near PIN pads for holes that could conceal a small camera. Install debit terminals so that customers have enough room to comfortably shield the PIN pad when entering their PIN number. The most common way of stealing a cardholder’s PIN is by “shoulder surfing” — looking over the cardholder’s shoulder. Make sure that any security May 2018 — BC Shipping News — 49
FINANCE
cameras on the premises don’t capture customers entering their PIN. Verify your online transactions — To help protect your business from fraudulent online transactions, be sure to monitor
your account activity and take advantage of security features available from the payment networks. These include things like using available CVV code or billing address verification services. Use
of Verified by Visa® or MasterCard® SecureCode services are also highly recommended for e-commerce merchants to add an extra level of security, and can provide greater protection from fraud-related chargebacks. Talk about it with your team — Fraud is not going away. In fact, it is only getting more sophisticated and complex. Consider incorporating fraud prevention techniques in your ongoing monthly team meetings. Share best practices with your team and encourage employees to speak up if they detect something suspicious. Unfortunately, there is no magic bullet for preventing fraud; rather, it is a multipronged approach that includes techniques and tools that, when applied together, can help protect your business from potential fraud. Andrew Kostiw is a Director of Treasury Management at TD Bank in Vancouver. Andrew has over 20 years of experience working in the banking industry including Commercial Banking and Cash Management. He can be reached at andrew.kostiw@td.com.
SATURDAY, AUGUST 4TH, 2018 - 6:00 pm Ticket Prices: $175 per person
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SAFETY AT SEA
Fast patrol craft reaching for better boat handling
T
he lightweight aluminum davits chosen as the boat handling solution best suited for fast patrol craft are rapidly extending their appeal among navies and other border forces, according to Vestdavit. The leading supplier has recently been advising classification societies on upgraded guidelines on davit performance that go far beyond the standards set by the Safety of Life at Sea Convention. The soon-to-be published guidance is expected to coincide with longstanding recommendations from Vestdavit that boat lifting and lowering speeds should take account of sea states, acknowledging the safety benefits of dynamic shock absorbers, boat guiding arms and self-tensioning wires. Davits used on fast craft merit special attention, according to Rolf Andreas Wigand, Managing Director, Vestdavit. The company recently saw two 26-knot Cape-class vessels enter service with the Australian Border Force, each equipped with a pair of lightweight PLAR-6500 units to lift 6,500 kg rigid hull inflatable boats (RHIBs). Vestdavit has already
installed 16 units on eight earlier ABF Cape-class vessels. The all-aluminum davit system is 30 per cent lighter than its steel counterpart. “Davits must be optimized for safety and efficiency, but fast patrol craft pose challenges for marine equipment,” says Wigand. “Weight is a specific variable; every kilo saved is an opportunity to enhance vessel stability or add payload, or both. Resilience and reliability are performance prerequisites, but so are stability and rapid deployment. Lighter davits enhance manoeuvrability, fuel consumption, speed responsiveness, in turn expanding a vessel’s operational window.” The all-aluminum option from Vestdavit is also preferred for fast patrol boats by the Royal New Zealand Navy, the Danish Navy, the Swedish Navy, and the US Coast Guard, says Wigand. The US Coast Guard is currently installing aluminum PLA-2000 rescue boat davits on their nine Bay-class 140 foot icebreaking tugs. Security forces in the Middle East and South Asia are now considering the solution for fast patrol vessels.
Safe working loads for all-aluminum davits from Vestdavit range between 850kg and 7,000kg, and the equipment type is easy to retrofit, Wigand says. The self-tensioned PLAR-6500 davits are fully SOLAScompliant but, in line with Vestdavit’s recommendations to Class, also feature shock absorbers, guiding rails, wire haulers, hydraulic end stops and independent HPUs. These attributes combine to help launch and retrieve boats safely at up to 10kts in heavy seas which, in the case of the ABF, stretch from the tropics to the Antarctic. “A-frame aluminum davits have been designed for use where weight is a high priority, but they are also corrosion-proof and proving themselves day-in-day-out as hard-wearing, high performance assets that navies and coastguards rely on for rapid boat launch and recovery.” PLAR Type davits are hydraulically operated with power stored via accumulators in compliance with latest SOLAS requirements. They can be installed with optional Wave Compensation System on winch, Hydraulic Wire Puller, Hydraulic Limit Switch and Remote-Control unit.
The Vestdavit fast patrol craft is now being used by navies around the world. May 2018 — BC Shipping News — 51
SAFETY Canadian Lifeboat Institution
Delta Lifeboat has an early start on activity
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he Canadian Lifeboat Institution is having a busy start to 2018. In addition to spending over two weeks in February/ March in the French Creek area to assist with the herring fishery, the Delta Lifeboat hosted members of the Canadian Coast Guard’s Marine Communications and Traffic Services in mid-March to provide familiarization with the Fraser River. Both sessions highlight the pro-active and extra-curricular activities of the Canadian Lifeboat Institution. BC Shipping News caught up with Captain John Horton who described both events.
CLI’s volunteer crew: Brian Cook, Lynn Harrison, Brian VanVlie, Bjorn Andersson, Andy Russell and John Horton.
52 — BC Shipping News — May 2018
2018 herring fishery
March is traditionally “herring time” in the area between Nanaimo and Comox. The fishing fleet vessels gather to harvest the roe herring for the lucrative market. This particular fishery can be very dangerous and, in fact, in 2017, one vessel sank and tragically took one life. The Canadian Lifeboat Institution has a history of deploying its lifeboats to the fishing grounds on standby and offering safety protocols in case of accidents. This year, the Delta Lifeboat left Ladner on February 24 with her volunteer crew, to patrol between French Creek and Comox. Work was carried out in close cooperation with Fish Safe BC and WorkSafeBC to monitor safe work practices. Also, many exercises were conducted with various fishing vessels, including towing, recovery of Man-Overboard, pumping out flooded vessels, firefighting and search patterns. This year’s fishery was blessed with good weather except for one day of gale force winds. The good news was that there were no accidents or fatalities. The bad news was that the amount of fish caught and the quality was very poor. Many of the sets were invaded by thousands of California sea lions who would jump right into the nets and devour much of the catch — as if it were their local restaurant. The Delta Lifeboat returned to Ladner on March 11 following a very successful deployment. Thanks were received from the Canadian Coast Guard, Fish Safe BC and the fishing companies for a job well done.
CANADIAN LIFEBOAT INSTITUTION Familiarization trip
On March 15, seven members of the Canadian Coast Guard’s Marine Communications and Traffic Services (MCTS) in Victoria travelled to Ladner to join the Delta Lifeboat for a familiarization tour of the very busy Fraser River. The group was made up of several radio operators new to the area and able to benefit greatly from a tour from Sandheads to New Westminster. Learning firsthand about the waterway, its general environment and the issues involved in moving commercial traffic of different descriptions under all conditions was invaluable. Safety is paramount on one of Canada’s busiest waterways with commercial ships up to 290 metres in length. Add in tugs and barges, intermodal ferries, fishing vessels and pleasure craft and the Fraser River can be a very busy place. Joining the Delta Lifeboat to provide commentary and answer questions for MCTS staff was Captain Mike Armstrong, Chair and active pilot for the Fraser River Pilots; Captain Stephen Brown and Commander
The Delta Lifeboat crew hosted MCTS staff from Victoria on a tour of the Fraser River. The exercise allowed those new to the region to experience activity on the river firsthand. (R) Bob McIlwaine, both directors of the Canadian Lifeboat Institution; Ryan Ford, Director of Fish Safe BC; and Jane McIvor, Publisher of BC Shipping News.
The exchange of information between all the groups added a huge understanding of the day-to-day workings of the Fraser and the joint role each organization plays.
May 2018 — BC Shipping News — 53
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