B.C. marine industry initiative feared dead in the water

It has attracted 15 new shipping companies to Vancouver over the last three years with a projected impact of more than $1.3 billion to B.C.’s economy, but the three-year Vancouver International Maritime Centre (VIMC) pilot initiative to establish the city as a global maritime hub appears to be running out the clock.

VIMC executive director Kaity Arsoniadis-Stein said government funding to keep the centre afloat and continue to bring more high-value maritime businesses to Vancouver is unlikely to be renewed.

“We are hoping by some miracle that the provincial government does something for us,” she said. “But if the province isn’t at the table, the federal government isn’t coming to the table. And this type of project does not get funded by industry [headquartered elsewhere]; you can’t fund regional economic development by competitors. It’s not going to happen. So who’s going to go out and market Vancouver?”

The provincial Ministry of Transportation and Infrastructure did not responded to requests for comment. Officials have vowed in the past to continue to work with international maritime-related businesses to promote B.C. as a business location. 

The VIMC is a three-year pilot program whose federal and provincial funding concluded in March 2018. According to a statement by Western Economic Diversification Canada, VIMC “met all requirements outlined in its funding agreement” but did not mention a chance for renewal.

Instead, federal officials are pointing to other programs - like Western Economic Diversification’s $1 million funding to the Association of British Columbia Marine Industries (ABCMI) last November, which is aimed at improving labour opportunities for women, First Nations members and youth through better training and networking support.

“[Western Economic Diversification] makes strategic investments in initiatives that enhance and strengthen the economy of western Canada,” a statement from the federal department said. “… While [Western Economic Diversification] does not have a program that specifically targets port/shipping business activity, the department has invested in projects that support this sector.”

In addition, Transport Canada spokesman Simon Rivet outlined several efforts from Ottawa aimed at boosting Canadian players in the global shipping and trade sector. These include the $2 billion National Trade Corridors Fund, a merit-based program that supports investment into projects that “support economic activity and the movement of goods and people.”

“To date, 39 projects have been approved for funding, with the Government of Canada contributing more than $800 million.”

Rivet added that a third call for proposals is now underway.

He said more than $247 million has been committed to 12 projects in B.C., seven of which are in the Vancouver area.

Arsoniadis-Stein said that the frustration for VIMC, which has received approximately $5 million in funding over the last three years, is that many government investments into infrastructure miss the point. 

She noted that while Vancouver remains North America’s most diversified port, investment focus has been on goods movement through the port. VIMC estimates this activity is valued at about $3 billion across Canada.

But she pointed out that major international shipping hubs like London, Singapore and Oslo offer far more: an “upper stream” cluster of business activities associated with shipping, such as ship management, brokerages, research and development, chartering, maritime law, ship finance, insurance and technology, that VIMC estimates could be worth up to $20 billion if Canada attracted a significant concentration of those businesses. 

Such a hub would allow Vancouver to profit not only from ships that make their way here, but also from shipping routes all over the world.

“We put billions into infrastructure development to facilitate the throughput, but we are not playing in the top part, the business activities portion of the pyramid,” said Arsoniadis-Stein. 

To reverse the trend, she said Vancouver needs to attract more ship owners. She cited examples such as Panama, Bermuda and the Marshall Islands that have successfully lured owners away from established hub cities by offering a flat tonnage tax for vessels instead of taxing shipping revenue.
Arsoniadis-Stein added that Canada’s tax regulation guarantees similar advantages that should be very attractive to owners.

“Our income taxes are enshrined in legislation,” Arsoniadis-Stein said. “Income off ships trading globally do not attract Canadian taxation. That’s how you can compete with Hong Kong, Singapore, Oslo, Cyprus, Rotterdam.… We need to attract the ship owners.… When you bring them in, the rest will follow in. That’s how you build a hub.”

VIMC has helped land several big players to establish shipping-related operations in Vancouver. Perhaps chief among them was the announcement last July that Singapore-based China Navigation Co. – owned by British conglomerate John Swire and Sons Ltd., which also owns Cathay Pacific Airways (HKG:0293) in Hong Kong – decided to open its North American headquarters in B.C. (see “Global shipping conglomerate brings its HQ to Vancouver” – BIV issue 1500; July 31–August 13).

The multinational conglomerate, which employs 136,000 staff worldwide and has a market cap estimated at US$69.4 billion, posted 2017 revenue of US$29.3 billion. Vancouver’s profile has also risen in the global marine sector during VIMC’s run. 

In 2017, Monitor Deloitte chose the city as one of five global marine hubs for comparison with European counterparts, and Vancouver made the list of Norway-based Menon Economics’ leading maritime capitals of the world. It was ranked in the fifth tier – along with Los Angeles, Bergen, Istanbul and Kaohsiung – among 30 ports.