South of the border, rumblings are growing of an American investigation into whether the Port of Prince Rupert’s successful container business has unfair advantages over U.S. ports.
Richard Lidinsky is chairman of the Washington, D.C.-based Federal Maritime Commission (FMC), which regulates American water-borne commerce.
He said he’s expecting the U.S. Congress, soon after it reconvenes in September, to ask the FMC to launch an investigation into the Port of Prince Rupert’s container business.
In 2010, the Port of Prince Rupert’s container volumes grew by nearly 30% to more than 340,000 TEUs (20-foot equivalent container units). In September 2010, Prince Rupert was named North America’s fastest-growing container port by London, U.K.-based Drewry Shipping Consultants.
Lidinsky said the concerns he’s been hearing from West Coast members of Congress centre around:
•a harbour maintenance tax that gets slapped on containers coming through U.S. ports that has no equivalent in Canada;
•a belief that Prince Rupert port security is more lax than security at U.S. ports; and
•differing rail structures on both sides of the border that give advantages to Canada.
“This all leads up to the fact that people have alleged that a shipper coming from, let’s say Shanghai through to the Chicago area, is paying up to $600 a box less [if it’s shipped through the Port of Prince Rupert] than if that same box had come through Seattle.”
Lidinsky said Canada isn’t believed to be breaching NAFTA or any other bilateral agreements. But he said the U.S. wants to establish whether the FMC has jurisdiction over U.S.-bound cargo arriving through a Canadian port.
“It needs to be established because we have statutes that deal with preference – one shipper over another shipper – and discrimination,” he said. “It’s a general regulatory framework that we’re trying to clarify.”
Lidinsky said one suggested “solution” to levelling the alleged unequal playing field would be to have the U.S. require U.S.-bound containers being shipped through Canada to pay the harbour maintenance tax – “to equalize the treatment [of cargo].” But he said NAFTA makes that difficult to legislate.
Lidinsky said there’s no push for confrontation with Canada.
“We’re not trying to erect any kind of barrier or wall in Canada,” he said.
“If the shipper wants to come through Canada, that’s his choice. If he feels he gets a better shipping deal coming through Rupert than through Seattle, that’s his choice. But we want to make sure he’s doing it by the rules and those ports can compete equally for that cargo.”
However Shaun Stevenson, vice-president of marketing and business development at Prince Rupert Port Authority, said the American concerns are unfounded.
“If [FMC] did complete some study into the movement of U.S. goods through Canadian ports, they’d find they’re moving through the safest entry points into North America in our security and protocols – and as well that Canadian ports and transportation systems aren’t subsidized.”
Stevenson said efficiencies for shippers are at the heart of the port’s success.
“We’re about a day and a half, minimum, closer to Asia than any other West Coast port and with the efficiency of the rail system, you can save four to eight days compared to other West Coast routes,” he said.
Gary LeRoux, executive director of the Canadian Association of Port Authorities, said he saw no merit in the proposed American investigation.
“It’s clearly the silly season in Washington if this is the kind of investigation they’re thinking about launching.”
He argued that it’s rich to see American ports complaining about being disadvantaged, given that they receive more government funding than their Canadian counterparts.
“We’d love to have all the largesse heaped on their ports by local, federal and state governments. We don’t have the luxury here in Canada.”
LeRoux added that issues such as the harbour maintenance tax need to be solved within the U.S. rather than in Canada, and argued that the proposed investigation will only hurt American shippers and consumers.
“If Congress wants to go to Wal-Mart and tell them, ‘You shouldn’t take the best price and the fastest route to get your shirts on the shelf … because the American consumer wants to pay more,’ then go ahead. Because that’s what they’re saying.” •
