Shipowners Sue Coast Guard Over Pilotage Rates, by Marex

Ships sued

By MarEx

Six Canadian and European shipowners – Brochart, Spliethoff, Wagenborg, Polsteam, Fednav and Canfornav – have joined in a suit against the U.S. Coast Guard over pilotage fees on the St. Lawrence Seaway / Great Lakes, alleging that the USCG has not taken commercial needs properly into account in its latest review. They contend that the agency has set the 2016 season rates so high that “pilotage is now one of the largest single cost items for foreign-flag vessels that enter” the area, and they have asked a federal court to reverse the Coast Guard’s decision. 

The U.S. and Canada jointly manage the St. Lawrence Seaway, which connects the lakes with the Atlantic, but the USCG is charged with administering pilotage rates for both Canadian and U.S. pilots on the waterway.  

The owners contend that in its latest ruling on pilots’ wages, the Coast Guard did not consider the different sizes of vessels transiting the Seaway, unlike in prior years, and also did not make account for the seasonal demand fluctuations in determining pilot staffing requirements – assuming instead a constant peak level demand (a measure the Coast Guard justified in part as a way to have enough pilots to comply with rest period guidelines). 

The six owners also disputed USCG claims that higher wages were needed to recruit and retain pilots. In its rulemaking announcement, the USCG asserted that “the career-long prospects a recruit or new pilot faces for lower compensation than their counterparts [elsewhere]” was an obstacle to maintaining a qualified pool for the Seaway. 

The current rate structure would  “effect a dramatic increase in costs for all vessel owners, and this effect may be especially harsh to vessels that operate on certain routes,” the plaintiffs said. As relief, the shipowners are asking a federal district court in Washington, D.C. to vacate the Coast Guard’s rulemaking action and to grant a 20 percent cut in pilotage rates.  

As of June 3 the Coast Guard has not yet filed a response with the court.