Flawed calculations by the U.S. Coast Guard will levy a 58% increase in pilotage fees on Great Lakes shippers by 2017, according to a coalition of shipping companies, port operators and other marine interests challenging the Coast Guard in federal court.
In a complaint filed in U.S. District Court in the District of Columbia, the coalition argues that the Coast Guard violated the Administrative Procedures Act by making “arbitrary and unsubstantiated decisions” while developing the 2016 pilotage rates.
The plaintiffs are asking the court to immediately reduce the 2016 pilotage fees by 20.6%, credit users for the services they have already paid for above that amount, and remand the entire rulemaking back to the Coast Guard for changes.
"Pilotage is currently one of the single largest costs to vessel operators engaged in international trade on the Great Lakes. On average, the daily cost of a pilot now exceeds the cost of chartering the entire cargo ship and its crew," said Steve Fisher, executive director of the American Great Lakes Ports Association, in announcing the lawsuit.
Shippers and port officials have been complaining for some time about the pilot fee structure. Will Friedman, president of the Cleveland-Cuyahoga County Port Authority, Ohio, says pilotage costs have gone up 114% in the last 10 years and “are unsustainable and will ultimately erode the viability of international trade through Great Lakes ports."
In addition to the ports association, plaintiffs include the United States Great Lakes Shipping Association, the Shipping Federation of Canada, and half-dozen European and Canadian shipping companies. In court papers, they present detailed arguments against the Coast Guard calculations, and contend that combined revenue among the three Great Lakes and St. Lawrence pilot associations was $18.3 million in 2014, or $4.1 million above what the Coast Guard had authorized that year.
Similarly, “the Coast Guard’s failure to apply actual data concerning the size of vessels that require pilotage services will result in a significant over-realization of 2016 pilotage revenues above and beyond the Coast Guard’s target revenue amount,” the lawsuit contends. Faults in the Coast Guard’s calculations will “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 complaint says.
The 2016 rate package set by the Coast Guard will expand the number of pilots, pay each $36,000 a year and ensure pilots have 10 days off per month during the Lakes’ nine-month shipping season, according to the Great Lakes ports association. Court papers indicate pilot retention has been another issue considered by the Coast Guard, with the agency concerned about keeping enough pilots in the industry to reduce delays.
But critics say the system needs to be modernized.
"The Coast Guard maintains a Great Lakes pilotage system largely unchanged since the 1960s. It is time that the agency modernize its approach, identify cost efficiencies and protect the thousands of jobs dependent on the Great Lakes navigation system,” said John Loftus, executive director of the Port of Detroit.