Shipping Industry

Shipping, or carriage of goods by water, has played a significant role in the development of human society over the centuries. Shipping has been a crucial link by which commercial relationships have been established between widely separated parts of the world. There are 2 major types of shipping services: shipload services, which move goods in bulk for one or a few shippers; and liner services, which carry relatively small shipments of general cargo on a regular schedule for many shippers. Some ships are owned by firms engaged in the production or processing of goods in bulk. Examples are tankers owned by petroleum companies, and bulk carriers owned by steel companies. Most ships, however, are owned by firms whose prime business is shipping. These owners make their vessels available to importers/exporters through a highly efficient international network of shipping brokers.

History and Development

Shipping is often the least expensive way of moving large quantities of goods over long distances. The existence of reliable water transportation has been a key to the economic and political well-being of most nations throughout history. For example, the merchant fleet of Great Britain during the Industrial Revolution was instrumental in the growth of that nation as a world power. Shipping services have always been an economic lifeline for Canadians. For the first settlers, ships were the source of essential supplies from the Old World, and they provided the means by which fur, agricultural, forestry and mining products could be marketed. In eastern Canada, especially in the Maritimes, a tradition based on SHIPBUILDING, fishing and trade flourished.

In 1840 Samuel CUNARD of Halifax established a transoceanic service that developed into the world-famous CUNARD COMPANY, and by 1878 Canada ranked fourth among the shipowning nations of the world. However, in the last decades of the century, Canadian participation in shipbuilding and shipping diminished, as steel and engineering skills, which Canada lacked, became prerequisites for a successful shipbuilding industry. The 2 world wars caused temporary booms in shipping under the Canadian flag, but since 1949, when the Canadian government decided to sell off its Canadian-registered fleet, the vast majority of Canadian overseas trade has been carried in ships registered in other countries. Most Canadian-registered ships now operate on domestic routes, such as the ST LAWRENCE SEAWAY, the Great Lakes and the coastlines.

Economic Significance

Shipping is especially important to Canada because of the importance of trade in the economy (in 1996, exports were 33.5% and imports 29.2% of Gross Domestic Product), and the importance of water transport in facilitating this export and import trade. About one third of exports and over a quarter of imports by value are transported by water, more than half of this by liner vessels. Although trade with the US is dominant and mostly by land transport, shipping is vital to the competitiveness of resource-based products in world markets. Liner shipping accounts for more than one half of the value of exports. However, because of the volume of resource exports and oil imports, the quantity of goods carried by shipload services greatly exceeds that carried by liners.

Although the Canadian-registered deep-sea fleet is small, officers and crews are needed to operate vessels on domestic routes. Vessels arriving from abroad require a variety of services, including Canadian pilots and tugs to bring them into port, as well as repair facilities and supply services in port. The movement of the cargoes themselves also creates considerable employment. For example, longshoremen help load and unload cargoes on the docks, and many persons, such as customs and insurance agents, look after documentary and other related requirements. Shipping agents, located in port cities, sell shipping services and co-ordinate the arrangements for ships and handling of cargo.

Domestic and Transborder Routes

Domestic shipping can be divided into 3 main categories. East Coast traffic consists primarily of fuel, pulpwood and general cargo shipments to Newfoundland and along the coastlines of the Maritime provinces and into the St Lawrence. The St Lawrence-Great Lakes traffic is by far the most important route. The main commodity movements are grain from the Lakehead to the St Lawrence ports, and IRON ORE from Canada to the US (see alsoCANALS AND INLAND WATERWAYS). West Coast shipping services include the movement of forest products and other natural resources, often by tug and barge operations. On both the East and West coasts there is an extensive network of ferry services (seeFERRIES). Other shipping services include occasional intercoastal movements of bulk commodities, barge services on the MACKENZIE RIVER and supply services to Arctic communities. Shipping is a key to the development of Canada's North, a means by which natural resources can be reached (seeTRANSPORTATION IN THE NORTH). The supply lines to many remote northern communities are maintained as the weather permits. In 1969 the American tanker SS Manhattan successfully navigated the NORTHWEST PASSAGE with the aid of a Canadian Coast Guard vessel, thereby proving that mineral and petroleum resources in remote northern areas could be reached by water (seeICEBREAKERS).

Overseas Shipping

Canada's most important overseas trading partners are Japan, Great Britain and other western European nations, so that the busiest shipping routes are the North Atlantic and the North Pacific. Significant ties are maintained with all regions of the world, and bulk shipping services are available as needed. Canada's trade is carried in vessels registered in many different countries. Many of these deep-sea vessels are registered in so-called flag-of-convenience nations, such as Liberia and Panama, where favourable tax and legal environments permit lower-cost operations.

Ships and Port Facilities

Ships and port facilities are efficiently serving Canadian trade. Specially designed ships and port facilities have been built to accommodate particular commodities. In eastern Canada, for example, ships called LAKE CARRIERS are built to the maximum allowable seaway dimensions. Maximum-sized lakers can carry about 29 000 tonnes (28 000 cargo capacity, 1000 fuel etc). On the West Coast, the self-dumping log barge has been developed for use in the forest industry. Roberts Bank, BC, is the site of a large coal superport, specially designed to handle the large volume of coal which arrives by rail for export overseas. Modern container terminals are essential to the liner services of Halifax, Montréal and Vancouver.

Canadian Shipping Today

Few Canadian-flag ships operate deep-sea routes. As of 31 December 1994 the Canadian-flag fleet of vessels over 100 gross registered tons (grt) was 2.5 million grt. By comparison, the three largest fleets were those of Panama, 64.2 million grt; Liberia, 57.6 million grt; and Greece, 30.2 million grt. The US fleet at 13.7 million grt was eleventh and the UK fleet at 6.5 million grt was sixteenth (Lloyds Register of Shipping). Most Canadian-registered merchant vessels operate on domestic routes, although several vessels constructed for the Great Lakes-St Lawrence Seaway traffic are also capable of transoceanic voyages.

The government implemented the recommendations of the 1985 task force on deep-sea shipping by amending tax regulations so that the management of international shipping could be conducted in Canada without exposing the earnings of the shipping services to corporate tax until distributed. This made Canada competitive with other countries as most ship owners do not pay tax. The result has been an increase in the number of shipowners in Canada and an increase in employment opportunities. While several existing Canadian companies have retained their prior structure, for example, Canada Maritime (a subsidiary of CANADIAN PACIFIC LTD.) and Fednav Ltd, other companies have been able to expand into ship ownership, for example, Canadian Transport Company (until 1997 a subsidiary of MACMILLAN BLOEDEL). A number of companies have moved into Canada; the largest is Teekay Shipping, a public company specializing in oil tanker shipping.

Regulation

Most shipping is by nature international - the carriage of goods between countries and across international waters. A ship may be owned, financed, registered, insured, and managed, each in a different country. When a ship is registered in any given country, it becomes subject to the laws of that country at all times. Each country has the right to establish its own shipping laws. International shipping conventions have been reached by a number of intergovernmental organizations, such as the International Labour Organization (ILO) and the International Maritime Organization (IMO). Many of the conventions have been ratified by Canada (seeINTERNATIONAL LAW; LAW OF THE SEA).

The United Nations Conference of the Law of the Sea (UNCLOS) has established a new regime of international maritime law of interest to shipowners and shippers. UNCLOS defines international maritime boundaries and, therefore, the extent of coastal state jurisdiction in environmental-protection and coastal shipping regulation.

In Canada, shipping falls under the jurisdiction of the federal Department of TRANSPORT. The Canada Shipping Act sets out the basic rules for ships flying the Canadian flag or operating in Canadian waters. The CANADIAN COAST GUARD ensures that ships meet the requirements of the Shipping Act and follow pollution-prevention procedures. The Canada Transportation Agency (formerly National Transportation Agency; CANADIAN TRANSPORT COMMISSION) is responsible for economic regulation: for example, shipping conferences must file their rates with the Agency. The Canada Maritime Act of 1997 proposes to decentralize the management of ports by allowing major ports to form self-funding port corporations.

Recent Developments

Significant technological advances have occurred in shipping. In Canada, improvements have included the development of the self-unloading carrier for use internationally as well as in the Great Lakes-St Lawrence Seaway trade. The size of ships carrying containers internationally has continued to increase; the largest vessels now carry over 6000 containers, measured in 20-foot equivalent units (TEUS). Liner companies are integrating their services through mergers and alliances. Large specialized ships continue to be developed; among the most specialized are the liquified natural gas carriers. Ports and inland transportation services are changing to meet the changing needs. The development of trade will be linked, as always, to cost-reducing technologies in shipping.