The Seaway Channel

The United States Coast Guard (USCG) has proposed a 9.41 percent increase in the rates that ocean vessels must pay for U.S. pilotage services in Great Lakes/St. Lawrence Seaway System later this year. The Coast Guard would like to have the new rates in effect beginning on August 1st of this year. This, despite the fact that the Great Lakes/St. Lawrence Seaway System is experiencing a significant fall-off in ocean vessel traffic this year due to weak freight demand produced by a damaged global economy.

The USCG had proposed a rate back in January that would have imposed an 18.92 percent rate increase for U.S. pilotage services in the System. That proposal met with a sizeable and predictable backlash from a struggling industry and the Coast Guard was forced to back down from their untenable original position. The new rate proposal is meant to assuage the concerns of industry but a nearly double-digit rate increase in a down market is unlikely to met with anything but additional protest by an industry that sees few prospects for improvement in economic conditions this year.

While the promulgation of pilotage rates are based on a formulaic approach, certain underlying assumptions made by the USCG's Office of Great Lakes Pilotage can have a profound upward or downward impact on the actual rate being proposed. Assumptions about traffic levels, the numbers of pilots required, the amount of reasonable expenses, etc. all have a bearing on the pilotage rate.

For example, in a year such as this one, it is widely known that the number of ships entering the system requiring pilotage services will be down compared to last year. It's impossible to say with precision how far that numberis likely to fall, but 5-10 percent would be a easily defensible estimate. If the target compensation rises as the USCG now knows, and we assume a lower level of ship traffic, one would think that the number of pilots required might decrease for this year. If one assumes the same number of pilots will be getting their target compensation regardless of the fact that they will be working fewer bridge hours on fewer ships, then rates are likely to go up. That's one of the inherent problems with the USCG's current rate making methodology and the current pilotage office's application of that system.

What is needed in the short term is a moratorium on any mid-season rate adjustment for this year until a more realistic assessment of ocean vessel traffic for this year and a more realistic assessment of the number of pilots the system really needs. What's needed in the long term is fundamental reform of the overall approach to pilotage in the Great Lakes/St. Lawrence Seaway System to fit the needs of international commerce in the 21st Century.

In the meantime, one can submit comments for the record to the U.S. Federal Register on or before May 26, 2009.

We encourage our readers to participate in this rule making by submitting comments and related materials. All comments received will be posted, without change, to http://www.regulations.gov and will include any personal information you have provided. The U.S. Coast Guard has an agreement with the Department of Transportation to use the Docket Management Facility. A. Submitting Comments

If you submit a comment, please include the docket number for the pilotage rate rule making, (USCG20081126), indicate the specific section of this document to which each comment applies, and give the reason for each comment. We recommend that you include your name and a mailing address, an email address, or a phone number in the body of your document.