FMC: Canada blameless, but Canadian ports still a threat to US cargo

THE Federal Maritime Commission's (FMC) inquiry over whether Canada had unfairly attracted cargo from US ports, because it imposed no equivalent taxes, found Canadians blameless while at the same time, saying their port operators still posed a threat to US cargo.

"The commission study has found no legal or regulatory impediment to the use of ocean carriers of Canadian or Mexican ports for US cargo shipments," said FMC chairman Richard Lidinsky.

"We identified a situation in the Pacific Northwest, even reaching southward into California, whereby cargo movement through certain parts of our border are putting these ports at a strong competitive disadvantage," said Mr Lidinsky.

The FMC plans to present a list of options to assist the US Congress to remedy the disadvantage, one being the abolition of the Harbour Maintenance Tax.

Of 76 responses to the inquiry, 38 said Canada's Prince Rupert port's lower costs were a reason they used it, with 11 respondents citing the tax as the key factor in opting for Prince Rupert as a gateway to US markets. But 13 respondents said the tax was not a factor and that Prince Rupert was faster and better.

Said Port of Seattle CEO Tay Yoshitani: "A lot of factors go into the routing of cargo and a lot of shippers/carriers want diversity in how they get cargo to warehouses is always an issue, and the HMT clearly disadvantages us against Canadian ports."

Said the study: "It is clear that the tax is one of many factors affecting the increased use of foreign ports for cargo bound for US inland destinations. While a user fee is necessary for US ports to grow, the number of proposals suggest an amendment in the current tax should be given consideration."

Separately, Robin Silvester, CEO of the Canadian Port of Vancouver, has said that more than 95 per cent of imports through his port are Canada bound and while the proportions are more weighted to the US at Prince Rupert 200 miles north, though the volumes are much smaller.

Mr Silvester also said it must be galling for US west coast ports to pay the lion's share of a dredging tax, for that is what the Harbour Maintenance Tax is, to pay for harbour deepening in the east coast ports that already siphon off west coast cargo through the Panama Canal, and stand to take even more when canal expansion is complete in 2014.