The Government of Canada’s subsidy to Marine Atlantic (“MAI”), nearly $1.5 billion since 2008, threatens the ability for privately owned and operated companies to offer competitive freight services to and from the island of Newfoundland.
Oceanex has invested in freight transportation infrastructure essential to the Newfoundland economy since 1909.
Having provided critical and reliable pier-to-pier and door-to-door transportation services for over 100 years, its continued long-term viability and the livelihood of its employees is at risk as long as the Federal Government continues to subsidize Marine Atlantic freight rates.
Highlights from a report prepared for Transport Canada by CPCS, an independent third-party include:
“MAI is a key supplier or enabler of the competitors of Oceanex, and therefore has a direct impact on competitive dynamics in the market.”
“MAI uses the support it receives from Government to price […] at less than half of the cost of these services, thereby creating a market distortion and entry barrier, effectively putting downward pressure on the rates charged by Oceanex and discouraging other marine carriers from entering the market.”
“Freight price increases at MAI would be unlikely to have a large impact on prices in Newfoundland owing to traffic shifts to Oceanex, the relatively small share of total product cost attributable to MAI […] and the ability of shippers to absorb price increases.”
“Put in simple terms, if an apple costs $1.00 before an increase in MAI prices, it would cost on average $1.01 after.”
All of the existing marine links to the island of Newfoundland are of vital importance. Oceanex understands and defends that every day. But increasing subsidization of Marine Atlantic freight rates since 2007 are squeezing Oceanex out of the market, jeopardizing jobs and competitive shipping options.
It is important to ask “Where are subsidies to Marine Atlantic really going?”