Ship companies sue over "runaway" pilot rates
Foreign shipping companies and port associations have filed a lawsuit against the U.S. Coast Guard over the increased rates for Great Lakes pilots.
The 12 percent rate hike allowed the Lakes Pilots Association to hire three pilots for Port Huron and to buy a new boat.
The U.S. Coast Guard-approved increase went into effect in April.
However, those opposed to it are saying the rate hike will harm the shipping industry.
"We believe pilots are important to ensure safety of navigation. We need pilots. However, the cost of Great Lakes pilots (including their compensation) needs to be reasonable," Steven Fisher, executive director of the American Great Lakes Ports Association said. "The U.S. Coast Guard needs to take the entire picture into consideration. In other words, how do we provide a fair compensation for pilots, while also keeping the overall shipping system competitive?
"If the Coast Guard remains insensitive to these costs, we will see shipping on the Great Lakes atrophy and that will mean job losses at our ports."
The rate increases and a change in how they are calculated would set each pilot’s target compensation at $326,114, according to a March 7 U.S. Coast Guard report.
The 12 percent increase would cost shipping companies about $1.86 million more this year than in 2015.
The Coast Guard also approved a temporary surcharge of $1.65 million to cover the costs of hiring and training additional pilots.
The rate changes followed complaints from pilots and industry officials regarding revenue shortfalls and safety concerns.
“They said these shortfalls are the primary reason that the associations could not provide sufficient pilot compensations to attract, hire, and retain qualified pilots,” the Coast Guard report said.
“… Industry has agreed that there is a shortage of qualified pilots and said that the decay of association infrastructure jeopardized the pilots’ ability to ensure vessel safety and provide efficient, reliable service.”
Fisher said the real increase for pilots is 24 percent, when including the surcharge of training and hiring. He said original discussions included a 58 percent increase.
"Essentially they implemented the first half of it and will do the second half next year," Fisher said, adding pilot rates have increased 114 percent in the past decade.
"So we're seeing it as a runaway cost for the shipping system and one that makes the shipping system noncompetitive."
Fisher said the lawsuit was filed in the end of May in the U.S. District Court of the District of Columbia.
Lakes pilots bring freighters through the Great Lakes
The Lakes Pilots Association, based in Port Huron, is a private company that provides piloting services to foreign vessels entering the lakes from the ocean. Foreign vessels are required by both the U.S. and Canada to have an American or Canadian pilot on board since the foreign ship officers aren’t licensed in the U.S.
The pilots communicate with other vessels and ports and give advice on how to navigate local waterways.
The increase allowed for the hiring of nine additional pilots among the three pilot companies.
Lakes Pilots Association provides pilots on Lake Erie, the Detroit River, the St. Clair River and all the ports in between.
George Haynes, Lakes Pilot Association vice president, said having proper compensation is key in ensuring freighters are navigated safely through the Great Lakes.
"We're the only ones on the ship who really know the waterways, the Great Lakes," he said.
Haynes said in bad years, such as 2009 when the economy was unstable, he made about $65,000, while on better years he'd make more than $100,000.
He said that isn't enough to get a captain to leave a lake freighter.
"If we have one oil spill, we hit a bridge and knock down something and there’s a major disaster, that’s important to the American people on the Great Lakes and the foreign shipping companies don’t care, they couldn’t care less," Hayes said.
Contact Liz Shepard at (810) 989-6274 or lshepard@gannett.com. Follow her on Twitter @lvshepard.