By Leo Ryan, AJOT

In a major development for enhancing the competitiveness of the domestic shipping industry, the Canadian government has announced a waiver of a longstanding 25% tariff on imports of all general cargo vessels and tankers as well as ferries longer than 129 metres.

The decision paves the way for an anticipated flurry in the near future of orders to modernise Canada’s 67-unit Great Lakes fleet, which on average is over 36 years old. It follows persistent lobbying by the Canadian marine industry.

The new duty remission framework lowering the costs for the marine industry was outlined before industry officials on Oct. 1 at the St. Lawrence Seaway’s Welland Canal by Finance Minister Jim Flaherty.

Waiving the levy will save the industry an estimated C$25 million per year for the next 10 years, according to the federal government.

The waiver is retroactive to Jan. 1, 2010, but the government also agreed to favourably respond to the relief requests made by Algoma Central Corporation and BC Ferries prior to Jan. 1. The duties remitted in these requests amount to respectively C$15 million and C$119.4 million.

In effect for two dozen years, the duty typically adds more than C$10 million to the purchase of a ship built overseas..

When the import duty was introduced, its intention was to protect the domestic shipbuilding industry. But Canadian shipyards have been unable to competitively build new vessels for the Great Lakes/St. Lawrence Seaway waterway. The last so-called full Seaway-size vessel to be built in Canada was in 1985.

Greg Wight, president of Algoma Central Corporation, applauded Flaherty’s “vision to see beyond the short term tax effect of this change. We have long said that removing this disincentive to invest in the Canadian maritime fleet would be the best infrastructure investment that Canada can make.”

Wight also strongly hinted that,within the next few months, Algoma Central Corporation hopes to announce “a sizable new vessel order of ‘next generation’ Canadian-flag bulk carriers. These ships would join the Seaway Marine Transport Fleet, our domestic dry bulk vessel operating partnership with Upper Lakes Shipping.”

Gerry Carter, chief executive of Canada Steamship Lines, pointed out that the newest state-of-the-art being designed “will not only substantially reduce our emissions and environmental footprints but also provide jobs for Canadians in the years to come.”

Meanwhile, cargo on the St. Lawrence Seaway – chiefly in commodities - has been showing signs of recovery after plunging to just over 32 million tonnes in 2009.