Nfld. & Labrador

With Marine Atlantic at the ready, subsidy for Oceanex not needed, says Andrew Parsons

With Marine Atlantic vessels either tied up or operating at a fraction of their capacity, Burgeo-La Poile MHA Andrew Parsons says a federal subsidy for Oceanex, which delivers roughly half of Newfoundland's food supply, is unnecessary.

Federal government exploring 'all options' at crucial shipping company ties up a vessel, lays off employees

Oceanex's headquarters overlook St. John's harbour. (Bruce Tilley/CBC)

Politicians and those in the trucking industry are offering assurances that critical food and medical supplies destined for Newfoundland and Labrador will continue to flow, despite the financial woes of a big player in the province's transportation sector.

Marine Atlantic, the federal Crown corporation that operates the constitutionally mandated ferry service between North Sydney and Port aux Basques, said Tuesday it is committed to "meeting the needs of our customers and maintaining our essential ferry link to the province of Newfoundland and Labrador."

Marine Atlantic says it is ready to add additional crossings between North Sydney and Port aux Basques, if needed. (Marine Atlantic)

Marine Atlantic's assurances come after shipping company Oceanex, which delivers roughly half of Newfoundland's food supply and 75 per cent of goods to the Avalon Peninsula, warned it's losing $2 million a week in the grip of the COVID-19 pandemic.

"At the end of the day we're a private company," said Oceanex executive chairman Sid Hynes on Tuesday. "We didn't come equipped with money to subsidize, if you will, or lose money. We won't be here very long."

Hynes said Oceanex's shipments to St. John's have declined by 35 per cent. A spokesperson for Marine Atlantic says with two vessels operating at about half their capacity and two others in standby mode, ferry crossings can be added, if necessary.

"(Marine Atlantic) can handle the freight coming in here," Burgeo-La Poile MHA Andrew Parsons told CBC News Tuesday.

The trucking industry is also ready to step up, if needed.

"I don't think the people of Newfoundland should be concerned," said Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association.

"Our industry will continue to provide food and other supplies to the province as we have been for many years."

Oceanex tying up a vessel, laying off workers

And Premier Dwight Ball pledged Tuesday afternoon that "there will be food security" in the province.

He said there's no reason for citizens to deviate from the public health guidelines of shopping for food and other essentials once a week.

Should Oceanex suspend its service or have a negative effect on the supply chain by reducing service, he said there is a contingency plan involving Marine Atlantic and the trucking industry.

"There's a lot of trucking capacity that are more than willing to step up," said Ball.

Oceanex's board of directors has decided to temporarily tie up one of its three vessels that delivers freight weekly to St. John's from Montreal and Halifax, and is in the process of laying off some of its roughly 1,000 employees.

The company has requested millions in subsidies from the federal government in order to continue the service, with federal officials saying they are considering the request.

Oceanex chairman Sid Hynes says his company needs about $5 million in revenue a week to operate. (CBC)

"It's the government who has to decide if the frequency of service is required," said Hynes.

Oceanex's troubles have ignited concerns about a potential serious disruption to the province's supply chain, but Parsons says citizens shouldn't worry.

"We have the means here to more than handle the necessary freight coming into this province," he said.

Parsons said a subsidy for Oceanex is unnecessary.

"(Marine Atlantic is) already federally subsidized," he said.

Hynes said Oceanex's reducing the number of weekly sailings from two to one is not a threat being made to secure financial aid but simply a response to an unprecedented situation. 

Oceanex's ships unload containers at its facility on the St. John's waterfront. (Bruce Tilley/CBC)

"It's being portrayed as a threat. There's no threat. This is just reality," Hynes said. "We have to cut the cloth now to fit the garment."

Hynes said increasing the volume of transport trucks delivering goods to the province would be far less efficient than his own service, and much more expensive.

"It's fine to say this can be trucked. For sure it can. But I'd like for someone to total up the price after it gets done."

Province won't be let down

Seamus O'Regan is promising Newfoundland and Labrador it won't be let down and it will not face food shortages.

O'Regan, MP for St. John's South-Mount Pearl, said the Oceanex problem is too critical to ignore.

"We're looking at all options just to make sure the supply chain stays in place," he told The St. John's Morning Show on Tuesday"It's way too important so we'll make sure it gets done."

O'Regan would not elaborate on what options are on the table right now and repeated much of the same message as reported by CBC News on Monday.

He said talks with Oceanex began about four weeks ago, when it became clear the COVID-19 pandemic would have implications for business in Atlantic Canada.

Natural Resources Minister Seamus O'Regan is promising there will be no food shortages in Newfoundland and Labrador. (The Canadian Press/Adrian Wyld)

Talks intensified in the last couple of weeks, and Oceanex opened its books to the federal government before the Easter long weekend.

"We're going through the numbers, which I think is really important, and finding out what is going on," O'Regan said.

Sid Hynes told CBC News the company needs about $5 million a week to operate and is currently $2 million short each week, due in large part to the reduction in vehicles it is shipping to St. John's.

The company is looking for a subsidy to cover its losses at least until September.

Supreme Court appeal dismissed in March

Hynes is no stranger to debates about subsidies in cargo shipping. Oceanex has been involved in a legal battle with the federal government since 2016 over subsidies it provides to Marine Atlantic, its main competitor.

After the federal court sided against Oceanex, the company went to the Federal Court of Appeal, which upheld the decision.

On March 26 — as the pandemic was tightening its grip on Newfoundland and Labrador — the Supreme Court of Canada ruled against hearing one final appeal by Oceanex.

According to Oceanex, the company ships about 75 per cent of freight to St. John's, and half of all freight destined for the province.

Marine Atlantic, which operates the ferry service to Nova Scotia, is the next largest freighter and received $133.6 million from the federal government in the 2018-19 fiscal year according to its latest annual report.

Read more from CBC Newfoundland and Labrador

With files from Ryan Cooke

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