B.C. tug companies optimistic that better times are finally on the horizon economic

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B.C. tug companies optimistic that better times are finally on the horizon
Operators tied to the forest industry were hit especially hard during the recession


VANCOUVER - B.C.'s tugboat industry is hoping an incoming wave of economic activity this year will offset a lengthy slump that left many tugs tied up dockside.

The economic downturn slowed port activity in 2009 and 2010, with fewer freighters as well as cruise and other ships needing the assistance of tugs to escort them in and out of B.C. harbours.

But tug companies tied to the forest industry suffered the greatest impact, as the business of towing logs or chip barges along the coast dried up significantly in many areas.

"Our industry probably had a decline of 30 per cent in business," said Capt. Phillip Nelson, president of the Council of Marine Carriers, a tug and barge industry association that represents 43 tugboat companies and several affiliate members. "And some companies lost a lot more business than that.

"On some days, every vessel some companies had were tied up," added Nelson, who noted that 350 tugs ply B.C. coastal waters with about 2,000 employees.

"The forest industry is the biggest customer of the towboat industry on the West Coast, so when that's in decline our members have to look for new [business]."

As well, he noted: "As consumers buy less goods, there's [fewer] ships moving them around from the world market into the port of Vancouver."

Despite the gloom, Nelson said business is on the rebound and is now only about 15 per cent below pre-recession levels.

"I think the industry is fairly optimistic about 2011," he said. "The economy is growing and some companies have diversified into other types of cargo."

As well, companies are starting to rehire, more boats are back out on the water and deals are being made.

Seaspan International, for example, took delivery this week of the first of four new state-of-the-art tugs that were purchased in part to handle the growing tanker traffic in Vancouver waters.

The RAstar 28 m tugs, designed by Vancouver-based architects Robert Allan Ltd. but built by Sanmar Denizcilik Shipyard in Istanbul, Turkey, are expected to dock, undock and escort about 90 ships a month in Vancouver harbour and Roberts Bank. The tugs, among the most powerful vessels in B.C. waters, typically sell for $15 million to $20 million each.

As well, SMIT Marine Canada recently sold its marine transportation division assets, consisting of its log barging, chip barging and aggregate barging business in B.C., to Seaspan.

SMIT will now focus on its core business: Harbour towing operations in Prince Rupert, Kitimat, Vancouver and New Westminster.

"The global recession affected every business in every country in the world," Seaspan's vice-president of marine operations Robert Hedley said in an interview. "It affected trade, and shipping went down. And when shipping goes down, tug operations are affected. 2009 was particularly difficult and a number of [our] vessels were tied up, which meant reductions in staffing on the tugs and in the office."

But Hedley, whose company has 60 tugs, 150 barges, five freight ferries and 1,500 employees, said things are looking up. "There's more commerce and international trade, which is good. That means more ships are coming in and out of the port, which means our tugs are in demand."

Hedley said the purchase of the new tugs and the SMIT deal bode well for Seaspan, despite the downturn in forestry.

"We don't know how long it will take to get back to [the business levels] of pre-recession, but marine transportation is an essential part of our economic infrastructure. It's been around for a long time and will be for a long time in the future.

"Our country has the largest coastline in the world [and] Vancouver is the largest port on the west coast of North America."

Nelson cited a major conference slated in Whistler for May, titled B.C.'s Tug Industry -The Next Generation, as one indication of an industry rebound. "We had to postpone the 2010 conference, mainly because of the economy."

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There are three main sectors in the tugboat industry: Coastal towing, which moves general cargo around the coast; ship assists, which helps big ships enter and leave docks in large harbours like Vancouver; and log towing, which involves moving raw logs up and down the coast.

One mid-size tug company that weathered the storm better than many was Catherwood Towing Ltd. of Mission, which over the past several years diversified from primarily moving wood products to moving barges containing other materials as well.

"Eight to 10 years ago, 99 per cent [of our business] was log towing," owner Ernie Catherwood said.

"About six years ago, there was an opportunity to work for Fraser River Pile and Dredge. That got us into barge handling [and] changed our direction. Today, 25 per cent [of our business] is log towing and 75 per cent is barge towing."

Nevertheless, Catherwood added, the recession hit his company hard, forcing layoffs and the sale of three boats.

"We were down to less than 40-per-cent utilization. Everything seemed to come to an end.

"Our cash flow just crashed. But with all the cuts we made in [2009 and 2010], we're seeing daylight at the end of the tunnel. It appears 2011 is looking better."

Darryl Jones, part-owner of Chemainus-based Jones Marine Services Ltd, which has nine tugs primarily used for forestry-related towing, said his company was hit by a labour dispute in 2007 and then the recession after that.

"In 2009, we were down 30-plus per cent in revenue. It was huge. And that was because of the poor market conditions in forestry."

Jones said he had to lay off about 15 employees, and was only running four or five tugs.

But things are improving. "The pulp industry is strong [and] we're operating six to seven boats now. I'm far more optimistic now than I was in 2010."

Kevin Obermeyer, president of the Pacific Pilotage Authority, said ship traffic in Vancouver harbour dropped during the recession, but not as much as many believe.

"We've been falling over the last few years," he added. "If it wasn't for grain [shipments] we'd have really been in the doldrums."

He said the number of assignments (when a pilot is placed on a vessel) dropped from 11,800 in 2007 to 11,400 in 2008, 11,000 in 2009, and 10,700 in 2010.

He agreed that while the amount of work dropped in Vancouver for tugs, it was far worse for coastal operations.

"Mills have been closing down [and] a lot of tugs move logs and chip barges."

Meanwhile, Terry Engler, president of the International Longshore Workers Union, local 400, said that while the forest industry downturn resulted in many layoffs, things are changing.

"The economic crash hit our industry very hard, in large part because the mills were being shut down or downsized," said Engler, whose union represents between 350 and 400 tug workers.

"Ship docking was also pretty bad in 2008, but that's come back."

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Ernie Catherwood, owner of Catherwood Towing Ltd. of Mission aboard Sea Imp VIII on the Fraser River, has seen a major diversification in the kind of work his company has taken on.



The Seaspan Raven, which recently joined the Seaspan International fleet, was built in Istanbul, Turkey.