The U.S. Coast Guard has proposed a rate decrease of about 1 percent for the three Great Lakes pilots’ associations for 2020, the first reduction after a five-year stretch of double-digit increases.
The Coast Guard sets rates for American pilots in the Lakes Pilots Association, the Western Great Lakes Pilots Association, and the St. Lawrence Seaway Pilots Association. The proposed rates for 2020 range from $327 to $757 per hour, depending on which of six pilotage services is provided. The fees are paid by shippers to the pilot associations.
The proposed rates are based on a workforce of 52 U.S. pilots with an average compensation of $367,085, a new high. The Coast Guard estimates the projected revenue for all three pilot districts will be $27.76 million for the 2020 season. That’s $225,658 less in estimated payments compared to the 2019 season.
“We’ve just suffered five years of double-digit increases, so it’s good, they’re taking their foot off the gas pedal, but the car is still speeding ahead,” said Steve Fisher, executive director of the American Great Lakes Ports Association, one of the shipping groups that has been asking the Coast Guard to rein in pilot rates.
For 2020, costs will actually increase by roughly $1 million due to inflation and the addition of one new pilot. However, because the Coast Guard did not seek funds for pilot training this year (as it did in 2019), the overall cost of the program will shrink.
All vessels engaged in foreign trade — known as “salties” — are required to engage U.S. or Canadian pilots during their transit through the Great Lakes. The regulated monopoly system used on the Lakes is similar to those used in other ports, but the main difference is that the federal government administers it rather than state governments.
The Coast Guard sets pilotage rates to cover operating and training expenses for the pilot associations. However, the revenues depend on the actual amount of traffic, which the Coast Guard must estimate each year.
For the 2016 season, the pilots received an additional $4 million to $5 million due to the Coast Guard’s miscalculations. Industry lawsuits against the Coast Guard for the 2016 and 2018 seasons are still working through the courts.
“The pilots ended up with millions of dollars of additional funds that even the Coast Guard didn’t intend for them to have,” Fisher said.
In their submitted comments to the notice of public rulemaking for 2020, the Great Lakes pilots said they are undercompensated compared to other U.S. pilots. For example, pilots at the Port of New Orleans are paid an average of $459,051, not including pension or medical benefits, which are paid separately. Previously the Coast Guard said it would undertake a comprehensive study of pilot compensation across the country, but that study was not referenced in the 2020 rate proposal.
The proposal eliminates the surcharge for training new pilots. However, two of the districts are training 11 pilots to replace retiring personnel. The pilots also asked for an administrative pilot slot to assist the president of each association with those duties.
The AGLPA and other industry groups have asked the Coast Guard to set rates every three years instead of annually.
“They are failing to realize that they’re causing a great deal of animosity within the industry by pitting us all against each other every year as they adjust these rates,” Fisher said.