Marine Atlantic says it can maintain Newfoundland’s supply lines if Oceanex bows out

Marine Atlantic says it can fill any gap in critical supply lines to the island of Newfoundland if pandemic-related financial losses force Oceanex Inc. to tie up its ships and stop carrying freight to St. John’s.

The federal agency has a four-vessel fleet; only two are in operation currently and those are working at half capacity.

“Should demand increase and additional capacity be required, Marine Atlantic has the ability to add additional crossings to the schedule with the two vessels currently in standby mode,” said Marine Atlantic spokesperson Darrell Mercer.

While the federal agency is offering reassurances, so is the province’s federal cabinet minister.

“We’re looking at all options just to make sure the supply chain stays in place,” Natural Resources Minister and St. John’s MP Seamus O’Regan told the St. John’s Morning Show Tuesday. “It’s way too important so we’ll make sure it gets done.”

Oceanex Inc., which runs weekly trips from Montreal and Halifax to St. John’s, says it is losing millions a week due to a drop in freight volume caused by the COVID-19 pandemic.

The Oceanex vessel Connaigra transporting goods to Newfoundland. (Oceanex)

It’s asking the federal government to offset its losses so it can keep running supplies to St. John’s.

“We just can’t continue,” said Sid Hynes, the company’s executive chairman. “It’s costing us $5 million a week to operate and we are about $2 million short.”

Hynes said the company almost certainly will have to cancel one of its weekly trips from Montreal, tie up that boat and lay people off.

He said the other Montreal trip and the weekly Halifax-to-St. John’s run also may have to stop if Oceanex can’t get federal financial support.

“It’s getting progressively worse. It’s not getting better,” Hynes said. “This past week was worse than the previous week.”

Hynes is looking for a federal subsidy to cover its losses at least until September.

O’Regan didn’t outline any specific measures to help Oceanex but has said repeatedly that the federal government, through Transport Canada and the Department of Finance, is working on a solution.

Transport Canada ‘exploring all options’

Transport Canada issued a statement about Ottawa’s efforts to offer support broadly to the shipping sector.

“The marine shipping sector has been hard hit by the pandemic. Our government has been in touch with these companies, as well as with the provinces and territories affected by this situation. We are exploring all options to understand the challenges and help support the industry during these unprecedented times,” said Transport Canada spokesperson Livia Belcea.

Newfoundland and Labrador Premier Dwight Ball has warned that the island has just a five-day supply of food at any one time and that losing Oceanex’s services could lead to critical shortages.

“For the many staples that we have in our life right now, Oceanex is the supplier,” Ball told CBC News. “So we’re literally less than a week away to running out of food that we eat and are part of our lifestyle here in our province.”

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 declined to hear one final appeal by Oceanex.

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