Monday, April 13, 2020

Newfoundland shortages and Oceanex

Oceanex Sanderling, with a very light deck load, operates weekly from Halifax.

From today's news we learn that Newfoundland is running short of vital supplies from the mainland, and Oceanex is running at an unsustainable level. The reports state that Oceanex has operating costs of about $5 million a week to run its three ships (two from Montreal to St.John's and one from Halifax to St.John's) and is currently losing $1 million a week.

The base traffic of new cars has essentially dried up and combined with the drop in other freight, traffic is down 35%. Newfoundland's oil industry has retrenched as well due to the collapse of the world oil price and many cuts are being made across the economy.

Oceanex will likely have to lay up one of its ships in order to reduce cut costs, but that may not be enough to permit the company to continue to operate without government assistance. Oceanex has a high debt level already and has long claimed that Marine Atlantic's rates are unfair competition, preventing it from being able to renew its fleet.

If you have been reading my series on Newfoundland freight traffic from Halifax, you will be aware that today's Oceanex is the outgrowth of CN's need to deliver new cars to Newfoundland. Both domestic built and foreign built cars are shipped from Autoport and have formed a key segment of the traffic since 1970. Import and export containers and RoRo / trailer traffic form the rest of the cargo.

The Montreal service has deep roots and goes back to pre-Confederation (1949) and subsidized post-Confederation operations. Oceanex was formed in 1991 to operate both Montreal and Halifax services.


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