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Marine Services Fees
You Asked About... The Marine Navigation Services Fee (MNSF) as Applied to Foreign Flag Cargo Vessels Engaged in International Trade
Caution and Disclaimer
While all possible care was taken to insure consistency with the Marine Navigation Services Fee Schedule in this pamphlet produced by the Canadian Coast Guard (CCG), the Fee Schedule shall take precedence in the event of a discrepancy between the contents of this pamphlet and the Fee Schedule.
Background
The Marine Navigation Services Fee (MNSF) was officially introduced by the Minister of Fisheries and Oceans on June 1, 1996 as a user fee for navigational services provided by the Canadian Coast Guard. Subsequently revised on July 1, 1997, and again on October 1, 1998, the MNSF is assessed on all vessels operating in Canadian waters with the exception of fishing vessels, "government ships" and pleasure craft as defined by the MNSF Fee schedule. It was also decided that, effective October 1, 1998, the existing fee structure would be frozen (i.e. unchanged) for three years. Responses to questions below are based on provisions contained in the "Fee Schedule – Fees to Be Paid For Marine Navigation Services Provided By the Canadian Coast Guard" effective October 1, 1998.
Q. 1. Why am I being asked to pay the Marine Navigation Services Fee?
The Marine Navigation Services Fee (MNSF) is based on the premise that those who benefit directly from publicly funded services should contribute in part to the cost of those services. The MNSF recovers a portion of the total costs incurred by the Canadian Coast Guard in providing navigation aids and Vessel Traffic Services (VTS) to commercial ships.
Q. 2. What aids to navigation and VTS services am I being asked to pay for?
Aids to navigation for which you are being asked to pay a portion of the cost include visual aids such as lightstations, buoys, channel markers and day beacons; radar aids including reflectors, beacons and RACONs; aural aids including fog horns, bell and whistle buoys and Loran-C. Vessel Traffic Services (VTS) include the monitoring of vessel movements via VHF radio communications and shore-based radar surveillance equipment, the issuing of the Notice to Mariners and Notices to Shipping, the establishment of compulsory traffic routes and the provision of weather forecasts.
Q. 3. What if I don’t need or use the Coast Guard’s navaids or VTS system? Do I still pay the MNSF?
Yes. If there are aids available for commercial ships in the geographic area in which your vessel(s) operate(s), you will have to pay regardless of usage.
Q. 4. My vessel is operating off Sable Island or Hibernia. Am I required to pay the MNSF?
No. As long as these vessels remain outside of "Canadian waters". Only vessels operating in, or entering "Canadian waters" which are defined, for purposes of the application of the fee, as the limits of our Territorial Sea (i.e. 12 nautical miles) are required to pay the MNSF. Vessels operating beyond the 12-mile Territorial Sea limit are not subject to the fee. However, if these vessels enter "Canadian waters" the MNSF would be charged.
Q. 5. How are Eastern Canada and the Western Region defined for purposes of the application of the MNSF?
Eastern Canada is defined as the waters of the provinces of Manitoba, Ontario, Quebec, Nova Scotia, New Brunswick, P.E.I. and Newfoundland. The Western Region encompasses the provinces of Saskatchewan, Alberta and British Columbia.
Q. 6. What if a foreign flag cargo ship arrives at or departs from a port in ballast? Does it pay the MNSF?
In Eastern Canada, foreign flag cargo ships calling a Canadian port in ballast are not charged the MNSF. Shipping agents are not required to submit an MNSF invoice for vessels arriving or departing in ballast.
In the Western Region, however, all foreign flag ships (except barges) entering Canadian waters pay the MNSF.
Q. 7. Who invoices foreign flag cargo ships?
In Eastern Canada, cargo ships are invoiced by shipping agents handling these vessels on behalf of the Coast Guard (i.e. Coast Guard collecting agents) or are direct-billed by DFO’s Marine Services Fees Billing, Collection and Compliance (MSFBCC) office through the agent of record appearing in Coast Guard VTS reports.
In the Western Region, Thunder Bay Airport Services Inc. invoices and collects the MNSF from foreign flag ships entering Canadian waters on behalf of Coast Guard.
Q. 8. What is the difference between a collecting agent and a non-participating agent?
A shipping agent that has signed a Collection Agreement with the Canadian Coast Guard to prepare MNSF documentation in exchange for a 5% administration fee is referred to as a collecting agent. Non-participating agents are shipping agents that, for one reason or another, have not signed a Collection Agreement and must be invoiced the MNSF directly by the MSFBCC office for those foreign flag vessels that they handle.
Q. 9. Is the shipping agent handling a foreign flag ship liable for the payment of the fee?
No, the MNSF fee is applied on the vessel and is normally payable by the entity (e.g. shipowner/operator/charterer) who has control of the vessel at the time of operations in Canadian waters in which the Coast Guard is providing navaids and VTS services. Industry agreements (e.g. charter parties) may also spell out who is responsible for payment of the fee. From an agent’s perspective, the MNSF should be treated as any of the other port/pilotage costs incurred by a foreign flag vessel calling a Canadian port.
Q. 10. How are foreign flag cargo ships billed and how often?
In Eastern Canada, the fee is applied on the vessel according to the number of metric tonnes unloaded and/or loaded each time the vessel calls a Canadian port.
In the Western Region, fees are applied on the vessel and are based on its size (i.e. Gross Tonnage) and the number of entries the foreign flag ship makes into Canadian waters in a twelve month period.
Q. 11. How long do I have to pay the MNSF?
Once the agent of record prepares and presents the MNSF to the shipowner/operator, it has thirty (30) days to pay the invoice. The agent of record normally remits payment on behalf of the shipowner/operator.
Q. 12. Are cargo unloadings and loadings treated separately in terms of the payment of the MNSF?
Yes, in Eastern Canada, the agent or the MSFBCC office is required to prepare separate invoices for unloadings (arrivals) and loadings (departures).
In the Western Region, Thunder Bay Airport Services Inc. prepares an MNSF invoice for each entry of a foreign flag ship into Canadian waters.
Q. 13. What happens if the shipowner/operator doesn’t pay the MNSF within thirty (30) days?
In Eastern Canada, the collecting agent sends a reminder to the vessel owner/operator, with a copy to the MSFBCC office, that the fee is overdue on the 31st day of the issuance of the invoice. If the owner/operator has not paid the fee within 60 days of the invoicing, the agent notifies the MSFBCC office which then initiates collection action.
In the Western Region, Thunder Bay Airport Services Inc. will initiate follow-up action on non-payment of the MNSF on the 46th day of the issuance of the invoice. Delinquent accounts are turned over to the Coast Guard by Thunder Bay Airport Services Inc. for collection after 120 days.
Q. 14. If a foreign flag barge in tandem with a tug loads and/or unloads at a Canadian port, does the barge pay the MNSF?
Yes, in Eastern Canada the barge pays the MNSF based on the tonnage loaded and/or unloaded while the tug pays the fee on its Gross Tonnage (GT) once a calendar month.
In the Western Region barges are exempt from payment of the fee and the tug pays on the basis of a maximum of twelve times in a twelve-month period.
Q. 15. If a foreign flag cargo ship loads and/or unloads cargo destined to or originating from an international port in the same calendar month in which it is engaged in the Canadian Coasting Trade, which MNSF fee does this ship pay?
The ship pays the higher of the fees charged to Coasting Trade vessels and foreign flag cargo ships. Where the amounts are identical, only the second fee applies. The ship is never charged under two different provisions of the MNSF Regulations in the same calendar month.
Q. 16. As a container operator in Eastern Canada, I share space/slots on my vessels as well as those of my partners. As a collecting agent, should I be reporting cargo tonnages loaded onto or unloaded from all vessels on which I share space?
All cargo tonnages loaded/unloaded at Canadian ports onto or from foreign flag vessels are subject to the MNSF. Normally, container operators pay the fee on all tonnages for which they are responsible regardless of the vessel from which the cargo was unloaded or onto which cargo was loaded. This appears to be the container shipping industry’s preferred approach to paying the MNSF on foreign flag cargo ships.
Q. 17. Does the MNSF fee vary regionally?
Yes, the fee per metric tonne of cargo loaded and/or unloaded varies by region and by zone within the Maritimes Region in Eastern Canada of the port in which you load and/or unload.
In the Western Region, foreign flag cargo ships are subject to fees based on GT ranges upon entry into Canadian waters regardless of Canadian ports of call.
Q. 18. What are the MNSF fees in Eastern Canada as of October 1, 1998?
Foreign flag cargo ships are subject to the following fees per metric tonne of cargo unloaded from or loaded at ports:
| In Newfoundland | CDN $0.152 |
| In the Maritimes: | |
| Bay of Fundy | CDN $0.089 |
| East Coast Nova Scotia | CDN $0.107 |
| Bay of Chaleur | CDN $0.160 |
| PEI/Northumberland | CDN $0.216 |
| Miramichi | CDN $0.216 |
| In Central/Laurentian | CDN $0.152 |
Q. 19. What are the MNSF fees in the Western Region as of October 1, 1998?
All foreign flag ships entering Canadian waters in the Western Region are required to pay, on each entry, an MNSF fee of CDN $640 plus $0.028 per GT for vessels of 1,000 GT or more. For a vessel of less than 1,000 GT, the MNSF is assessed at CDN $300 plus CDN $9.50 per GT of the vessel up to twelve times in a twelve month period.
Q. 20. Are there maximum fees payable in Eastern Canada and the Western Region?
Yes, in Eastern Canada, foreign flag cargo ships pay a fee on a maximum of 50,000 cargo tonnes while in the Western Region, all foreign flag ships pay on a maximum of twelve (12) entries into Canadian waters in a twelve month period.
Q. 21. Are there minimum fees payable in Eastern Canada and in the Western Region?
In Eastern Canada, there is a minimum fee of CDN $25 payable by foreign flag cargo ships per MNSF invoice prepared.
There is no minimum MNSF payable by these ships in the Western Region.
Q. 22. Are there any commodity-specific rates in the MNSF fee schedule?
Yes, in Eastern Canada, shiploads of gypsum and aggregates pay the lesser of the regional rate or ceilings set at CDN $0.15 and CDN $0.05 per metric tonne respectively.
In the Western Region, there are no commodity specific fees payable.
Q. 23. Who does the agent of record send payments to?
In Eastern Canada, payment of the fee is to be sent to:
Department of Fisheries and Oceans
Revenue Accounting
200 Kent St., Station 10S047
Ottawa, Ontario
K1A OE6
In the Western Region, payment should be sent to:
Thunder Bay Airport Services Inc.
Att.: Kimberly Otway
Suite 340-100 Princess Street
Thunder Bay, Ontario
P7E 6S2
Q. 24. How does the Coast Guard define "transshipments" for purposes of the application of the MNSF?
Transshipments are defined as cargo, for which the MNSF fee has been paid on the first water leg and which is carried on a second or subsequent vessel to a final destination without any intermediate processing at a port or location between waterborne legs. Transshipments normally only occur on vessel departures (loadings). Transshipment provisions in the MNSF Regulations do not apply in the Western Region.
Q. 25. Are there specific MNSF fees for transshipments of wheat outbound from the ports of Montreal, Trois-Rivières and Quebec City to foreign destinations?
Yes, foreign flag cargo ships loading wheat in Eastern Canada for offshore destinations pay the following MNSF per metric tonne of wheat loaded:
| Quebec City | CDN $0.0669 |
| Trois-Rivières | CDN $0.0122 |
| Montreal | CDN $0.0304 |
There is no applicable MNSF fee on wheat in the Western Region.
Q. 26. Why does the Coast Guard impose a fee on transshipped wheat outbound from these ports and not from other ports along the Lower St. Lawrence River?
Canadian Wheat Board statistics reveal that a proportion of wheat shipments entering silos at the ports of Montreal, Trois-Rivières and Quebec City did so via transport by rail from the West. As such, this wheat is subject to payment of the MNSF. Because available statistics cannot discern between wheat moved by rail and wheat moved by ship to these ports for transshipment overseas, all wheat shipments out of these ports pay an adjusted MNSF fee in order to ensure that wheat moved to the port by rail pays its fair share of the user charge.
Q. 27. Are other grain products that are transshipped at Quebec City, Trois-Rivières and Montreal subject to payment of the adjusted MNSF?
No, grain products other than wheat such as corn, oats, barley, rapeseed and canola, that are transshipped, according to the Coast Guard’s definition, are not subject to payment of the adjusted MNSF fee or any MNSF fee at these three ports or at any other Eastern Canadian ports.
Q. 28. Other than wheat at the aforementioned ports, how is the MNSF applied to all other transshipments?
All other transshipped cargo is exempt from payment of the MNSF. However, while the MSFBCC office does not require an invoice for a transshipment, the MSFBCC office would prefer that an invoice be submitted for a transshipment by the agent of record. Moreover, the MSFBCC office will pay collecting agents a CDN $50 fee for submission of a "transshipment" invoice along with supporting documentation. If the MSFBCC office does not receive an MNSF invoice for the "transshipment", this will eventually be picked up in the MNSF audit of Marine Navigation Services Fees invoices and the agent will then be asked to justify not paying the fee.
Q. 29. Should shipping agents prepare MNSF invoices for transshipments?
Yes, for wheat outbound from Quebec City, Trois-Rivières and Montreal only, the shipping agent is required to prepare an MNSF invoice and submit it along with payment to the MSFBCC office. The MSFBCC office does not require that shipping agents prepare an MNSF invoice for loadings of all other cargo deemed to be transshipments. However, the MSFBCC office will pay collecting agents a fee of CDN $50 if the agent prepares and submits an MNSF "No Charge" invoice for transshipped cargo exclusively. Where an MNSF invoice consists of both "billable" and transshipped cargo, the agent is limited to an admin fee of 5% of the MNSF amount, in Canadian dollars, owed on the "billable" cargo.
Q. 30. Are foreign flag cargo ships transiting Canadian waters en route to or from a port in the U.S. subject to payment of the MNSF?
No, vessels that do not arrive at or depart from a Canadian port do not pay the MNSF.
Q. 31. Are Canadian registered vessels loading/unloading international cargoes at Canadian ports billed as foreign flag cargo ships?
No, in Eastern Canada, Canadian registered vessels, even when engaged in international waterborne commerce, are invoiced the MNSF on a quarterly basis by the MSFBCC office. Collecting agents should not prepare MNSF invoices for any Canadian vessels loading or unloading international cargoes.
In the Western Region, Canadian registered vessels are billed on an annual basis by Thunder Bay Airport Services Inc.
Q. 32. Do foreign flag cargo ships loading/unloading at Canadian ports North of 60 Degrees North Latitude pay the MNSF?
No, these vessels are exempt from payment of the MNSF.
Q. 33. Are foreign flag cargo ships eligible for the 5% discount on the MNSF owed for an on board operating Precision Navigation System (PNS) meeting Coast Guard's Interim Standard?
Yes, however all vessels seeking the 5% PNS discount must first apply and submit the required PNS documentation to the MSFBCC office for consideration and determination of the eligibility of the ship. The MSFBCC office will notify foreign flag shipowners/operators in writing if their ship(s) qualify for the PNS discount.
Q. 34. Do foreign flag vessels loading/unloading cargo calling at Churchill, Manitoba, pay the MNSF?
Yes, even though Churchill is defined as a "remote" port, foreign flag vessels moving between a foreign and a "remote" Canadian port south of 60 Degrees North Latitude are required to pay the MNSF fee at a rate of CDN $0.152 per metric tonne of cargo loaded and/or unloaded.
Q. 35. Where do I find more information on the MNSF rate structure/Fee Schedule as it pertains to foreign flag vessels?
In Eastern Canada, the MNSF fee schedule appears on the back of all paper invoices provided to collecting agents by the MSFBCC office for use with foreign flag vessels to which the fee applies.
For more information on the MNSF fee structure in the Western Region, owners/operators of vessels paying the fee should contact Thunder Bay Airport Services Inc. at (807) 473-2611.
Q. 36. Why is the MNSF rate structure so complex?
The MNSF was a result of extended consultations with all stakeholders over a period of three years. The present rate structure in Eastern Canada is a result of Coast Guard concessions to various industry interest groups in an attempt to make the fee as fair and equitable as possible. While the Coast Guard approved the rate structure presently in place in the Western Region, the schedule of fees was actually developed by the Western Marine Community (WMC), a group representing marine interests on the Canadian West Coast.
Q. 37. When are MNSF fees scheduled to change again?
MNSF fees were frozen by the Coast Guard effective October 1, 1998 for a period of three years.
Q. 38. If I want more information on the MNSF, who do I contact?
For more information, please contact the Marine Services Fees Billing, Collection, and Compliance Division of the Department of Fisheries and Oceans at 1-800-563-6295.
This pamphlet is the fourth in a series prepared by the Canadian Coast Guard.
Other Pamphlets in the Series include:
No. 2 You Asked About… The Marine Navigation Services Fee as Applied to Tonne-Kilometre Operators
No. 5 You Asked About… The Marine Navigation Services Fee as Applied to Foreign Flag Cruise Ships
