New BC Ferries report highlights company challenges and economic uncertainty

The latest update from BC Ferries reveals a corporation facing rising costs, high staff turnover, and inflation in the midst of economic uncertainty.

The corporation filed a 41-page supplementary update to the Office of the BC Ferries Commissioner last Friday, in which it revised its infrastructure planning, fleet maintenance costs, and passenger outlook to reflect the “elevated certainty of a recession during 2023.”

Based on previous trends, BC Ferries estimates that ferry traffic could drop up to 3% during a mild recession, which Canada’s six major banks are predicting will happen this year. Ferry usage has remained close to pre-pandemic levels, and at times exceeded them in 2022.

‍

An agreement signed between BC and the ferry corporation in 2020 means that price increases have been capped at 2.3% each year from 2023 to 2025. To help BC Ferries maintain that rate, the province announced last month that it would be providing an additional $500 million to the corporation.

BC Ferries is seeking a higher price cap for the next four-year term (2024-28), which may result in an additional $15.9 million in ticket revenue for BC Ferries in the 2024 fiscal year, according to the report. The BC Ferry Commission will decide whether or not the higher price cap is appropriate, and will release their preliminary findings March 31.

Since the start of the pandemic, BC Ferries has cut back on major capital projects and fleet investments. Further delays and cuts are now expected in its long-term capital projects. Approximately $24 million worth of capital spending has been cancelled, with $366 million more deferred out of the current 12-year capital plan set to end in 2035. Despite this, $229 million has been added to the capital budget, largely due to inflation.

BC Ferries has been experiencing challenges in hiring and retaining employees across a number of departments, including senior management roles. The report said that there is a growing gap in company wages in comparison with the rest of the marketplace. Worker shortages in the marine industry are endemic, as reported by Capital Daily last year.

Turnover of union-exempt employees in management positions has gone up to 20%, while another 20% of current managerial employees are eligible for retirement within the next five years.

The report also highlighted unsustainable workloads of 12- to 15-hour days and a chronic lack of work-life balance for those working in its Human Resources department.

“BC Ferries is experiencing a gap in overall leadership capabilities, with front-line leaders needing higher levels of support to manage both operations and their team members,” the report said.