At the end of last month, the independent Canadian BC Ferry Commission approved the building of four new major vessels (NMVs), marking a significant step forward in BC Ferries’ long-term fleet renewal plans, it said.
However, the Commission did not approve a requested fifth vessel and highlighted significant challenges facing the ferry system, primarily the systemic funding gap that will need to be addressed.
This decision identified two main areas of uncertainty that are foundational to the health of British Columbia’s marine highway:
- A systemic funding gap and significant investment is needed to deliver even the same level of service as today, either by tax payers or customers through fare increases.
- Disagreement about future traffic demand pressures and what ferry customers see as acceptable levels for waits, delays, and risks of mechanical breakdowns.
“We’re disappointed, and obviously at odds with this decision. We put forward the strongest possible case on behalf of our customers to increase capacity and resiliency at the most affordable price,” said Nicolas Jimenez, BC Ferries’ President & CEO.
“Our customers have been clear—they need more sailing capacity, fewer delays, and a ferry system that keeps up with demand in the coming years.
“While four vessels will still provide some much-needed benefits, we believe we’re missing a critical opportunity to build a more resilient transportation network for the future at a lower price now,” he said.
BC Ferries had proposed to add five vessels on a fixed-price basis for extra capacity and resiliency on its busiest routes to meet the needs of BC’s growing population, tourism industry, supply chains, and local economies.
There were four key areas where the Company’s position and the Commission’s decision differed:
- Affordability: BC Ferries believed that a fifth vessel, which will be needed in the future, will only get substantially more expensive and put even more upward pressure on fares over time.
Due to unique market conditions, fixed-price bids, and economies of scale, building a series of five now will be significantly cheaper than building one or two at a time.
Independent market experts agree that the favourable conditions for the current shipbuilding procurement process that BC Ferries has conducted will not be repeated, meaning costs for future ships – and fare pressures – will certainly be higher tomorrow than today.
Further, supported by business leaders in the province, there’s a real question about whether the system can afford not to keep up with demand and what harms that could risk for tax payers, local economies, the tourism industry, and the province’s supply chain.
- Future demand:BC Ferries’ data showed that the major routes are already almost at capacity during peak season. Long-term planning models submitted as part of the company’s application to the Ferry Commission, based on BC statistics’ data, were conservative.
They identified that there is significant strain on the system today and that without procuring all five vessels now, the risk of waits and delays will be much worse within the next decade than they are today.
- Shifting demand: Through offering discounted saver fares on off-peak sailings over the last four years, BC Ferries has successfully created significant additional space on its busiest sailings by enticing customers to choose other sailing times, some 17% on its busiest route.
While the company will continue to leverage saver fares, reservations, and scheduling changes to manage peak period demand, these tools are already showing diminishing returns.
- Ferry system funding:This is an issue that’s well-understood by the company, the Commission, and the Provincial government since before the last performance term (PT) submission in 2023, and BC Ferries agreed that a long-term fix is needed.
However, in this case, BC Ferries can finance the five vessels with no impact on fares until at least 2028.
Further, the incremental cost of procuring a fifth ship on a fixed-price basis now relative to the broader system funding gaps is fractionally very small.
The Government has already committed to working with BC Ferries to identify the best ways to address these systemic issues.
“This is a missed opportunity to take advantage of fixed pricing to build five ships in a very affordable way for our customers,” Jimenez added.
“We fully expect shipbuilding costs and demand will continue to grow, putting even more pressure on future fares and reliable service, and may hold us back from meeting the expectations of our customers and the communities we serve.
“We’ll now reassess how we can best deliver service in the future that customers, coastal communities, and local businesses expect,” he said.
BC Ferries said it will continue to advocate for long-term investments in the ferry system that are designed to ensure a reliable and affordable ferry service for British Columbians.
This work, including how to manage the need for additional NMVs in the future, will now occur in parallel with the company’s next performance term negotiations with the Province and related submission to the Commission, anticipated in late 2026, for the 2028/2032 performance term.
BC Ferries also claimed it was in the middle of a transparent, competitive global procurement process to select the highest quality, most affordable bid from the shipyard that will build the NMVs.
This process is expected to completed by early summer.
