Spike in commercial traffic helped Marine Atlantic endure pandemic upheaval
But with passenger traffic down last year, Ottawa stepped in to cover big losses in revenue
A surge in commercial traffic, driven largely by a shift to online shopping and a spike in the shipment of building materials during the pandemic, helped Marine Atlantic endure one of its toughest ever years in 2020-21.
But it wasn't enough to offset some big losses as passenger traffic slumped badly due to pandemic travel restrictions, forcing the federal government to increase its subsidies for the service, and prompting Marine Atlantic to temporarily lay off employees and divert funds earmarked for capital projects to the operating side of the ledger.
The federal Crown corporation released its annual report for the last fiscal year Tuesday, and it revealed just how badly the constitutionally mandated ferry service between Nova Scotia and Newfoundland and Labrador was blown off course by the COVID-19 pandemic.
Strict public health measures aimed at slowing the transmission of the disease forced Marine Atlantic to reduce passenger numbers on its vessels, close shipboard food and retail services, and suspend seasonal service into Argentia in 2020.
As a result, Marine Atlantic vessels carried roughly 140,000 passengers and 50,000 passenger vehicles last year, about half the pre-pandemic volumes.
But while passenger traffic sank, the number of commercial vehicles grew by about nine per cent, to just under 90,000.
"This helped offset some of the decreases in passengers and onboard service," Shawn Leamon, Marine Atlantic's vice-president of finance, said during a video presentation of the annual report.
Leamon said there were four factors that contributed to the increase in commercial traffic: government stimulus, a shift to online shopping, an increase in home renovation projects as people spent more time at home, and more propane shipments.
Total expenses for the year came in at $219 million, well over the $83 million — a drop of $22 million from the previous year — in revenue from user fees.
That required the federal government to make up the difference to cover operating costs, to the tune of $135.6 million in subsidies from taxpayers.
It's government policy that Marine Atlantic recover 65 per cent of its costs through user fees, but that shrank to just over 55 per cent last year.
Marine Atlantic also shaved more than $11 million in wages and benefits through temporary layoffs, and saw its fuel bill shrink by nearly $14 million because it required 130 fewer sailings, and fuel prices foundered to historic lows because of the pandemic.
Marine Atlantic president and CEO Murray Hupman said a "return to normal operations is on the horizon," while board chairman Gary O'Brien praised employees for enabling the ferry service to continue throughout the pandemic.
Marine Atlantic operates four ice-class vessels: MV Blue Puttees, MV Highlanders, MV Atlantic Vision and MV Leif Ericson.
In a typical year, roughly two-thirds of the business comes from commercial vessels carrying goods and other supplies to and from Newfoundland and Labrador, while the remainder is passenger traffic that occurs primarily in the summer.
Meanwhile, O'Brien said efforts to charter a new vessel continues to make progress, with two companies advancing to the request for proposals phase.
Marine Atlantic plans to charter the new vessel for five years, with an option to purchase at the end of 60 months. The new vessel is expected to enter service in 2024.
A new administration building in Port aux Basques is expected to be completed in 2023-24, and there are plans to carry out navigational improvements in the harbour, said O'Brien.
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