Should BC Ferries' new big ships be built in British Columbia?

Preliminary conceptual artistic rendering of the New Major Vessels. (BC Ferries)

The last time new purpose-built large ferry ships were locally constructed for BC Ferries was in the 1990s for the duo of Spirit-class vessels — the Spirit of British Columbia and Spirit of Vancouver Island, which are still BC Ferries’ largest vessels — and the trio of failed PacifiCat fast ferry vessels.

A quarter century after the last large-sized ferry vessel was built in a shipyard in British Columbia, there are renewed calls for the ferry corporation to send work to local shipyards. More specifically, this relates to the forthcoming historic contract award to design and build up to seven “major vessels” for the major routes between Metro Vancouver and Vancouver Island.

Each of these seven major vessels will carry up to 360 standard-sized vehicles and 2,100 passengers. They will be larger-capacity replacements for the aging 1980s-built C-class vessels, which each carry up to 250 to 310 vehicles and 1,200 to 1,500 passengers.

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The forthcoming major vessels order includes six replacement ships and one new additional ship. BC Ferries is expected to launch its Request For Proposal (RFP) process later this month to meet its goal of being able to enter the first new ship into service by 2029.

Preliminary conceptual artistic rendering of the New Major Vessels. (BC Ferries)

The new “Build BC Ferries” campaign, led by local shipyard giant Seaspan, supported by various local trade unions and suppliers, is calling on the ferry corporation to build these seven vessels locally. On its campaign website, BC Ferries’ major vessels program is deemed a “once-in-a-generation opportunity to build ferries in BC and support high-value jobs and economic growth in our province.”

Through the campaign, Seaspan asserts BC’s shipbuilding industry has “never been more ready to help BC Ferries” and that shipbuilding jobs, wages, and spending should be kept in the province.

It is suggested that Seaspan has built up greater experience and infrastructure to accommodate large ship orders, particularly following the federal government’s landmark 2011 decision to award BC shipyards with the multi-billion dollar contract to build over 20 large, complex vessels for the Royal Canadian Navy and Canadian Coast Guard.

“We have led the re-establishment of BC’s shipbuilding sector and are currently building the largest and most complex ships ever built in Canada. A pragmatic, build-in-BC approach to ferries would sustain and grow our province’s shipbuilding capability while generating meaningful, long-term jobs and economic benefits for the many small businesses and workers who are a part of our industry,” Ali Hounsell, a spokesperson for Seaspan, told Daily Hive Urbanized upon inquiry.

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Seaspan’s main shipyards facility in North Vancouver. (Seaspan)

Seaspan’s main shipyards facility in North Vancouver. (Seaspan)

MS Regatta (left) and Grand Classica (right) at Seaspan’s North Vancouver shipyards. (Kevin Reimer/Instagram)

According to Seaspan, the BC shipbuilding industry supports up to 9,800 jobs, generates C$3.1 billion in labour income, and contributes C$4.3 billion to provincial GDP through shipbuilding and maintenance work. Between 2012 and 2035, Seaspan’s shipyards in BC will contribute over C$2.5 billion in tax revenue to the municipal and provincial governments.

Since the 2000s, BC Ferries has consistently awarded major new-build contracts to foreign shipyards, particularly European shipyards. This includes the trio of large Coastal-class ships built by Germany’s Flensburger Schiffbau-Gesellschaft that entered service in 2007/2008 and the six small Island-class ships for minor routes by Netherlands’ Damen Shipyards Group that entered service between 2020 and 2022. In January 2024, following a competitive bidding process, BC Ferries announced Damen Shipyards had been selected to build four additional Island Class vessels by 2027.

BC Ferries’ new Island Class vessels under construction at Damen Shipyards in Romania in November 2020. (BC Ferries)

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BC Ferries’ sixth Island Class vessel launched into water on April 21, 2021, at the Damen Shipyards in Poland. (BC Ferries)

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BC Ferries’ first two new Island Class hybrid-electric vessels arrived in Victoria on January 18, 2020. (BC Ferries)

The ferry corporation has turned to these foreign shipyards — which are also some of the world’s largest shipyards — in large part due to their competitive lower-cost bids, with the difference in labour costs being one of the driving factors.

“BC shipyards have a higher cost structure, primarily due to skilled worker wages. A low-cost bid project, with no incentive, points or value for the use of BC workers and suppliers, ensures that much or all of the work will be conducted in low wage nations, with low environmental, safety and employment standards,” continued Hounsell.

BC Ferries asserts that its decision-making process will strongly consider affordability. The ferry corporation suggests it will place greater weight on pursuing the greatest bang for its buck to improve services and reduce the upward pressure of increasing fares to cover the higher cost of locally built ships.

“Our customers have highlighted affordability as one of their top priorities. We simply cannot tell them they need to pay higher fares because it potentially costs us hundreds of millions — or even billions — more just because we built these ferries in BC,” Jeff Groot, a spokesperson for BC Ferries, told Daily Hive Urbanized.

“As an essential public service, we believe it’s important to invest here at home and do that in a way that helps us provide affordable, reliable service to our customers. At the end of the day, the successful shipyard — whether it’s local or not — needs to be able to build high quality, safe ferries and to deliver them to us on time.”

Groot maintains that the forthcoming RFP’s competition process will enable BC Ferries to choose the shipyard that best meets the technical requirements at the best price.

Over the many years, during its various contract award announcements, BC Ferries has repeatedly noted that no Canadian shipyards submitted a bid despite being invited to participate in the open procurement process. This was also the case for the January 2024 award for the four additional Island-class ships.

“I’d encourage every shipyard that’s interested to consider the affordability pressures that British Columbians are facing in all areas of their lives and then put its best foot forward with any proposal it chooses to submit,” continued Groot.

Artistic rendering of BC Ferries’ Island-class vessels. (BC Ferries)

In 2021, BC Ferries publicly pondered the possibility of ordering seven additional Island-class ships from Canadian shipyards. This appeared to be a response to the provincial government’s expressed interest at the time in supporting BC shipyards through BC Ferries’ procurements.

The entire “Made-In-Canada” proposal at the time carried a total cost of nearly C$1.2 billion, including the installation of new charging infrastructure at the terminals to operate the Island-class vessels in full battery-electric mode. However, the lion’s share of the costs would come from the procurement of the seven vessels from Canadian shipyards.

At the time, BC Ferries also made it clear that the higher cost of building these ships domestically would only be possible if the federal and provincial governments were willing to provide significant additional funding to offset the higher “Made-In-Canada” cost.

Contract details released in BC Ferries’ 2004 order for the three Coastal-class ferries from Flensburger Schiffbau-Gesellschaft provide a possible indicator of the sheer cost difference between Canadian and European shipyards.

Each Coastal-class ship has a length of 160 metres, a width of 28 metres, and a gross tonnage of 21,777 GT, and carries up to 370 vehicles and 1,650 passengers.

The 2004 contract value for the Coastal Celebration, Coastal Inspiration, and Coastal Renaissance was C$325 million (€206.4 million) or roughly equivalent to C$500 million in 2024 dollars.

During the 2004 contract award announcement, in explaining their rationale, BC Ferries revealed that the chosen German bid was about 40%, or C$130 million, less than the Canadian bid price they received during the early phase of the bidding process. Flensburger Schiffbau-Gesellschaft’s payment schedule also saved BC Ferries about C$30 million in interest payments. After assuming the extra C$81 million in duty, there is still a C$80 million advantage with the German shipyard.

If BC Ferries had selected the Canadian bid, based on their provided numbers at the time, the three Coastal-class ships would have cost C$455 million in 2004 dollars — equivalent to over C$700 million in 2024 dollars.

BC Ferries’ Coastal Renaissance ship. (BC Ferries)

BC Ferries’ Spirit of Vancouver Island ship. (Regine Poirie/Shutterstock)

BC Ferries did not disclose the January 2024 contract value to Damen Shipyards for building the four additional Island-class ships.

However, it is known that the June 2017 contract value to Damen Shipyards to build the very first two Island-class ships carried a cost of C$86.5 million. Then in 2019, BC Ferries grew this original order by four more vessels for a total of six initial ships under the brand new Island-class fleet typology, with the second contract to Damen Shipyards carrying a value of C$200 million for a total of C$286.5 million. The first two ships cost C$43.3 million per vessel, while the last four ships cost C$50 million per vessel.

These figures represent pre-pandemic marketplace costs. Since the pandemic, especially after the March 2022 start of the steep inflationary trend, global costs for labour and materials have skyrocketed.

It is also known that in May 2024, the federal government’s Canada Infrastructure Bank provided BC Ferries with a C$75 million low-cost loan to help finance the January 2024 order of four additional Island-class vessels.

Each Island-class vessel holds up to 400 passengers and about 50 vehicles — a small fraction of the significantly large size of the future major vessels. The Island-class vessels each have a length of 81 metres, a width of 17 metres, and a gross tonnage of 2,277 GT.

The future seven large ships will be comparable to the size of the Coastal-class and Spirit-class vessels.

Regardless of where the future seven ships in the major vessels order are built, given the size of the ships, the number of ships on order, and inflating costs globally, the upcoming major vessels contract is likely to be the most expensive new-build order in BC Ferries history by a wide margin.

Preliminary conceptual artistic rendering of the New Major Vessels. (BC Ferries)

Groot notes that while new-build contracts have not gone to BC shipyards, the ferry corporation has still sent significant work to companies like Seapsan and their local workers, including C$60 million annually for maintenance and about C$900 million over the next 12 years overall.

When asked to provide a comment on the Seaspan-led “Build BC Ferries” campaign, the BC Ministry of Transportation and Infrastructure reiterated BC Ferries’ annual maintenance work investments in local shipyards and highlighted the provincial governments’ new BC Maritime Industries Strategy.

“Through the BC Maritime Industries Strategy, we committed to opening up new jobs and market opportunities by supporting an inclusive, modernized marine sector with reduced carbon emissions and prioritizing investments that will establish and advance BC’s position as a global leader in innovative and high-value industrial maritime activity,” reads the Ministry’s statement to Daily Hive Urbanized.

“We understand that BC Ferries has initiated a procurement process for its new major vessels program, to modernize its fleet and provide more capacity across the system and that Canadian shipyards have been encouraged to apply.”

The Ministry also noted that they are providing up to C$25 million for BC shipyards to fund new and upgraded infrastructure and assets through co-invested projects.

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