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B.C. Ferries struggles with rising costs, shortage of staff

Employee turnover is high, mid-life upgrades for ships are being deferred, and maintenance costs for its aging fleet and infrastructure have jumped.
B.C. FerriesÂ’ Swartz Bay Terminal. DARREN STONE, TIMES COLONIST

B.C. Ferries has revised its four-year plan to take into account a predicted mild recession, inflation, “significantly” rising costs across the system and ongoing employee staffing and retention challenges.

A 41-page supplemental report to the Office of the B.C. Ferries Commissioner updates the corporation’s outlook submitted six months ago.

Employee turnover is high, mid-life upgrades for ships are being deferred, and maintenance costs for its aging fleet and infrastructure have jumped.

B.C. Ferries’ updated forecast, based on the expectation of a mild recession early in its 2024 fiscal year, predicts traffic will be down one to three per cent overall, resulting in a $14-million drop in fare revenue.

With high inflation that could cut into consumer spending in the next two years, there is a “real risk there will be a reduction in discretionary travel, which could further impact travel,” the update says.

Even so, the company is assuming favourable economic conditions will return in the 2025 fiscal year, bringing traffic back up to earlier forecasted levels.

It cautions that vehicle traffic could decline with future fare-rate increases. However, the province announced last month it was providing $500 million to B.C. Ferries to keep fare increases below three per cent per year.

Capital spending is typically planned over 12 years. Numbers provided in September have been revised because of “extraordinary” inflation, the update said.

About $229 million has been added to the capital budget of $5-billion-plus even as some projects have been cancelled or deferred.

New vessels account for about $2.2 billion of the capital budget. The cost of several more new Island-class vessels has increased, although the report did not say by how much.

Expected costs of $3.1 billion to upgrade existing vessels, terminals and information technology are expected to rise by about $187 million from previous estimates, mainly because of inflation, the update said.

As some projects have been advanced and others confirmed, more than 50 new initiatives remain, including a potential new tug and barge.

About 15 projects have been cancelled, valued at about $24 million.

Mid-life upgrades for the Coastal-class ferries have been pushed back to 2034.

Terminal and vessel maintenance costs have climbed because of supply-chain pressures, inflation, unplanned work due to deferred capital programs, and required repairs at terminals, the outlook says.

The cost to maintain the terminals has been higher than expected — expenses rose by $6.9 million for the 2023 fiscal year and by $7.9 million for the 2024 fiscal year.

More than half of the report addresses long-standing human resources issues, including lack of trained staff, high turnover, lack of leadership training and pay rates that are not competitive.

At the urging of the union representing B.C. Ferries workers, wages talks are set to reopen in November, five month ahead of schedule.

The report compared hourly rates for eight positions and found B.C. Ferries was behind Seaspan, a North Vancouver-based marine company, in seven work categories.

Deckhand and bridgewatch workers at B.C. Ferries earned 24.9 per cent less than at Seaspan and third engineers on a large vessel earned 18.6 per cent less.

The outlook contained a section that looked at how to attract and retain workers, including information obtained through exit interviews.

Consistent themes emerged when employees were asked why they were leaving B.C. Ferries.

An unnecessary amount of paperwork is required when technology could be used, they said, and operations management was not sufficiently trained to manage staff. Workers pointed to an unsustainable workload, such as years of working 12-to-15-hour days and most weekends and the belief that a work-life balance was not possible.

Other issues included a feeling that the workload was unmanageable and the situation would not improve in the long term. A lack of progress in human resources was also listed.

B.C. Ferries made hiring accredited officers a priority, but the report said there has been a growing number of declined employment offers.

Would-be employees noted the difficulty in finding housing and the cost of living in some communities, the report said.

“B.C. 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.”

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