In 2011, the San Francisco Bar Pilot Association, a monopoly that controls pilotage of ocean-going vessels into and out of San Francisco Bay, experienced year-over-year increases in their revenues of 8.4% and saw total collected pilotage charges exceed $50 million for the first time.
With only 56 licensed pilots, the $50 million total cost of the San Francisco pilot monopoly comes to a record high of $906,000 per pilot. And, that wasn’t their only revenue record set in 2011 – average fees per vessel also increased to an all-time high.
So it was no surprise last year, given their historically high earnings, when the Legislature rejected a plea of poverty from the pilots when they came looking for a raise. Many Legislators felt that the net annual take-home pay of $400,000 for a job where you only work six months a year was hard to justify, much less justification for a raise.
What is a surprise is that, despite their record-high revenues, the pilot monopoly is now making waves about asking for increased pay … again! After already being rejected by the Legislature, the pilots should abandon any prospective efforts to further augment their compensation in 2012 and avoid further hyperbole or misrepresentation in the pursuit of a rate increase.
For instance, in an op-ed published last week in Capitol Weekly entitled “Safety First,” the pilots’ make the claim that by paying them even more money than the record amounts collected in 2011 the Bay will somehow be safer. Specifically, the pilots argue that larger ships refuse “to pay even a penny” for the pilots required for its safe passage. This is contrary to existing law and a bizarre claim, since ships are required to pay pilotage fees based on ship-size, so larger ships pay much more. In fact, these larger ships already pay fees which are 235% higher than that of an average vessel. The very reason for this is because larger ships can present additional navigational challenges and may need additional pilot resources to be moved safely – in other words, the rates already compensate pilots for exactly the situation they complain about now.
Yet, despite these existing higher fees and the fact that pilots do not get paid based on work that they do personally (each gets a cut of overall revenues based on their duty rotation so nobody is paid directly for their own work), somehow they believe that they’re working for “free” if a ship needs additional pilot attention. Considering that the total bill for moving the largest ships to port and then back to sea is currently about $26,000 per call, it is hard to imagine why these ships should pay an additional $10,000 on top of that just to receive the same service pilots are already providing.
The irony is that, while the pilots are complaining about having this additional work, it’s estimated that on average a pilot is actually on a ship only about 3.5 hours each day that they’re on duty. And they’re only on duty and working 175 days a year. In 2006, the busiest year for pilots in the past two decades in terms of vessel traffic, a typical pilot was only actually on-board vessels for about 700 hours over the course of the entire year.
Lastly, the contention that a “safety” problem exists which can only be solved by increasing pilot pay is extremely troubling. Pilots have duties as professional mariners and state licensees no matter what their income level. To believe the pilots’ logic is to endorse the implicit threat that vessels will not be moved safely if pilots are not paid as they wish. That is a threat this monopoly can make credible only if its state regulators turn a blind eye.
Of course there are legitimate navigational issues and challenges facing larger ships at the Port of Oakland, and there are significant constraints in those channels and turning basins, but none of those safety constraints change simply by giving more money to pilots. Since our vessels are required by law to use the services of this compulsory monopoly, our only recourse is to strongly defend the statutes which require pilots to provide services as requested and also limit fees to those approved by the Legislature.
Like any other monopoly, even if some services are less lucrative than others, so long as the state sets an overall fair rate of return, the business is made whole. In 2011, this one monopoly yielded record revenues in what is essentially a risk-free enterprise. If the pilotage system can’t keep vessels moving safely now, when pilots are working less but making more, then their customers are going to keep asking some tough questions; and, if the pilots come back to Sacramento looking for a raise, the public and Legislature will too.
Ed’s Note: John McLaurin, President, Pacific Merchant Shipping Association