In recent years, there has been a slowing of cargo moving through the Great Lakes and St. Lawrence Seaway on vessels like the 625-foot bulk carrier Federal Shimanto, shown here in August 2002 on the St. Clair River near Port Huron, Mich. Between 1998 and 2002, cargo on the Seaway fell about 24 percent, while vessel transits declined more than 17 percent. During the same period, the Great Lakes saw its cargo volumes decline by about 12 percent.
Key traditional cargoes, such as iron ore, have been declining in recent years. While business is lagging, the need to modernize aging infrastructure is becoming acute.
Even the weather is conspiring to make life more difficult for Great Lakes operators. Drought has lowered water levels, reducing the amount of cargo that lakers can carry safely. And an unusually cold winter has forced a postponement in the opening of the 2003 shipping season.
Shipowners are well aware that they cannot solve these problems by themselves. They can continue to increase efficiency by investing in modern shipping technologies, but they need the help of government to address issues of infrastructure improvement, user fees and trade policies.
Donald N. Morrison, president of the Canadian Shipowners Association in Ottawa, Ontario, said, “We need to be clear about our priorities. We need to draw attention to the need for action.”
Crucial issues facing the industry include:
• The Seaway’s aging infrastructure: These older facilities are expensive to maintain, and they are unable to accommodate large modern ships, according to the 2002 U.S. and Canadian preliminary Great Lakes Navigation System Study.
• The need to update the Soo Locks: Capt. Rejean Lanteigne, vice president of operations at the CSA, called the Soo Locks “very important infrastructure for (the) U.S. steel industry.” He cautioned that “a catastrophic failure of the lock” could shut down larger laker vessel traffic.
• Steel imports that are reducing regional demand for iron ore: George J. Ryan, former president of the Lake Carriers’ Association, which represents U.S.-flag operators, said that despite U.S. tariffs imposed on foreign steel in 1997, “There’s little reason to expect that iron ore shipments (on the Great Lakes) will rebound any time soon.”
• Low water levels: Increased maintenance dredging of shipping channels and port facilities could help to offset the effects of low water that restricts the carrying capacity of vessels.
The economic importance of the vessels using the Great Lakes and Seaway is immense. U.S.- and Canadian-flagged vessels on average transport more than 170 million tons of cargo annually across the five Great Lakes and through the Seaway. The lakers’ shipping routes can stretch up to 1,339 miles from Duluth, Minn., at the western end of Lake Superior to Montreal. From there, it is another 1,000 miles to the open Atlantic.
Great Lakes operations
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The U.S.-flag fleet includes approximately 65 large self-propelled vessels and tug/barge units serving the dry and liquid bulk markets, plus another 20 smaller tug/barge units engaged primarily in carrying liquid bulk products. During the 1970s and 1980s, U.S. carriers built 31 new ships and a number of older vessels underwent major conversion work to lengthen them. Any newbuild work or major conversions are performed in U.S. shipyards to comply with the Jones Act.
Canadian-flagged lakers numbered 80 in 2001, according to the CSA. Of that total, 29 were bulkers representing 485,452 grt, and 33 were self-unloaders representing 667,034 grt. Canadian owners contract with Canadian shipyards for major repairs and conversion work, but newbuilds are purchased overseas because of lower costs.
Vessel owners under both flags have increased efficiency and made technical improvements in their fleets. Installation of bow and stern thrusters reduced the reliance on tugs for dockings. A major improvement program starting in 1972 involved the installation of self-unloader equipment on many lakers.
“Those ships are equipped so the crews can unload the vessels without any need for shoreside personnel or equipment,” said Glen Nekvasil, the LCA’s vice president of communications.
The largest of the self-unloaders, the 1,000-footer lakers, can discharge their cargo of 70,000 tons of iron ore or coal in less than 10 hours.
The number of ships has gradually declined for several reasons. Some lakers have undergone conversions to increase their carrying capacity. That has meant more cargo can be carried in fewer ships. Contraction of the heavy industrial base of the Great Lakes region has led to reduced cargo volumes. Competition from pipelines, trucks and rail has further reduced the amount of cargo moving by water.
The statistics for the Canadian laker fleet are representative of the changes to shipping of both flags over the past 10 years. In 1992, there were 115 Canadian ships representing 1.6 million grt in service. By 2001, that number had declined to 80 ships representing 1.4 million grt.
One response of ship operators has been to share resources. The most recent example is a multi-year agreement announced in January between Oglebay Norton Marine Services Co. LLC and American Steamship Co. to pool their fleets. The deal involved Oglebay Norton’s 12 self-unloader vessels and American Steamship’s 11 self-unloaders.
The business realities that led to the deal became apparent five years ago. According to John N. Lauer, chairman of Oglebay Norton Co., headquartered in Cleveland, Ohio, “When we evaluated the company’s strategic direction and growth potential in 1998, it became evident that we had to overhaul the business. We needed to enter faster-growing markets and find new options for our Great Lakes fleet beyond iron ore. And we had to greatly reduce our overall dependence on the integrated steel industry.”
It would be hard to overstate the importance of steel to Great Lakes shipping. Great Lakes cargoes peaked at more than 122 million tons in 1997, but then the U.S. steel industry began to suffer from a flood of imports.
Dumping of Asian steel “resulted in a 25 percent decrease in iron ore shipments on U.S. lakers due to the bankruptcies of more than 30 American steelmakers and steel processors,” the LCA said.
Among U.S.-flagged lakers, approximately 80 percent of their cargoes are still destined for steel mills along the Great Lakes. It takes 1.3 tons of iron ore, 400 pounds of fluxstone and some metallurgical coal to make one ton of steel.
“Every ton of foreign steel imported displaces two tons of cargo on our boats,” Nekvasil explained. “So if you want to know how U.S.-flag Great Lakes shipping is doing, look at the steel industry. When they do well, we do well. And when they don’t, we don’t do well either.”
Coal is another major commodity of the lakers primarily serving the steel industry and utilities along the lakes. The recent downturn in eastern coal cargoes was offset by increased shipments of western, low-sulfur coal. The LCA reported that coal shipments were 41.9 million net tons in 2002, representing 5.5 percent less coal compared with 2001, but “the decrease mostly reflected excess stockpiles in Canada.”
In numbers of ships, the largest decline was in tankers, with Canadian-flagged ships going from 23 in 1992 to nine in 1996, with eight ships taken out of service between 1995 and 1996. In 2001 there were 10 Canadian-flagged tankers.
Looking ahead, the CSA’s Lanteigne is generally optimistic about the tanker business, noting, “It has its ups and downs but is generally a strong market.” He said two of the existing tankers are single-hull and would likely be withdrawn from service in the near future. Under the U.S. flag, Cleveland Tankers operates two double-hull vessels. Company president Gerry Grammenos said one is designed to carry asphalt and heavy oils and the other to carry primarily petroleum products, such as gasolines and distillates, and they operate all over the Great Lakes. The market, he said, “is stable but not one that will grow.”
Infrastructure challenges
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Lanteigne noted that while the Canadian government has talked a lot about supporting its shipping industry, little has been done to date. However, Albert Jacquez, administrator of the Saint Lawrence Seaway Development Corp. in Washington, D.C., said Canada’s Minister of Transport David Collenette and U.S. Transportation Secretary Norman Y. Mineta are increasingly acknowledging “the importance of the maritime industry and the need to keep up with demand.”
Improvements to the Soo Locks are high on the industry’s wish list. Connecting Lake Superior and Lake Huron, the Soo system consists of four separate locks. In April 2001, a U.S. study proposed replacing the small, obsolete Davis and Sabin locks with a larger modern one.
Only one of the four Soo locks, the Poe, is large enough to accommodate 1,000-footers. A failure of the Poe would prevent these large lakers from moving in or out of Lake Superior. The large lock proposed by the study would be as large as the Poe, assuring access to the larger lakers in the event of problems with the older lock.
Among the issues still to be finally resolved is the cost-sharing formula between the U.S. government and states deriving the commercial benefit of shipping passing through the St. Marys River and Soo Locks.
St. Lawrence Seaway
The St. Lawrence Seaway is the vital link between the Great Lakes and the Atlantic Ocean. Vessels pass through 15 locks on the 190-mile-long Montreal-Lake Ontario section. Transits in the Welland Canal Section during 2002 totaled 3,016 vessels carrying 32.1 million tons of cargo, compared with 8,072 vessels carrying 25 million tons in 1959.
In an average year, the Seaway is used at 50 to 60 percent of its operating capacity. Cargo passing through the Welland Canal and the Montreal-Lake Ontario sections of the system during the 276-day 2002 season was estimated at 41.1 million metric tons, a 1.4 percent drop from 2001.
At age 44, the Seaway’s “aging infrastructure takes more and more of our resources to maintain its viability,” Jacquez said. Joint U.S. and Canadian studies are underway to determine the extent of improvements to be made. The complexities are significant.
“We are talking about a system 2,300 miles in length with 17 major ports in the U.S. and Canada and involving two countries, eight states and two provinces. A lot of factors have to be looked at,” he said.
The existing Seaway locks limit the size of ships to those with a length of 740 feet, beam of 78 feet, draft of 26 feet 6 inches and air draft of 75 feet. Increasing the Seaway’s lock capacities has often been mentioned as a possible infrastructure improvement.
Jacquez said the goals of the Seaway are to hold down shippers’ costs through increased efficiencies and to reduce the system’s maintenance costs, possibly through modernization of the infrastructure. Vessel traffic control in 2003 will become more efficient with the new Automatic Identification System allowing the Seaway’s traffic control centers to monitor vessel speeds and headings. Other goals include developing new business, such as small cruise-ship travel to the Great Lakes and expanded use of integrated tug barges.
Ultimately nature rules
The shipping season is naturally limited by winter ice. However, with the assistance of U.S. and Canadian Coast Guard icebreakers, Great Lakes mariners strive to extend the season as much as possible. By early December 2002, the U.S. Coast Guard icebreaker Biscayne Bay was already assisting vessels in the ice in Saginaw Bay.
The 2002-2003 winter “produced more ice than in the last five or six years. Superior, Huron and Erie were completely frozen over in early March,” said Tim Calappi, physical scientist with the U.S. Army Corps of Engineers in Detroit.
For the first time ever, heavy river ice caused a six-day delay in the opening of the Seaway season, until March 31.
Once the lake and river ice melted, the outlook was for hindered navigation due to low water levels. In March, Calappi listed some of the expected problem areas: “Lakes Michigan and Huron look like 24 inches lower than long-term average from now through August. Compared to last year, that’s 12 inches lower. It looks like they will be the worst. Lake Superior looks like 3 to 5 inches lower than last year and will have the least amount of change. Lake Erie will be 9 to 13 inches lower than last year because it’s been pretty dry there for the last couple of months.”
Great Lakes shipping can look for little relief in 2003 from the economy or from the weather.
At the St. Lawrence Seaway, Jacquez said Great Lakes operators faced “a soft economy” but were “looking for it to strengthen toward the end of the year.”
The LCA’s Nekvasil summed it up this way, “In a nutshell, it looks like it could be another difficult year.”
Richard O. Aichele (rottoa@inforworks.com) is a free-lance writer based in Saratoga Springs, N.Y.
