MarAd: U.S.-flag laker fleet on the road to recovery from recession, still faces obstacles

Despite low water and lack of dredging, the Great Lakes shipping industry is on the mend from record low traffic in 2009.

The Maritime Administration’s report, “Status of the U.S.-Flag Great Lakes Water Transportation Industry,” outlines some of the success and challenges of the U.S.-flag fleet that plies the lakes. Cargo on the lake dropped 33 percent in the economic crisis of 2009, when major shippers in the steel and auto industries were hard hit. Iron ore, the single most important cargo for U.S.-flag lakers, has almost fully recovered to pre-recession levels.

The industry sees the report as positive, said Glen Nekvasil, vice president of the Lake Carriers’ Association, which represents 17 companies that operate 57 U.S.-flag vessels.

“It confirmed what previous reports said, that we’re very efficient and very safe, and since we’re in fresh water we don’t have to build new ships so you can achieve most of the efficiencies by re-powering those vessels,” Nekvasil said.

MarAd launched the study in 2009 when the industry was hit with a confluence of challenging conditions, including loss of cargo due to the recession, uncertainty about federal regulations on emissions and ballast water treatment and low water conditions.

The report concluded that “the U.S. Great Lakes maritime industry is generally healthy, providing efficient, safe and environmentally friendly transportation services. It continues to be competitive with railways and trucks and, supported by responsible regulation and infrastructure maintenance, will remain an essential part of the regional and national economies.”

Dredging on the lakes remains the No. 1 priority for the lake carriers, and the drought of the last several years has only exacerbated the problem. In 2012, the federal government funded dredging in only 16 of the 60 ports on the Great Lakes. Carriers have to reduce cargo to allow vessels to operate.

Mark Barker, president of The Interlake Steamship Co., said his 1,000-foot lakers give up two to two-and-a-half feet of loading depth due to low water.

“That’s 300,000 to 400,000 tons a year each vessel loses, and that equates to six more trips to carry the same amount of tonnage with normal water levels,” Barker said. “With the limited season we have on the lakes, that’s cargo that we can’t get back.”

The water level on lakes Michigan and Huron are 29 inches below long-term average, and the other lakes are also well below average. The industry anticipated worsening conditions when the 2013 shipping season through the Sault Ste. Marie locks resumed March 25.

The industry faces uncertainty in ballast water regulations. Federal regulations currently require U.S.-flag lakers to use Best Management Practices instead of the treatment systems designed for oceangoing vessels. However, individual states could require lakers to treat their ballast. The industry’s position is that because lakers never leave the system, there’s no need for them to treat their ballast.

“Their ballast tanks contain only what’s already in the lakes and the non-indigenous species introduced by oceangoing vessels have been migrating freely throughout the system for years,” James H.I. Weakley, president of the Lake Carriers’ Association, said in the group’s response to the study.

In response to clean air regulations, some laker operators are converting older vessels from steam power to diesel engines, and upgrading older diesels to newer, cleaner engines. According to the report, 12 lakers remain powered by steam engines rather than diesel engines.

Because of technical issues, steamships are exempt from the sulfur limits that apply on the Great Lakes. Some Great Lakes carriers remain interested, however, in re-powering these older vessels with modern engines that can burn low-sulfur fuels for less pollution and better fuel efficiency.

Interlake Steamship has re-powered four vessels since 2006. Barker said impending regulatory changes were part of the equation.

“We saw the government was going to focus on emissions and environmental impact so we started down a path of re-powering for that purpose,” Barker said.

For further emission reduction, vessel owners are considering dual-fuel engines that can operate on either diesel or liquid natural gas.

“Nothing has been announced officially, but we know that some members are looking at it,” Nekvasil said. “The infrastructure would need to be put in place, but I know that people are looking very seriously at it.”

By Professional Mariner Staff