|Port City Tugâ€™s Prentiss Brown, equipped with a Bludworth connection system on its bow, is shown here docked at Muskegon, Mich. Parent company Sand Products Corp. has been acquiring vessels in an effort to gain new business on the Great Lakes. (Courtesy Port City Tug)|
The shipping business may be down â€” way down â€” on the Great Lakes, but not everyone in the business is down and out. Some lake freighters and tug-barge combinations were kept tied to their docks for intermittent periods of the 2009 sailing season, and many professional mariners on the lakes suffered through a curtailed season with diminished paychecks. But with the exception of Hannah Marine Corp., few companies have actually disappeared from view.
A good example of continued life-during-recession comes from the activities of Michigan-based Sand Products Corp. Fresh from the profitable sale of three self-unloading Great Lakes â€œriver classâ€ freighters, Sand Products has lately been focusing on the tug and barge business, with recent acquisition of two tugs and prospects for further additions to its sizable book of business in the near future.
Sand Products, headed by industry veteran Chuck Canestraight and family owner-investors, recently acquired one of the best tugs from the disbanded Hannah Marine fleet, and another tug from McAllister Towing of New York. The two tugs are similar in size and are set up for articulated barge operations with the Bludworth coupling system. The plan is to put them to work handling one, if not two, similarly equipped barges moving cement for longtime customer St. Marys Cement.
Meanwhile, a short hop across Lake Michigan, Occidental Petroleum, which gained a sizable calcium chloride operation from Dow Chemical last summer, has acquired the tug Mark Hannah. That vessel also is set up with the Bludworth system and is very similar to the two new Sand Products tugs. Because Occidental needs an operator to transport calcium chloride, it will be interesting to see if these potential partners will eventually be brought together across the lake. Occidental brought in the tug Sea Robin with a matched barge from Allied Towing of Norfolk, Va., to move calcium chloride this past summer. Occidental also brought in the tug Zeus from Dann Marine Towing, of Chesapeake City, Md., to handle a smaller barge it had acquired. Whether or not Occidental will opt for the same tugboat strategy to move its products this coming summer remains to be seen.
Most of the underway activities of Sand Products are managed by Ed Hogan, former chief operating officer of Hannah Marine. He joined Sand Products almost two years ago. Hogan, a former tug skipper for Andrie Inc., has long connections with shippers and tug operators in the region. As head of Sand Products subsidiary Port City Tug, based in Muskegon, Mich., Hogan might be just the right guy to establish and maintain relationships with customers as well as manage an active fleet of cargo vessels.
The breakup of Cleveland-based Hannah Marine may be the best-known tug industry casualty of the current economic recession on the Great Lakes. Hannah, a private family-owned company, once operated one of the largest fleets of tugs and barges on the lakes. The company described itself as a pioneer in introduction of articulated tug-barge operations on the lakes.
It is hard to say, from the outside, whether the companyâ€™s demise was related to economic conditions or to management issues. The company was founded in 1948 by James Hannah and was later operated by his son, Don Hannah. Then, after a period of successful management by an outside president, Don Hannah returned to acquire the company from his siblings in 2006. A few years later, almost all of the companyâ€™s equipment was either sold or auctioned off by creditors.
Still unsold, as of December 2009, is Hannahâ€™s 60,000-barrel, double-hulled and ice-strengthened tank barge, Hannah 6301. The vessel formerly was paired with the tug Mark Hannah carrying calcium chloride for Dow Chemical. This barge, coincidentally, is interchangeable with both of the new tugs owned by Port City Tug as well as with Mark Hannah, now owned by Occidental Petroleum. Clearly there are matchups to be made in this little segment of Lake Michigan.
The people at Port City Tug said they were initially put off by the high price asked by Hannah Marine for its tug Susan W. Hannah. Instead, they were able to find a solid tug that surveyed well at McAllister Towing. Port City purchased Michaela McAllister in late 2008. It was Hogan, who still holds a 1,600-ton U.S. Coast Guard license, who brought the old Michaela up from New York to Bay Shipbuilding Co. in Sturgeon Bay, Wis., for refurbishment and conversion to the Bludworth connection system.
Michaela, since renamed Prentiss Brown, is 113 feet long with a reported 4,300 hp. It was built in 1967 and spent almost its entire career, thus far, in salt water. The boat came out of the shipyard in February 2009 and has since been employed moving the self-unloading cement barge St. Marys Conquest to various ports on the lakes.
It was just a matter of months after the purchase of Michaela McAllister that Port City was able to acquire Susan W. Hannah for the more reasonable price of $1.9 million at a sheriffâ€™s auction for Hannah Marine equipment.
Built in 1977 on the Gulf Coast, Susan W. Hannah operated much of its career in salt water until being brought into the Hannah Marine fleet. The boat is 121 feet long with reported 4,300 hp. It was upgraded to newer EMD power in 1994 and had been working for St. Marys Cement on behalf of Hannah Marine until being laid up and recently sold at auction. Port City Tug reports that it will eventually change the tugâ€™s name, but the boatâ€™s owners may be waiting to see how it can best be put to work.
Susan W. Hannah is available for future projects, and thatâ€™s the way Canestraight, president of Sand Products, likes it for the moment. A tug company has to have boats available for potential work assignments.
â€œWe thought it wise to keep another tugboat around as opportunities arise,â€ he said. â€œWe may also be seeking further business in the management of another Bludworth system.â€
Canestraight said he also has his eyes on another of the Hannah tugs available through auction â€” Mary Hannah â€” and also possibly one of the Bludworth-equipped barges that is still for sale. Heâ€™d acquire the barge most likely not for its possibilities as a tanker, but rather as a candidate for conversion to a deck barge.
â€œWe are certainly convinced about the ATB Bludworth connections,â€ he said. â€œAnd we want to keep looking at the ones that are still available out there. The Bludworth system seems to be a good fit here on the Lakes. It allows for a little flexibility in the dimensions of interchangeable tugs. The notch is standard, but there is flexibility in where the pads would contact the sides of the notch.â€
Canestraight noted that an easy and fluid conversion of a conventional tug to a Bludworth system might come with a price tag of about $1.5 million, but the frequent need for extra work involved might drive it up to $2 million.
The Bludworth ATB system consists of a caliper at the bow of the tug, which is attached to the forward end of a bargeâ€™s notch, and pads on the side of the tug that make contact with similar pads on the sides of the notch.
Canestraight said he is keeping his feelers out for potential work assignments all around the Lake Michigan area.
â€œSince we sold off those three river freighters we have been looking at tug and barge opportunities, particularly in our segment of the lakes,â€ said Canestraight. â€œWhere we see opportunity is in the specialty barge segment of what is called componentry hauling.â€
Canestraight refers particularly to components for construction of offshore wind turbines on the Lakes.
â€œWind energy â€” everyone is wondering how they can get involved with that,â€ he said. â€œSince we are ideally situated on the west shore of Lake Michigan with a deepwater port and a good wind scenario, we are hoping to position ourselves to be available for future projects.â€
There are a couple active projects right now, but mostly still in the planning stages. In one such proposal, a Norwegian company has announced plans for a $3 billion development of 100 to 200 wind turbines in an area encompassing 100 square miles of water situated roughly between Muskegon and Ludington, Mich. The turbines, measuring 300 to 450 feet in height, would be built as close as two miles offshore in some areas, according to the developer.
Deck barges are best for wind projects with tugs that can handle the barge and handle the weather, plus have the capability of carrying large equipment. One would need a substantial barge and a tug of several thousand horsepower, said Canestraight, and covered deck barges might be particularly advantageous for some applications.
Canestraight said he has been impressed by the recent addition of a covered deck barge, Niagara Spirit, to the fleet of McKeil Marine, based in Hamilton, Ontario. The ideal barge in this sense might be 300 to 400 feet in length with a retractable cover, capable of handling a variety of cargo, including containers and some bulk materials, and fitted with the Bludworth ATB system.
Canestraightâ€™s primary company, Sand Products, operates seemingly without direct involvement in the marine industry, except that it needs ships and barges of other companies to transport sand products around the lakes.
The company has a large sand mining operation in northern Michigan where it digs out and processes different types of sand products before loading the material onto ships. Sand Products operates several commercial docks on the lakes where it processes and distributes its sand to final customers.
But Canestraight said he and his partners have been impressed by potential in the marine industry since the sale of the three river freighters in 2008.
The three self-unloading freighters, each measuring 630 feet and capable of carrying about 20,000 tons of bulk cargo, had been purchased from Oglebay Norton Marine Services in 2006 for about $18.5 million. They were then chartered out to Lower Lakes Transportation of New York, which is a division of New York- based Rand Logistics, according to Canestraight. After two years of chartering, the three ships were sold outright to Rand Logistics for about $20 million, according to news reports.
â€œThat worked out well, and it kind of rejuvenated our interest in marine operations,â€ said Canestraight. â€œWhat we are doing right now is really our first modern push into operations in the marine industry.â€
In the past, the company operated a Muskegon-based ferry across Lake Michigan. It has, for many years, operated and chartered out the ATB combination, McKee Sons and Invincible, carrying bulk products â€” primarily crushed limestone. (The McKee family is a major owner of Sand Products).
Another area of interest to Canestraight and his partners is short-haul container shipping by barge. This, as well, would lend itself to tug-barge combinations with ATB connection systems. Canestraight sees Ludington â€” directly across Lake Michigan from Milwaukee, Wis. â€” as potentially a natural base for such a â€œshort-seaâ€ shipping route for containerized cargo. The route would avoid the congestion of Chicago, located at the bottom of Lake Michigan.
â€œThis is another area of possible future business development,â€ he said. â€œI can see a sort of marine highway type of concept, moving intermodal container barges with our tugs. Thereâ€™s been a lot of talk about that both here and in many areas of the East Coast as well.â€
Here again, Canestraight has been observing the work of McKeil Marine, which found a perfect use for its barge Niagara Spirit, ferrying containers between Hamilton and Montreal. McKeil, working with the Port of Hamilton, helped to inaugurate the weekly two-way service in July 2009, with its barge capable of carrying up to 260 TEUs per trip. The service is billed as an alternative to truck and rail transportation of containers.