By Alex Binkley
While Seaway watchers track shipments of grain, iron ore and other traditional commodities through the Seaway this year, they’ll also have something new to keep an eye on.
The Cleveland-Europe Express Ocean Freight Service is scheduled to debut in April bringing regularly scheduled container service to the Seaway-Great Lakes after years of talking about it. The operation is expected to move at least 250,000 tonnes of freight this year between the Ohio region and Europe, and will be alternative to sending containerized goods by road or rail to ships in East Coast ports. William Friedman, President & CEO of Port of Cleveland, says the service “will allow local companies to ship out of their own backyards, simplifying logistics and reducing shipping costs. This service will be a game-changer for manufacturers in the region, keeping shipping dollars local, while opening our shores to the global market in a new way.”
One person who will be paying close attention to the progress of the container service is Bruce Hodgson, Director of Market Development for The St. Lawrence Seaway Management Corp. “If it works, it could bring in others.” They could use Cleveland as a hub or consider other ports such as Hamilton, which has been building up its transportation infrastructure.
Last year, the Seaway was hit “with a shift in trading patterns and opportunities that didn’t materialize,” he says. The result was a 5.2 per cent overall decline in shipments despite a surge in grain movements in December. Iron ore was down 3.5 per cent largely because exports from the Upper Lakes to China dropped instead of rising. Break-bulk movements dropped 20 per cent, mainly because of lower steel imports. Even with the late season surge, grain was down 3 per cent during 2013, coal was off 3 per cent and dry bulk was down 12 per cent. More of the record Western Canadian grain crop could have been shipped last fall but transits were delayed by the harsh December weather.
For this year, Hodgson expects a lot more grain as well as iron ore movements. “The U.S. economy should be picking up, which will also translate into additional movements of stone, gypsum and cement.” There could also be more shipments of low sulphur coal to Europe and an increase in bulk petroleum products through the Lakes. Other commodities to watch for are steel imports for the auto industry and wind turbine components now that a U.S. tax credit has been restored. Oil sands developments in Alberta and Saskatchewan should be importing more project cargoes through the Seaway. And highway departments and municipalities will be anxious to rebuild their depleted stocks of road salt.
When asked about the prospects for the Seaway-Great Lakes this year, Michael Broad, President of the Shipping Federation of Canada, noted, “The world economy is still sluggish. Hopefully it will pick up a bit, I get this feeling the market is expecting some improvement.”
Robert Lewis-Manning, President of the Canadian Shipowners Association, offered a similar assessment pointing out the long winter will leave some customers in need of quick re-supply. What happens after that depends a lot on economic conditions and Mother Nature.
Betty Sutton, Administrator of Saint Lawrence Seaway Development Corp, singled out the new container service when asked in an interview what she will be watching during his first full year in the post. She says the service has the potential to double existing Ohio-Europe traffic during its inaugural season. It is “a breakthrough for the Great Lakes because it plugs the waterway into the international global container transportation business,” she contends. It should be of interest to other Great Lake ports and discussions about other services are already under way. “Currently, local manufacturers use East Coast ports to ship goods to Europe, incurring additional rail and truck costs along the way,” said Will Friedman, president & CEO of Port of Cleveland. “The Cleveland Europe-Express will allow local companies to ship out of their own backyards, simplifying logistics and reducing shipping costs.”
The service will be operated by the Spliethoff Group, a Dutch company, which owns and operates a fleet of about 100 multipurpose, heavy-lift and ro/ro vessels. Initially, the Express will call once a month at Cleveland. The agreement with the Spliethoff Group allows the port to add a second ship, upping service frequency to a call every two weeks, as demand rises.
“Providing scheduled, reliable capacity to the America’s industrial heartland via the Great Lakes/St. Lawrence Seaway routing will enable shippers to connect more efficiently to the European continent,” said Bart Peters, manager of the Spliethoff Group’s America Service.
However, iron ore and grain remain the Seaway’s bread and butter, and the backlog of Prairie grain presents the waterway “with a very good opportunity to show what it can do to alleviate the issue,” points out Terence Bowles, President and CEO of The St. Lawrence Seaway Management Corp. Which is quite a turnaround from 2013 when there was little grain available in the spring to ship through the system.
The challenge facing the Prairie grain situation is immense. At a recent farm conference, Lyndon Carlson of Farm Credit Canada noted that the size of last year’s grain crop in Western Canada caught the industry and the railways by surprise. Wheat production was up 36 per cent, durum 37 per cent, canola 25 per cent and barley 20 per cent. “That equates to 14.3 million tonnes of extra production, which is about the equivalent of an average canola crop. We have to get used to this level of production because it will be the new normal. This year’s carryover will be least three times normal.”
The situation should put a spotlight on the port of Thunder Bay, Bowles says. While the Canadian Wheat Board is no longer the dominant player in the western grain trade, it has purchased eastern grain terminals which it will be using as much as possible during the coming months. “They could be using the Seaway season to try to clear the backlog,” Bowles added. In recent years, the grain industry has treated the Seaway as a second transportation option. The system has the chance to show it can be a key player, he said.