By Alex Binkley
While the 2015 Great Lakes-Seaway season is shaping up for a slow, frigid start like last year, no one expects it will end quite as dramatically. Not that they would mind.
After losing the first month of the 2014 shipping season to widespread ice on the Lakes, the Seaway reported it carried 40 million tonnes of cargo in 2014, a gain of almost 7 per cent over 2013 tonnages, and the highest volume since 2008 when the Seaway carried 40.7 million tonnes.
The St. Lawrence Seaway Management Corp. had planned a March 27 opening day for the season, and then, as reports rolled in detailing the extent of the ice coverage, it decided to delay the launch until April 2. President and CEO Terence Bowles said in an interview, “We want to make sure everything is ready to go; we remember what happened last year.”
By mid-February, it was clear the ice situation could be as bad, and possibly worse, than 2014. The Seaway agencies, shipowner groups and the Canadian and U.S. Coast Guards met regularly to plan the opening of navigation. On top of that quandary, the queasy state of the global and Canadian economies has the marine industry in a cautious mood about this year’s prospects, regardless the length of the season. To many, the Seaway’s success will be mostly dependent on whether the U.S. economy can continue to post healthy growth numbers.
“It will be tough to repeat last year’s results,” Bowles notes. “The fog over Europe doesn’t help either.” Grain exports should be healthy this year as the terminals at Thunder Bay are well stocked and a number of Canadian freighters overwintered there in hopes of getting an early start to the season with a full load. The automotive and construction sectors are doing well, he adds. “Coal will be way down; that’s an industry in trouble.” Then there’s the uncertainty caused by the drop in crude oil prices and the lower value of the loonie. Its decline could be a shot in the arm for the manufacturing sector, which could bring more business to the Great Lakes, he hopes. While he didn’t want to pick a number, he didn’t disagree when asked if 37 million tonnes would be a reasonable guesstimate.
Last year’s comeback story was driven in large part by a 44 per cent increase in grain shipments, mostly from the Prairies. That boom was helped by the presence of more ocean going vessels coming to Great Lakes ports with steel and other cargoes and taking grain out.
In addition to the total tonnage, an intriguing statistic from last year was that the additional 2.6 million tonnes of freight was accomplished with 3,909 ship transits of the system, just nine more than in 2013. In other words, a lot fewer ships left the system with empty holds. “At one point we had more than 50 ocean going vessels in the system,” Bowles points out. “That gave us a real leg up.” It also accounted for a sizeable chunk of the grain shipment increase.
Robert Lewis-Manning, President of the Canadian Shipowners Association (CSA), says his members will likely have a more normal workload of between 50 million and 60 million tonnes this year. He expects that the 2015 numbers will be slightly better than 2014’s. While they look for business, the shipping lines are also watching moves in the United States on ballast rules and emissions from vessels and are waiting for the final text of the Canada-Europe free trade deal to determine the implications for the domestic shipping industry.
Michael Broad, President of the Shipping Federation of Canada, also took a cautious position on the prospects for 2015. He will be watching the levels of imported steel. “It should be a strong opening and with the way the American economy is going, it should continue.” With the foreign freighters in the system, export prospects rise as well. “In the end, the Seaway depends on the health of the U.S. economy.”
Glen Nekvasil, Vice-President of the Lake Carriers Association (LCA), said his members moved 90.1 million tonnes of cargo in 2014, an increase of 1.1 per cent over 2013. Iron ore increased 4 per cent to 46.5 million tonnes, coal dipped 2.6 per cent, limestone shipments slipped 3 per cent and cement rose 3.7 per cent. Salt jumped 39 per cent as many communities had exhausted their supplies for road clearing during the previous winter. Sand cargos were essentially unchanged from 2013, but American grain decreased by 42 per cent. Two factors assisted in the U.S. cargo boost: higher water levels and the activation of three ships not scheduled to operate in 2014, he pointed out. “The results also show how badly behind we were from the early onset of winter in 2013. It was pretty impressive how we came back.”
While water levels should be adequate for the first part of the season, Nekvasil says they “won’t be any reason to skip dredging.” LCA is part of a long running campaign to convince Washington to properly dredge Great Lakes ports so ships don’t have to sail lightly loaded. “The President says more funds are coming to the Lakes; we’ll be watching.”
Betty Sutton, Administrator of the U.S. Saint Lawrence Seaway Development Corp. (SLSDC), says she’s “cautiously optimistic, as usual. We anticipate that a healthier U.S. economy and the potential for U.S. grain will have a positive impact on the system in 2015. The strong finish to the Seaway’s 2014 navigation season contributed to the resurgence in the overall economy and foreshadows a positive outlook for increasing use of maritime transportation to move goods throughout the region and beyond,” she says. The historic number of ocean vessels entering the Seaway last year “helped bring the benefits of international trade to the region.”
Sutton is entering her second full year as Administrator and is looking to boost the Seaway’s potential “to facilitate trade and economic development throughout the Great Lakes – Seaway region. The Seaway exists for economic activity, connecting North America’s ‘Opportunity Belt’ to the world.”
SLSDC “has established a Great Lakes Regional Outreach Initiative, which will focus on trade and economic development activities and work on the ground with the Great Lakes – Seaway System stakeholder community. Our Great Lakes Regional Representative and Economic Development Specialist will work with and support Great Lakes/Seaway ports, terminals, shippers, carriers, and labour to increase maritime trade; meet with federal, state and local elected officials to offer assistance; coordinate with other regional federal entities, Great Lakes state transportation officials and regional economic development agencies to ensure Seaway system maritime transportation is understood and prioritized in regional planning; and provide information about federal maritime transportation and funding assistance programs.”
Bowles says the Highway H2O program is a key element of the promotion of the Great Lakes-Seaway system. “We need to tell the story about we’ve accomplished. What we want is to do is attract as much traffic as we can. To do that, we have to be competitive.” Initiatives including hands free mooring, which will be adopted through the whole system by 2017, and which “will make us more competitive.” The new mooring system is “one of our biggest moved forward in the last 30 years,” he continues. The modernization program means ships can pass through the system faster, which helps them become more competitive.”
Lewis-Manning is worried about the regulatory impact of U.S. ballast policies and provisions in the trade deal with Europe. For almost a decade, Canada and the U.S. jointly enforced ballast exchange requirements on all ships coming from overseas ports to prevent the spread of aquatic nuisance species in the Great Lakes. While the policy has worked, the U.S. ignored internationally-accepted policies on ballast treatment developed by the International Maritime Organization to come up with its own plan.
That has empowered both the Environmental Protection Agency and the U.S. Coast Guard to administer ballast treatment policies. The U.S. Great Lakes fleet is exempt, but not Canada’s. The EPA wants Canadian shipowners to spend millions installing ballast equipment on their vessels even though there is no approved technology for the cold waters of the Great Lakes. The Canadian government intends to adopt a similar policy leaving the shipping lines “in an impossible position,” Lewis-Manning says. Lewis-Manning says the best prospect for now is legislation before Congress that would assign the Coast Guard sole responsibility for ballast regulations.
CSA has proposed a five-year delay in the requirement for ballast equipment, to allow for ongoing study of technology that might work in the Great Lakes. Shipowners should not be at the mercy of two American agencies working separately to bring in a ballast policy. Lewis-Manning says the Canadian government understands the predicament the shipowners are in. However, the issue has not been publicly addressed by cabinet ministers, who have lots to say about other cross border disputes.
On the trade front, Lewis-Manning says that even with the release of the draft final text, which lawyers are currently vetting, the domestic shipping industry remains uneasy about its proposals. CSA wonders why the agreement would allow international shipping lines to employ foreign vessels to transfer empty containers between Montreal and Halifax when required. The change was sought by the Shipping Federation of Canada for its container line members but the domestic group says the traffic should be made available to its members first.
The agreement is also silent on the future of the Coastal Trade Act, which had Canadian shipping companies worried about their $700 million investment in new ships for the Great Lakes-Seaway system.