by Jack Kohane

Adapting to changing times and adopting new strategies are musts in building business these days. Just ask David S. Gutheil, who wants to accelerate the pace of his harbour port’s revenues by looking beyond the obvious. As VP, Maritime and Logistics for Port of Cleveland, a Green Port on the Great Lakes and a transportation gateway into the North American heartland, he oversees 13 million tonnes of cargo flowing through his port each year, generating $1.8 billion in local economic activity. Now the Port is tapping into the global market.

Speaking at the 9th annual Highway H2O conference, the leading cooperative business development platform for Great Lakes-Seaway System, Gutheil told an audience of transportation leaders that he views Port of Cleveland as, “Well positioned to take a leadership role as the first major U.S. port on the Great Lakes to start direct, scheduled containerized and non-containerized cargo service between the Great Lakes and Europe.” Chicago, by contrast, is three more days of sailing for ocean freighters. “We’re probably in the best place geographically to make this work,” he emphasized.

Port of Cleveland (POC) has finalized terms with the Dutch company Spliethoff Group to run the North America/Europe service via the St. Lawrence Seaway. The Port is launching its own Liner Service, chartering vessels because the private market will not act alone, due to barriers to entry such as locks, tolls and a shuttered Seaway over winter.

While acknowledging that most Ohio and Midwest cargo moves through East Coast ports, Gutheil opined to the 150 delegates that the status quo is detrimental to competitiveness due to the artificially higher transport costs associated with East Coast routings. A study by a maritime consulting firm determined the port could draw at least 10 per cent of Ohio’s European exports, which would increase the amount of cargo handled at the port by 250,000 to 400,000 tonnes annually. “Business growth within the system for the future hinges on the need to keep pushing for more ways to get additional international vessel capacity into the Great Lakes,” he said. “The midwestern United States is one of the largest manufacturing bases in the world, if not the largest. Currently, this market is underserved by direct maritime access due to the lack of ample capacity to handle business from this area. This is why we are starting our Liner Service, in partnership with Spliethoff. We want to offer cost-effective alternatives to shipping through the Great Lakes,” he continued. “Scheduled service will give shippers reliability and frequency.”

Cleveland’s global outreach spotlighted the Highway H2O Conference theme: taking a global view on adapting to changing markets to stay competitive. Organized by The St. Lawrence Seaway Management Corporation (SLSMC), Highway H2O showcases the latest in forward thinking initiatives that promote the Great Lakes/St. Lawrence Seaway system in Canada and beyond.

Hands-free mooring was spotlighted by Benoit Nolet, a manager with The St. Lawrence Seaway Management Corporation. “It’s a vacuum-based automated mooring technology, called Gen-IV, designed to make shipping faster, easier and safer on the Seaway,” he explained. The technology is claimed to safely hold up to 450,000 dwt bulk vessels and 18,000-TEU container vessels, and virtually eliminates the need for conventional mooring. A one-man system, Gen-IV’s remote control vacuum pads, recessed in the quayside and attached to hydraulic articulated arms, extend, attach and moor ships in about 30 seconds (conventional mooring normally takes between 20 and 90 minutes involving mooring gangs, ships’ crews, pilots and tugs).

“SLSMC is developing this application in partnership with the supplier (Cavotec MoorMaster),” Nolet noted, adding that this product, called Gen-IV, is tailored to the Seaway’s unique environment. Last year, the new mooring system was tested on all commercial vessels entering the test lock.

Benoit listed the equipment’s benefits delivered since its deployment at the test lock: Enhanced safety by removing the hazards associated with handling of mooring wires; faster lockages and faster transits; leveraging technology to improve port efficiency; and compatibility with the majority of the fleet, with little or no need for customer adaptation. “The system is working as designed,” Benoit summed up. “We will continue to transition to no wires.”

Transitioning to Foreign-Trade Zones may take much more time, at least in Canada, according to Dr. Dr. Mark Ferguson, a lead researcher at the McMaster Institute for Transportation and Logistics (MITL –- a non-profit organization of private and public sector investors) and author of the study “Maximizing the Potential of the Foreign Trade Zone Concept in Canada.” Taking the podium at Highway H2O to deliver the first presentation in the “Research Delivery: Supporting the Future of Transportation” session, Ferguson (an expert in the logistics infrastructure) explained that a Foreign Trade zone (FTZ) generally refers to a specific designated location within a country that is eligible for duty and tax exemptions with respect to the purchase or importation of inputs or finished goods. These goods are then processed, assembled or packaged in the FTZ for re-export (in which case taxes and duties do not apply), or for entry into the domestic market (in which case taxes and duties would be deferred until the time of entry). There are about 3,000 free zones in the world across 135 countries, most of which have emerged in the past 25 years. Ferguson characterized the U.S. FTZ framework as “tidy and elegant”. Canada’s FTZ stance, by contrast, is referred to as a “patchwork of programs. “There are too many programs … and there is a lack of integration and harmony in the treatment of duties versus taxes,” he asserts.

But the time may be right for Canada to revisit its lack of a true FTZ policy. Leading the way is CentrePort Canada, located next to Winnipeg’s James Armstrong Richardson International Airport, a 20,000-acre inland port designated as Canada’s first FTZ. Ferguson recommends that decision-makers overseeing the Great Lakes/Seaway system explore ways to optimize the usage of the waterway via extensive use of the FTZ concept. “Treat Seaway ports as outside the customs territory of both Canada and the U.S. and permit free movement of all Canadian and U.S. vessels between these ports,” he advocated. “Have none of these movements defined as cabotage movements. Encourage processing activities within these zones to link more goods closer to the marine mode. This approach would require significant legislative changes … but perhaps there is a way to move the Seaway closer to its full potential.”

Seizing opportunities afforded by the Great Lakes/Seaway waterway was the topic of discussion by Dr. Richard Stewart, Professor at the University of Wisconsin-Superior and a Director with the Transportation and Logistics Research Centre. He zeroed in on the issue of Highway H2O’s operational challenges and opportunities to attract more customers.

“Increasing congestion, fuel costs, trucking costs and limited capacity in truck and rail infrastructure along with the growth of world trade will provide new opportunities for marine,” he affirmed. “However, to take advantage of these developing opportunities, the marine industry will need to increase collaboration between modal partners to achieve the shipper’s objectives in cargo delivery, in areas such as reliability, safety and security, price, and easily available, accurate and timely information.” 

Outlining the advantages offered by Highway H2O, Stewart cited that there is currently excess capacity available on the waterway, that the waterway is the right option to take heavy loads off the nation’s highways, and that the system reliably operates 84 per cent of the year. “On the downside, the system has virtually no scheduled (liner) service, needs front and back haul cargo to be competitive, and the Highway H2O borders need to be more open to reduce barriers to trade.”

Stewart pointed out that the solutions may well come from the next generation of marine leaders. “We have a compelling need to bring in new people and ideas to expand Hwy H2O,” he emphasized. “The new Hwy H2O leaders should be multi-modal and global in background and outlook, and to achieve this goal it cannot be left to just the educators. Industry needs to help students become interested in this field from K-12 through graduate school. Hwy H2O, the (marine) industry and agencies need to create more Scholarships, Fellowships, Internships, Management training programs and support research.” Pushing education is a crucial key to the future health of the industry.

Pushing earth to facilitate the flow of mega-ships on one of the world’s busiest water routes, an update on the 80-km-long Panama Canal’s ambitious US$5.25 billion, eight-year expansion program (due for completion in 2015) was provided to Highway H2O attendees by María Eugenia de Sánchez, Executive VP of Planning and Business Development with the Panama Canal Authority. She detailed what the project involves: the construction of post-panamax locks in the Pacific and in the Atlantic side; deepening and widening of the entrances to the canal on both ends; and the excavation of new access channels to the two new locks. The expanded canal locks have been designed to handle full container vessels of up to 13,000 TEUs, and Capesize vessels of up to 180,000 deadweight tonnes with cargoes around 140,000 tonnes. “This is relevant to Canada as your country is an important origin for metallurgical coal from the West Coast ports to Europe,” said Ms. de Sánchez. “The expanded Panama Canal will allow the waterway to provide a better service to all of our customers.”

Change has been constant on the Great Lakes/System ever since it opened in 1959. That was the overarching message at this year’s Highway H2O Conference, reinforced by Terence Bowles, President and CEO of SLSMC. “These are exciting times for the marine industry,” he stated. “On the Canadian side of the Seaway, we have invested some $265 million over the last five years in our locks and structures. In the next five years, we plan on investing a further $400 million to ensure that the locks and structures remain a highly reliable and cost-effective means of moving cargo to market. On the U.S. side, our colleagues are in the midst of a ten-year asset renewal program valued around $172 million, which will reach completion in 2018. Within our existing locks and channels, the Seaway has the capacity to double the amount of cargo transiting the system on an annual basis. We are ready to accommodate new streams of business right now.”