By Jack Kohane
The St. Lawrence Seaway is a cornerstone of Canada’s transportation and trade strategy, bolstering the country’s trade potential with
growing markets overseas. But how does the Seaway/Great Lakes system stack up against its North American gateway competitors? That question dominated most discussions during the 2-day Hwy H2O seaway summit held in Toronto in the fall of 2015.
“The Seaway system is perfectly positioned to connect the North American heartland with the growing industrial and consumer economies of emerging markets such as Asia, Africa and the Middle East, favouring trade connections to North America’s East Coast, including routes that transit the Panama and Suez Canals,” said Bruce Hodgson, Director of Market Development for The St. Lawrence Seaway Management Corporation (SLSMC) in his opening address to marine industry’s big wheels attending the 11th annual confab. “Being able to move everything from iron ore and stone, to salt and grain, to steel and wind turbines cost-effectively directly contributes to making every one of our industries more competitive in today’s global economy. From this vantage point, the Seaway’s market development team is working with vessel owners, ports, and a wide range of other stakeholders to collectively market the entire Great Lakes Seaway System through joint trade missions and promotional campaigns,” he added.
Going up against its major competitors – including the west coast’s Asia-Pacific Gateway and the U.S. Gulf and East Coast Gateways – the St. Lawrence/Great Lakes system continues to gather strength by gaining customers’ trust. “It is a challenging market,” acknowledged Hodgson. “But we are continuing to make a concentrated effort on showcasing how we can save business time and money. We need to remove the myth that we are a complicated system.”
Hodgson cited the results of a SLSMC 2012 Competitive Study that zeroed in on opportunities and recommendations, including a renewed focus on such commodities as petcoke, metallurgical coal, and timely delivery on project cargo. “We found that we could do a better job on building relations in these segments,” he emphasized. Hwy H2O is a big part of that initiative, establishing and cementing more relationships with stakeholders.” Other areas of reinvigorated focus: packaging and selling the entire Seaway routing (encompassing more than 100 commercial ports in the navigation system); delivering the message that this is North America’s closest access point to Europe, offering state-of-the art multimodal connections to a continental market of 450 million consumers; and encouraging rate flexibility among transport chain partners to promote Seaway routing competitiveness. “Research has shown that we are competitive and well positioned for opportunities in the long term,” he lauded.
Expanding on the theme of competitiveness, Marc-Andre Roy, Vice President (North America), for Ottawa-based management consulting firm, CPCS Transcom Limited, advocated the Seaway’s business case. “The bulk markets that make up 80-90 per cent of the Seaway’s traffic are more or less captive to the system given its cost advantage. Growth in this traffic is basically constrained to what the economy is doing. Going after new markets —- by improving competitiveness to grab market share from other gateways and modes —- presents an opportunity for growth, but this growth would be off a relatively small base (10-20 per cent) of the Seaway’s existing business. So in a sense, Hwy H2O will have to fight the hardest to build market share in its smallest segments. Still, the Seaway’s competitiveness remains relatively safe.”
He pointed out that import/export opportunities in the Alberta oil sands and the Cleveland-Europe Express could have significant potential for the Seaway. “The shippers, forwarders, and engineering, procuring and construction companies are comfortable with this routing. The issue (with project cargo pieces) is the huge cost of things when the various parts of these huge projects don’t arrive on time. What’s the play for the Seaway? Great Lakes routings are more likely used for project cargo originating in Europe,” Roy commented. “The Great Lakes/St. Lawrence Seaway System delivers several key benefits, including cost competitiveness, reliability of service, strategic location, and that Hwy H2O affords a sustainable transportation solution.
Staying sustainable and keeping competitive in marine transport calls for investment in infrastructure. In the case of Port of Quebec, snaring more international commerce will largely hinge on its ambitious Beauport 2020 initiative. Detailing the project for Hwy H2O Conference delegates, Patrick Robitaille, Vice-President Business Development for Port of Quebec (QPA), stated, “The international marine transportation market is experiencing sustained growth that has been beneficial to Port of Quebec’s activities, thanks in part to the port’s strategic advantage of having 15-metre depth at low tide. But the Port also must now contend with congestion at its docks at peak times and a lack of land available for creating new partnerships. The Port must generate sufficient revenue to carry out repairs to its existing infrastructure, which is the oldest in the country. To face these challenges, QPA is putting forward a strategic project to develop new port infrastructure: The Beauport 2020 – Phase 1 project, located in the port sector of Beauport.”
Currently under an environmental assessment (conducted by the Canadian Environmental Assessment Agency and involving ongoing public participation), the project proposes to extend the current wharf line by 610 metres with a depth of 16 metres, create 18.5 hectares of new land, and rebuild and redesign the existing beach. It requires an investment of $190 million (of which $60 million has already been pledged by the federal government). The overall project (QPA will favour projects that involve intermodality with a small carbon footprint) is estimated at $530 million and will be completed in two phases. The project is estimated to take five years to build. (The Beauport 2020 video can be streamed at: http://www.youtube.com/watch?v=LoQAjMQkcp4).
“This redevelopment will enable the port to increase transshipments of goods and also allow ships of greater capacity to dock here,” noted Robitaille. “Beauport 2020 is very important to assure our competitiveness. Beauport 2020 provides the Seaway with future land to develop. We want to provide deep water port access to the Great Lake system and Port of Québec’s natural deep water port is certainly a competitive advantage we want to make sure we fully develop.”
Robitaille forecast that with the completion of the Beauport 2020 project, tonnage at the port will increase by over 30 per cent. “This will enhance what the port has become today – an essential hub for Canadian foreign trade and a unique multimodal transfer point on the St. Lawrence,” he said in concluding his presentation.
Promoting the Seaway to a wider international marketplace is Bruce Hodgson’s mission. In his summary, he told Hwy H2O delegates, “Grain exports are driving shipping traffic on the St. Lawrence Seaway and we are optimistic that they will continue to be a strong performer and help to offset the decreases we are seeing in iron ore and coal due to the steep declines in global prices. An upswing in Great Lakes manufacturing activity means we’re also expecting some good years for higher value cargoes such as wind turbines for the energy sector, steel and aluminum for the automotive industry and large factory equipment.”
Hodgson went on to list some of the latest SLSMC initiatives designed to boost trade and traffic along the 3,700-kilometre system that currently moves about 35 million tonnes of commodities and project cargos annually. Among the cost-savings programs now in place: the toll structure has been modified to offer more business incentives, including a 20 per cent reduction on tolls for cargo qualified as new business; a 10 per cent volume incentive for existing cargo customers; and an additional 20 per cent incentive for new services.
“The Load Centre Consolidation initiative will attract more cargoes to Duluth, Toledo, and Milwaukee, among other Midwest ports,” said Hodgson. “It’s an opportunity to build the breadth of manufacturers and shippers who individually do not have enough cargo to fill a ship or cargo hold. We will raise industry awareness that you do not need a liner service to attract carriers.” According to Hodgson, volume pooling at ports, particularly Milwaukee, will increase these centres’ viability and attractiveness in vying head-to-head with Gulf Ports for new business; and help influence carrier port call decision-making criteria by building load density (carriers are looking for tonnage or cubic capacity minimums).
“I am excited about the opportunities that lie ahead for the St. Lawrence Seaway,” he boasted to the audience. “I am convinced that marine transportation will continue to play a key role in ensuring Canada’s ongoing prosperity, as trade increases with emerging markets overseas. Within the broader Great Lakes Seaway System, the Seaway’s role as a vital connecting artery will only increase in importance.”