By Alex Binkley
Led by shipowners buying new freighters or rebuilding existing vessels, the Great Lakes-St. Lawrence marine corridor is well into a massive infrastructure investment cycle.
An investment survey conducted by Martin Associates of Lancaster, Penn, says that from 2009 to 2018, about $7.1 billion will be spent in Canada and the United States on capital improvements in ships, terminals, ports and the Seaway. It does not include routine annual maintenance. The survey said its purpose was to inform Canadians and Americans “on the level of investments being made in the Great Lakes-Seaway navigation system. By quantifying these investments, this survey helps illustrate confidence in the future viability of the navigation system and optimism regarding the region’s economy.”
However, the survey offers no suggestions about what kind of investments will be needed after 2018 to keep the waterway in good condition and attractive to shippers and shipping lines. It did note that the private sector accounted for about
two-thirds of the actual and planned investments with the rest coming from governments.
The removal of the 25 per cent duty on imported ships for Canadian service has generated more than $2 billion worth of new ship purchases by domestic carriers, the biggest influx of new ships in three decades. However there are still a lot of older Canadian ships plying the Great Lakes trades, and emission controls and ballast rules may catch up with them before long.
U.S. Great Lakes vessels are undergoing US$75 million of repairs and overhauls this winter on top of the nearly $6 million required in April and May to repair damage suffered in the heavy ice.
Meanwhile the transition to hands off mooring by the Seaway, scheduled to be completed in 2017, “is one of the biggest moves forward in 30 years,” notes Terence Bowles, the Seaway’s President and CEO. While the system will be beneficial to ships, the pressure on the Seaway to cut costs will remain.
The survey was sponsored by a coalition of Canadian and American maritime groups, the Seaway agencies, the Chamber of Marine Commerce (CMC), the Great Lakes Ports Association, the Canadian Shipowners Association, Lake Carriers Association, Fednav and the ports of Cleveland and Windsor.
While infrastructure development is a popular topic in both countries, the survey’s findings have not sunk in with politicians yet by becoming part of the ongoing debate about the future direction of publicly supported projects.
CMC President Stephen Brooks says the groups “will be working closely with our stakeholders and governments to make sure the right regulatory and investment climate exists for further economic growth and environmental improvements.” That would have to include additional new ships, ongoing port development, and adequate dredging and Coast Guard services.
The battle with ice in the Great Lakes last year and again this winter points out “the lack of icebreaking resources,” he notes in an interview. “We need sufficient icebreakers on the Lakes to keep shipping channels open.” While the attention is usually focused on conditions on the Seaway in the spring, early ice during the fall of 2013 created havoc for shipping lines and there were problems this winter as well. While both the Canadian and American governments have talked about new ships, there’s no sign of them being built any time soon, he continues. “Companies are ready to move product through the system if they can. Increased icebreaking could lead to changes in the way we do business.”
Like all our industries, the marine sector wants the right rules and regulations in place, he adds. It is also looking to governments to beef up marine education and training at colleges across Canada including the program the Marine Studies program at Georgian College in Barrie.
John Buboltz, Assist Vice-President of Merchandising and Transportation with Cargill Inc., said, “We need to recognize that future growth in the agriculture and food economy sector in Canada depends on efficient shipping systems.” Sean Donnelly, President and CEO, ArcelorMittal Dofasco, was speaking for many of the waterway’s users when he said, “Investments in fleet renewal with environmental, productivity and efficiency gains as well as reliability and availability improvements to infrastructure contribute to our business success and to the sustainability and profitability of the entire marine transport supply chain.”
Allister Paterson, President of Canada Steamship Lines, says the new ships “not only benefit the North American mining, agricultural, construction and manufacturing industries that we serve, but also those who live in communities throughout the Great Lakes and St. Lawrence River region.” Terence Bowles pointed out that “modernizing our structures and technology allows companies to export their goods more quickly and cost effectively. Marine shipping is vital to the success of Canada’s international trade strategy.”
The survey breaks down the spending on new and rebuilt ships as $2.3 billion in Canada and $344 million in the U.S. Investments by international owners add more than another $1 billion to the vessel component. Canadian ports, terminals and waterway infrastructure investments will be in the $2.2 billion range and $814 million in the U.S. The Canadian and U.S. government have approved spending of close to $1 billion to modernize the Seaway’s lock infrastructure and technology over the 10-year period, which the survey points out is “the Seaway’s most significant transformation in five decades.” Great Lakes and St. Lawrence River ports and terminals are also collectively investing more than $1.8 billion on expanding their docks, equipment, facilities and intermodal connections.