By Alex Binkley
Even if the Seaway posts another traffic increase this year, it remains a long way from being heavily used, says Terence Bowles, President and CEO of The St. Lawrence Seaway Management Corp. (SLSMC). The system currently works at about half of its capacity. In its 2012 annual report, SLSMC noted that in 2011 “total revenues increased to $68.2 million, while operating expenses amounted to $73.6 million. We have not covered our operating expenses since the great recession of 2009, which heavily impacted our iron ore and steel cargo volumes, but we are making good progress in rebuilding our business.”
The federal government, which owns the Seaway facilities, provided a five-year asset renewal plan of $270 million, with $62 million in funding for major maintenance in 2012 and 2013 covering everything from concrete rehabilitation to replacement of lifting machinery. Whether the Seaway would be eligible for additional funding in a renewed National Infrastructure Program is up in the air because the Harper government hasn’t spelled out how it plans to proceed. Most experts expect it will shift the program to private-public funding from straight federal and provincial support. That would force the Seaway to look for a funding partner or partners for future infrastructure related projects.
Bowles hopes that economic growth in emerging markets in China, India, South America, the Middle East and Africa will put more loaded ships through the Seaway. It “will play an important role in enabling Canadian businesses to further diversify their trading relationships.” The Seaway has frozen its tolls since 2008 and offered discounts for new business and qualified cargo movements. The 2012 annual report noted the “incentives have attracted more than 7.5 million tonnes of new cargo, and generated $12.5 million in toll revenues. Many of these new users are becoming regular Seaway customers.” The new business incentives will be continued in the future, Bowles insists in an interview.
SLSMC is focused on cutting costs and improving service. “We have to keep working on our competitiveness to protect our cargo flow. Our costs keep rising and we need to invest in our assets. We fully understand the need to be competitive with the railways.” The Seaway needs a lot of favorable outside influences to boost its traffic levels above the current levels of roughly half its annual capacity level, he adds. “It’s critical we keep working on improving the viability of our operations with reliable infrastructure. But we also need the other players in the system to keep their costs competitive.”
Craig Middlebrook, Acting Administrator of the U.S. Seaway Development Corp. (SLSDC) says the Canadian and American governments and shipowners have shown their confidence in the future of the waterway with infrastructure investments and new or re-powered ships. SLSDC “is at the mid-point of the federally funded multi-year Asset Renewal Program (ARP). The infra-structure improvements are significant and already making a difference in the safety and efficiency of the system. The first four years of ARP funding totaled $65.5 million on 43 ARP projects with another $16 million estimated to be spent in FY 2013. If all goes as planned, the U.S. government will have invested upwards of $175 million in total on the rehabilitation and modernization of the infrastructure.” The investment ensures the long-term reliability of the Seaway and supports the efforts by the ports and the private sector to move North American products and raw materials to global clients, Middlebrook explains. Efficient waterway and port infrastructure will continue to keep the maritime industry an important economic force and port investments are a key part of the good news story of 2012.
Roy LaHood, who recently stepped down as U.S. Transportation Secretary, spoke about the importance of Great Lakes shipping during one of his final speeches. He noted that a study by his department’s Maritime Administration found, “The shipping industry in the Great Lakes region is recovering from the extreme lows experienced in 2009. It is healthy and providing safe and environmentally friendly transportation services. It also said the industry is competitive with railways and trucks and is an essential part of the regional and national economies. “It confirms what we’ve long known – that the Great Lakes fleet provides efficient, safe and environmentally sound transportation services that remain competitive with other modes of freight transportation,” he points out.
The study looked at a broad range of issues relevant to the water transportation industry. In 2009, the Great Lakes maritime industry suffered from several challenging conditions, including a 33 per cent drop in cargoes due to the recession. The moderate recovery in waterborne cargoes since that time, aided by the recovery of the automobile and steel industries, is providing support to the water transportation industry. It predicts that with the exception of coal, the major cargos of iron ore and limestone on the Great Lakes will grow with the economy over the next several years. Coal cargos have not recovered since the recession. The Department of Transportation “is committed to a strong future for the maritime industry, and the Great Lakes fleet is an extremely important part of that future,” he adds.