By Alex Binkley
The 2014 shipping season on the Great Lakes and St. Lawrence Seaway will likely be remembered as the year carriers spent playing catch up because of a massive ice buildup on the Lakes during the winter. The season “will be one month shorter,” says Greg Wight, President and CEO of the Algoma Central Corporation, which operates 25 bulk carriers and seven tankers on the waterway. It usually starts around March 20 with the opening of the Seaway. This year, the port of Thunder Bay didn’t start loading ships until late April. “We have a record grain crop to move and we’re significantly behind,” Wight explains. “We’re going to be pretty busy for the rest of the season.” In addition to mountains of grain in Western Canada, salt, aggregates and other commodities are in demand around the Lakes.
“It’s been a painful start,” notes Paul Gourdeau, Executive Vice-President of Montreal-based Fednav International. “But with every day that goes by, the situation gets better.”
Fednav operates about 100 owned and chartered freighters internationally and on the Great Lakes and St. Lawrence River. He is counting on the record grain crop in Western Canada last summer and the difficulties moving it by rail through the winter to keep his company’s ships busy hauling grain from Thunder Bay for the rest of the year. “And there will be this year’s crop as well. We are expecting a serious improvement in our traffic over last year,” he added. Steel imports should be on the rise as the U.S. economy picks up steam. “It looks promising compared to last year.”
Knud Jensen, Executive Vice-President of Canfornav Inc., which operates 40 vessels, describes the delay to the beginning of the navigation season as a disaster and expects the grain shipments won’t reach a normal rhythm until mid-June. “From then until the end of the season, we are going to be very busy.”
Grain is the main outbound commodity for both Fednav and Canfornav while imported steel is a common inbound cargo. Grain was a headache for the carriers last year because shipments were light until late in the season due to the delay in the Prairie harvest. By the time the grain was flowing, the early onset of brutal winter weather hampered operations on the Lakes. At times last year, grain availability was so low that ocean freighters sometimes sailed out of the St. Lawrence in ballast because there were no loads, Jensen noted. Even the terminals on the river were underutilized. “However, the ships are reluctant to come into the waterway if they don’t a cargo to transport out.”
Dan McCarthy, Vice President, Marketing and Customer Service for Canada Steamship Lines, which is augmenting its 16 Great Lakes vessels with six new ships, also saw the late start of the season as the biggest challenge for the carriers. “Intense ice conditions in Lake Superior created havoc for shippers and carriers throughout March and April, as grain, ore and coal ports were essentially inaccessible. Domestic inventories were depleted, and dozens of ocean vessels waited in the St. Lawrence for export cargoes to arrive. The time lost will have a significant compression effect on the lakes market for many months to come. With a record grain crop in 2013-2014, we are seeing a very large “carry” into the 2014-2015 season,” he added. “Even if production is somewhat lower than last year we expect a very busy season for agriculture products from Thunder Bay as well as Lake Huron, Erie and Ontario ports to the St Lawrence.” As for other commodities, “soft pricing in the export markets for iron ore and coal suggest we will not see any growth in 2014 volumes relative to previous years,” he noted. “However, ore and coal pricing can be volatile, so this could change.”
By late winter, the five Great Lakes were 92 per cent ice covered, especially Superior and Erie. The extent and thickness of the ice buildup, which hadn’t been seen in decades, required a herculean icebreaking effort by the Canadian and American Coast Guards to open routes for ships to reaching waiting cargoes.
The Pierre Radisson, one of Canada’s heavy-duty icebreakers, was among four Canadian Coast Guard vessels brought into the Lakes once the Seaway opened to punch through the ice. Even with the icebreakers in action, the first trips from Duluth to the Soo Locks took five days in a convoy escorted by an icebreaker, says Glen Nekvasil, Vice-President of the U.S. Lake Carriers Association which represents U.S. shipowners. Normally the trip takes just over a day. Nekvasil noted that the thick ice in April “slowed transits to not much more than crawl at times. Lake Superior’s ice was so challenging that the U.S. and Canadian Coast Guards had to convoy freighters the entire month. In fact, the ice on Lake Superior was so challenging that it was not until May 2 that the U.S. Coast Guard stopping convoying vessels and allowed lakers to operate on those waters without escort.” Many ships had to be lightloaded to cope with shallower drafts in the St. Marys River.
About half the normal amount of cargo moved through the Seaway in April, says Andrew Bogora, spokesman for The St. Lawrence Seaway Management Corp., because ships couldn’t get through the ice to the waiting loads of grain and other commodities waiting to be shipped. Bogora says that traffic levels through the Seaway during May had climbed significantly over April’s level as the carriers and their customers were working hard to move all the available freight.
In addition to refilling grain terminals on the St. Lawrence and the Great Lakes, domestic carriers were busy moving iron ore, salt and other commodities where there is a pent-up demand because of the long winter, Wight pointed out. “We will be busy refilling our customers’ stockpiles.”
While June and July are often a slow period for freight traffic on the Lakes, Gourdeau said that he expects the pent-up demand for export grain should mean there are “no summer doldrums in the system this year. We will have a more even and continuous flow of goods throughout the season, which is good for us and everybody else.” The ice-hindered start to the season was compounded by pilotage delays, he noted. “At times, ships had to wait for a convoy to get through the ice.” Then there were delays in getting pilots because the slow transits at the start of the season from Lake Huron to Thunder Bay meant pilots weren’t always available when ships came along.
The pilotage system is geared to the normal flow of traffic but this spring was anything but. “We need a way to get a waiver in these unusual circumstances,” he noted. “We will need to discuss this with the pilotage authorities and the pilots. We need to build more flexibility into the system in case we get more winters like this.”
Jensen says the lack of a coordinated marketing agency like the former Canadian Wheat Board has compounded the delays in grain movements. With long term delivery contracts, the CWB would have adjusted faster to the delays in railway shipments this past winter. “Very little grain went to the Lakes last year. That shortfall hit both the salt and freshwater fleets. It cost us a lot last year working cargo by cargo instead of with contracts.” In addition to grain, Canfornav hauls some coal coke from the Lakes.
The carriers will also be welcoming new vessels to their fleets this year. Algoma took delivery of its first Equinox vessel in 2013 and expects a couple more to arrive later this year, Wight notes. “From the outside, the new ships look like regular lakers,” he notes. “On the inside, there’s an incredible difference. The changes are almost unbelievable.”
McCarthy said the arrival this fall of two new Trillium Class bulk carriers “will bring important environmental benefits and efficiencies to the market which will continue to advance the overall benefits of marine transport within the Great Lakes and St. Lawrence for decades to come.” Starting in 2012, CSL has acquired four Trillium class self-unloaders, which “feature state-of-the-art technology, setting new standards in operational and environmental performance, energy efficiency and reliability.”
Canfornav launched a new building program in 2000 that has given it an ultra-modern fleet. It moved into the Supramax size in 2011 and 2012 with the construction and delivery of the 57,000-dwt vessels M/V Pintail and M/V Scoter and has ordered two 64,000-dwt Ultramax vessels from the Zhengzhou shipyard in China for delivery in 2015. Additionally, orders have been placed for six 36,000 dwt Handysize vessels from the Yangfan shipyard, two for delivery in the last quarter of 2013, one for the first quarter of 2014, one for the second quarter of 2014 and the remainder for the third quarter of 2014.
Fednav has 12 Handysize lakers on order from Oshima Shipyard in Japan, with deliveries set to begin next spring and conclude in late 2016. In addition, it owns or operates 33 Handysize lakers on long-term charter.