Over 60 participants, representing the Canadian and American marine community attended the recently held conference organized by the Canadian Shipowners Association in partnership with the Lake Carriers Association of the United States. The conference highlighted the following speakers:

Warren Jestin, Senior Vice-President and Chief Economist, Scotiabank,  cautioned that the current recovery will be slow and is unique because it is characterized by structural and not typical cyclical change. He considered political risk, not economic risk, to be the present key driver of economic change, and the new normal is softer growth of around 2 to 2.5 per cent.  This slow growth will pose a challenge to government revenues and paying down debt.

European banks, in an effort to improve liquidity, have slowed lending and therefore stifled growth and recovery. In addition, the tension between highly populated, fiscally challenged countries and sounder economies with smaller populations is also growing. Central banks are very nervous with these scenarios, so Jestin warned to expect volatility in interest rates.

Jestin also highlighted tension between slow growth of the developed/old-world versus the faster growth of the developing world including the BRIC (Brazil, Russia, India, China) nations. Although new world growth is slowing, it is still driving commodity prices. Canadian growth is strong because it is commodity-based, particularly the economies of B.C., Alberta, Saskatchewan, Newfoundland and Nova Scotia. Canada is unique for its relatively high employment, strong financial backing, deficit of 1 per cent of GDP, and enviable fiscal situation. Jestin noted that consumers in Canada and the United States have overinvested in real estate which could see capital losses if the housing market deflates.

In summary, Jestin noted that growth will be through the new world, with Europe presenting a drag to global recovery.

William Strauss, Senior Economist and Economic Advisory, Federal Reserve Bank of Chicago, agreed with Mr. Jestin’s message and argued that there is a good news/bad news story unfolding for the global and North American economies. Strauss noted that, while growth is subdued in North America, Canada and the U.S. are faring better than most other countries. Strauss said that that the bad news is that even in high-growth countries, growth has slowed and pointed out China’s effort within this slowdown to transition away from lower-paid jobs in manufacturing.

Strauss said that the appetite of American banks for risk is very low; they produce adequate profits and are therefore not lending and circulating money. In addition, Americans are not saving enough for retirement and their savings are not yielding adequate incomes. Home values have stabilized but are not growing. All of these factors are adding up to current low GDP growth of around 1.6 per cent which may go to 2.1 per cent this year. Like Jestin, Strauss warns that the recovery will be slower and based on lower growth of up to 2.4 per cent in the next few years whereas past recovery periods were shorter and featured a higher growth rate.

Also of concern is the trend that more jobs are being lost than being created; so far this year 8.7 million jobs have been lost and only 1.8 million added. Manufacturing will grow, aided by low energy prices, but this growth will not fill the jobs gap, as growth will be through productivity gains. A final negative trend is that of falling prices due to weakness of demand.

Strauss was optimistic about the Midwest and Great Lakes economies (steel, energy).  He cautioned that Ontario needs to control its spending.

Canadian Coast Guard Commissioner Marc Gregoire elaborated on the transformation and reorganization of the Coast Guard, as well as ongoing and future initiatives such as a planned stakeholder consultation on Marine User Fees.

Rear Admiral Michael Parks, United States Coast Guard (USCG), elaborated on the strong relationship between the Canadian and American Coast Guards, the challenge of balancing safety and commerce, and the need for predictability in regulations.

Donald Roussel, Director General, Marine Safety, Transport Canada, spoke about the integration of Marine Safety and Security into a “one-stop” shop over the next three years, and how Transport Canada is working with USCG in the Canadian-American Regulatory Cooperation Council in the areas of marine security and mutual recognition of oversight regimes on the Great Lakes and St. Lawrence Seaway.

Joe Comuzzi, Canadian Chair of the International Joint Commission for the Great Lakes, spoke about the current water level consultation process and the importance of mutual solutions.

Jan Miller of the US Army Corps of Engineers, addressed the challenge of maintaining the capacity for dredging, especially when the need can be unpredictable. Miller also spoke about the challenge of assembling funding in support of dredging from multiple funders.

Ed Wiltse, Vice-President, Operations, Grand River Navigation Company, the only maritime industry representative on the Michigan Aquatic Invasive Species Advisory Council, highlighted  the current process for the Michigan Ballast Water regulations. Wiltse noted that the consultation process is underway and spoke about his efforts to educate the government and other stakeholders involved in the consultation process.

David Bolduc, Executive Director, Green Marine, spoke about the growth of the Green Marine program and how this year’s results show an improvement in environmental performance.  Bolduc emphasized that Green Marine is based on transparency and inclusiveness with industry and stakeholders, including associations and others involved in environmental stewardship.  He noted that insurers are becoming interested in the program.

Peter Hinchcliffe, Secretary General, International Chamber of Shipping, pointed out the challenges facing the international shipping industry, including the drive to develop a market-based measure for greenhouse gas emissions. He noted that the shipping industry is facing significant regulatory regime change and that it will have to be proactive to ensure that regulations are equitable and manageable.

Commander Ryan Allain, Directorate of Marine Safety, Security and Stewardship, U.S. Coast Guard, elaborated on the USCG Ballast Water Discharge Standard Final Rule and how it balances current marine technology with the need to protect the marine environment. USCG is in the process of certifying labs to test ballast water treatment systems and acknowledged that there are challenges finding systems that work in cold fresh water.

Robert Carberry, Assistant Secretary, Regulatory Cooperation Council Secretariat, spoke about relevant aspects of the Regulatory Cooperation Council Joint Action Plan aimed at ensuring economic growth. Carberry noted that transportation is one of the focus areas for greater regulatory alignment. Relevant marine transportation efforts include establishing a safety and security framework for the St. Lawrence Seaway and the Great Lakes, and aligning the Marine Transportation Security Regulations to prevent duplication of services and removal of impediments to cross-border operations.

Kirk Jones, Vice-President, Sustainability, Government and Industry Affairs, Canada Steamship Lines, outlined the benefits of short-sea shipping, including recent research on the quieter, safer and cleaner nature of marine transportation. He noted that the industry has been too silent and should do more to promote the benefits of short-sea shipping.

Craig Middlebrook, Acting Administrator, Saint Lawrence Seaway Development Corporation (SLSDC), spoke about infrastructure renewal, water levels, and ballast water regulations. Middlebrook noted that the Seaway is concerned about the impact of the International Joint Commission’s impending water-level plan on marine transportation and navigation. National Ocean Policy is also an area with which SLSDC is involved, through the Great Lakes National Ocean Policy planning body, and should result in more collaborative and integrated planning. Investments in the Seaway are planned at US$186 million over 10 years (2009-2018).

Terence Bowles, CEO, The St. Lawrence Seaway Management Corporation, noted that modest growth is expected for the Seaway. With $270 million invested and expected to be invested in infrastructure renewal from 2008-2013, the need for further investments will continue over the next few years.  Asset renewal has enhanced safety and decreased transit times. Innovation is improving productivity and safety. Examples included vessel self –spotting, the use of hands-free mooring, and draft information systems. Vessel self spotting ensures that ships can navigate in the confined locks while the hands-free mooring reduces the chance of wires breaking and can free the workforce to attend to more value-added activities. The Seaway has also developed a draft information system to help ships cope with greater freight weights. Bowles noted that innovation is key to reducing costs, improving safety and increasing market share.

AK Steel Kirk Reich and Darren Callihan described how the steel industry is a key partner and client of the marine shipping industry. Reich detailed how AK Steel went from facing bankruptcy to growing and competing through innovation, technological upgrades and vertical integration. Through this process, Reich noted that management worked closely with labour to re-engineer processes without job losses and has won awards for the company’s products. Among key decisions made by AK Steel were the purchase of a new furnace, investing in Magnetation LLC iron ore recovery from tailings, and the acquisition of coal and iron-ore supplies.  AK Steel expects to grow its housing, stainless, auto and electrical steel product streams.

Bob Sarvela, Midwest Energy Resources Company, spoke glowingly about the Northern Route to Europe through the Great Lakes and the Seaway. Midwest Energy partnered with Canada Steamship Lines and BNSF Railway to integrate a delivery route for its coal from the Powder River Basin to Europe.  At the centre of this is The Superior Midwest Energy Terminal at the head of Lake Superior in Superior, Wisconsin, where trains unload and ships load coal bound for Europe.  Sarvela noted the challenge of competing with coal of lower sulphur content. He noted that the shipping time of the Northern Route to Europe is six days less than the traditionally-Gulf Coast shipping routes.

Bruce Bowie is President of the Canadian Shipowners Association.