By Alex Binkley

Shipments during the opening weeks of the 2016 Seaway season have been in line with the low traffic predictions made before the waterway opened for business last month, notes Bruce Hodgson, Director of Market Development for the Seaway Management Corp., although the Seaway won’t issue its first official report on traffic results until the end of April. Hodgson noted that thick ice last year delayed the Seaway opening into April so the bit of traffic so far this year is an improvement over that. He anticipates it will be close to the five-year average for the opening weeks.

Hodgson still expects this year’s traffic through the Seaway will be below the 36.1 million tonnes of 2015, which was down from 39.9 million tonnes in 2014. While the United States economy has picked up, growth in Canada is sputtering and globally conditions aren’t much better. He notes the Canadian shipping lines are taking a cautious approach this year to keep expenses to a minimum. Ships will be brought into service when there is sufficient cargo demand.

There have been a few shipments of Canadian grain as well as iron ore and dry bulk especially cement and stone, he said in an interview. “General cargo has been slow from the start, as has been liquid bulk. Steel is about the same as a last year. As for coal, there’s nothing to report.”

With the Great Lakes virtually ice free from the opening, ocean going ships have entered the system to deliver cargo and then travel to the Thunder Bay or U.S. ports on Lake Superior to collect grain loads. “Rail car deliveries to the ports are strong and the elevators are filling up.” The shipping community will be tracking the progress of the 2016 crop in Western Canada to see dry conditions persist and reduce the harvest, he added.

The Lake Carriers Association issued an upbeat report on how its members fared in March. American freighters moved 1.77 million tonnes of cargo during the month, more than double their total of a year ago. The March float was also on pace with the month’s five-year average. While the U.S. cargoes are generally domestic and unlikely to pass through the Seaway, they give an indication of the level of traffic on the Great Lakes. However, the activity is seen as a positive indicator about the American economic recovery.

U.S. iron ore cargoes totalled 1.38 million tonnes, again more than double the volume of a year ago. Coal cargoes reached 133,157 tonnes, basically a repeat of a year ago. Limestone cargoes dipped slightly to 68,278 tonnes, but shipments of cement more than tripled the volume of a year ago, rising to 182,915 tonnes. Year-to-date U.S.-flag carriage stands at 4.1 million tonnes, an increase of 8 per cent compared to the same point in 2015. Iron ore cargoes are up 16 per cent, but coal shipments have dipped 56 per cent. Limestone cargoes have increased 26 per cent and cement shipments are up 71 per cent.

Meanwhile, generally mild weather along the Seaway has allowed construction work including hands free mooring to be wrapped up early, Hodgson added. While it’s little compensation, the troubled state of shipping internationally shows the traffic situation on the Great Lakes isn’t unusual. Hodgson said commodity prices are too low for iron ore or coal to move the Seaway-Great Lakes to China or other overseas customers.

Great Lakes pilotage fee increases not welcomed

A decision by the U.S. Coast Guard to authorize a hefty increase in payments by foreign ship owners for the services of American Great Lakes pilots could be another headache for the waterway this year. Steven Fisher, Executive Director of the American Great Lakes Ports Association, said his members absolutely oppose the increase because it will end up being a 58 per cent hike during this year and next for ocean-going ships entering the Great Lakes. “The Coast Guard should not be in the business of economic regulation; it is simply not their expertise. The agency incorrectly calculated the adjustment, made arbitrary decisions, and failed to consider – or even seek to appreciate – the negative impact of their actions on Seaway commerce,” Fisher added. “It is time that the Coast Guard become a partner in the success of the navigation system and adopt an agenda of pilotage reform and efficiency improvements.”

Mike Broad, President of the Shipping Federation of Canada, said that on top of the rate increase is an US$1.75 million surcharge to cover the costs of hiring and training additional pilots. The cost increase will be passed onto shippers, he said, but that could discourage shippers from using the Great Lakes-Seaway in favour of shipping by rail or road. Broad said the Coast Guard dismissed industry’s evidence and relied on anecdotal information.