By Alex Binkley
There was an upbeat mood in the air as the March 29 official opening of the St. Lawrence Seaway approached, fueled by a nearly 9 per cent growth in business during 2017, and warm February temperatures that cooled fears of extensive ice coverage on the Great Lakes as in 2014.
However, threats by President Trump to impose hefty tariffs on imported steel and aluminum cast a shadow over the optimism. Bruce Hodgson, the Seaway’s Director of Market Development, said it had become difficult to offer any certainty in predicting 2018 traffic levels.
The Seaway handled just over 38.1 million tonnes of cargo in 2017, an increase of 3.1 million tonnes over 2016. Iron ore increased by 29 per cent to just over 8 million tonnes, dry bulk rose almost 18 per cent to 10.5 million tonnes and general cargo climbed by 30.4 per cent to 3.4 million tonnes. Liquid bulk edged up 2.9 per cent to 3.8 million tonnes and coal posted a meagre 0.4 per cent increase to 2.3 million tonnes. The one negative result was grain shipments which fell 10.7 per cent to 10 million tonnes. The number of transits through the system rose 9.1 per cent to 4,119. The 2017 results were ahead of the five-year average of 37.5 million tonnes,” Hodgson said. “The result was positive overall and a welcome rebound from 2016.
Both the Canadian and American economies are running on all cylinders.” The tonnage would have even better if drought hadn’t reduced the size of the American grain crop available to ship through the Seaway. “Canadian grain was stable, iron ore responded to growing domestic and international demand while dry bulk was a solid contributor,” he said.
The dry bulk sector includes imported steel and aluminum, which increased in 2017 and all signs were of continued growth this year, he said. For now, the future of that business is uncertain.
Once a major commodity, coal has steadily declined and demand for it now is mostly metallurgical coal for making steel, he said.
While this year is the Seaway’s 60th anniversary, it isn’t planning any celebrations as it did for the 50th anniversary. However, shipping lines, ports and other Seaway partners are welcome to mark the occasion.
Prior to Trumps’ tariff threats, the Seaway was forecasting a 40 million tonne season for 2018. “The Thunder Bay grain terminals are full and if the international demand is there, there could be a lot of early season traffic,” he said. Iron ore shipments are expected to remain healthy this year and the Seaway is ready to handle it.
One unknown is whether the Canada-Europe free trade deal will generate any uptick in trans-Atlantic commerce this year. “We’ve done a couple of reviews that concluded the deal can only be positive,” Hodgson said. “However, a lot of it will likely be transported in containers. There are some opportunities with special crops grown in Ontario and with the auto sector.” Growing trade with Middle Eastern countries and North Africa is another possibility for boosting the Seaway’s business.
The Seaway went into overtime before it wrapped up its 2017 navigation season on Jan. 11. Frigid late December-early January temperatures created unexpected ice problems for the locks. The cold lingered and by early February the Great Lakes were almost 70 per cent covered by ice and on their way to matching conditions in 2014, the U.S. National Oceanic and Atmospheric Administration (NOAA) said. That year it took well into April for enough ice to be cleared to allow navigation. However, an unexpected mild spell in mid-February of this year and strong winds brought ice coverage back to the 50 per cent range toward the end of the month, NOAA said. The Seaway, ports and shipping lines will be watching the March weather closely as well as how the snow melt affects water levels in the Lakes.
Bruce Burrows, President of the Chamber of Maritime Commerce, said the 2017 traffic increase was “a nice finish to a year of recovery and new business. We saw some impressive cargo gains this year, with more diversity of types of cargo as well.” The traffic increase “underscores how vital the Great Lakes Seaway system is as a gateway,” he said. The cargo increases were fueled “by global economic recovery and new business wins by our members. I see this as new momentum, so we need to build on this and advance our ambitions to deliver both economic and environmental progress for inland and coastal shipping.”
Mike Broad, President of The Shipping Federation of Canada, said, “The Seaway depends on the U.S. economy and international traffic was up last year because of the strength of the U.S. economy.” One obvious concern is that the Trump Administration could make changes to American import tariffs or rules that disrupt shipments through the waterway, he said. “As long as there are no restrictions or tariffs on imports, the Seaway’s growth will continue.” Even though the Seaway system is running at only 50 per cent of its capacity, it remains an important conduit for grain exports and steel imports, he said.
The Seaway has announced a 1 per cent increase in tolls and wharfage charges for the start of the 2018 navigation season. The New Business Incentive and the Gateway Incentive programs will continue for the 2018 navigation season and provide examples of the corporation’s efforts to keep costs down to encourage business development.
The Incentive programs have generated $36.3 million in new business during the last decade, Hodgson said. They are “part of ongoing efforts to diversify our commodity base. The recently introduced Gateway Incentive provides a stimulus for shippers to save by switching the movement of their cargo to the Great Lakes.”
Burrows said the ice conditions at the closing “underscore the urgency of upgrading and expanding Coast Guard icebreaking resources. Governments on both sides of the border have made public infrastructure investments a prominent part of their political platforms during the past two years. Now is the time for marine to secure its fair share.”
The late closing “reminded us that challenges can arise even in the good years,” he said. “It underscored the importance of having a competitive, well-resourced and resilient marine transportation system that advances our ambitions to deliver both economic and environmental progress.” Reliable icebreaking is also important when the Seaway is closed because ships are busy for as long as possible during the winter delivering “vital supplies such as road salt, heating oil and construction materials in the winter to cities across the Great Lakes and in the lower St. Lawrence River,” he said.
Ongoing negotiations between Chantier Davie and the federal government about converting four icebreakers originally built for the U.S. Coast Guard for service in Canada are being closely watched. While it won’t solve any problems this year, it could be important for the future.