Vol.35 No.1 JUL‑SEP 2006

G LGREAT LAKER J U L Y – S E P T E M B E R 2 0 0 6 Iron ore before and after China n Great Ships Initiative n Icebreaker Mackinaw n Sustainable Development V O L U M E 3 5 N U M B E R 1 The Interlake Steamship Company Interlake Corporate Center 4199 Kinross Lake Parkway Richfield, Ohio 44286 Telephone: (330) 659-1400 FAX: (330) 659-1445 ISO Certified E-mail: sales@interlake-steamship.com Special Delivery? WE CAN HANDLE IT! Even if it means navigating a challenging location or moving a difficult cargo, our customers depend on us to deliver their dry bulk cargoes safely and efficiently. In fact, Interlake Steamship’s versatile self-unloading vessels have been the first to load or unload at many of the Great Lakes’ most challenging ports. With vessel capacities ranging from 17,000 to 68,000 gross tons, you can trust Interlake to meet your raw material transportation needs. At Interlake Steamship, every delivery is a special delivery. GREAT LAKES/SEAWAY REVIEW July-September, 2006 1 A R T I C L E S J U LY- S E P T E M B E R 2 0 0 6 The international transportation magazine of Midcontinent North America GREAT LAKES/SEAWAY REVIEW GREAT LAKER 221 Water Street Boyne City, Michigan 49712 USA (800) 491-1760 FAX: (231) 582-3392 harbor@harborhouse.com www.greatlakes-seawayreview.com www.greatlaker.com A searchable editorial archive is available at www.greatlakes-seawayreview.com Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Guest Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 The Lake Carriers’ Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 The Administrator’s Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Naval Architecture & Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Regional Shipyard Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Ballast treatment technology research. Page 31. The icebreakers Mackinaw decommissioning and commissioning. Page 67. Photo essay THE CHANGING OF THE GUARD . . . . . . . . . . . . . . . . . . . . . . . . . . 68 The final days of the U.S. Coast Guard icebreaker Mackinaw WAGB 83. Maritime heritage NORTHWEST MICHIGAN PORTS OF CALL . . . . . . . . . . . . . 71 Shippers and visitors are drawn to the lakeshore. Marine photography LIGHTHOUSING IN THE “EXPRESS LANE” . . . . . . . . . . . 76 Lakers DREAM COTTAGE AT DETOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 Couple tackles restoration of old laker’s forward end Lighthouses GRAND ISLAND—SAFE FOR NOW . . . . . . . . . . . . . . . . . . . . . . . . . .83 Volunteers have been busy stabilizing historic Lake Superior lighthouse. Boatwatching MORE TIPS FROM BOATNERDS . . . . . . . . . . . . . . . . . . . . . . . . . .87 A guide to the best places in Canada to view vessels. Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Laker Lighthouse News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Meet the Crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Commodities IRON ORE—BEFORE AND AFTER . . . . . . . . . . . . . . . . . . . . . . . . . .6 China’s influence on demand for ore is profound. Short sea shipping CONTINUING TO ADVANCE . . . . . . . . . . . . . . . . . . . . . . . 15 The Great Lakes’ history—and future—with short sea shipping. Interview: John Jamian ADVOCATING FOR THE LAKES . . . . . . . . . . . . . . . . 19 John Jamian joins private sector as Seaway Great Lakes Trade Association President. Infrastructure INNOVATING TO IMPROVE SERVICE . . . . . . . . . . . . . . . . . . . . . 23 Welland vessel positioning, securing system being tested. Interview: Roger Dudley MOVING IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Project Transport and Trading brokers heavy duty cargoes. Ballast water management GREAT SHIPS INITIATIVE LAUNCHED . . . . . . . 31 Research ballast treatment technology focuses on system’s specific needs. Sustainable development RESTRUCTURING MARITIME TRANSPORTATION 41 Sustainable development creates a better bottom line. Port profile: Toronto CHANGING WITH THE TIMES . . . . . . . . . . . . . . . . . . . . . 44 Port of Toronto prepares for dramatic waterfront alterations. Towing & barging EXPERIENCING GROWTH . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 New cargo, conversions characterize growth for tug-barge companies. Training & recruitment PRACTICAL PARTNERSHIPS . . . . . . . . . . . . . . . . . . . . 57 Hands-on experience and innovative collaboration for new mariner training. Admirality law THE LAW OF BRIDGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 A two-act account of American Steamship Company’s favorable ruling. D E P A R T M E N T S G LGREAT LAKER Doing business with China. Page 6. 2 www.greatlakes-seawayreview.com BUSINESS AND EDITORIAL OFFICE 221 Water Street Boyne City, Michigan 49712 USA (231) 582-2814 (800) 491-1760 FAX: (231) 582-3392 harbor@harborhouse.com www.greatlakes-seawayreview.com www.greatlaker.com EDITORIAL AND BUSINESS STAFF Jacques LesStrang Publisher Emeritus Michelle Cortright Publisher Janenne Irene Pung Editor Rebecca Harris Art Director Lisa Liebgott Production Manager Tina Burch Business Manager David L. Knight Editorial Consultant Roger LeLievre Great Laker Editor Virginia Forrand Circulation Manager ADVERTISING DEPARTMENT Kathy Booth Account Manager James Fish Director of Sales William W. Wellman Senior Account Manager EDITORIAL ADVISORY BOARD John D. Baker, President, Great Lakes District Council, International Longshoremen’s Association; James Campbell, Vice President/General Manager, The Chamber of Maritime Commerce; Joe Com uzzi, Member of Parliament, House of Commons; Gary L. Failor, Executive Director, Cleveland-Cuyahoga Co. Port Authority; James H. Hartung, President, Toledo-Lucas Co. Port Authority; Davis Helberg, Executive Director, Seaway Port Authority of Duluth – Retired; Rep. Marcy Kaptur, Member of Con gress, Appropriations Committee; Donald N. Morrison, President, Canadian Shipowners Assn.; Rep. James L. Oberstar, Member of Congress, Transportation & Infrastructure Committee; John J. Peacock, Executive Vice- President, Fednav Limited; George Ryan, President, Lake Carriers’ Association – Retired; Daniel L. Smith, National Vice President-Great Lakes, American Maritime Officers; Rep. Bart Stupak, Member of Con gress, Energy & Commerce Committee; James H.I. Weakley, President, Lake Carriers’ Association. SUBSCRIPTIONS – (800) 491-1760 Published quarterly. One year $25.00; two years $45.00; three years $65.00. Foreign: One year $35.00; two years $60.00; three years $90.00. Payable in U.S. funds. Back issues available. Article reprints are also available. Reprints produced by others not authorized. ISSN 0037-0487 SRDS Classifications: 84, 115C, 148 Great Lakes/Seaway Review and Great Laker are published quarterly in March, June, September and December. Postmaster: Send address changes to Great Lakes/ Seaway Review, Great Laker, 221 Water Street, Boyne City, MI 49712 USA. © 2006 Harbor House Publishers, Inc., Boyne City, Michigan. All rights reserved. No article or portion of same may be reproduced without written permission of publisher. JULY-SEPTEMBER, 2006 THE INTERNATIONAL TRANSPORTATION MAGAZINE O F M I D C O N T I N E N T N O R T H A M E R I C A VOLUME 35 NUMBER 1 Great Laker Cover: The crew of the Mackinaw WLBB 30 board the ship and line the deck during the June commissioning ceremony in Cheboygan, Michigan. Photo by Janenne Pung. Great Lakes/Seaway Review Cover: BBC Ukraine offloads tubes and steel rounds from Argentina at the Algoma Steel dock in Sault Ste. Marie, Ontario. Photo by Steve Brede. P U B L I S H E D F O R 3 5 YEARS GREAT LAKES/SEAWAY REVIEW July-September, 2006 3 First quarter shows strong gains Traffic and tonnage on the Seaway is up 15 percent compared to last season, according to the St. Lawrence Seaway Management Corporation. The increase is distributed across a broad spectrum of cargoes from traditional staples of grain and iron ore to various aggregates and bulk liquids. Steel is a stellar performer, both in demand from domestic mills for iron ore and coal to imports of steel products from a variety of countries. Imports of steel from counties such as Russia, South Korea, Egypt, Turkey, Germany and China have contributed to a 30 percent rise in the number of ocean vessels entering the Seaway so far this season. . Mackinaw becoming maritime museum The famous Great Lakes icebreaker, Mackinaw (WAGB 83) has been decommissioned and is now in the hands of a private board that is making way to open the ship as one of Michigan’s most important maritime museums. The Mackinaw is docked in Mackinaw City, Michigan. Tours are expected to be offered Labor Day weekend. (For additional information, see page 82.) . GLC hires new director Tim Eder is the new executive director of the Great Lakes Commission. Eder, who started in July, is the former director of water resources for the National Wildlife Federation. He has more than 25 years of experience in natural resources policy development and advocacy. He will be in charge of the commission’s day-to-day operations. Eder is the commission’s fifth executive director since it was established in 1955. . DATELINE Agreement reached on Seaway opening A Memorandum of Understanding (MOU) has been signed identifying procedures to be followed prior to the annual opening of navigation on the St. Lawrence Seaway. The agreement between the Canadian and U.S. Seaway Corporations, their respective Governments and the Mohawks of Akwesasne represents the culmination of months of negotiation. The MOU establishes procedures to set the opening date of the Seaway by providing the tribe with the data used by the Seaway related to weather and ice conditions; create a process for meeting with the tribe and discussing these procedures prior to selecting an opening date; commit the parties to undertake a jointly funded three-year joint observational study on the effects of icebreaking on tribal land; and require the tribe to withdraw its pending lawsuits. In addition, the agreement establishes that if the waterway’s official opening date is prior to March 15, SLSDC will conduct an environmental review in accordance with applicable environmental laws and regulations. . Final WLB-class cutter decommissioned The Coast Guard’s final 180- foot WLB-class sea-going buoy tender, USCGC Acacia (WLB 406), was decommissioned in an official ceremony at Station Charlevoix, Michigan in June. The Acacia is one of 39 180-foot seagoing buoy tenders built for the U. S. Coast Guard between 1942 and 1944. Acacia was commissioned on September 1, 1944 in Duluth, Minnesota. The cutter, named after the original Coast Guard Cutter Acacia, which was sunk by a German U-boat off the British West Indies in 1942, had been stationed in Charlevoix since 1990. The ship is now docked at Navy Pier in Chicago. The American Academy of Industry, and Illinois-based non-profit, plans to use the Acacia as an interactive maritime history display. . Hwy H2O signs agreement with German port group Hwy H2O signed a Memorandum of Cooperation with the Seaports of Niedersachsen in Oldenburg, Germany in July. The memorandum established a marketing alliance between the two groups. The agreement was signed by (from left) Andreas Bullwinkel, General Manager of the Seaports of Niedersachsen, Richard Corfe, President and CEO of the St. Lawrence Seaway Management Corporation, on behalf of Hwy H2O and Jan Mueller, chairman of the Supervisory Board and owner of the Jan Mueller Brakebulk Terminal, Port Brake. The agreement will promote trade between northern Europe and the Great Lakes/St. Lawrence Seaway system, generate business opportunities through joint marketing and encourage an exchange of information and collaboration. This will be accomplished through joint participation at conferences and exhibitions, as well as an annual workshop. The agreement evolved from a trade mission to Germany in October 2005. . Brohl leaves USGLSA After 10 years, Helen Brohl has left the U.S. Great Lakes Shipping Association to become Director of the Secretariat for the Committee on the Marine Transportation System in Washington, D.C. She assumed her new position in July, which entails working with the coordinating board of agency heads and the CMTS Helen Brohl made up of cabinet level secretaries. . G R E A T L A K E S / S T . L A W R E N C E S E A W A Y WHATEVER IT TAKES TO MEET YOUR COAL TRANSPORTATION REQUIREMENTS • Coal Sourcing • Rail Transportation • Dock Services • Blending • Trucking • Vessel Transportation A DTE Energy Company For more information visit our website at www.midwestenergy.com or call 715.392.9807 Midwest Energy Resources Port of Milwaukee exports food to Africa It took 44 people 33 days to unload railcars full of 55- and 110-pound bags of grain products and palletize it for exporting to Africa. The bags were stacked to the ceiling of Terminal 3. Fednav, Ltd. secured the 11,000- metric-ton shipment of Food Aid moving under PL480 Title II. The cargo, destined for Uganda, the Democratic Republic of Congo and Kenya, included corn-soy blend, cornmeal green peas and yellow peas. Federal Marine Terminals, the port’s general cargo stevedore, loaded the food to sail onboard the 27,800 dead-weight ton Federal Margaree, built in 2005. Shipments of food aid from the Great Lakes under PL480 have been a rarity since the cargo preference provisions of the Merchant Marine Act of 1936 were amended in 1985 requiring that 75 percent of the cargo shipped must be booked on privately-owned U.S.-flag commercial vessels, if available, at fair and reasonable rates. There are but two such ocean carriers that are able to enter the Great Lakes, which are not generally part of the trading pattern. The last PL480 shipment that went out by ocean vessel from the Port of Milwaukee was in 2003. . Hwy H2O goes global Hwy H2O is widening its marketing base. The group recently appointed Alan Taylor as its European agent. Based in the United Kingdom, Taylor will promote the interests of the Great Lakes/St. Lawrence Seaway and the 18 ports participating program. “Europe has been one of our largest trading partners and represents an important market for our stakeholders,” said Aldert van Nieuwkoop, Director of Market Development for the St. Lawrence Seaway Management Corporation. “By pooling our resources, Hwy H2O allows for us to have European representation and will ensure that all participating port partners benefit from increased international exposure.” Prior to forming his own consulting company in Europe in September, Taylor spent more than 30 years in executive management. As managing director, he developed and implemented strategic plans while running a group of companies within ship operations, port related activities and distribution for both home and international markets to just-in-time requirements. Canada and the U.S. are not new to Taylor; his previous employer handled and distributed large quantities of newsprint and other forest products within the UK on behalf of North American producers. . Hugues Morrisette passes on “It’s not the dying that disturbs me, it’s the leaving.” (M. Pagnol, César, 1946) Hugues Morrisette, geographer and resident of Quebec, died after a short illness at Saint-Sacrament Hospital July 15. Hugues is a former employee of Transport Canada and said to have been a lifelong example of courage, serenity and will. He was a founding member of groups such as the Great Lakes/St. Lawrence Maritime Forum; the International Association of Great Lakes and St. Lawrence Mayors; and the St. Lawrence Economic Development Council (SODES), a non-profit organization mandated to protect and promote the economic interests of the St. Lawrence. Throughout the industry, Hugues is known as a ceaseless promoter of the system and its environmental stewardship. . D A T E L I N E Hugues Morrisette Alan Taylor 4 www.greatlakes-seawayreview.com GREAT LAKES/SEAWAY REVIEW July-September, 2006 5 The Great Lakes Seaway and Ontario In the industrial heartland of Canada, the Province of Ontario offers a motherlode of riches for both importers and exporters. From Cornwall to Thunder Bay, Ontario ports provide excellent service and facilities for both crew and cargo. The Great Lakes Seaway allows continuous water passage to bring your products into a market place with over nine million consumers. The gold mine doesn’t run out there. Ontario is an El Dorado of goods for the voyage home. From steel to sewing machines, wheat to whatever, or from cars to computers, Ontario products can travel world-wide through the Great Lakes port system via the economical marine mode. Don’t let this golden opportunity slip by. Get to know more about the Great Lakes Seaway. Your Golden Opportunity URBAN & RURAL INFRASTRUCTURE POLICY BRANCH 2nd Floor, Building B, 1201 Wilson Ave. Downsview, ON M3M 1J8 Telephone: (416) 235-3670 Ministry of Transportation Ontario Traveling container highlights Seaway as global shipping channel As part of its ongoing efforts to promote container shipping on the Great Lakes/St. Lawrence Seaway, the St. Lawrence Seaway Management Corporation arranged for a 20- foot container to be shipped from Europe to North America where it will then travel along the St. Lawrence Seaway to the Great Lakes’ largest and farthest inland port—the Port of Duluth-Superior. The “Hwy H2O Traveling Container” was launched from the Port of Aarhus, Denmark July 19 aboard the BBC India with a large Hwy H2O mural on both sides of the box. Along with the Hwy H2Ocontainer, the vessel is carrying a load of windmill components. The traveling container initiative will assist in drawing attention to the ability of the system to move containers efficiently and reliably, directly into North America’s heartland. To highlight the timeliness of shipping containers via the Seaway, a contest is being hosted on the Hwy H2O website (www.hwyh2o.com). Details of the container’s journey across the Atlantic Ocean and through the Great Lakes are being also posted on the website. After arriving at the Port of Duluth, the container will spend the rest of the shipping season traveling to Hwy H2O partner ports along the Great Lakes. . SEPTEMBER 12-13 Global Greenship, Washington Marriott Washington, D.C., Jane Poterala (212) 620-7209 or conferences@sbpub.com 27 Great Lakes Ballast Water Conference Crown Plaza Hotel, Cleveland, Ohio CDR Karen Phillips, (216) 902-6049 or Karen.A.Phillips@uscg.mil 26 National Marine Day, Ottawa, Ontario (613) 233-8779 x2 jcampbell@cmc-ccm.com D A T E L I N E REGIONAL CALENDAR REGIONAL CALENDAR OCTOBER 2-3 Second Annual MiCorps Conference Higgins Lake, Michigan Matt Doss (734) 971-9135 or mdoss@glc.org 3-5 Great Lakes Commission Annual Meeting Duluth, Minnesota Tom Crane, (734) 971-9135 or tcrane@glc.org NOVEMBER 9-10 Hwy H2O Conference, Doubletree Hotel Mississauga, Ontario , Jennie Richardson, (905) 641-1932 ext. 5438, www.hwyh2o.com DECEMBER 5-6 Developing Successful Shipyard Contracts Washington Marriott Washington, D.C. , Jane Poterala (212) 620-7209 or conferences@sbpub.com 6 www.greatlakes-seawayreview.com pellet price dropped by 3 percent. If the old relationship still holds for the pellet versus sinter-feed-fines price, then we could be on the waning phase of this boom cycle. However, it is still early in the price negotiation process. At these prices, sinterfeed- fines have risen to $50.31/long ton for 2006 and pellets have dropped slightly to $74.02/long ton pellets FOB-Tubarao, Brazil. The price of sinter-feed-fines is now twice what it was two years ago, or more precisely, the price of fines has risen 107 percent in two years and a total of 168 percent in the last four years since the China impact. For pellets, the price is up 1.8 times, or 81 percent in the last two years and 137 percent over the last four years, when the China boom began to impact world prices. These increases came after the preceding two decades of nearly flat pricing for iron ore on the world market. We can call this a turn-around. Most of the cause can be directly related to growth and development in China. To think “before China versus after China” is an important perspective. It may even be a new era. C O M M O D I T I E S PETER J. KAKELA Ph.D., Professor Michigan State University These published prices are quite reliable for most transactions throughout the year. Also, the European and Asian prices are usually very similar in trend and magnitude. The steel analysts received their first significant price signal in 2003 when world iron ore pellet prices increased by 9 percent. This was followed by a 19 percent jump in 2004 and then the explosive increase of 2005, when pellet prices climbed 86.4 percent. With this, world pellet prices went up a total of 144 percent in a threeconsecutive- year climb. The recent explosion of iron ore prices is even more startling when compared to the two decades that preceded 2003. In 1980, world pellet prices were $31.08/long ton FOB-Tubarao, Brazil. By year 2002, after numerous, but minor, ups and downs, the pellet price had climbed just $0.21, to reach $31.29/long ton. The price for 2005 was $76.31/long ton of pellets (LTP) FOBTubarao, a whopping $45.02/LTP increase. Expectations are for another solid year in price for 2006. One European sinterfeed- fines price contract was settled with a 19 percent increase, but the companion With world demand exploding for iron ore and the many other raw materials needed in developing countries, patterns and prices are getting a lot of attention. In iron ore, you have the high-quality pelletized ores and the lessprocessed, fine-grain ores. Pellets are made at the mine, whereas the fine-grain ores must be processed (sintered) at the steel mills before being fed to blast furnaces. Pellets, therefore, are more expensive coming out of the mine than the sinter-feed-fines. Almost all of North America’s iron ore production is in the form of high quality pellets. The pattern I have been watching for the past several years involved a trade-off of pellets versus sinter-feed-fines. Demand for pellets tended to be stronger during the leading phase of a boom cycle, whereas sinter- feed-fines tended to be stronger during the waning phase of the cycle. The measure was price. Pellet prices rose faster in the leading phase, whereas the price of sinterfeed- fines held better in the waning phase. Many of the patterns that held for the 1980s and 1990s are no longer apparent. Like the oil price hikes of 1973 and 1979, we could be in a whole new ballgame with world iron ore prices and pricing patterns. The China effect started in 1997. That is documented now, but was missed by most observers. China’s domestic iron ore production peaked in 1997 and then started to decline. At the same time, China’s imports of iron ore began rapid escalation. Most outside observers, including me, didn’t recognize this shift until several years later. The real telltale indicator came in 2003, delayed in large part because so many analysts rely on price as their key measure for iron ore. Most of these people are really steel industry analysts, and they follow iron ore as a secondary interest. Their primarily concern is steel. So, for ore, they rely on price as the key measure. Price is, after all, fundamental economics and it is easy to come by. There are two main markets for the world price: Europe and Asia. Once they are negotiated, the annual prices for each market are published. — before IRON ore China’s influence on demand for ore is profound GREAT LAKES/SEAWAY REVIEW July-September, 2006 7 China joined Cleveland-Cliffs Inc. in purchasing the bankrupt EVTAC iron ore mine and pellet plant in northern Minnesota. • In April of 2005, Cleveland-Cliffs purchased 80.4 percent of the Portman iron ore mine in western Australia in order to gain access to Chinese and other Asian markets. Shipping Minntac pellets to China was a first of its kind. It involved unit-trains hauling ore more than 2,000 miles across western Canada to a shipping port in British Columbia for transport across the Pacific Ocean to China. It demonstrated that trains could make the trip in less time than was anticipated and the British Columbian shipping port was able to handle the traffic. The purchase of EVTAC by Laiwu and Cliffs marked the first direct holding of iron ore property by a Chinese steel mill in North America. Together, they re-named the operation United Taconite and were able to ramp up production quickly as the plant had only been out of operation for about six months. Most of the pellets from United Taconite are now shipped to the Stelco or Dofasco steel mills on the eastern end of the Great Lakes. In turn, Laiwu’s contract with Cliffs is to buy approximately But what impact has China had on the North American iron ore industry? Lots, including several direct impacts and many indirect impacts. Direct impacts on U.S. iron ore. China’s growth in iron ore demand and its need to import high quality ores have had at least three direct impacts on the North American iron ore industry. These are: • In late 2003 and early 2004, approximately 1.0 million long tons of high-quality iron ore pellets from U.S. Steel’s Minntac Mines in northern Minnesota were transported to China. • On December 1, 2003, Laiwu Steel of North American iron ore mine core. The move to acquire the Portman Mine was clearly to gain greater access to the Chinese and other Asian markets. Cliffs paid more than 100 times the price per ton of capacity for the Portman Mine than it did to buy the EVTAC/United Taconite Mine in Minnesota less than a year and a half earlier. Indirect impacts. In addition to the direct connections, China’s recent and rapid growth in iron ore demand is creating several major indirect impacts on North American iron ore. These include: • Development of a four-tiered pricing structure within North America. C O M M O D I T I E S • Expansion of iron ore pellet-making capacity in the U.S. for the first time in about 15 years. • Emergence of Cleveland-Cliffs as the largest owner of iron ore in North America, making it the domestic steel industry’s leading iron ore supplier. Iron ore pricing in North America is by individual negotiations with each steel maker. After acquiring major iron ore pellet capacity, Cleveland Cliffs changed its pricing policy. It now revolves around three key factors: 1) world pellet prices, 2) U.S. China’s Iron Ore & Pig Iron Production China’s Iron Ore imports as part of World Seaborne Trade World Iron Ore Production vs. Seaborne Trade and after 4.0 million long tons of pellets per year. This contract is being fulfilled with pellets from one of Cliffs’ other mines, the Wabush Mine, which is located at the mouth of the St. Lawrence Seaway. This makes sense because Wabush enjoys access to ocean shipping. Cliffs is the most established iron ore mine manager in North America, with 157 years of experience and commitment. A decade or so ago, Cliffs held an interest in the Robe River operation in Australia, but since the mid-90s it has focused on its World Production Seaborne Trade Wherever you are, Wherever you’re going Upper Lakes is there to serve you through its network of support companies. We Are Not Just Ships! In addition to partnering in Seaway Marine Transport, the largest Canadian flagged shipping operation, Upper Lakes offers a wide range of services to the Great Lakes marine industry: Marine transportation of asphalt & black oils, Shipbuilding & repair, Marine & industrial fuels and Grain elevators & other cargo handling facilities. These are some of the companies that make up Upper Lakes Group: Allied Marine Industrial Situated right on the Welland Canal, AMI is able to offer 24/7 service to vessels transitting this waterway and surrounding areas. AMI offers: Tel: (905) 834-8275 Fax: (905) 834-3564 Website: www.allmind.com e-mail: sales@allmind.com Mission Terminal Inc. Strategically located in Thunder Bay, MTI is a full service grain terminal offering grain transfer, cleaning and storage (135,000 tonnes cap.). MTI offers full seaway draft and 24 hours per day loading capabilities and is licensed by the CGC. Winnipeg Thunder Bay Tel: (204) 940-3010 Tel: (807) 623-8868 Fax: (204) 957-5282 Fax: (807) 623-8823 e-mail: mission@escape.ca McAsphalt Marine Transportation is a joint venture by McAsphalt Industries Ltd. and Upper Lakes Group Inc. for the marine transportation of asphalt and black oils on the Great Lakes and East Coast. The “Norman McLeod” is an ice strengthened, OPA 90 compliant,70,000 bbls double hulled articulated tug-barge unit propelled by the twin screw 6,000hp tug “Everlast”. They join the 40,000 bbl capacity barge “McAsphalt 401” in the McAsphalt fleet. To service all your ‘black oil’ marine transportation requirements, please contact Roy Hickingbottom at: Tel: (416) 281-8181 or (800) 268-4238 Fax: (416) 281-8842 e-mail: rhickingbottom@mcasphalt.com • Precision machining and machinery repair by skilled and experienced personnel. • Certified welding to TSSA and CWB Standards. • Precision plate and steel fabrication. • On-site millwrighting for plant maintenance & equipment installations. • Work to Lloyd’s and ABS certification. Hamilton Marine This Port Colborne based topside repair and steel fabricating company offers a cost effective solution to marine or industrial steel fabricating and repair requirements. • Mobile repair crews are able to carry out repairs at any convenient location. • Riding crews can be supplied. • Familiar with LRS, ABS and CSI requirements. Tel: (905) 834-3322 Fax: (905) 834-3020 Provmar Fuels Inc. Supplying your marine or industrial fuel requirements by bunker barge or trucks. Products: Bunker C, all grades IFO, Marine diesel as well as sludge oil removal. Hamilton based, Provmar offer 24/7 service to the ports of Hamilton, Clarkson, Oshawa, Port Credit, Port Weller and Toronto. Tel: (905) 549-9402 Fax: (905) 549-9929 e-mail: provmar.com Port Weller Dry Docks is a full service shipbuilding and repair facility located on the Welland Canal. It has two Seaway sized drydocks/building berths and a 1200’ outfitting wharf. • 175,000 sq. ft. of undercover fabrication and manufacturing facilities. • State-of-the-art automated panel line, welding and assembly shops are fully integrated and capable of producing 400 tons of steel fabrication a week. • Extensive machine shop equipped with modern CNC controlled machinery PWDD is fully capable of handling your marine requirements from routine drydocking and repairs to new ship construction. Tel: (905)934-2581 Fax: (905)934-8135 e-mail: sales@pwdd.com Les Elevateurs des Trois-Rivieres ETR is a full service transfer terminal located in Trois-Rivieres, PQ with capability to load or unload vessels up to Panamax size and up to 35’ (10.6m) draft. • Receiving and storage • 110,000 tonnes of facility for grain, coke, grain storage. alumina, meal, sugar, • 1500 tph unloading and cement. rate for grain. • Feed grains distribution facility to local Quebec market. Tel: (819) 374-6203 Fax: (819) 374-6392 e-mail: elevtr@elevtr.qc.ca GREAT LAKES/SEAWAY REVIEW July-September, 2006 9 Recent U.S. Iron Ore Production U.S. Iron Ore Production hot-rolled steel prices and 3) the U.S. producer price index. With world iron ore prices soaring and hot-rolled steel prices high, Cliffs’ contract prices for merchant iron ore pellets are estimated to have jumped 33 percent in 2005 and are likely to hold close to this level for 2006 deliveries. That puts delivered prices to Lower Lakes steel mills at about $60/LTP, up from approximately $45/LTP in 2004. In contrast, the mills with their own production capacity are still able to deliver ore at costs. These would include U.S. Steel and Mittal Steel (in part) in the U.S., as well as Dofasco and Stelco in Canada. Full costs, plus transportation costs, to Lower Lakes steel mills currently runs between $40/LTP to $42/LTP. In contrast, eastern Canadian iron ore pellets are sold on a world price basis. Current 2006 world pellet prices are about $75/LTP plus transportation costs. Transport costs into Great Lakes markets run between $9.15/LTP and $13.25/LTP. This brings delivered prices for Canadian ore to about $85/LTP or more. Offshore ore imported through the St. Lawrence Seaway or up the Mississippi and Ohio Rivers systems would cost approximately $100/LTP or more. So, in practice, we have a four-tiered pricing system: • Self-supplied pellets at $40/LTP • Cliffs merchant pellets at $60/LTP • Canadian pellets at $85+/LTP • Off-shore pellets at $100+/LTP Looking at new capacity. The iron ore industry in North America has seen far more capacity reduction in the past two decades than renovation or new construction. Effective capacity dropped from 125.2 million LTP/year in 1980 to a low of 81.4 million LTP/year just eight years later in 1988. Today, North American pellet capacity stands at just 85.4 million long tons. The U.S. and Canadian iron ore mines produced approximately 82.8 million in 2005, for a 97 percent operating rate. Demand for iron ore concentrates is also expected to be strong for the next few years. The current strong demand for iron ore pellets led Cleveland-Cliffs to reopen an additional 1.5 million LT of swing pellet capacity at United Taconite. “Line 2” had not operated since 1999, but was restarted at minimal cost, maybe $10 to $25/LT of annual capacity. Cliffs also has plans to renovate 0.8 million LTP/year of additional poised capacity at Northshore at a cost of $30 million or $37.5 LTP capacity. This expansion, however, has been delayed. At Keewatin Taconite, U.S. Steel reopened 0.5 million LTP/year of its swing capacity to boost total capacity there to 6.0 million LTP/year. There is only another 2.5 million long tons of swing available in North America. After that, the cost to recapture any of the 12.5 million long tons of poised pellet capacity increases greatly, probably in the range of $25 to $55/LTP annual capacity. New capacity construction costs would start at $100/LT and higher. No new capacity is expected in North America. Cliffs took on massive capacity as U.S. and Canadian steel companies fought off bankruptcy. Many steel companies shed their iron ore mines and other peripheral operations, including coal and railroads. This turned fortuitous for Cliffs in the last three years as the Chinese demand for imported iron ore grew strong. After more than 150 years as a key mine manager, Cliffs began to take on a much greater role as mine owner. Today, Cliffs manages 37.4 million long tons of iron ore pellet capacity, or about 41 percent of the North American total, and owns 23.4 million long tons of that, or 26 percent of the total capacity. Its route to ownership of more and more mining properties was as follows. • 1990 CCI owned 6.3 million long tons. • 2000, it owned 12.1 million long tons. • By 2004, it doubled its equity ownership again, to 23.4 million long tons. In addition to China. Currently, China’s influence on U.S. and global iron ore demand is enormous, but there are other significant factors. The decline in the U.S. dollar is curbing U.S. imports and thus aiding domestic demand. Also, the major competitor to iron ore is iron and steel scrap, and the prices for scrap have soared in the last three years. The high prices for scrap have helped push more demand toward domestic iron ore. These factors, coupled with a stronger domestic steel industry after their bankruptcies and major consolidations, are producing one of iron ore’s strongest periods since the 1970s. As China builds its infrastructure to accommodate the bursting demands for growth and development, it will need more iron ore to meet its vast needs for steel. Although China is much of the driving force, there is more. In addition to the growing Chinese demand, there are the bricks. India and Brazil are also developing at a rapid pace even though each is on a lesser scale than China. They are building roads, bridges, buildings and other infrastructure that requires much raw material, including iron ore to make their steel. Russia is re-industrializing. Southeast Asia is also a rapidly developing market for raw materials and commodities, including iron ore. These countries are the so-called BRICS (Brazil, Russia, India, China, and Southeast Asia). They will lead the growth in steel consumption for the next decade as they move further up on the developmental curve. They will need increasing volumes of iron ore, as well as many other basic commodities, to achieve their goals. Highgrade iron ore and especially pelletized iron ore will be the premium products in demand because of the innate capacity of pellets to speed blast furnace production. As a result, the long-term outlook for iron ore prices and demand is very positive. This is especially true for high-grade ores and pellets. So this researcher is drawing a line in the sand, or at least a mental line at 2005 on his price graph, to indicate before and after China. It is similar to the mental line that marks the jobs cut of the 1982 recession or the one that indicates the pellet plant construction boom of the 1970s or the fear of resource depletion that marked the post-World War II era. We have another major marker: China’s true birth of its booming demand for iron ore and steel. n C O M M O D I T I E S 10 www.greatlakes-seawayreview.com was the second stop on our itinerary, prior to joining the rest of the Seaway delegation in Beijing. Therefore, it was with anticipation that the entourage arrived in Korea—Saturday afternoon April 15. What follows is a brief day-to-day account of our two-week odyssey. SEOUL, SOUTH KOREA APRIL 15-19 While pleased to have finally arrived, not unsurprisingly, many of the group wanted no more than a shower and sleep after the grueling 19-hour journey. Some hardy types managed to join me for cocktails and a buffet supper with the port’s Korean trade representative, who gave us a rundown of the meetings that he had arranged for us in Seoul. Details were also provided of our tour of the city and the demilitarized zone (DMZ) that would commence at 8 a.m. the next morning. Dreams of a lazy Sunday were quickly dispelled. The contrast between a successful, industrious and prosperous society and a dismal totalitarian regime was brought into stark detail even before our bus arrived at the DMZ Sunday. Within 45 minutes of Seoul, one can view a landscape totally devoid of vegetation; everything that can be consumed has been harvested for fuel and to sustain life. We were guided through tunnels designed by North Korea to move up to 10,000 fully-equipped combat troops per hour in the first wave of an invasion. Despite the fact that Seoul is within an hour and a half’s tank ride of the DMZ, most Koreans remain convinced that reunification will take place in their lifetime; they have even built the beautiful and eerily quiet Dorasan railway station in anticipation of that joyful day. A tour of this facility and Seoul’s royal palace concluded our first day in Korea. Monday saw us get back to work in earnest with the stevedores and terminal operators in our group touring the port of Kwangyang to see first-hand how Korean ports handle steel and containerized cargo. Others stayed behind to meet with a Korean shipbroker and freight forwarder. Tuesday was entirely devoted to meetings with steel producers and trading houses. Breaking into two groups, we were able to meet with a number of active Korean corporations, and member of the team provided an outline of their companies’ capabilities. The success of these meetings and the useful contacts that we made put us in a positive frame of mind as we said goodbye to Seoul and boarded our flight to China. YINGKOU, PR CHINA APRIL 19-21 Our hosts at the Port of Yingkou signaled their intent to treat us like visiting dignitaries as soon as we cleared Chinese customs in Shenyang Wednesday afternoon. The ladies in our party were greeted with flowers just prior to our embarkation for the two-hour coach ride to Yingkou. As Canadians, we felt right BOB MATTHEWS Vice President, Marketing Hamilton Port Authority Our bleary-eyed group of travelers arrived at Toronto’s Lester B. Pearson International Airport in the early hours of April 14. Once the bottomless coffee pot at Air Canada’s Maple Leaf lounge had improved the collective demeanor, grumbling gave way to animated conversation and the realization that the long-anticipated trip to the far side of the world in the pursuit of expanded trade was about to begin. Hamilton Port Authority (HPA) President and CEO Keith Robson, Vice- President of Marketing Bob Matthews, board member John Holditch and trade consultant Bob Armstrong had visited China and Korea before. But for Steelcare President Demetrius Tsafaridis and Upper Lakes Groups VP of Business Development Graeme Cook, this would be their first trip to Asia. Changing planes in Vancouver, the delegation was in fine form and able to engage in some gentle ribbing (“about time you showed up”) at the expense of Quebec Stevedoring President Denis Dupuis and Vice-President Geoff Lemont as they joined the now 10-strong group for the 11-hour flight to Seoul, the first stop on our two-week trade development mission. Catalyst for trade. The Hamilton Port Authority firmly believes that its role as a catalyst for trade and commerce includes encouraging our tenants and customers to work together with us in pursuit of common goals and objectives; Quebec Stevedoring operates successfully in Hamilton as Great Lakes Stevedoring, Steelcare operates a number of facilities at the port including a stateof- the-art steel-handling warehouse and Upper Lakes Group is actively partnering with the port on a number of short sea shipping initiatives. The port decided to head to Asia ahead of the full Seaway delegation in the early stages of planning. There can be no doubt that Chinese trade expansion will eventually mean more business for the Seaway, the ports, carriers and other stakeholders, but we shouldn’t overlook the potential of another Asian tiger: the Republic of Korea. This industrious nation of 48 million is one of the world’s leading economies, and following promising meetings in Korea in 2005 with a number of steel producers and traders, it seemed logical to formally introduce the capabilities of our port partners to the same group. A significant portion of the Port of Hamilton’s throughput is international steel, with approximately one million metric tons crossing our piers in 2004 and 2005. In addition, we invited our colleagues to become involved in a new relationship: In 2005 the Port of Hamilton and the northern Chinese port of Yingkou formalized a sister port agreement, which includes a reciprocal commitment to expand trade and business contacts between our respective regions. Yingkou A Great Lakes/Seaway trade mission to Asia The Hamilton Port Authority participated in the recent trade mission to Asia while also traveling with its own delegation. T R A D E M I S S I O N T O A S I A A friendship agreement is signed by representatives from the Shanghai Port Authority and Hwy H2O. A declaration of cooperation is signed between the U.S. and Canadian Seaway entities and the Chinese Ministry of Water Transport. HEAD OFFICE Plac Rodla 8, 70-419 Szczecin, Poland tel. (+48 91) 359 43 33, 359 40 81 fax (+48 91) 359 42 88 email: pzmmanagement@polsteam.com.pl www.polsteam.com.pl 12 www.greatlakes-seawayreview.com shipping lines and other organizations. The next day, many participants were able to visit the impressive Yangshan container terminal that, when complete, will boast the throughput capacity of Vancouver, Montreal and Halifax at one island location served by a 40-kilometer causeway. For those who had the opportunity to visit Yangshan in 2005, prior to the official opening, the change in one year can only be described as breathtaking. The rapid pace of development stands as a not-so-subtle reminder that the Chinese mean business. They are investing in port capacity to handle trade and if we are to be considered a reliable partner, we’d better start doing the same. HONG KONG SAR APRIL 26-30 For many of the delegates, this was their second visit to Hong Kong and many took the opportunity to pursue specific agendas. Our group was able to meet with a number of leading Hong Kong-based liner operators to update them on our development plans. Other delegates participated in trade seminars such as the one hosted by Invest Hong Kong. This organization’s function is to promote business for Hong Kong. The main message that came across for the Hwy H20 group was that while opportunities abound in China, it remains a milieu that is not for the faint-hearted. Utilizing business contacts in Hong Kong can mitigate the risk because Hong Kong has a mature legal system based on English Common Law. In addition, currency management is easier in Hong Kong, so why not set up here and reach into China the easy way? A tour of the Hutchison Terminal was an eye opener for many used to the relatively relaxed scale of operations at North American ports, reinforcing the underlying feeling that in many ways we, in North America, are now the developing world. At an evening reception, we were fortunate to be able to meet with members of the Hong Kong marine community where a number of useful connections were made. The next day, the delegation visited the Shenzen economic zone and delegates interacted with a number of logistics companies. Saturday, we toured Hong Kong and enjoyed a final dinner together. It must be said that the interaction among the group throughout the trip was excellent; we are getting to know each other better and, by extension, we are becoming more proficient at jointly promoting our System to a global audience. Necessary follow-up. Awareness of the capabilities of the Great Lakes/St Lawrence Seaway system is critically important, and we must continue to bring our message to decision makers in China and elsewhere. International agreements signed with relevant authorities will increase this exposure, but the onus will be on each of us individually to engage in expanded dialogue with our Asian counterparts. There is still a lot of work to be done if the full potential of our System is to be realized. It is hoped that the Hwy H20 program will improve in effectiveness as we enlarge the membership to include carriers and terminal operators. We trust that ship agents, chartering brokers and freight forwarders will also see the value in signing on to the program and support the Seaway and ports in our marketing efforts. n at home with driving sleet slowing our journey; however, a late arrival meant a mad rush to dress for a formal dinner with the port hierarchy. Our first 14-course meal tested everyone’s stamina and all proved to be up to the task; however, the ironman award must to go to port chairman Larry Russell, who had 15 minutes to change following his overnight flight and bus ride, yet he still managed to be on form as he toasted Yingkou Port Group President Gao Bao Yu and senior port executives. Thursday morning, we were given a presentation on the Port of Yingkou followed by an extensive tour. We were staggered by the scope and pace of construction; a new container facility with the throughput capacity of the Port of Montreal will (our hosts’ emphasis) be in operation in 2008. In the afternoon, we made presentations to members of the local commercial, industrial and maritime community. Following introductions, Keith made the requisite PowerPoint presentation and Demetrius Tsafaridis was able to introduce Steelcare’s specialized cargo handling capabilities to area steel mills. The level of interest demonstrated by the attendees was gratifying; Denis Dupuis and Geoff Lemont were delighted to meet a shipper who, as it turned out, was an extended customer. An impromptu return visit to the port the following day actually allowed them to see a vessel loading for a QSL facility on the St. Lawrence River. Graeme was able to discuss Upper Lakes expertise in self-unloader technology and during the port tour see a Chinese-flag self-unloader up close. During the course of Thursday evening’s rather relaxed official dinner, the relationships that were formed will facilitate beneficial trade relationships between the Yingkou community and the members of our port partner delegation. BEIJING, PR CHINA APRIL 21-24 We concluded the Hamilton Port Authority-led portion of the mission as we flew to Beijing to join the arriving delegation. PBB Global Logistics were contracted to handle the transportation aspects, with Datton International arranging the formal business program. All delegates appreciated a social program that included a tour of Beijing and the Great Wall. A highlight of the Beijing business program was a meeting with the Chinese Ministry responsible for Water Transport. This was followed by the signing of a declaration of cooperation between the Seaway entities and Ministry, which may have positive repercussions if fully utilized. After lunch, we met with executives of COFCO, the Chinese National Cereals oils and foodstuffs import and export corporation, to discuss the potential for grain exports through the Seaway. They were quite candid about the fact that most of their imports come through the west coast, but they were open to considering the Seaway as an alternate routing if commercial considerations dictated. SHANGHAI, PR CHINA APRIL 24-26 The business portion of the mission involved a meeting with the Shanghai Port Authority and the signing of a friendship agreement between the Port and the Hwy H20 partners. A business seminar in the afternoon followed presentations by the Seaway, Hamilton Port Authority, Port of Cleveland and Upper Lakes Group. At both the seminar and the reception that followed, participants were able to network with T R A D E M I S S I O N T O A S I A Trade Mission delegates attend a business seminar in Shanghai. Delegates take in the magnitude of port by viewing a display. GREAT LAKES/SEAWAY REVIEW July-September, 2006 15 construction sector, working for local companies, including Dean Construction from the Windsor region. We were also involved in towing and ship docking; however, we began to see a gradual drop in revenue. There was less and less funding for dredging and marine construction projects, and we had to quickly find new avenues for growth. We were looking for longer-term sustainable revenue, and we found it in marine transportation via tug and barge. Until that point, almost all waterborne cargo was moving by self-propelled vessels, certainly on the Canadian side. First short sea shipping contract. Our first large, or at least large to us, short sea shipping contract was moving liquid prod- S H O R T S E A S H I P P I N G BY BLAIR McKEIL President & CEO McKeil Group of Companies Short sea shipping is not a new concept. It has been part of the East Coast, Great Lakes and St. Lawrence River for centuries. From the early 1500s, when Jacques Cartier first ventured up the St. Lawrence, and the 1600s, when Champlain navigated into the Great Lakes, our waterways have proven to be one of Canada’s most important resources. You could say that the advent of short sea shipping was initiated as early as the cargo canoe. Canoes were manned by professional paddlers known as voyageurs. These first canoes could carry up to four tons of cargo. In the early 19th century, York Boats, which were developed by the Hudson’s Bay Company, replaced the canoe. They added durability and increased capacity. From there we moved to sailing vessels, steamships and then diesel-powered vessels. As vessels developed, so did our waterways. In 1680, construction of a canal began to bypass the Lachine Rapids. In 1824, construction of the Welland Canal began and in 1829 it opened. In the early 1950s, the whole system was redeveloped. The world continued to change with the development of the locomotive and automobile. Railroad tracks and roadways began to cover the landscape, and our waterways were no longer the only means of transportation. When the St. Lawrence Seaway was redeveloped to allow large vessels to transit into the Great Lakes, my family first became involved in short sea shipping. In the early 1950s, my father and grandfather built their first wooden boat and sailed it up to Valleyfield, Quebec. There, my father started his first job transporting crew and supplies to the dredges during the reconstruction of the St. Lawrence Seaway. My initial experience with short sea shipping took place when I was in my mid-20s, running a small family business. The business was heavily involved in the marine Continuing to advance The Great Lakes’ history—and future—with short sea shipping ucts from nearby Amherstburg to various ports on the Great Lakes, St. Lawrence River and East Coast. At the onset, there was a great deal of skepticism in the marketplace, which proved to be wrong. The customers’ vessel requirements grew. Three to four vessels were dedicated to the business, and we were moving in excess of one million tons per year to ports throughout the Great Lakes. From that point, we continued to grow in different market segments and geographical areas, all part of what we call short sea shipping. Well over a decade ago, we were approached by John and Greg Ward. They had a vision and a belief that there was a need to ferry trucks between Windsor and Detroit that were unable to use the bridge or the tunnel due to the products they were carrying. It cut significant hours off the trucks’ transit times. I don’t think any of us could clearly foresee the overall increase in truck traffic or highway congestion we are experiencing today, let alone the border delays. Another example involves our relationship with McAsphalt. For more than a decade, we have had a tug dedicated to moving the McAsphalt 401 barge carrying asphalt and bunker to ports, including their facility in Windsor, Sterling Fuels. They are now building a second barge. We have at least three to four tug-barge units ranging from 5,000 to 11,000 DWT moving forest-related products from ports in Labrador, Newfoundland, New Brunswick, Nova Scotia and Quebec directly to mills for production, as well as moving cargo up to Voisey Bay for construction of the new nickel mine. Four years ago, we signed a contract with Air Canada to shuttle jet fuel from Quebec City to Hamilton, where the fuel was transported to Pearson Airport in Toronto. This allowed Air Canada to buy jet fuel directly from the refineries in Venezuela and bring it up on 60,000 DWT tankers to storage facilities in Quebec. From there we shuttled it into the Ontario market. We were only moving about 10 percent of their daily requirement at Pearson; however, they were able to use this as leverage with the oil majors in regards to pricing as well as having an alternate supply source. Changes expand opportunities. Other modes of transport are facing their own issues. Road congestion, border delays and an aging infrastructure are affecting the trucking industry. The railroads are also faced with an aging infrastructure along with car shortages and delays. As our economy continues to grow and urban sprawl continues, these issues will only get worse. Short sea shipping can provide a lot of relief. Rail and truck always will be vital transportation modes, and by utilizing our waterways, our natural highway, we can continue to revitalize a transportation The big win will be the interface between three modes of transportation—road, rail and marine. The sum of the three will be far greater then their individual parts. It just doesn’t get any better than this: Our docks are at the midpoint of Great Lakes shipping, the crossroads of major rail and highway systems and the expressway to the heart of America. Midwest Terminals… Is solutions-oriented, working harder for you Is within 20 hrs. drive of 72% of U.S. population Can accommodate any size vessel, including loaded 1000 ft. (305 m.) vessels Has a 4,100 ft. dock (1,250 m.) – with 28 ft. (8.5 m.) of draft Is capable of transferring to, from or between rail, trucks or ships – with our 6 gantry cranes and our 60 in. (1.5 m.) ship-loading conveyor capable of 827 ST/hr. (750 MT/hr.) for most bulk materials Visit us online at midwestterminals.com and see what we can do for you. CORPORATE OFFICE 387 W. Dussel Dr. Maumee, OH 43537 t USA www.midwestterminals.com 16 www.greatlakes-seawayreview.com mode that has been in decline. This market is poised for rejuvenation. In the past five years we have watched upstarts like Lower Lakes Transportation rapidly grow, servicing a nice short sea shipping segment. We have seen companies like Canada Shipping Lines (CSL) invest heavily in its short sea shipping segment through new forebodies on existing vessels to extend their lives for another 30 years and increase carrying capacity. Algoma Central is making considerable investments, including two new ships on the liquid side. This past year, we have seen a new upstart on the bulker side called Voyageur Marine. Its niche is servicing the agricultural customers moving an array of cargoes including grain, beans, etc. The vessels call into Windsor on a regular basis servicing customers like Archer Daniels Midland. I foresee strong, new growth coming from the smaller tonnage markets—10,000 to 15,000 DWT range—with vessels like Wagenborg’s or integrated tug-barge units moving a varied array of cargoes, both bulk and break bulk. Working together. The big win will be the interface between three modes of transportation— road, rail and marine. The sum of the three will be far greater then their individual parts. A great example of this is the integrated unit we have running between the Gulf of the St. Lawrence and the Great Lakes, the Alouette Spirit. This barge can carry in excess of 11,000 DWT. It is more than 550 feet in combined length and equipped with its own ramp. Trucks are able to drive directly onto the barge to be unloaded. There is adequate space for the trucks to turn around and maneuver. The barge is equipped with side doors and a weathertight roof, which allows for side loading and unloading as well as the ability to backhaul bulk and break bulk cargoes. At the main discharge port, the cargo is moved directly to a warehouse where it is loaded on trucks or railcars. With these three modes of transport working together, the customer has a better economic model. We see this as just the beginning. The future of short sea shipping is bright. Seventy-five percent of the products we are carrying on the water today were being moved by alternate modes of transport in the past or not moved at all. In simple terms, we are introducing new business to waterborne transport and the Great Lakes. In the future, we will see a container feeder service moving containers in from the St. Lawrence River to various ports throughout the Great Lakes and backhauling containers to the St. Lawrence River. In the bigger picture, we will see floating transfer stations capable of discharging large ships midstream in the St. Lawrence, and reloading feeder barges or ships will simultaneously create new efficiencies. Global supply chain. As all of Asia, including India, continues to grow, so will their demand for North American commodities. At the same time our demand for their finished goods will continue to grow. We are a small part of a much larger global supply chain. As long as we are able to work together and drive the efficiencies of waterborne movements on the Great Lakes and St. Lawrence, we will all move forward and prosper. We are starting to see a big change in the way stakeholders are looking at short sea shipping. The St. Lawrence Seaway has made big strides in how it looks at business today. Its marine transport businesses have become extremely proactive in both understanding and helping to build new business. Port authorities have moved from acting as landlords to becoming more progressive in understanding our new realities and helping come up with solutions to foster growth. We are seeing more of the same from the private sector. Companies like FMT, Logistec and Quebec Stevedoring are actively coming up with new, efficient solutions for cargo handling, loading and unloading. Everyone is starting to think outside of the box. When we integrate all the stakeholders, the Seaway, the port authorities, cargo handling entities and the carriers, along with the other modes of transport, we will build a long-term, not just sustainable, but vibrant marine transportation sector. We need to continue to educate the North American market and the government on the benefits of short sea shipping. We could see unprecedented growth in marine business on the Great Lakes in terms of the amount and types of cargo. More than 300 years ago, our waterways played a big part in making North America what it is today. If we are to continue to grow and prosper, we have to get back to our roots. With the knowledge of the past, coupled with the know-how of today, short sea shipping can become an even greater success story. n Blair McKeil, leading his organization through its 50th year in business, now employing 400 people, provided his insight on short sea shipping during Windsor Marine Night. GREAT LAKES/SEAWAY REVIEW July-September, 2006 17 G U E S T E

Maritime Editorial