Vol.35 No.2 OCT‑DEC 2006

O C T O B E R – D E C E M B E R 2 0 0 6 Expanding international trade n Continuous improvement at Hamilton n Shipbuilding and Ship Repair V O L U M E 3 5 N U M B E R 2 G LGREAT LAKER 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 WE CAN HANDLE IT! Prepared for Tomorrow? At Interlake Steamship, investing in the future is a top priority. Our state-of-the-art electronic charting, positioning and communication systems add up to superior navigational safety. Our electronic load controllers and skewed propeller blades keep Interlake’s diesel propulsion engines running at peak efficiency. Repowering of MV Lee A. Tregurtha ensures her continued reliable operation. These are just a few examples of Interlake’s long-term commitment to its customers. Interlake Steamship – prepared for today, and prepared for tomorrow. GREAT LAKES/SEAWAY REVIEW October-December, 2006 1 A R T I C L E S O C T O B E R – D E C 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: (866) 906-3392 harbor@harborhouse.com www.greatlakes-seawayreview.com www.greatlaker.com A searchable editorial archive is available at www.greatlakes-seawayreview.com D E P A R T M E N T S Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Administrator’s Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Guest Editorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 The Lake Carriers’ Association Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Naval Architecture & Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Regional Shipyard Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Seaway gaining greater presence with foreign shippers. Page 7. Global demand increases for iron ore. Page 14. Port of Hamilton experiences growth. Page 40. International trade EXPANDING INTERNATIONAL INTEREST . . . . . . . . . . . . . .7 Seaway gaining greater presence with foreign-based shippers. Commodities U.S. IRON ORE’S CHANGING REALITY . . . . . . . . . . . . . . . . . . . . . 14 New developments in foreign shipments, investments will have lasting imprint on Lakes trades. Reader Survey THE RESULTS ARE IN… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Our readers have spoken, we have listened. Fleets MERGERS AND ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Iron ore industry faces both horizontal and vertical integration. Interview: MANAGING SHIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Chuck Ilenda keeps them moving. The Environment MOVING FORWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Corporate leaders delve deeper into Green Marine. Great Lakes Organizations MEET TIM EDER . . . . . . . . . . . . . . . . . . . . . . . . . 33 Great Lakes Commission hires new executive direcctor. Great Lakes Organizations IMPROVING SAFETY . . . . . . . . . . . . . . . . . . . . . . 39 Great Lakes Captains Association speaks out for members’ interests. Port Profile: Hamilton CONTINUOUS IMPROVEMENT . . . . . . . . . . . . . . . . . . . 40 Port of Hamilton takes offensive approach to growth. Shipbuilding & Ship Repair BUILDING BUSINESS . . . . . . . . . . . . . . . . . . . . . . 53 Surge in shipbuilding is a healthy indicator. Lakers QUEEN OF THE LAKES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Edward L. Ryerson returns to service. Maritime Museums CELEBRATING OUR HERITAGE . . . . . . . . . . . . . . . . . . . . . 67 Wisconsin ore dock could open to tours. Marine Photography THE APOSTLE ISLANDS . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Discovering a Lake Superior Archipelago. Maritime Attractions HANDS-ON-HERITAGE . . . . . . . . . . . . . . . . . . . . . . . . . . .71 New facility for tall ship Denis Sullivan. Lighthouses PRESERVING MICHIGAN’S HISTORIC LIGHTS . . . . . . . . . . . . . . . .73 Fund established to assist local lighthouse stewards. Light Stations “THE OLD COAST GUARD STATION” . . . . . . . . . . . . . . . . . . . . . .75 Restoration and maintenance of the St. Clair Flats Canal Range Light Station. Crews SEAFARER MINISTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Extending a hand of welcome. Meet the Crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Laker Lighthouse News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 G LGREAT LAKER 2 www.greatlakes-seawayreview.com P U B L I S H E D F O R 3 5 Y E A R S Business and Editorial Office 221 Water Street Boyne City, Michigan 49712 USA (231) 582-2814 (800) 491-1760 FAX: (866) 906-3392 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 $30.00; two years $55.00; three years $70.00. Foreign: One year $40.00; two years $65.00; three years $95.00. 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. OCTOBER-DECEMBER, 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 2 Call for information on available property or current services (414) 286-8131, bnowak@port.mil.wi.us. • Two major railroads: Union Pacific Railroad Canadian Pacific Railway • Direct Interstate Highway • Seaway-depth berths for ocean vessels • Barge service to Illinois and Mississippi Rivers • Site & Terminal development for: Manufacturing Facilities Warehousing & Distribution Service Centers Material/Cargo Handling OFFERING: 2323 S. Lincoln Mem. Dr. Milwaukee, WI 53207 www.port.mil.wi.us WHERE YOU ARE ALWAYS WELL CONNECTED BARGING BUSINESS Combining the economy of Great Lakes shipping with flexibility for cargoes not suitable for traditional self-unloaders, the tug barge PERE MARQUETTE 41 offers a level of dependable service that translates into outstanding value. Let us help you evaluate how our new articulated tug barge system can benefit your company. u Self-loading/unloading: hydraulic crane with grapple, clamshell or magnet; conveyor places material approximately 80′ from side of ship u Stone, logs, pig iron, scrap metal, coils, slabs and over-dimensional pieces u Conveyor unload materials up to 15 inch u Articulated tug barge coupler technology u U.S.- flag Great Lakes service INTO YOUR PERE MARQUETTE SHIPPING COMPANY 701 Maritime Drive • P.O. Box 708 Ludington, MI 49431 (231) 845-7846 u Fax (231) 843-4558 www.pmship.com Great Lakes/Seaway Review Cover: Laker Edward L. Ryerson back in service. Photo by Chris Winters. Great Laker Cover: Project cargo loading at the Port of Hamilton. Photo courtesy of Hamilton Port Authority. GREAT LAKES/SEAWAY REVIEW October-December, 2006 3 Congressman James L. Oberstar (D-Minn.) accepts his Iron Man Award from the Great Lakes Maritime Task Force in Washington D.C. September 29. The award recognizes Rep. Oberstar’s support for the iron mining, steel and Great Lakes shipping industries. Also pictured are (left to right): Steven Fisher, American Great Lakes Ports Association; James Patti, Maritime Institute for Research and Development; Brian Schoeneman, Marine Engineers’ Beneficial Association; Charles Crangle, American Maritime Officers; John Cullather, House Subcommittee on Coast Guard and Transportation; Karen Phillips, Canadian National Railway; Larry Evans, Transportation Institute; and James Weakley, Lake Carriers’ Association. Minister of Transportation supports Seaway During the Second Annual Hwy H2O conference in Toronto, Ontario in November, Ontario Minister of Transportation Donna Cansfield expressed support for increasing use of the Great Lakes/St. Lawrence Seaway system. The ministry is working with the Ontario Marine Transportation Forum in reviewing the province’s marine transportation polices and strategic priorities. “Sustainable transportation and the protection of the environment are among my highest priorities as Minister of Transportation,” Cansfield said. “I want a transportation system that promotes prosperity—one that works for the people who live and do business in Ontario and one that will work for generations to come.” . Port of Buffalo gets new director The Port of Buffalo, New York has promoted James Yamonaco to Port Director. Fred Finger, who held the position for 20 years, retired in July. As Assistant Port Manager, Jim worked closely with Fred in overseeing the day-to-day port operations. Handling bulk commodities grew under Finger’s direction. The Robert J. Lewis Pacesetter Award will be given to the Port of Buffalo this year for increased tonnage. . Skelton passes Following a courageous battle with cancer, Captain Ray Skelton, died October 13 at his home in Duluth. Captain Skelton, a former Great Lakes ship master, served as the security, environmental and government affairs director for the Duluth Seaway Port Authority and foreign trade zone manager. He began his career with the port authority in 1990. From 1965 through 1986, he served in various shipboard capacities with American Steamship Company, Litton Industries and Columbia Steamship Lines. . New SLSDC administrator sworn in Secretary of Transportation Mary Peters has sworn in Collister “Terry” Johnson, Jr. as Administrator of the Saint Lawrence Seaway Development Corporation (SLSDC). “Terry’s maritime and trade development experience will help increase traffic on this vital maritime corridor,” Peters said. Johnson will work closely with his Canadian counterpart at the St. Lawrence Seaway Management Corporation. He served previously as President and CEO of FastShip Atlantic and as Chairman of the Virginia Port Authority. His most recent post was Senior Management Consultant at Mercer Management Consulting, Inc. Johnson becomes the ninth Administrator in the corporation’s history, succeeding Albert Jacquez. Seaway Administrators by statute may serve a seven-year term. . Tom McAuslan passes The Port of Oswego Authority and the Great Lakes maritime community suffered a great loss with the passing of Executive Director Thomas McAuslan on August 30. As Executive Director since 1995, he was responsible for many infrastructure improvements as well as increased business for the port. During McAuslan’s tenure the port was the recipient of the St. Lawrence Seaway Pacesetter Award for many years. Recently, he was responsible for securing windmill components as new cargo. Respected in the maritime community, McAuslan demonstrated a natural ability to work well with the Longshoremen’s Union, business people, pilots and virtually any individual, group or organization associated with the marine industry. He is survived by his wife Dottie McAuslan and two children. . Collister “Terry” Johnson, Jr. 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 DATELINE James Yamonaco Ray Skelton SLSMC names new marketing director Bruce Hodgson has been appointed Director, Market Development for the St. Lawrence Seaway Management Corporation (SLSMC). Hodgson will be responsible for advancing Hwy H2O efforts to attract both traditional and new cargoes into the system and positioning the system as a key component of the North American intermodal transportation system. Previously, he ran his own company and has held management and senior sales positions with Norasia Container Line Canada Ltd., Wheels Pacifica Freights Systems Inc., Westwood Shipping Lines and International Sea-Land Shipping Services Ltd. He will be based in St. Catharines, Ontario. . Tom McAuslan 4 www.greatlakes-seawayreview.com 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 Voyageur Marine commissions vessel The Voyageur Pioneer, the third major vessel purchased by Voyageur Marine Transport in less than a year, entered the Welland Canal November 8. Purchased in Europe and upgraded by Hamilton’s Heddle Marine Services in six days, the vessel left Hamilton for Thunder Bay to pick up her first cargo—a shipment of grain for Archer Daniels Midland. The vessel is fully booked for all of 2007. After 11 years of sailing as a fully-certified ocean class vessel, now flying a Canadian flag, Voyageur Pioneer’s 1.8 million cubic feet of carrying capacity makes her one of the largest carriers on the Great Lakes. . Sept-Îles and government partner in major extension project The Sept-Îles Port Authority (SIPA) entered into a cost-sharing partnership with the federal and Quebec governments for the extension of La Relance Terminal Dock 41. The present project, requiring an investment of C$8.6 million, C$4.6 million of which will be provided by the port authority, will involve extending the railcar ferry dock as well as deepening the approach channel to enable larger ships to dock, ensuring the terminal’s future as an intermodal hub. . Duluth-Superior and MERC terminal earn Pacesetter Award Strong performance last year by the Port of Duluth-Superior and the Midwest Energy Resources Company (MERC) terminal in Superior, Wisconsin, resulted in their winning the Great Lakes Seaway tonnage award. The port shipped just over three million metric tons of bulk cargoes through the Seaway in 2005, almost all of it grain, bettering its 2004 total by 10 percent. MERC shipped 151,000 tons of low-sulfur Powder River Basin coal through Seaway locks in 2005 after no tonnage listed moving through the locks for the previous season. . The Great Lakes Group promotes Thauvette Gregg Thauvette has been promoted to Vice President, Operations. He was formerly the company’s director of operations and general manager of Tugz International LLC, an affiliate. In his new position, Thauvette will oversee all tug and barge operations, operating personnel and administer the company’s safety program. Before joining the company, he served for seven years in the U.S. Navy’s nuclear power program. . Cleveland-Cliffs buys Brazilian mining firm Iron ore supplier Cleveland-Cliffs has acquired Centennial Amapa, owner of 30 percent of Amapa Project, a developing iron ore terminal that includes a 192-kilometer railway and real estate on the banks of the Amazon River. When fully operational, the project is expected to produce 6.5 million tons of directreduced grade pellet feed per year. Under the non-binding terms, Cliffs would purchase 100 percent of the shares of Centennial Amapa for $133 million. Cliffs would provide technical support for the construction and operation of the project. Approximately $275 million in future capital will be required. Cliffs would be responsible for 30 percent of such capital. Closing is subject to completion of due diligence, as well as approval by the Cliffs’ Board of Directors. . D A T E L I N E GREAT LAKES/SEAWAY REVIEW October-December, 2006 5 Season tonnage weighing heavy Traffic and tonnage through the Seaway is mounting this season. Total cargo volume at the end of September was 31.9 million metric tons, according to the St. Lawrence Seaway Management Corporation (SLSMC). New cargoes attracted to the system is growing at an annual pace of more than 100 percent. SLSMC is crediting its new incentive toll system to helping bring in more than 400,000 metric tons of new cargo, contributing nearly $1 million of incremental revenue as of September 30. . Capt. Luther Blount dies Luther Blount of Warren, Rhode Island died September 24. Founder of Blount Marine Corporation, Bay Queen Cruises and American Canadian Caribbean Line, Blount is famed as an exemplary entrepreneur and philanthropist. An engineer by trade, Blount is best known as a shipbuilder and cruise operator. His Warren shipyard, currently operating under the name Blount Boats Inc., has created more than 300 hulls, including famous NY Harbor Circle Line ferries and his industrychanging stern trawler, the Narragansett. He designed, built and operated a fleet of U.S.-flag, overnight expedition-style ships for over 41 years, currently operating as American Canadian Caribbean Line Inc. . D A T E L I N E REGIONAL CALENDAR JANUARY 19 IAGLP/AGLP Joint Winter Meeting Royal York Hotel, Toronto, Ontario President Steve Fisher (202) 625-2102 or safsaf@aol.com 22-23 Maritime & Port Security 2007 Conference & Expo Crystal Gateway Marriott, Arlington, Virginia, (703) 920-3230 or marinelog.com 24-26 Industry Days, Great Lakes Captains’ Association, Holiday Inn, Traverse City, Michigan, Jack Cork (906) 632-3891 FEBRUARY 3-6 Passenger Vessel Association National Convention at Maritrends 2007 Charleston Area Convention Center Complex Charleston, South Carolina Leslie Kagarise (703) 518-5005 or lkagarise@passengervessel.com www.passengervessel.com 7-11 International Ship Masters’ Convention Crowne Plaza-Cleveland City Centre Cleveland, Ohio, Russ Brohl 419-285-5811 or lkbrohl@thirdplanet.net 18-20 70th Annual International Joint Conference of the Lake Carriers’ Association & Canadian Shipowners Association, Saddlebrook Resort, Tampa Florida, Carol Ann Lane (216) 861-0593 or lane@lcaships.com FEBRUARY (Continued) 27-28 Admiral’s Dinner, Marine Community Day Crowne Plaza Cleveland City Centre Hotel, Cleveland, Ohio Attendance: Harbor House Publishers (800) 491-1760; Lodging: (216) 771-7600 www.clevelanddowntownhotel.com MARCH 7 Great Lakes Day Congressional Breakfast and Issues Briefing, Washington, D.C. Great Lakes Commission, Dave Knight (734) 971-9135 or dknight@glc.org 12-15 Seatrade Cruise Shipping Convention Miami Beach Convention Center Miami Beach, Florida www.cruiseshipping.net, (609) 452-9374 REGIONAL CALENDAR Continually seeking to leave as few ripples as possible, the Fednav Group is dedicated to promoting environmentally responsible shipping practices. Clean Machine www.fednav.com GREAT LAKES/SEAWAY REVIEW October-December, 2006 7 I N T E R N A T I O N A L T R A D E Ten years ago, Germany-based Wagenborg Shipping sent the Kroonborg—loaded with steel— to North America. When leaving Three Rivers, the ship was outbound loaded with telephone directory paper. The transatlantic voyage into the Great Lakes/St. Lawrence Seaway was instrumental in turning the northern European coastal trader into a worldwide shipper. “If you would have asked anyone at Wagenborg 10 years ago if we would have 100 sailings to North America a year, nobody would have said yes,” said Hans Kroon, Wagenborg Shipping North America Chartering Manager in Montreal. Between 30 and 35 of those sailings involve the Seaway, with the remainder going to the East Coast of North America. The number of sailings into the system is expected to increase. “We’re looking for more inbound EXPANDING international interest Seaway gaining greater presence with foreign-based shippers 8 www.greatlakes-seawayreview.com GREAT LAKES/SEAWAY REVIEW October-December, 2006 9 shipments from the Far East in steel products. That remains to be seen. Steel is flowing with our competitors already.” The Kroonborg’s arrival was also an important step forward for the system, which is now traversed by a multitude of international shippers, including BBC, Beluga, Fednav, Polish Steamship, Canfornav and Wagenborg. International tonnage has grown to represent an annual average of about 20 percent of the Seaway’s cargo. In 2005, it increased to 21.7 percent, or 9.4 million metric tons. According to Richard Corfe, St. Lawrence Seaway Management Corporation (SLSMC) President/CEO, 45 percent of the vessels coming through the system’s first lock this season are ocean vessels—compared with 35 to 40 percent in 2005. While overall transits are up about 10 percent from 2005, salty transits are up nearly 30 percent. “This year, with twothirds of the navigation through, 26 percent of the volume has been international cargo,” Corfe said. “We expect to end up with 10 to 10.5 million international [metric] tons.” Several fundamental market conditions are contributing to the increased shipments, including an upswing in steel imports and grain exports, said Paul Pathy, Senior Vice-President of Fednav Limited in Montreal. With U.S. steel mills unable to meet national demand and foreign steel prices low, the West Coast is receiving foreign steel from China while the East Coast is taking imports from Europe, Russia and Egypt— “just about anywhere”—with ships bringing the steel farther into the country via the Seaway. Fednav’s tonnage into the system has increased by 30 percent this season, most of which is steel, Pathy said, noting that although steel is presently slowing down as the U.S. builds inventory and prices begin to equalize, grain exports are heating up, attributed to poor growing seasons in Australia, Russia and the Ukraine. “We’re going to see a strong end of the year,” he said. Fednav has 56 Lakes-suitable ships in its fleet of about 90 vessels. Although the company is looking to expand its business base in the Mississippi River and elsewhere, Pathy said the Lakes will continue to be a key market for them. While there are other bulk and break-bulk shippers trading in the system, the company’s main competition is the Mississippi River and rail from Baltimore. “Right now, the market is strong and there are not enough ships to go around, everybody’s busy,” he said. Fednav has acquired six ships to operate in the 2007 season. The vessels, smaller than the company’s 30,000-metric-ton standards, will haul about 19,000 metric tons and are equipped with heavy-lift cranes and ‘tweendecks. BBC migrates to North America. As part of the growth in international shipments into the system, BBC Chartering established a Canadian office in Montreal in 2004. The office was opened as the company was completing newbuilds of 12,500 dwt, well suited for cargoes in and out of the Seaway. “Eastern Canada and the Great Lakes areas are important,” said Ross Fletcher, of BBC Chartering Canada, Inc. “We’re in our third year now and we’ve seen business improve every year.” BBC has been involved in bringing wind turbine components to system ports for a growing number of wind farms in the northeast. In 2005, the company had 38 vessels transit the Seaway en route to many of its 54 ports of call. Inbound project cargo continues to involve wind turbine components this season. Last season’s shipments were en route to Oswego in Upstate New York and Owen Sound. Hamilton and Duluth are also receiving the components coming from Denmark, Germany and the United Kingdom, Fletcher said. Other inbound cargo is pipes, coming from South America. The ships are carrying project cargo and grains outbound. “We are on track to have a similar number of transits this year as we did last, and we still have a couple of months to go before the end of the season,” Fletcher said. With a mission to develop business in eastern Canada and the Great Lakes, Fletcher and another local broker personally contact major shippers, brokers and forwarders to scout for additional shipments for both BBC and Beluga Chartering. Being from Canada and stationed there helps the team cut the six-hour time difference to Bremen, Germany. New cargoes entering the system The following cargoes are either new to the system or being hauled via a new route: ALUMINUM SUGAR SYNTHETIC GYPSUM TOLUENE WIND TURBINE PARTS/ COMPONENTS International tonnage has grown to represent an annual average of about 20 percent of the Seaway’s cargo. I N T E R N A T I O N A L T R A D E 10 www.greatlakes-seawayreview.com trade in the Lakes. “We have no use to build big ships like the 1,000-foot lakers because they’re not a common size for heavy-lift,” Fischer said, noting that some newbuilds due to be sailing in 2008-2010 will become Beluga’s largest ships with the intent to sail them elsewhere since the cranes are too high to navigate the system. However, increased shipping in the Lakes is expected. “The more we present in the Lakes and make advertisements there, the more people are contacting us,” Fischer said. “They appreciate a carrier that services in and out of the Lakes.” Wagenborg builds vessels. Most of what is coming into the system through Wagenborg Shipping is arriving on 6,000- and 9,000-metric ton ships, according to Kroons. “We built them to the specs so they can come into the Lakes,” he said. “We think any ship above 6,000 [metric] tons should be Lakesoutfitted. They can do the transatlantic voyage.” Most of Wagenborg’s 30 to 35 sailings in the system each year haul forest products and steel; with outbound cargo forest and agri-products. The company has reintroduced forest products for import into the Lakes using its boxshaped ships. The company’s building program entails constructing 12 ships that range from 12,000 to 18,000 metric tons, all fitted for the Seaway. The first will be sailing in 2008. “Those ships will load in the Far East and go into the Lakes,” Kroon said. “They have an advantage for the low portside because they’re equipped with cranes.” Wagenborg delivers all over the Lakes. It shares the optimism of the competition Most of BBC’s fleet of 90 ships is equipped to trade in the system. The company is specializing in bulk and project cargo at this time, although Fletcher said BBC personnel in Bremen have met with Hwy H2O representatives regarding containerized shipping. “There could be opportunities down the road if the short sea program comes to being,” he said. “Possibly, we could use our ships in the program.” Beluga to sail newbuilds. Beluga Chartering hauled its first shipment into the system in 1998, loaded with German press plant machinery. That kind of cargo continues to fill the ships en route to the Seaway three or four times a year, said Ingo Fischer, Director of the Europe desk for Beluga Chartering. Like BBC, wind turbine components have recently become a staple cargo, delivering to Milwaukee, Thunder Bay and Duluth. A primary inbound cargo is steel coming from Sweden, Russia and Belgium, delivering to Toledo, Detroit and Burns Harbor. “The movement into the Lakes has definitely increased,” Fischer said, “from once a year in 1998 and 1999 up to eight times a year. We’re looking to increase our sailing in the Lakes through catching more business in the windmill, steel and automotive industries.” Beluga is frequently carrying dismantled plant machinery on its return trip. Cement and steel plants from the states are being sold to Middle East countries and China. In a recent sailing, the company transported a full load of a knock down steel plant from Sydney, Newfoundland. Grain is also a common backhaul. With Beluga’s largest vessels able to haul 17,000 metric ton of cargo, any of its 36 ships can The Kroonborg’s arrival was also an important step forward for the system, which is now traversed by a multitude of international shippers, including BBC, Beluga, Fednav, Polish Steamship, Canfornav and Wagenborg. Trade mission to South America planned Saint Lawrence Seaway Development Corporation (SLSDC) and St. Lawrence Seaway Management Corporation (SLSMC) will be hosting a bi-national trade mission to Brazil and Argentina, South America in April 2007. The trade mission program last visited Brazil in 1995 and Argentina in 1991. Brazil ranks second for overall Seaway tonnages, accounting for more than a million tons annually. Many of the system’s staple commodities originate from Brazil and Argentina: pig iron, sugar as well as steel coils and slabs. According to SLSDC, there is significant potential for new cargoes like fuel-based alcohols, such as methanol and ethanol made of sugar cane to enter the system. The delegation will host formal presentations with shipowners, operators, cargo representatives and government and maritime officials from both countries. The two Seaway corporations will facilitate one-on-one meetings and tour some of South America’s largest ports and cargo facilities. “We see South America as an untapped market we can work with,” said Richard Corfe, SLSMC President/CEO, noting how sugar is increasingly being imported from South America to Great Lakes ports in the last two years. n I N T E R N A T I O N A L T R A D E 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 GREAT LAKES/SEAWAY REVIEW October-December, 2006 13 interest in feeder vessels that will take cargo farther inland. More ports are traveling abroad and formalizing relationships with ports and shippers. In 2006, Memorandums of Cooperation were signed between: • Hwy H2O and Seaports of Neidersachsen in Oldenburg, Germany • SLSDC/SLSMC/U.S. Department of Transportation and Ministry of Communications Water Transport Department (Beijing), People’s Republic of China • A Friendship Agreement was signed between Hwy H2O and Shanghai Municipal Port Administration Bureau, People’s Republic of China • A reverse trade mission was held in St. Catharines in late October, where representatives from the SLSDC and SLSMC hosted a delegation of Chinese guests. In addition to the agreements, Hwy H2O representatives are addressing trends and being proactive in communicating with shipbuilders. In October, a delegation visited Calgary as a result of an increase in project cargo coming into the port from overseas. “This is an area where we can act as a conduit into this booming area and allow cargoes from around the world to get there,” Corfe said. Marine experts are visiting European and Asian shipyards where vessels are being built that could potentially trade in the system. They are educating builders on Seaway specifications in hopes that, when finished, the ships will be able to traverse the system without major alterations. “We offer our services to people building vessels to make sure that we’re involved at the front end of the cycle and they are able to trade in the Seaway,” Corfe said. “It’s a market that can be opened up.” The relationships and ongoing communication target a single outcome: more tonnage for the Great Lakes/St. Lawrence system. that shipping in the Lakes is a worthwhile endeavor. “The main benefit of doing business in the Seaway is cost savings and efficiency,” Kroon said. “If you can bring it closer to the final destination, it means efficiency and cost savings. We see a willingness to develop and do business on the Lakes, which is interesting to us. There’s a good spirit for developing business here.” Hwy H2O focus. With international shippers navigating the system—and building ships designed to transit the Seaway locks— an increasing amount of attention is turning to international partnerships. Trade missions continue to educate foreign ports and shippers on the system’s benefits. Individual ports are forming partnerships with their foreign counterparts. Hwy H2O is marketing the system as a whole, rather than port by port. “Hwy H2O is our main vehicle for international promotion,” Corfe said, noting that in addition to adding a European representative in 2006, a second emissary may soon be stationed in China. “We’re seeing more ocean vessels and more niche markets.” “Increased international trade and awareness has a lot to do with the growth of Hwy H2O,” said Collister “Terry” Johnson, Saint Lawrence Seaway Development Corporation (SLSDC) Administrator. Although it’s difficult to directly attribute increased international shipping to Hwy H2O, Corfe said the marketing campaign, partnered with an upswing in the North American economy, are producing results. “We will continue to approach the system on a worldwide basis,” he said. For whatever reason, shipping goods through the Seaway is gaining attention while other modes of transportation and coastal routes are struggling to keep up with imports. Shipping paths are being established from Asia to Halifax via the Suez Canal, which may launch “The main benefit of doing business in the Seaway is cost savings and efficiency,” Kroon said. “If you can bring it closer to the final destination, it means efficiency and cost savings. We see a willingness to develop and do business on the Lakes, which is interesting to us. There’s a good spirit for developing business here.” I N T E R N A T I O N A L T R A D E 14 www.greatlakes-seawayreview.com U.S. iron ore’s changing reality Recent test runs have sent Minnesota pellets to Algeria. A Chinese steel company owns part of a U.S. iron ore mine and China’s demand for high quality iron ore continues to explode. The high quality and relatively low price of American pellets has brought new worldwide attention to U.S. ores. New developments in foreign shipments, investments will have lasting imprint on Lakes trades MILLIONS OF GROSS TONS/YR IRON ORE OTHER CARGOES U.S.-Flag Shipping on Great Lakes SOURCE: LAKE CARRIERS’ ASSOCIATION C O M M O D I T I E S SOURCE: DULUTH SHIPPING NEWS GREAT LAKES/SEAWAY REVIEW October-December, 2006 15 A Chinese steel company owns part of a U.S. iron ore mine and China’s demand for high quality iron ore continues to explode. The high quality and relatively low price of American pellets has brought new worldwide attention to U.S. ores. The recent global developments have produced two major ore-related events on the Great Lakes in 2006 that could have lasting influence on Lakes shipping. One is the shipping of American-made pellets in BY PETER J. KAKELA, PH.D Professor, Michigan State University In 2006 and beyond, the reality of iron ore is changing. Global demand and seaborne trade are growing rapidly. World prices for iron ore have more than doubled in the last three years. China continues to increase its raging appetite for imported ore. These global developments have ricocheted back and broken through the insular barrier that has surrounded the U.S. iron ore mines for at least the last century. Recent test runs have sent Minnesota pellets to Algeria. a foreign-built, registered and crewed ship across the Atlantic in seaborne trade. The other is the consolidation of the two largest Great Lakes shippers. American pellets go seaborne. In mid- July, Mittal Steel shipped some of its equity- owned Hibbing taconite pellets from northern Minnesota through the Allouez terminal in Superior, Wisconsin to Annaba, Algeria. It was part of a test by Mittal, the largest steel company in the world, to see how well the Minnesota pellets would do in the Mittal-owned blast furnace at Annaba. The experiment went like this: • 24,500 long tons of Hibbing taconite pellets were railed from Hibbing, Minnesota to the Burlington Northern Santa Fe dock at Allouez, Wisconsin near Duluth. Nothing new there. • The pellets were loaded from the BNSF dock into the 730-foot ocean-going vessel, Goviken, a Bahamian-registered salty. That’s new. Most of the ocean vessels loaded in the Duluth-Superior area are loading grain for overseas. Loading iron ore went just as well. • Sailing to Algeria is not new, but moving iron ore from a U.S. port to a non-U.S. port skirts the Jones Act, and thus allows for a foreign-built and foreign-crewed ship to transport the Minnesota ore. This probably cut the shipping cost in half from the Duluth area to Sept-Iles, Quebec at the mouth of the St. Lawrence. That would drop Lakes shipping costs from about $20/ton to $10/ton for Duluth to Sept-Iles. • With the less expensive self-supplied ore and reduced foreign shipping costs, Minnesota pellets are highly competitive at The pellets were loaded from the BNSF dock into the 730-foot ocean-going vessel, Goviken, a Bahamianregistered salty. C O M M O D I T I E S GREAT LAKES/SEAWAY REVIEW October-December, 2006 17 world shipping ports in the mouth of the St. Lawrence. Hibbing taconite pellets at cost run about $42/long ton FOB-Upper Lakes shipping port. With $10/ton foreign freight, then $52/ton cost at Sept-Iles would handily beat the current world price of $74/long ton at that port. Unloading the Hibbing taconite pellets in Algeria is an unknown and thus another new development. How compatible the Hibbing taconite pellets are with the Annaba blast furnace is the big unknown in this experiment. The biggest question is: Will pellets improve the hot metal output per blast furnace day in this Algerian furnace as they have done elsewhere? If so, Mittal Steel could be moving more pellets around the globe. Earlier, other international developments signaled change for the American iron ore mines. These included: • On December 1, 2003, the Chinese steel company, Laiwu Steel of China, bought a share of a Minnesota iron ore mine. It was the first Chinese ownership of a U.S. iron ore facility ever. Laiwu Steel purchased 30 percent of the bankrupt EVTAC mine in Eveleth, Minnesota. Cleveland- Cliffs bought the other 70 percent. Together, they quickly named the operation United Taconite and restarted production within the month. • During that sale to the Chinese, another Minnesota mine, Minntac, was shipping a million tons of pellets directly to China. This shipment went about 2,000 miles by rail across western Canada to the port of Prince Rupert, British Columbia, then by ocean vessel to China. That, too, was a first. Rapid change. The realities of U.S. iron ore mines are changing, and changing fast. There are more examples. Mittal Steel has suddenly become the fourth largest iron ore mining company in the world. Mittal, however, is primarily a Interlachen Capital Group, a Minneapolis-based investment firm, will invest up to $14 million in Minnesota Steel to provide working capital to complete the steps needed to close financing of the $1.6 billion facility to mine and process iron ore and manufacture steel slabs on Minnesota’s Iron Range. Interlachen’s investment will provide resources to finalize environmental review and permitting, conduct final engineering, develop detailed plans and cover legal and financing fees. Financial close is scheduled for December, 2006, after permits have been issued. “We are excited to invest in Minnesota Steel given the company’s strong ownership, experienced management team and sound project plan,” said Gregg Colburn, Portfolio Manager at Interlachen. “Minnesota Steel’s project is unique given its captive ore body and low-cost steelmaking capability. The company’s operational strengths combined with the long-term demand for steel creates a compelling value proposition.” Minnesota Steel is planning North America’s first mine-based steelmaking facility near Nashwauk. The plant will process iron ore into direct reduced iron (DRI) pellets, which will feed an electric arc furnace to produce up to 1.65 million tons of steel slab annually. “The Board of Minnesota Steel is committed to making this incredibly important project a reality,” Chairman Joseph Bennett said. “This project is important to the State of Minnesota and the needs of our North American steel industry.” The founders of Minnesota Steel are descendants of Russell M. Bennett and John M. Longyear, both of whom helped develop iron mining on the Mesabi Iron Range in the late 1800s. John Elmore, president and CEO of Minnesota Steel, acknowledged the continued progress for the project. “It’s very gratifying to see the advancements we’ve made with the board’s direction, encouragement and support.” In addition to Interlachen’s investment of working capital, the company has signed an exclusive $600 million agreement with internationally known experts HYL and Danieli to provide commercially proven technology for the DRI plant and the electric arc furnace and associated processing equipment. Minnesota Steel has secured rights to mine the entire ore body, the quality of which has been validated by independent, third parties. Environmental review and permitting activities are well underway, with all required permits expected by year’s end. Additionally, the State of Minnesota recently authorized $23 million in bonding and grants to develop public infrastructure that also will support the project. Construction will begin in early 2007, with the first steel slabs to be produced in 2009. In addition to the 2,000 construction jobs, Minnesota Steel will create 700 full-time jobs and 2,100 spinoff jobs, generating more than $600 million annually of economic impact. It will contribute $18 million a year to the State and local governments in taxes and royalties. n Minneapolis firm invests in Minnesota steel Iron ore industry faces both horizontal and vertical integration World Iron Ore Pellet Prices (WITH FORECAST) C O M M O D I T I E S 18 www.greatlakes-seawayreview.com Trucking Warehousing Shipping Stevedoring PHONE 906.863.7811 WEB www.kkintegratedlogistics.com HEADQUARTERS Menominee, Michigan The best shipping solution is the one that’s scaled to your needs. KK Integrated Logistics is pleased to announce that the Lewis J. Kuber (formerly Buckeye) is now operating as an integrated tug barge. It has been specially developed to serve small customers on river ports vital to the Great Lakes seaway system. Whether your logistics needs are small or large, rely on KK Integrated Logistics to come through for you in a big way. SHIP SMALL, THINK BIG. GREAT LAKES/SEAWAY REVIEW October-December, 2006 19 steelmaker whereas the biggest three iron ore mining companies (CVRD, Rio Tinto, and BHP-Billiton), as well as the fifth largest miner (Cleveland-Cliffs), are primarily mining companies. Mittal seems to be resurrecting the vertical integration model with great success. As a steel company, Mittal is now about 50 percent selfsufficient in iron ore and it is planning to be 80 percent self-sufficient by 2010, according to Lakshmi Mittal, Chairman of Mittal Steel Company. Another example is that iron ore prices are more than double what they were three years ago. In fact, 2006 world pellet prices are up 137 percent over 2002 prices and sinter-feed prices up 164 percent from 2002. Prices are expected to remain high for the next decade or more. Another expression of the recent price increase is the sale price of mines themselves. In November 2003, the Cleveland-Cliffs (CCI) purchase of the major interest in EVTAC was for less than $1/long ton of capacity. In 2005, just two years later, Cliffs paid more than $100/ton of capacity for controlling interest of the Portman mine in Australia. What adds to this price differential is that EVTAC (now United Taconite) pellets are worth about 50 percent more than the Portman iron ore fines. Ownership changes. One last example goes to ownership changes. Currently, domestic steelmakers are self-supplying only about 58 percent of their iron ore needs versus 85 percent captive ore a decade ago. In North America, besides Mittal’s acquisitions of ore with its purchases of steel companies and U.S. Steel retaining its ore assets, Cleveland-Cliffs has grown to become the key merchant owner/seller of ore. Cliffs took on massive capacity as Mittal Steel’s Iron Ore Ownership (MILLION METRIC TONS/YR) SOURCE CURRENT INCREASES FUTURE CAPACITY TO CAPACITY CAPACITY (12/05) (YEAR) USA 9.3 0.0 9.3 2005 Bosnia 2.5 2.5 5.0 2007 Mexico 7.6 2.5 10.1 2007 Kazakhstan 7.9 1.5 9.4 2007 Kazakhstan 1.0 1.0 2010 Ukraine 6.0 5.0 11.0 2009 Liberai 0.0 10.0 10.0 2007 Other 17.0 6.0 23.0 2010 TOTAL 50.3 28.5 78.8 U.S. and Canadian steel companies shed their iron ore mines and other peripheral operations to fight off bankruptcy. This turned fortuitous for Cliffs in the last two and a half years, as the Chinese demand for imported iron ore grew so strong. Today, CCI manages 37.4 million long tons of iron ore pellet capacity, or about 41 percent of the North American total, and owns 24.6 million long tons of that, or 26 percent of the total capacity. Its route to ownership of more mining properties was as follows: • In 1990, Cleveland-Cliffs owned 6.3 million long tons. • In 2000, Cleveland-Cliffs owned 12.1 million long tons. • By 2005, it doubled its equity ownership again to 24.6 million long tons. Growth of Mittal Steel ore activities, Cleveland-Cliffs expansion and more Chinese demand are now added onto the previous wave of consolidation by the big three world iron ore mining companies, CVRD, Rio Tinto and BHP-Billiton. Of course, the high world prices caught steelmakers’ attention and the mines are adjusting to the much higher value on the world scene. In North America, merchant sellers, not the self-supplying steel makers, now supply much of the ore. The merchant mines are selling at high-prices and running at near capacity to meet the heavy demand. In North America, CCI is the largest supplier, owning 26 percent of the capacity and managing 42 percent of the market. The domestic steelmakers do not have much choice as international iron ore is priced even higher and in tighter supply. Currently, domestic steelmakers are self-supplying only about 58 percent of their iron ore needs versus 85 percent captive ore a decade ago. n Today, CCI manages 37.4 million long tons of iron ore pellet capacity, or about 41 percent of the North American total, and owns 24.6 million long tons of that, or 26 percent of the total capacity. C O M M O D I T I E S Recent Great Lakes Shipping Tonnages (MILLION GROSS TONS/YR) YEAR IRON ORE OTHER TOTAL 1999 57.58 55.37 112.95 2000 60.33 53.81 114.14 2001 46.92 54.94 101.86 2002 48.19 53.27 101.46 2003 43.02 51.72 94.74 2004 51.21 60.12 111.33 2005 46.57 61.09 107.66 The Port of Cleveland… More Than a Working Waterfront Stephen Pfeiffer spfeiffer@portofcleveland.com 216.241.8004 phone 216.241.8016 fax www.portofcleveland.com Businesses around the world rely on the Port of Cleveland to transport 13.1 million tons of cargo annually. You, too, can give your business a lift with the Port of Cleveland’s maritime services including: • 9 berths and 6,500 linear feet of dock space maintained at full seaway depth of 27 feet. • Heavy-lift crane capacity of 150 tons. • More than 350,000 square feet of warehouse space and one-million square feet of open storage. • Connectivity at the gate to all major interstates and direct access to two major railroads (CSX and Norfolk Southern). Contact us today for more information on how we can help your business boom. BOOMING at the Port of Cleveland Business is GREAT LAKES/SEAWAY REVIEW October-December, 2006 21 T H E A D M I N I S T R A T O R ’ S O U T L O O K After I was appointed by President Bush and confirmed by the Senate as the Administrator of the SLSDC, Secretary Mary Peters challenged all the Administrators in the Department of Transportation to identify projects that could produce tangible results over the next two years. There are several important priorities that, if addressed with vigor and perseverance, I believe can be accomplished and result in measurable improvement for the Seaway over the next 24 months. Safety. Today’s mariners depend upon state-of-the-art communications to provide help should foul weather, engine malfunction, or terrorist attack put them in harm’s way. Integrating the Automatic Identification System (AIS) with the system employed by the U.S. and Canadian Coast Guards provides added security in an uncertain world. The Seaway Corporations made the use of AIS on commercial vessels mandatory in 2002. It’s time to ensure that AIS covers the entire waterway from Duluth to the Gulf of St. Lawrence. Advanced collision avoidance tools that AIS offers can save lives, protect property, and provide invaluable environmental safeguards. Short sea shipping. As fuel prices fluctuate, border lines lengthen, and rail and road capacity is squeezed, shipper interest in waterborne movement has increased substantially. Establishing cross lake freight routes, like those envisioned by the MarineLink Coalition, has many benefits, including enhanced safety, reduction of air emissions, fuel savings, and reduction of highway traffic. These benefits, however, cannot be fully achieved unless policies are adopted allowing marine transport to achieve its potential. A limited exemption to the harbor maintenance tax, if crafted with precision, could provide a good start to energizing the short sea market. When regulatory impediments to moving cargo via freight ferries exist, even as highway traffic congestion increases daily, it’s time to re-examine A LOOK AT OUR PRIORITIES Areas that can produce tangible results over the next 24 months tial costs for adopting these technologies. I want to explore ways to facilitate funding options that will help them promptly implement aquatic nuisance species technology. Completion of the Study. The Great Lakes Seaway Study has been underway since May 2003 and is scheduled for completion by mid-2007. This study is an assessment of the system’s current and future requirements to maintain safety, reliability, viability and efficiency at levels consistent with those present today. Simply put, it will be a 50-year roadmap addressing engineering, economical and environmental issues for the binational waterway. The Study starts with the premise that system performance and reliability should not be permitted to degrade from its current performance. That means we have to ensure adequate capital funding for Seaway infrastructure needs. Locks, bridges, operational assets, roads, and navigation devices must be kept in excellent working order. A single lock system provides no margin for error. One lock closure has a costly ripple effect on every ship waiting to transit. This report is all about improving the waterway that has served us so well for almost half a century and preparing it to do the same for the next generations. It is essential that the study be completed in a timely manner. The Seaway is indeed facing an historic time of opportunity and challenge. I am honored to serve at the helm during these days of change, and ask your every assistance in helping make the voyage a successful one for all our stakeholders. n n SAFETY It’s time to ensure that AIS covers the entire waterway from Duluth to the Gulf of St. Lawrence. n SHORT SEA SHIPPING A limited exemption to the harbor maintenance tax, if crafted with precision, could provide a good start to energizing the short sea market. n AQUATIC INVASIVE SPECIES We must find a solution, and that solution must be as fast-tracked as is scientifically and prudently possible. n COMPLETION OF THE STUDY It is essential that the study be completed in a timely manner. whether there is a better alternative. Aquatic invasive species. Seeking a solution to the problem of aquatic invasive species that enter the Great Lakes via ballast water of ocean-going vessels is an essential priority for our system. The maritime community has been kicking this can down the road for the past two decades. The game has gone on long enough. We must find a solution, and that solution must be as fast-tracked as is scientifically and prudently possible. This will require support of technology initiatives to solve the problem. The SLSDC is integrally involved in the “Great Ships Initiative,” which has the mandate of identifying R&D ballast water solutions that are safe, reliable, effective and affordable. The SLSDC will also be working diligently with the Great Lakes Maritime Research Institute on various economically and environmentally sustainable maritime commerce efforts. In addition, we are supporting the Green Marine project, which is an industry coalition for resolving maritime environmental issues. We should also not ignore the fact that when a solution is found, owners will have to pay substan- COLLISTER “TERRY” JOHNSON, JR. Administrator Saint Lawrence Seaway Development Corporation 22 www.greatlakes-seawayreview.com 0cean vessel • river barge • railcar • truck • overseas container whatever way your cargo arrives and by whichever means it needs to be shipped, RMT can handle it. WE FEATURE: 175 acre facility on the Calumet River • Full Seaway draft • Rail served by IHB and Norfolk Southern Truck and rail scales • Inside storage • All commodities handled Reserve Marine Terminals… For all inquiries, contact Hal Tolin (haltolin@reservemarine.com) at 773-382-0123 or Steve Joseph (stevejoseph@reservemarine.com) at 440-287-7222. www.reservemarine.com FOR ALL YOUR MATERIAL HANDLING NEEDS 11600 S. Burley Ave., Chicago, IL 60617 C O M M O D I T I E S Lakes fleet tonnage serves steel, down from roughly 60 percent six years ago, but still topping all other cargo sources combined. This is true for the Canadian fleet as well. On the production side, Mittal is relentlessly cost driven. Even if it is the world’s largest steel company, it is still managed like a cash-conscious company on the rise. Among special emphases is liberation of working capital through reduction of inventories, including raw materials. That is why we run as long a shipping season as we do, a trend that actually started at Inland Steel 20 years ago when internal rail-oriented traffic management started to look at the holding costs of winter ore inventory. Regarding consolidation, we are no stranger to that on the Lakes, whether in shipping or steel. Twenty-five years ago there were approximately 17 integrated steel companies served by Lakes shipping; now there are eight, with Mittal and USX dwarfing the rest. Of those eight, four are foreignowned or have a foreign partner. In 1981 there were approximately 22 significant Lakes fleets, and now there are 11, with three major U.S. fleets and three major Canadian fleets (effectively two for commercial purposes). How will steel-related supply chain operators on the Lakes change now that the reins of Lakes steelmaking are held in a few hands? We will see more stable steel pricing, as periods of softening demand will be met by an orderly reduction of supply, with the highest cost production idled first. More stable pricing itself will help dampen swings in demand, softening swings from inventory accumulation when higher pricing is expected, and liquidation when lower prices are expected. Both of these should make for less year-to-year variability in the quantities of raw materials required. Turning to globalization, consider this humbling fact: in a 12-month period ending mid-2005, China added 134 million tons of steelmaking capacity. The entire steelmaking capacity of the U.S. is a little over 100 million tons. When I was with Inland (and Oglebay before that) global competition was external. When Inland was acquired by Mittal, that perspective changed quickly. Global competition and information exchange is now as much or more internal than external. Each Mittal facility is competing for capital with all the other Mittal operations around the globe, and Mittal determines where it expends its capital the same way you or I do: where it gets the best ratio of return to risk. The ultimate health of the North American steel industry is tied to our customers, North American manufacturing. Consolidation in the context of globalization means that the remaining large customers and fleets on the Lakes will have to continuously work on long-term relationships that will permit both to compete against what the world can offer. n This presentation was made at the 2006 International Joint Conference. DANIEL J. CORNILLIE Manager, Marine Logistics Mittal Steel – Indiana Harbor Despite recent growth in the tonnage of western coal and non-steel-related limestone, the integrated steel industry remains the primary driver of Great Lakes cargoes. Conservatively, 55 percent of the total U.S. Success in ore trade to depend on continued strong relationships between carriers, customer GREAT LAKES/SEAWAY REVIEW October-December, 2006 23 R E A D E R S U R V E Y Results of the first Great Lakes/Seaway Review reader survey in a decade have proven interesting, informative and encouraging. While celebrating that 88 percent of respondents read the magazine cover to cover, the staff is considering readers’ suggestions on how to improve upon more than 35 years of coverage. We especially value the comments on additional articles you would like to see in the magazine. “We appreciate our readers taking the time to participate in the survey,” said Publisher Michelle Cortright. “We take our role in Great Lakes/St. Lawrence Seaway system seriously and never rest on our laurels. Like the industry itself, we are looking for ways to further improve our publication and the role we play. The survey was designed to gather important information that will help us achieve that goal.” Surveys were sent randomly to subscribers and advertisers from throughout the region, including the U.S., Canada and overseas. Within the shipping industry, 66 percent of readers are decision- makers, with the remaining 34 percent in positions where How long do you typically retain your copy before you discard it? The results are in… Our readers have spoken, we have listened they make recommendations to the decision-makers. Unlike most publications, two-thirds of our readers retain their copies of Great Lakes/Seaway Review for a year or longer, with one-third keeping the magazine as part of a permanent collection. A gratifying 92 percent of respondents rated the magazine’s content as good or excellent. The magazine’s layout and design received a resounding 97 percent good/excellent rating. Some of the comments we received: “Your entire staff is a pleasure to work with. The articles reflect succinctly the Port District—past, present and future. What you do for the system is greatly appreciated.” “It is my privilege to support the foundational business of shipping and I am always pleased to have an opportunity to work with you.” “You and your staff do a splendid job. It is a great service to the Great Lakes maritime community and beyond.” We appreciate your suggestions and comments at any time. Please call (800) 491-1760 or email harbor@harborhouse.com.n How long have you been reading? 74% of readers have been reading for 3 years or more How much do you read? 88% read each issue of the magazine from cover to cover Grea

Maritime Editorial