Vol.38 No.1 JUL‑SEP 2009

J U L Y- S E P T E M B E R 2 0 0 9 Changes in the Iron Ore Industry . Soo and Seaway Celebrations . Ballast Water Management V O L U M E 3 8 N U M B E R 1 G LGREAT LAKER The Interlake Steamship Company Interlake Corporate Center 4199 Kinross Lakes Parkway Richfield, Ohio 44286 Telephone: (330) 659-1400 FAX: (330) 659-1445 ISO Certified E-mail: sales@interlake-steamship.com WE CAN HANDLE IT! Moving Mountains? Whether it is a mountain you need to move, or it just seems like it, at Interlake Steamship we work closely with our customers to solve their raw materials delivery challenges. Our dedicated shore personnel and experienced vessel crews focus on achieving safe, reliable, on-time cargo delivery. Interlake Steamship’s versatile self-unloading vessels, with capacities ranging from 17,000 to 68,000 gross tons, are equipped to get the job done, even under the most challenging conditions the Great Lakes have to offer. Whether your mountain is taconite pellets, coal, limestone or grain, call Interlake Steamship. Our job is moving mountains. GREAT LAKES/SEAWAY REVIEW July-September, 2009 1 A R T I C L E S Commodities EARLIER RECESSIONS CHANGED U.S. IRON ORE INDUSTRY . . . . . 6 Quick recovery expected when the economy shifts. Celebrations MAKING HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 A new lock, 50th Anniversary celebration mark significance of the Great Lakes/St.Lawrence Seaway system. Ballast Water Management A SYSTEM IN DISARRAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 The case for a single regulatory regime. MAKING HEADWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Science documents no new invasives since at least 2006. RAPID RESPONSE TO VHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Experts share knowledge on VHS from International Conference on Aquatic Invasive Species. Interview “IT’S CHALLENGING, YET IT HAS TO BE SOLVED” . . . . . . . . . . . . . . . . 31 Allegra Cangelosi discusses progress being made in the control of invasive species. Marine Photography GREAT LAKES SEAWAY TRAIL . . . . . . . . . . . . . . . . . . . . . . 36 The western portion provides views of Lake Erie’s lights. Promoting the Lakes THE WONDER OF THIS PLACE . . . . . . . . . . . . . . . . . . . . . 39 Great Lakes book to come alive on PBS documentary series. Security GLOBAL SHIPPING SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Bringing needs, suggestions, best practices together. Economic Development A GATEWAY IN TRANSITION . . . . . . . . . . . . . . . . . . . 47 The more demanding the economic times, the greater the opportunity for innovation. Admirality Law SUPREME COURT CONSIDERS KEY CASES . . . . . . . . . . . . . . . . . 49 An update on the latest maritime-related lawsuits being considered on the Hill. Maritime Heritage A SECOND CHANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 McGulpin Light burns once again. Training & Recruitment ADDRESSING THE MARITIME PERSONNEL SHORTAGE . . . . . . . . . . . . . . . . . 55 Attracting and retaining experienced maritime workers. Passenger Cruising STEADY GROWTH IN TOURISM . . . . . . . . . . . . . . . . . . . . . 59 Great Lakes cruising embraces luxury market. Great Lakes People DEEP WATER MAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 A remarkable life includes diving for legendary treasure and hero’s service on WWII battlefield. Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Lake Carriers’ Association Viewpoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 The Administrator’s Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Naval Architecture & Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Regional Shipyard Activity Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Laker Library Reviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Lake Boat & Lighthouse News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Meet the Crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 On the Radar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 D E P A R T M E N T S J U LY- S E P T E M B E R 2 0 0 9 The international transportation magazine of Midcontinent North America Susan Eisenhower, granddaughter of President Dwight D. Eisenhower, addresses attendees at the 50th Anniversary of the St. Lawrence Seaway at Massena, New York. Page 12. A quick recovery is expected in the iron ore industry when the economy shifts. Page 6. McGulpin Light at the Straits of Mackinac burns once again. Page 51. G LGREAT LAKER 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 Lighthouses, Lake Boats, Travel & Leisure 2 www.greatlakes-seawayreview.com Business and Editorial Office 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 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 Roger LeLievre Staff Writer/Special Projects Virginia Forrand Circulation Manager ADVERTISING DEPARTMENT Kathy Booth Account Manager Rex Cassidy Account Manager James Fish Director of Sales John H. Nikolai Account Manager William W. Wellman Senior Account Manager EDITORIAL ADVISORY BOARD John D. Baker, President, Great Lakes District Council, International Longshoremen’s Association; Bruce Bowie, President, Canadian Shipowners Association; Davis Helberg, Executive Director, Seaway Port Authority of Duluth – Retired; Anthony G. Ianello, Executive Director, Illinois International Port District; Ray Johnston, President, Chamber of Marine Commerce; Peter Kakela, Ph.D., Professor, Department of Community, Agriculture, Recreation and Resource Studies, Michigan State University; Rep. James L. Oberstar, Member of Congress, Chair, House Transportation & Infrastructure Committee; Mark Pathy, Executive Vice-President, Fednav Limited; George Ryan, President, Lake Carriers’ Association – Retired; Daniel L. Smith, Former National Executive Vice President, American Maritime Officers; Rep. Bart Stupak, Member of Con gress, Energy & Commerce Committee; John Vickerman, Founding Principal, Vickerman & Associates, LLC; James H.I. Weakley, President, Lake Carriers’ Association. SUBSCRIPTIONS – (800) 491-1760 or www.greatlakes-seawayreview.com www.greatlaker.com Published quarterly. One year $30.00; two years $50.00; three years $70.00. Foreign: One year $45.00; two years $65.00; three years $95.00. Payable in U.S. funds. Back issues available for $7.50. Article reprints are also available. Reprints and scans 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, Michigan 49712 USA. © 2009 Harbor House Publishers, Inc., Boyne City, Michigan. All rights reserved. No article or portion of same may be reproduced without written permission of publisher. 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 38 JULY-SEPTEMBER, 2009 NUMBER 1 Eisenhower Lock and Long Sault Dam at Massena, New York, site of the 50th Anniversary of the St. Lawrence Seaway celebration. Photo by Michael Cortright. • Seaway size ocean vessels • Interlake commerce • Inland river barges • Pipeline facilities • Canadian Pacific Railway Comes with a view! 5 Acre Parcels Available Now 2323 S. Lincoln Memorial Dr., Milwaukee, Wisconsin 53207 www.milwaukee.gov/port • Union Pacific Railroad • Immediate access to ALL transportation modes • Call for information • (414) 286-8131 • bnowak@milwaukee.gov There’s room for you 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 GREAT LAKES/SEAWAY REVIEW July-September, 2009 3 New maritime director joins Cleveland port team Patrick Coyle is the new Maritime Director for the Cleveland-Cuyahoga County Port Authority. He replaces Stephen Pfeiffer, whose retirement was effective June 1. Coyle brings a strong background in logistics from the perspective of third party logistics and a large manufacturer, working most recently for Excel Logistics as the General Manager of North American Tire Transportation for the Goodyear Tire & Rubber Company. He oversaw inbound and outbound transportation of 15 warehouses and nine manufacturing facilities, in addition to overseeing Goodyear’s operations at the Port of New Orleans and the North Carolina Port Authority. Coyle will be leading cargo expansion and diversification at the current port site while planning for the development of a new port. He will also be working to attract international investment to both the port and a proposed trade district on Cleveland’s east side. . Roger LeLievre joins staff Roger LeLievre has joined the staff of Great Lakes/ Seaway Review. LeLievre, who has more than 30 years experience in the newspaper business as a reporter and editor, is well-known around the Great Lakes as editor and publisher of the boatwatching field guide “Know Your Ships.” He also serves as president of the Marine Historical Society of Detroit and is on the board of directors of Great Lakes and Seaway Shipping On-line, the group that runs the non-profit BoatNerd.com website. In addition, he is an associate member of the International Shipmasters’ Association (Port Huron Lodge #2). A 1977 graduate of Central Michigan University and a native of Sault Ste. Marie, Michigan, he lives in Ann Arbor, Michigan. . David Oberlin passes Seaway legend David “Dave” Wright Oberlin died July 28, 2009 in Florida. He was 89. Dave was a former U.S. Navy Commander— awarded the Silver Star for Conspicuous Valor in the Submarine Service during WWII—Assistant Director of the Toledo-Lucas County Port Authority, Director of the Duluth Seaway Port Authority, Administrator of the Saint Lawrence Seaway Development Corporation (SLSDC), Special Assistant to the Director of the Maritime Administration and President of Fednav USA. On the day of Dave’s passing, he received two packages: the Trident Award from the SLSDC commemorating his achievements and a book by D’Arcy Jenish entitled “The Saint Lawrence Seaway, Fifty Years and Counting” in which he is remembered. Earlier in the year, an excerpt of Dave’s memoires was published in the 50th Anniversary issue of Great Lakes/Seaway Review. The sign for Dave Oberlin Drive will commemorate his contribution to the Port of Toledo for years to come, as will the Oberlin Building at the Eisenhower Lock at Massena, New York. Dave was preceded in death by his beloved wife, Ellie. He is survived by daughters Diane Oberlin and Alida Pisano and by sons David and Robert and an extended family including 11 grandchildren and four great-grandchildren. . Roger LeLievre Patrick Coyle Seaway Review adds to Editorial Advisory Board Great Lakes/Seaway Review welcomes Bruce Bowie, President of Canadian Shipowners Association; Ray Johnston, President of the Chamber of Marine Commerce; Mark Pathy, Executive Vice-President of Fednav Limited; and John Vickerman, Founding Principal of Vickerman & Associates to its Editorial Advisory Board. Bowie and Pathy are new representatives of an organization and company that have long been represented on the editorial board while Johnston and Vickerman are new additions to the board. Members of the Editorial Advisory Board serve as advisors and contributors on the magazine’s content and share the vision of its role in helping the system’s maritime industry prosper. . Dutch Runner calls on its first U.S. port Loading rebar on the Dutch Runner was a new experience for employees at the Port of Oswego. The Great Lakes Feeder Lines vessel came in empty and left with 737 bundles of rebar. With bundles ranging from 49 to 59 feet, the load weighed about 2,700 metric tons. The rebar—used in reinforcing concrete used in construction— was hauled for Novosteel, which has a plant in Oswego, New York. It was also the first time the port had handled rebar. In preparation for more cargo diversification, the port has invested $1.25 million in upgrading equipment, including the purchase of a Trackmobile for moving rail cars and multiple fork lifts and front end loaders. A newly-installed, high-density concrete pad is providing additional outdoor storage space for heavy or oversized cargo. In addition, a proposed container terminal—planned to be built on land already owned by the port authority—is projected to cost $3.5 million. . Participants in a recent Marine Caucus stand 1,700 feet below the surface of Lake Huron at Sifto Salt and the Port of Goderich. From left: Rowland Howe, Sifto Canada; Mike Wallace, MP, Burlington; Ben Lobb, MP, Huron-Bruce; Lois Brown, MP, Newmarket-Aurora; Ed Holder, MP, London-West; Larry Miller, MP, Bruce-Grey-Owen Sound; Stephen Brooks, Chamber of Marine Commerce; Ray Johnston Chamber of Marine Commerce; Al Hamilton, Sifto Canada and Allister Paterson, Seaway Marine Transport. America’s Marine Highways grants proposed The Senate Commerce, Science and Transportation Committee has approved legislation sponsored by Sen. Frank Lautenberg (D-New Jersey) to reduce congestion on the nation’s roads by encouraging short sea shipping. The measure would create a grant program for America’s Marine Highways to encourage shipping by sea or inland waterway and establish a new program to modernize port facilities. The bill would also establish a Port Infrastructure Development Program to improve the capabilities of port facilities to move freight and make America’s Marine Highways an extension of the surface transportation system. “The strength of our freight transportation system is being threatened by our overwhelmed roads and bridges—and the simple, smart solution is to ship more of America’s goods by sea,” Lautenberg said. “Shipping reduces congestion on roads, cuts emissions and energy consumption, and improves safety.” . David W. Oberlin DATELINE 4 www.greatlakes-seawayreview.com D A T E L I N E Ogdensburg developing new access road The Port of Ogdensburg is investing $1.4 million from a State of New York grant to build a new access road that will provide a wide, double lane road for oversized cargo such as wind turbines. The road enters the port at a different location than the entrance currently used, is adjacent to increased lay-down space and will remove trucks from residential roadways. The port is currently undergoing a U.S. Army Corps of Engineers study to determine if additional dredging or a dock extension is warranted. . Three Rivers port gets C$7.9 million for upgrades The Port of Three Rivers is receiving C$5.9 million from the Canadian Infrastructure Stimulus Fund to complete phase one of its modernization plan. The money will be used to lay out the port’s perimeter and add new access roadways to create a better transition between the port and the city. In addition, outside storage space will be expanded, improvements made to indoor storage, new rail tracks installed and the port’s environmental impact reduced by adding dust collectors and green spaces, lowering energy consumption and providing better control of heavy traffic. In addition, C$2 million is being contributed by the Government of Quebec and the remaining C$6.9 million will be covered by the port authority. The improvements will increase port capacity 22 percent, according to Gaetan Boivin, Three Rivers Port Authority President and CEO. . Coal, steel workers being called back ArcelorMittal Cleveland is restarting a blast furnace and other operations at its steel complex near the downtown. The return of the company’s C-5 blast furnace, a steel shop, hot mill, pickle line, tandem mill and galvanizing line is resulting from improving market demand. Hundreds of employees will be brought back in phases. On May 11, the company announced that it would temporarily close the plant in Rocky Flats, requiring 912 steelworkers to be laid-off. The shutdown followed a 45 percent decline in the global steel market. Cliffs Natural Resources is calling 100 miners back to work, a result of the improving demand for coal used to manufacture steel. These call-backs are signs that excess global steel inventory has diminished. . Midwest International Terminals expanding At the Port of Toledo, Midwest International Terminals is receiving grant funding to purchase and improve property and acquire equipment that will create 40 permanent jobs. The $7.5 million grant—coming from the Ohio $3.2 million approved for Soo Locks maintenance The U.S. Army Corps of Engineers, Detroit District, has awarded a $3.2 million contract to fabricate equipment for lock maintenance. The contract is being funded through the American Recovery and Reinvestment Act. G&G Steel, a large-scale steel fabricator in Russellville, Alabama will construct and deliver six steel stoplogs for the Poe Lock. The more than 100-foot long steel stoplogs will be used to stop the flow of water into the lock from the St. Marys River canal to permit lock chamber dewatering for repairs and maintenance. “The stoplogs will allow Soo employees to replace the Poe Lock’s gates, if they are damaged and can’t be repaired”, said William O’Donoghue, the Detroit District’s Chief Technical Service Branch. “Not only can the stoplogs be used on the Poe Lock, but they can be used on a replacement lock once it’s built.” The stoplogs project is one of 18 the Detroit District will complete with the $41 million in stimulus funds it received. . GREAT LAKES/SEAWAY REVIEW July-September, 2009 5 REGIONAL CALENDAR D A T E L I N E Bipartisan Job Stimulus Plan—is being administered by the Lucas County Improvement Corporation (LCIC) for a public grain transfer and multi-modal delivery system at Ironville Docks. Specifically, the LCIC will use the money to invest in conveyor and material transfer systems to improve efficiencies at the port. Overall, the improvements will cost about $10.7 million, with $1.6 million coming from Midwest and $1.6 expected to come from the U.S. Department of Commerce Economic Development Administration in the form of a grant. The project is expected to create 30,000 man hours in the construction phase and will take about 54 months to complete. . Port of Green Bay’s dredging fund grows The Port of Green Bay received an additional $3 million in federal dollars for dredging the Green Bay harbor during the 2010 fiscal year, bringing total funding of the project to $6.4 million. The funding will address current and backlog needs. Port Manager Dean Haen said Senator Herb Kohl and Congressman Steve Kagen listened to the port’s needs and supported the funding requests. Ships are close to being able to carry cargo at full capacity when traveling along the Fox River without fear of grounding. “The 13 businesses on the Fox River are dependent upon the port to provide low-cost transportation of raw materials,” Haen said. . Algoma operating new cogeneration facility Despite a difficult fourth quarter, Essar Steel Algoma in Sault Ste. Marie, Ontario reported an improved overall performance and net income of $217.3 million for the 2009 fiscal year. Stronger steel markets early in the year, combined with productivity improvements, resulted in the strong overall performance. “We achieved exceptional results in combination with several significant capital projects— namely the restart of No. 6 blast furnace, the commissioning of a cast house emission control system on No. 7 blast furnace and the construction of a 70 MW cogeneration facility,” said Chief Executive Officer Armando Plastino. “As we weather this cycle, we remain focused on the immediate need for continued cost containment and look to capitalize on our favorable position when markets improve.” The cogeneration facility converts byproduct fuels from the cokemaking and ironmaking processes into electricity and steam for the steelworks. It features two 375,000 lb/hr boilers and a 105MW turbine combined with other related components such as a generator, a blast furnace gas holder, condensate and feed-water systems, a water treatment plant, a cooling tower, a transformer and a distributed control system. It began operation early this summer. . SEPTEMBER 22-23 Ohio Conference on Freight 2009 Hilton Hotel Toledo and Dana Conference Center Toledo, Ohio • www.tmacog.org 23-24 Society of Naval Architects & Marine Engineers Great Lakes & Great Rivers Section Meeting Ann Arbor, Michigan Richard Mueller, rmueller@netsco.us OCTOBER 13-15 Breakbulk Transportation Conf. & Exhibition Ernest M. Morial Convention Center New Orleans, Louisiana • www.breakbulk.com 21-23 Society of Naval Architects & Marine Engineers Annual Meeting and Expo Providence, Rhode Island www.snameexpo.com/2009 NOVEMBER 4-5 Hwy H2O Conference Toronto, Ontario • www.hwyh2o.com 2010 FEBRUARY 10-11 Marine Community Day InterContinental Hotel, Cleveland, Ohio www.marinecommunityday.com SPECTACULAR • ADVENTURE • LUXURY CRUISES DESTINATION DULUTH GREAT LAKES HOT SPOT•DULUTH, MINN. Travel aboard the luxury liner Clelia II on a weeklong cruising adventure that spans our inland seas. Regular excursions between Toronto, Ont., and Duluth, Minn., reflect an exciting new era of passenger cruise service on the Great Lakes. Visit www.traveldynamicsinternational.com www.duluthport.com 218.727.8525 6 www.greatlakes-seawayreview.com C O M M O D I T I E S PETER J. KAKELA Professor Department of Community, Agriculture, Recreation and Resources Studies – CARRS Michigan State University This recession is unlike those of 1982 or 2001-02. At least for the U.S. iron ore industry, the 2008-09 recession will play out in a very different way than it has in these earlier recessions—that is the good news. First, the ownership structure of the North American iron ore industry has changed significantly since the 1982 recession and the 2001-02 downturn. Second, the U.S. has reduced capacity for making iron ore pellets since 1982. And third, there’s been a boost in productivity per employee hour of work in the last 27 years. These changes have resulted in an industry marked by more consolidated control with less marginal capacity and higher productivity. Because of this, the industry of today will be able to rebound quickly from the current recession. What may be lacking is time and money for innovation. Consolidation changed the industry. In the early 1980s, there were three iron ore merchant sellers in Minnesota and nine steel companies with captive ownership of mining capacity. Today, there is just one merchant seller (Cleveland-Cliffs) and two steel company owners (U.S. Steel and ArcelorMittal). This change came gradually through the late 1980s and 1990s, but accelerated during the 2001-2002 slowdowns, when many U.S.-based steel companies faced bankruptcy. Cleveland-Cliffs (now called Cliffs Natural Resources) was the key mining company to benefit from the sell-off of American iron ore capacity during the 2001-02 economic downturn. Cliffs is now North America’s largest merchant supplier. It grew to become the key merchant owner of ore as it took on massive capacity when U.S. and Canadian steel companies shed their iron ore mines and other peripheral operations to fight off bankruptcy. This turned fortuitous for Cliffs as the Chinese demand for imported iron ore was strong, as well as a strong domestic demand. Cliffs picked up much additional mining capacity for pennies on the dollar. For instance, in 2003 it paid approximately $3.5 million for EVTAC (which became United Taconite) with its 4.6 to 6.0 million tons of annual capacity, meaning that it paid less than $1 per annual ton of capacity. To refurbish idle capacity often runs $75 to $100 per annual ton of capacity. New pellet plant construction is estimated to cost between $150 and $200 per annual ton of capacity. In retrospect, Cliffs was smart and lucky; smart to take over threatened capacity at the bottom of the downturn and lucky that the economy and demand for iron ore improved so quickly and dramatically, starting in 2003. With the current, highly-consolidated ownership structure, decisions to cut production in the American iron ore industry can be made swiftly and without the competition that could flood the market with supply. Also, the ownership of ore is tied to individual steel mills. As the three owners saw the demand declining in this current downturn, they Earlier recessions changed U.S. iron ore industry Quick recovery expected when the economy shifts GREAT LAKES/SEAWAY REVIEW July-September, 2009 7 0 10 20 30 40 50 60 70 80 90 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009 20 30 40 50 60 70 80 2000 2005 2010 Pellet Capacity and Production In Minnesota and Michigan Pellet Capacity and Production In Minnesota and Michigan 2000-2009 Pellet Capacity Pellet Capacity Pellet Production Pellet Production Million LT Pellets per Year Million LT Pellets per Year 2009 est. 2010 forecast SOURCE: KAKELA C O M M O D I T I E S have scaled back operations quickly and simultaneously. There was little competition to push supply onto other consumers. Today, Cliffs manages approximately 39.6 million long tons of iron ore pellet capacity in North America, or about 46 percent of the North American total, and owns 24.8 million long tons of that, for more than 29 percent of the total capacity. Its route to ownership of more mining capacity was as follows: • In 1990, Cliffs owned 7.7 million long tons of annual capacity, managing 39.2 million • In 2000, Cliffs owned 12.1 million long tons, managing 43.0 million • By 2005, it doubled equity ownership again to 24.6 million long tons, managing 37.4 million • In 2009, Cliffs owned 24.8 million long tons of pellets, managing 39.6 million Major ownership changes also occurred in the North American steel industry over the last eight years. The economic downturn of 2001-02 hit the American steelcompanies hard, prompting two major changes in ownership: 1) American steel companies, in trying to stay out of bankruptcy, sold or gave away most of their non-core assets which included steel company- owned iron ore mines, and 2) most of the American steel companies that did go bankrupt were bought by Lakshmi Mittal to make Mittal Steel, which later became ArcelorMittal Steel and is now the largest steel company in the United States. On the steel side, bankrupt American companies were being bought by Mittal Steel on an amazing basis. In May of 2005, Mittal Steel bought the International Steel Group of Cleveland, Ohio, which had been formed mostly out of purchases in bankruptcy court of: • LTV Corporation, Cleveland, Ohio in April 2002 • Acme Steel Incorporated, Riverdale, Illinois, in October 2002 • Bethlehem Steel Corporation, Bethlehem, Pennsylvania, in May 2003 • U.S. Steel Corp’s Plate Works, Gary, Indiana, in November 2003 • Weirton Steel Corporation, Weirton, West Virginia, in May 2004 • Georgetown Steel Co., Georgetown, South Carolina, in June 2004 • Cliffs HBI facility, Trinidad & Tobago, in July 2004 In December of 2005, Mittal Steel added Ispat-Inland Steel Company to its U.S. holdings. These acquisitions made Mittal Steel the largest steelmaker in America. U.S. Steel Corp. became a distant second. These two North American steelmakers have also increased their ownership of iron ore capacity: • U.S. Steel has increased with its acquisition of National Steel and its National Steel Pellet Plant (now Keewatin Taconite). U.S. Steel moved from 16 million long tons of annual capacity in 2002 to 24.4 million now and is refurbishing another 3.5 million long tons of pellet capacity that had been moth-balled at Keewatin Taconite. • ArcelorMittal’s Steel increased its iron ore holdings in North America in 2003, through acquiring Ispat-Inland Steel Company, which held about 4.2 million long tons of annual pellet capacity in North America. Today, as ArcelorMittal, it holds approximately 28.3 million long tons of capacity. ArcelorMittal’s sudden rise to become the world’s largest steel company is well known, but not many people outside of the iron ore industry think about this company’s sudden rise to become the world’s fourth largest iron ore mining company. ArcelorMittal pushed Cliffs out of fourth place and now, with recent iron ore acquisition in the Ukraine and Liberia plus expansions in Bosnia, Mexico, Kazakhstan and elsewhere, it could boost its annual capacity from about 50 million metric tons per year to about 78 million. ArcelorMittal Steel has publicly announced its intent to become 75 percent self-sufficient in iron ore. They would need to own about 90 million tons of capacity to reach the goal. U.S. iron ore and steel are lean. For the decade prior to the 1982 recession, the U.S. iron ore industry was busy adding new capacity. This was not just exploration, discovery, blast, crush and ship ore. The 1970s was the boom time for building modern iron ore pelletizing plants. These complex processing plants are designed to run 24 hours a day, 365 days a year at near full capacity. In Minnesota alone, 31.1 million long tons of new annual pelletizing (LTP) capacity was added between 1972 and 1979. This almost doubled the previous capacity and pushed Minnesota’s pel- The industry of today will be able to rebound quickly from the current recession. Import Export www.fednav.com www.fmtcargo.com GREAT LAKES/SEAWAY REVIEW July-September, 2009 9 lapse of iron ore demand in the U.S. in the early 1980s led to lay-offs of about twothirds of the miners in Minnesota and Michigan. In general, the lay-offs were by seniority, so many of the younger, less experienced miners were dismissed. As demand for iron ore began to return in the middle and late 1980s, few of the laid-off miners were called back. The working miners were simply expected to do more. As a result, the productivity numbers for labor, in tons of pellets produced per employee hour worked, began to increase sharply. One example of this transformation can be seen in the numbers of mining jobs in Minnesota. Just before the 1982 recession, in 1979 there were 15,789 iron ore miners in Northern Minnesota. By 1988, the low point, only about 4,500 iron miners were working in Minnesota. More than 5,000 jobs were lost in 1982 alone. A few mining jobs came back as demand picked up, but demand for ore and employment numbers never came back to pre-1980s numbers. About 10,000 mining jobs were lost in Minnesota with the 1982 recession. The long-term reduced demand was responsible for about 3,000 of these mining jobs lost and the push to be more efficient and increase labor productivity eliminated the other 7,000 mining jobs. Similar patterns occurred at the Michigan and Eastern Canadian iron ore mines. Labor productivity grew slowly but steadily from the inauguration of the first commercial iron ore pellet plants in 1955. It started at about one long ton per employee hour and grew to two tons by 1973. It hit a plateau until the 1982 recession forced a boost. Within six years, productivity at the Minnesota iron mines nearly doubled, jumping from two tons per employee hour to almost four tons per hour by 1987. Labor productivity has stayed around four tons per hour level since and there appears to be little chance of another major increase. Recovery and pricing expectations. After two decades of stable pricing for iron ore, world prices suddenly become volatile. First, in 2003, prices began to shoot up and now in 2009 they are tumbling down. I expect them to rise and fall, and then rise again over the next 10 years. With the current downturn, there is still a great deal of uncertainty about the world economy. When an economic rebound will take hold is a question on many minds. If President Barrack Obama’s call to rebuild infrastructure truly becomes a high priority, the iron ore industry and steel mills should experience resurgence early in the recovery. But these are volatile times. The recent volatility in iron ore prices came after two decades of little or no change in prices. From 1982 to 2002, the world price for iron ore pellets hovered around $30 per long ton. In 2003, the price began to rise, by 10 percent and then a 19 percent increase in 2004. In 2005, the price jumped 87 percent, with only a slight drop in 2006 of negative 3 percent. Then a 5 percent increase resulted in 2007, followed by another huge increase of 87 percent in 2008. In total, iron ore pellet prices increased 375 percent from 2003 to 2008 to reach the all-time-high prices of about $145 per long ton. Now the price of pellets has dropped by 48 percent for 2009 sales. The attitude of the moment is cloaked with the negativity of the past few months. There are two important considerations: • Even with a 48 percent reduction, the price of pellets is still profitable for the major producers. The 48 percent reduction would drop the price to approximately $75.31 per long ton, which is almost two-and-a-half times higher than the 2002 price and still above production costs for the major producers, which in North America runs about $45 to $50 per long ton and in Brazil is closer to $35 to $40 per long ton. • A fluctuating price is not always bad for the biggest producers. No seller wants a downturn in price, but if you are big let capacity to 63.3 million LTP a year. This capacity was slashed to 38.6 million LTP a year just eight years later. As a result of the 1982 recession, North American iron ore pellet production dropped by 48 percent for the year and, by 1988, 43.2 million long tons (or 34 percent) of capacity was closed. Most of the closed capacity was first stage or the oldest iron ore pellet capacity. About 10 million long tons of this capacity was re-opened between 1988 and 2000, but closing the LTV Mining in 2001 brought capacity back to near 1988 levels. After the 1980 to 1988 capacity cuts, there have been only a few small projects resurrected. The lower capacity, however, is more in line with demand and the mines have run at high and more stable operating rates. The industry has been operating at these higher rates of capacity for the past 20 years. The average operating rate for the nine years up to and including 1987 for North American iron ore pellet plants was 71 percent. From 1988 to present it has averaged 91 percent per year. The iron ore industry is simply leaner and has been operating much closer to capacity over the last two decades than before the 1982 recession. There are industry-wide structural reasons for this transformation toward a leaner iron ore mining industry. One key one is the rise of steel made from steel scrap in electric arc furnaces (EAF) instead of iron ore in blast furnaces. Steel made from scrap in electric arc furnaces increased by about 50 percent between 1980 and the present. As a result, EAFs now account for approximately half of the steel made in the U.S. Also, imported iron ore increased significantly after the 1982 recession. As EAF steel increased and imported iron ore rose without an increased overall rate of domestic steel production, demand for domestic iron ore reduced. A greater balance between North American iron ore capacity and production occurred, creating the leaner industry. Labor productivity improved. The col- The recent volatility in iron ore prices came after two decades of little or no change in prices. Once the rebound in demand occurs, the majors will be in place to benefit most and could put pressure to increase prices significantly again. C O M M O D I T I E S The CN ore dock from the Duluth hillside. Polsteam USA Inc. 17 Battery Place, Suite 907 New York, NY 10004 Phone: 212 422 0182 E-mail: polsteamusa@polsteamusa.com Polska Zegluga Morska P O L S T E A M In Bulk Cargo Transportation since 1951 WWW.POLSTEAM.COM.PL enough or strong enough, it isn’t all bad. In the case of iron ore production, I’m assuming the major companies, especially the Big Three international iron ore mining companies, are able to weather a 40 or 50 percent cut in price and significant reduction in demand for a year or two. The “junior” merchant sellers, however, may or may not be able to make it through such a downturn. It is even worse for the start-up mining companies that looked profitable when iron ore pellets were selling for $145 per long ton, but not when the price dropped to $75.00 and collapsed demand. Therefore, price volatility can be of benefit to major companies that can weather the downturns. When prices drop to near the major’s costs levels, many of the juniors and most of the start-ups will be losing money. In North America, the threatened juniors and start-ups include the Ungava Bay project, New Millennium project, Essar-Butler project and Iron Nugget project at the Empire Mine in Michigan. Recently, the planned refurbishment of Iron Ore Company (IOC) of Canada’s pellet plant at Sept Iles was cancelled, but IOC now plans to build a new pellet plant inland at Labrador City. The larger iron ore mining operations generally have lower production costs and lower capital costs compared to the juniors and start-ups. Also, the majors have been able to collect high profits over the last six years with the run-up of world prices. They have larger work forces that may be able to adjust or absorb some reductions in staffing. Once the rebound in demand occurs, the majors will be in place to benefit most and could put pressure to increase prices significantly again. This pattern of major companies benefiting from price volatility has occurred in other natural resource industries. One of the best examples is the world’s petroleum industry. In that industry there is a formal producers’ oligopoly, the Organization of Petroleum Exporter Countries (OPEC). The oil ministers from each of the dozen or so OPEC countries meet regularly to discuss and adjust production quotas for each member country. They influence price by controlling the supply of oil. When supplies are constrained, prices for crude oil increase, which stimulates the search for more supply. New exploration for oil and gas is stimulated, coal gasification and liquefactions plants are built and high cost petroleum production from tar sands and off-shore oil drilling are initiated. Solar, wind and biomass energy projects may be initiated. When OPEC increases production again, generally the price of oil drops. When oil prices drop below the base cost of energy from other sources, many of these so-called alternative energy sources struggle or fold. When this cycle happens more than once, it begins to raise the cost of entry for these alternative energy sources. Therefore, volatility in prices is not always negative, or at least not negative for all of the producers. For 2009, there are temporary closures of mines, employee layoffs and reduced production at most, if not all, of the North American iron ore mines. This is a result of the current economic recession as it is being played out in North America. Total output in 2009 is expected to be at least 40 percent below capacity. However, there is little-tono chance of a mine closing permanently in C O M M O D I T I E S 40 45 50 55 60 65 70 75 Wabush QCM Hib Tac Northshore IOC Minorca Keewatin Empire United Tac Tilden M/H Minntac 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 North American Pellet Production Cost Curve by Mine (2008) Operated at Capacity, Delivered to Cleveland Cumulative Pellet Capacity (millions of long tons) Dollars per LTP The iron ore industry is simply leaner and has been operating much closer to capacity over the last two decades. the North American market because: • Three-quarters of the integrated steel mills are located inland around the southern shores of the Great Lakes. This interior location gives the major domestic iron ore producers in Minnesota and Michigan, as well as eastern Canadian producers, an advantage over seaborne imports. • Two-thirds of the North American iron ore pellet capacity is captively owned by two North American steel companies, U.S. Steel and ArcelorMittal. • The higher world prices for seaborne traded iron ore continue to price imported ore into the Lower Great Lakes’ steel mills above domestically produced iron ore. • The reduction in iron ore pellet production capacity during the 1980s recession cut domestic capacity to the bone. • Labor productivity is now high at U.S. iron ore mines. • The consolidation of ownership of the North American iron ore mines to three major owners allows a quicker and more direct response to demand than when there were 12 owners. Given the above, there will not be any major iron ore mines and pellet plants closing in North America in the near future. . SOURCE: KAKELA GREAT LAKES/SEAWAY REVIEW July-September, 2009 11 Son of Poe 12 www.greatlakes-seawayreview.com When 20 shovels broke ground between the Poe and Davis locks, there was a shovel for nearly every year elected officials and industry representatives fought for federal approval of a second large lock at Sault Ste. Marie, Michigan. Dignitaries from the U.S. and Canada dug into the earth as a symbol of two key steps having been made: authorization for constructing a second Poe-sized lock at full federal expense in the 2007 Water Resources Development Act and appropriations to build coffer dams to hold back the St. Mary River as the first phase of lock construction. Actual construction of the two $1.9 million coffer dams—one at each end of the Sabin Lock—will begin in late August or September, according to John Niemiec, Project Manager for the U.S. Army Corps of Engineers. The groundbreaking was momentous and said to be the beginning of a project that creates an economic equivalent of a small automobile plant, according to James Weakley, who spoke on behalf of the Lake Carriers’ Association and the Great Lakes Maritime Task Force. C E L E B R A T I O N S Making history A new lock, 50th anniversary celebration mark significance of the Great Lakes/St. Lawrence Seaway system The Soo Locks typically serve as a gateway for more than 80 million tons of cargo a year, saving customers an estimated $3.6 million annually in transportation costs compared to land-based modes. “It’s a way to put people back to work and a way to keep them working,” he added, noting that the new lock enhanced national security and economic stability for the U.S. mining, manufacturing and power producing operations. “This is the lock that built America, connecting American mining with American manufacturing, won economic and military wars. We can do it again. The economic recovery will not be complete until this project is.” The Soo Locks typically serve as a gateway for more than 80 million tons of cargo a year, saving customers an estimated $3.6 million annually in transportation costs compared to land-based modes. Seventy percent of the U.S.-flag fleet relies on the Poe Lock to move from Lakes Superior to Huron because the vessels are too large for the other two operating locks. “In military terms, this is key terrain,” said Gen. John Peabody, Commander and Division Engineer of the Great Lakes and Ohio River Division for the Corps. “This modern northwest passage is the lifeblood for the United States and Canada.” “There’s been study after study saying that we should build this lock. Some thought this day would never come,” said Congressman Bart Stupak (D-Michigan), noting that through passage of the 2007 Water Resources Development Act, the way was cleared. “The Great Lakes economy cannot wait any longer. There’s been enough talk. Let’s get the job done.” “Your team in Washington (D.C.) still has more to do, but it will get done. Because of the heart of the Great Lakes community, it will get done,” said Senator Debbie Continued on page 15 Dignitaries break ground at the Soo as a first step for new large lock A Seaway reunion structure of the future and is part of other significant firsts of the 1950s: the creation of NASA, construction of the nation’s highway system and statehood for Alaska and Hawaii—things people said could never be done.” Congresswoman Marcy Kaptur (DOhio) asked the crowd about the new dream for the Seaway, which she referred to as a support for the entire U.S. economy. “If Lake Erie is the Saudi Arabia of wind, then surely the Seaway is the sustainable energy way of transportation,” she said. “We have an unrivaled sustainable ecosystem in the Great Lakes/St. Lawrence Seaway system.” Kaptur also noted the federal focus on the renewable energy bill provides funding for federal authorization to expand investment in alternative energy. She is working to get a funding system that’s currently being used in western-U.S. regions moved into the Great Lakes states, possibly through the SLSDC. Secretary of the U.S. Department of Transportation (DOT) Ray LaHood recognized the $3.6 billion annual savings the GREAT LAKES/SEAWAY REVIEW July-September, 2009 13 C E L E B R A T I O N S Twenty-plus years of advocating for a second large lock at Sault Ste. Marie, Michigan. Fifty years of serving as a primary transportation artery through the economic epicenter for North America. Two significant milestones mark the summer of 2009—milestones that prompt stakeholders to look beyond the latest economic downturn and to a future filled with a new generation of commercial shipping on the Great Lakes/St. Lawrence Seaway system. A21-gun salute. Bag-pipe processional. Presentation of colors. Pledge of Allegiance. Taps from a single trumpet. These honorary elements set the stage for a public celebration at the Dwight D. Eisenhower Lock in Massena, New York, recognizing the 50th Anniversary of the St. Lawrence Seaway. The outdoor, lock-side event was attended by a mix of about 1,000 community members, boatnerds and the shipping industry’s finest. Dignitaries arrived by entering the locks aboard a U.S. Coast Guard Cutter and stepping landside. They moved onto a stage from which they shared comments and congratulations. “That so many of you would travel from around Canada and the United States is a sure sign of the Seaway’s continuing vitality—of its past, present and future,” said Collister “Terry” Johnson, Jr., Administrator for the Saint Lawrence Seaway Development Corporation (SLSDC). “Constructing the Seaway was quite a risk, but I think we’ve proven that it was a risk well worth taking.” “The Seaway is symbolic of the close friendship between Canada and the United States and represents what we can achieve when we set our minds to it,” said Georges Rioux, Consulate General of Canada, Chicago. “We pay tribute to past generations which saw the power and potential. We are the heirs and beneficiaries of their vision.” The theme of the celebration, which extended from the lock-side celebration to three days of events, was “A vital waterway… past, present and future.” Speakers recognized the boldness of those who advocated for lock construction while also noting that technological advancements are streamlining the system, moving it into the next 50 years. The system has, and continues to be, used for transportation and power generation. When speaking, Susan Eisenhower stood alongside the lock that her grandfather, former President Dwight D. Eisenhower, supported and ultimately helped dedicate in 1959. “The 1950s were a period of revolutionary change,” she said. “The Seaway was a new, large project coming on the heels of WWII. It was part of creating the infra- Continued on page 15 50th Anniversary celebration draws generations of contributors and their passion Canada Steamship Lines 759 Square Victoria Montreal, Quebec H2Y 2K3 T: (514) 982-3800 • F: (514) 982-3802 • ships@cslmtl.com • www.csl.ca For relief of headaches and pain due to congestion… …Use as directed. cargo GREAT LAKES/SEAWAY REVIEW July-September, 2009 15 Ltd., Allister Paterson, President and CEO of Seaway Marine Transport (SMT) and Adolph Ojard, Executive Director of the Duluth Seaway Port Authority. Former Duluth Seaway Port Authority Executive Director, Davis Helberg, served as keynote speaker. Laurence Pathy, President & CEO, Fednav Ltd.: “Our traditional trade patterns are changing. The environmental segment has demonized the shipping industry. Our costs are rising. “We are, however, positive about the future and the system’s viability. The Great Lakes/St. Lawrence Seaway system is the most economic way to move cargo. The marine mode is the least polluting method of transportation. Both governments have put significant capital into the system. Shipping companies have invested in vessels that are specific to the system. “The future depends on all of us all working cooperatively to meet challenges. Be innovative. Our challenge is to reenergize trade on our marine highway. “We need to get all of the stakeholders to sit down together. I suggest a bi-national meeting to set the stage for our global future.” Allister Paterson, President & CEO, Seaway Marine Transport: “The lifeblood of our company is the Seaway. If the Seaway wasn’t here, we wouldn’t be here. Seaway provides to customers through its efficient, consistent service. The federal investment in upgrading the Seaway’s infrastructure involves the 10-year, $165 million Asset Renewal Plan that now being executed. During the current funding year, $17.5 million is being invested in upgrades. “I promise that you will have the full support of the DOT and President Obama’s Administration in moving the system forward,” he said. “In one way or another, the St. Lawrence Seaway has affected all of our lives,” he said. “The Seaway is an economic engine for towns on both sides of the border.” An industry dinner. The evening following the lock-side celebration, the SLSDC hosted a dinner at the Massena Country Club. Industry speakers, who shared their observations on the system and its future, were Laurence Pathy, President and CEO of Fednav Son of Poe, continued from page 12 A Seaway reunion, continued from page 13 Continued on page 17 Stabenow (D-Michigan). “These locks opened us up to the world and are the key to our prosperity. In Michigan, we build and grow things, and we couldn’t do it without these locks. We need a 21st Century infrastructure for a 21stCentury manufacturing industry.” Additional speakers to the estimated 300 attendees at the groundbreaking included Lt. Col. James Davis, Commander of the Corps’ Detroit District; Senator Carl Levin (D-Michigan); Terrence “Rock” Salt, Principal Deputy Assistant Secretary for the Corps; Maj. Gen. Meredith “Bo” Temple, Deputy Commanding General of Civil and Emergency Operations for the Corps; Sault Ste. Marie, Michigan Mayor Anthony Bosbous; Sault Ste. Marie, Canada Mayor John Rothwell; Darwin “Joe” McCoy, Chairman of the Sault Ste. Marie Tribe of Chippewa Indians; and David Knight, Special Projects Manager for the Great Lakes Commission. Some have dubbed the new lock, “Son of Poe.” It will match the Poe Lock’s dimensions and could be completed in the next six to seven years, if federal funding is approved annually at the Corps full request for the $580 million project. “We’re in a position to keep construction moving as long as we get the funding,” Niemiec said. “It’s exciting to see this project move from the drawing board to the ground,” Maj. Gen. Temple said. “This project is ultimately about people—people of vision who have made this project possible.” Janenne Irene Pung . The federal investment in upgrading the Seaway’s infrastructure involves the 10-year, $165 million Asset Renewal Plan that is now being executed. During the current funding year, $17.5 million is being invested in upgrades. C E L E B R A T I O N S 50th Anniversary speakers step land-side for the July celebration in Massena, New York, U.S. Centerpointe Corporate Park • 500 Essjay Road • Williamsville, NY 14221• 716-635-0222• ascinfo@gatx.com• www.americansteamship.com 100 years of experience – positioned for the next century Performance Based Service Oriented Customer Focused American Steamship Company book on resilience. We are adaptive and blessed with hardworking people. We keep finding new ways to generate new cargo and new trade. We have overcome and we will again. That’s what we do in the Great Lakes. “We market the system as a complex. It has taken us a long time to learn how critical it is to tell our story. If we don’t tell it, the critics will tell our story. We’re a bulk cargo system. It’s hard to compete with the glitz of cruise ports, colored containers and high-tech cranes. “The system will, of course, outlive all of us. What will it be like in the next 50 years? “This is the Great Lakes. It’s about people, not steel ships and concrete docks—it’s people.” Janenne Irene Pung . “The Seaway was really ahead of its time. Today, everyone is talking about short sea shipping. “Our fleet badly needs replacement. We need to reinvest. Impediments are taking us apart, such as individual state-based ballast water regulations. Because of the different sets of rules, we cannot buy new assets until a standard is set. We need to come together to get this done. “SMT is bullish on short sea shipping and the Seaway. We are ready to invest in the future. We need to develop homogeneous regulations to be able to do this.” Adolph Ojard, Executive Director, Duluth Seaway Port Authority: “Optimism abounded 50 years ago when the Seaway opened. We always need to remember that the minute you think you understand transportation, it will change. Without this magnificent waterway, our lives today would be very different.” Davis Helberg, former Duluth Seaway Port Authority Executive Director: “The Seaway founders had exaggerated expectations. The original promises of the St. Lawrence Seaway could never have been measured up to. Threats and challenges have come over the years, but we wrote the GREAT LAKES/SEAWAY REVIEW July-September, 2009 17 C E L E B R A T I O N S Continued from page 15 Honored speakers and guests stand for the U.S. and Canadian national anthems. Trident Award recipients. Trident Awards SLSDC recognizes key contributors as Guardians of the Seaway During the 50th Anniversary dinner in Massena, New York, July 10, the Saint Lawrence Seaway Development Corporation recognized people from throughout the system—past and present—with a Trident Award for their contributions to the construction and successful operation of the Seaway. The recipients are: Akwesasne Mohawk Albert S. Jacquez American Great Lakes Ports Association Automatic Identification System Research Development Team Canadian Coast Guard Canadian Prime Minister Louis St. Laurent Canadian Shipowners Association Chamber of Maritime Commerce Collister Johnson, Jr. Congressman Bertrand H. Snell Congressman David R. Obey Congressman George A. Dondero Congressman James L. Oberstar Congressman John A. Blatnik Congressman John McHugh Congressman Marcy Kaptur David Oberlin Dr. Noobar R. Danalian Gail C. McDonald Great Lakes Commission Great Lakes District Council, International Longshoremen’s Association Great Lakes Pilotage Authority Guy Véronneau Harbor House Publishers, Inc., publishers of Great Lakes/Seaway Review Her Majesty Queen Elizabeth II Honorable Lionel Chevrier International Joint Commission James L. Emery Joseph H. McCann Lake Carriers’ Association Lewis G. Castle Martin W. Oettershagen Massena Chamber of Commerce President Dwight D. Eisenhower President Richard Nixon Robert Moses Saint Lawrence Seaway Development Corporation Advisory Board Save the River Seaway International Bridge Corporation Senator Alexander Wiley Shipping Federation of Canada SLSDC Employees St. Lawrence Economic Development Council St. Lawrence Seaway Pilots Association Stanford E. Parris The St. Lawrence Seaway Management Corporation Transport Canada U.S. Army Corps of Engineers U.S. Coast Guard Ninth District U.S. Great Lakes Shipping Association McAsphalt Marine Transportation Limited 8800 Sheppard Avenue East Scarborough, Ontario Canada M1B 5R4 Phone: 416-281-8181 • Toll Free: 1-800-268-4238 Website: www.mcasphalt.com At McAsphalt Marine Transportation Limited, we are committed to providing our customers with the best, most efficient black oil transportation available anywhere on the Great Lakes and Eastern Seaboard. With our OPA90, fully doublehulled, hot products tank barge utilizing the most modern and sophisticated Navigation Guidance equipment and Articouple linkage system, your cargo will be delivered safely… • Lloyds certified unit • Meets all OPA90, USCG and CCG Standards • 11,000 tons of cargo on only 22 feet of draft • Fully coiled with two 10 million BTU thermal oil heaters • 6,000 BHP tug fully equipped with twin Kort nozzles • Articouple mechanical connecting system between tug and barge • 1,000 HP BowThruster operated from wheelhouse • Servicing all Great Lakes and Eastern Seaboard ports in Canada and the U.S. On Tiime,, Evverryy Tiime!! GREAT LAKES/SEAWAY REVIEW July-September, 2009 19 G U E S T E D I T O R I A L It seems that everyone wants a better marine highway and “a better Seaway.” So the question to ask is: Why are we not working together to make this happen? More importantly, what do we—industry, environmental groups and government— need to do to build a better marine highway? Let me suggest three ideas that would go a long way in achieving a better marine highway. First: Remove one of the main obstacles that is preventing Canadian shipowners from renewing their fleets with more environmentally advanced vessels. Second: Create a harmonized regulatory framework that satisfies both commercial and environmental considerations. And third: Join together to support the Green Marine program. Remove the 25 percent duty. Shipping companies and major cargo shippers are calling on the federal government of Canada to act swiftly to remove the 25 percent import duty on foreign-built ships. Canada’s fleet of commercial vessels is aging and Canadian shipowners estimate that they will have to spend more that $1 billion over the next 10 years to replace this fleet with more technologically-advanced, energyefficient and environmentally-friendly ships. A major impediment to the renewal of the Canadian fleet is the 25 percent import duty that the government imposes on foreign built ships—an added cost of more than $12 million per vessel—which severely constrains the ability of Canadian shipowners to find the best value for their shipbuilding dollars. New vessels will improve the marine industry’s environmental performance and reduce the environmental footprint of what is already the most environmentallyfriendly mode of transportation. The use of new engine technology, improved hull designs, the latest equipment and new methods to manage oil and water waste will mean an overall reduction in a ship’s environmental footprint in terms of air emissions, fuel efficiency, onshore power requirements and noise in port. New vessels will enable the installation of improved ballast water LET’S JOIN TOGETHER Don’t we all want a better marine highway? management technology, designed for the vessel rather than an inefficient or impractical retrofit solution. New materials- handling systems will mean cleaner operations and less cargo residues. Removing the 25 percent duty penalty on new vessels opens the door to achieving these environmental benefits and to building a better marine highway. Harmonize the regulatory framework. Shipowners are unlikely to invest the millions of dollars it takes to build new vessels or retrofit the existing fleet to meet the ever-increasing range of environmental regulations unless there is some certainly and predictability of what future requirements are likely to be. The current patchwork of state-by-state ballast water regulations has created a huge problem for all vessel operators in the Great Lakes/Seaway region. While some states have embraced the IMO’s standard for ballast water treatment, others have set standards that, in some cases, will be impossible to comply with. As the United States and Canada move towards implementing an emissions control regime for ships trading in coastal and inland waterways, shipowners have highlighted the need to harmonize limits on emissions and avoid creating another unworkable regulatory situation for the marine sector. Additionally, vessel operators are cautioning regulators to fully assess the implications of potential modal shifts arising from the more stringent air emission targets and the ability of the market to adjust through technology or fleet renewal. Ensuring that standards and regulations for air emissions and ballast water are developed in line with international standards and harmonized at a federal level with provinces and states will contribute to building a better marine highway. Support green marine. A report recently published by Great Lakes United, and endorsed by a large n

Maritime Editorial