Vol.39 No.3 JAN‑MAR 2011

GREAT LAKER V O L U M E 3 9 N U M B E R 3 Trade patterns . Fleet renewal . Seaway toll freeze and incentives . Progress in ballast water management J A N U A R Y- M A R C H 2 0 1 1 L G Interlake Steamship 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 Special Delivery? WE CAN HANDLE IT! Even if it means navigating a challenging location or moving a difficult cargo, our customers depend on us to deliver their dry bulk cargoes safely and efficiently. In fact, Interlake Steamship’s versatile self-unloading vessels have been the first to load or unload at many of the Great Lakes’ most challenging ports. With vessel capacities ranging from 17,000 to 68,000 gross tons, you can trust Interlake to meet your raw material transportation needs. At Interlake Steamship, every delivery is a special delivery. www.greatlakes-seawayreview.com Great Lakes/Seaway Review 221 Water Street, Boyne City, Michigan 49712 USA (800) 491-1760 FAX: (866) 906-3392 harbor@harborhouse.com The international transportation magazine of Midcontinent North America G L A R T I C L E S J A N U A RY-MARCH 2 0 1 1 Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Administrator’s Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Guest Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Guardians of the Great Lakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Regional Shipyard Activity Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Naval Architecture & Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 International Trade THE EVOLUTION OF GLOBAL LOGISTICS . . . . . . . . . . . . . . 6 Analyzing business development opportunities for the Great Lakes/St. Lawrence Seaway system. Fleets NEWBUILDS MAKING THEIR WAY INTO SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Canadian and U.S. fleets move vessels into next era. RECAPITALIZING THE FLEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Shipowners preserve strong hulls, modernize inside. CONSOLIDATION TAKES ANOTHER STEP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Algoma Central acquires Upper Lakes’ fleet. Interview DEVELOPING NEW BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 New leader of Canadian Seaway focuses on growing cargo in the system. ENTERING A NEW PHASE OF LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Richard Corfe reflects on his time leading SLSMC. Legislation 112th CONGRESS USHERS IN CHANGE . . . . . . . . . . . . . . . . . . . . . . . . 29 Major infrastructure policy issues await consideration. Cargo Incentives AN OFFER YOU CAN’T REFUSE . . . . . . . . . . . . . . . . . . . . . . . . 31 Seaway toll freeze and incentives continue in 2011 season. Passenger Cruising COLUMBUS RETURN A 2011 HIGHLIGHT . . . . . . . . . . . . . 32 Resolution of Customs issues still considered critical. Ballast Water Management SEEING PROGRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 States begin to make decisions based on scientific findings. GETTING CLOSER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 U.S. Coast Guard anticipates April release of national standard. TREATING BALLAST WATER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 One developer shows how various standards and moving targets are impacting progress implementing onboard systems. Vessel Management WHAT’S IN YOUR SHIPS’ STORES? . . . . . . . . . . . . . . . . . . 49 Looking at current trends for what shipowners keep on-hand. Marine Photography CHICAGO’S LIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Providing insight into the best views of the lights around the Windy City. Great Lakes People LIVING A DREAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Al Jackman’s lifelong journey exemplifies his passion for the Great Lakes. Lakers A FLEET DISAPPEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Boatwatchers lament loss of Upper Lakes fleet. Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 GREAT LAKER D E P A R T M E N T S GREAT LAKES/SEAWAY REVIEW January-March, 2011 1 A multi-modal transportation strategy is necessary for the Seaway region to grow. Page 6. Newbuilds, ship renewals and consolidation in the U.S. and Canadian fleets. Page 15. Customs, border issues under discussion for passenger cruising on the Great Lakes. Page 32. The Port of Milwaukee Fednav 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 Felton Business Manager Amanda Korthase Circulation Manager ADVERTISING DEPARTMENT Kathy Booth Account Manager Rex Cassidy Account Manager James Fish Director of Sales Jennifer Martin Account Manager John H. Nikolai Account Manager Patricia A. Rumpler 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; Joe Cappel, Director of Cargo Development, Toledo-Lucas County Port Authority; Steven A. Fisher, Executive Director, American Great Lakes Ports Association; 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; Daniel L. Smith, Former National Executive Vice President, American Maritime Officers; 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 $32.00; two years $53.00; three years $75.00. Foreign: One year $47.00; two years $68.00; three years $100.00. One year digital edition $20. 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. © 2011 Harbor House Publishers, Inc., Boyne City, Michigan. All rights reserved. No article or portion of same may be reproduced without written permission of publisher. Great Lakes/Seaway Review Cover: Perspective on the stack of Interlake vessel. Photo by Roger LeLievre. Great Laker Cover: Upper Lakes flagship Gordon C. Leitch exits lock. Photo by Roger LeLievre. 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 39 JANUARY-MARCH, 2011 NUMBER 3 • Seaway size ocean vessels • Interlake commerce • Inland river barges • Pipeline facilities • Canadian Pacific Comes with a view! 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 • www.milwaukee.gov/port bnowak@milwaukee.gov There’s room for you PartnerShip and operating prac We are committed t Par actices. View our environmental policy at www.f ed to environmentally responsible business rtnerShip .fednav.com 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 January-March, 2011 3 Additional Asian carp barrier in place A new electronic barrier constructed by the U.S. Army Corps of Engineers is in place in the Chicago Sanitary & Ship Canal near Romeoville, Illinois. Construction of the Barrier IIB—now the third of its kind between the Mississippi River and Great Lakes waterways— involved building the barrier and installing a power station to provide additional power to repel fish during the winter months when the water has increased salinity. The power station was completed in October and the barrier began operating this spring. The new barrier is part of an effort to install additional protection for the Great Lakes, including: • Installing mesh fencing in areas prone to flooding. • Employing field crews to test the electric barriers. • Developing a metric between federal and state agencies on the various efforts, who is in charge and the cost for 2011. • Launching a website to more quickly get accurate information to the public, www.asiancarp.org. • Forming the Asian Carp Regional Coordinating Committee. • Launching the Great Lakes and Mississippi River Interbasin Study. • Appointing former leader of the Indiana Department of Natural Resources, John Goss, as the Asian carp specialist to oversee federal response for keeping invasive species out of the Great Lakes. When appointed by President Barack Obama, it was stated that Goss would lead an $80 million federal attack against Asian carp. “The new fish barrier works,” said Gen. John Peabody, Commander of Corps’ Great Lakes and Ohio River Division. “We know it works because we have extensive data to demonstrate it.” “We are looking at long-term effects to keep the fish out of the Great Lakes,” Goss said. “We’re looking at what the solutions are and how to deal with Asian carp and all invasive species.” . As proposed, the President’s budget will cut the Great Lakes dredging budget by 32 percent in fiscal year 2012. The appropriation will remove the smallest amount of sediment since the U.S. Army Corps of Engineers started keeping records more than half a century ago. As a result, only 11 of the 83 U.S ports on the Great Lakes will be dredged. “Never in my 51 years in this industry have I seen such a total abandonment of the federal government’s responsibility to maintain the Great Lakes Navigation System,” said John D. Baker, President of Great Lakes Maritime Task Force. “Cargo movement on the Fourth Seacoast can top 200 million tons per year, yet the federal government is turning its back on us. What was a dredging crisis is now a State of Emergency for each of the eight Great Lakes states.” About 3.5 million cubic yards of sediment build up in Great Lakes ports and waterways each year. At the proposed level, the Corps will be unable to dredge half of the sediment that builds up in a year. Funding for dredging has been inadequate for years, negatively impacting ship’s ability to fully load and move cargo efficiently and inexpensively. The lack of sufficient dredging has been trimming 5,000 tons or more off loads. The Administration’s budget will pay to dredge 1.6 million cubic yards next year, building the backlog by more than 17 million cubic yards unless Congress provides more funds. . In his 47-year Congressional career, former Congressman Jim Oberstar (D-Minn.) has received many honors. But few are as big-literally—as the announcement that The Interlake Steamship Company is renaming and rechristening one of its ships the Hon. James L. Oberstar. The vessel will be rechristened in a ceremony at Duluth. The ship, currently known as the Charles M. Beeghly, stretches 805 feet with a beam of 75 feet and a carrying capacity of 31,000 gross tons. She was built in 1959 at the American Ship Building Company in Toledo, Ohio and later modified at Fraser Shipyards, Inc. in Superior, Wisconsin. “It’s a big ship that will be renamed for one of the giants of Congress,” said Mark W. Barker, President of Interlake Steamship Company. “Jim Oberstar’s commitment to America in general and our region in particular is truly as big as the Great Lakes.” Barker said it is the first time one of the huge lakers has been named for a U.S. legislator. Oberstar’s tenure on Capitol Hill consisted of 11 years as a senior Congressional aide and 36 years as a Member of Congress. Most recently, he served as Chairman of the House Transportation and Infrastructure Committee, where he earned a reputation as Congress’ primary expert on transportation issues. He was well-known as a tireless champion of maritime issues, particularly those on the Great Lakes. He represented the Iron Range in Minnesota, a region that depends on shipping to move iron ore pellets to market, often through the Port of Duluth, the westernmost and largest port on the Great Lakes. Oberstar frequently spoke of his father, an iron ore miner, who was particularly proud of his son’s connection to the Great Lakes shipping industry. . DATELINE Proposed dredging funds half of what’s needed Interlake honors Oberstar Great Lakes Shipyard D A T E L I N E 4 www.greatlakes-seawayreview.com expertise to service existing European customers and to expand its worldwide network. CSL will manage the belted self-unloader business through new subsidiary, CSL Europe, which will be based in the United Kingdom (UK) and Bergen, Norway. Three key commercial employees from Jebsens, including Helge Sandvik, are joining CSL. Jeffrey Barnes of CSL International Inc. has been appointed Managing Director and will relocate to the UK this summer. He will report to Paul Cozza, who is responsible for all of CSL’s international operations. “Jebsens is a famous name in world shipping and Atle Jebsen was a pioneer in building up a self-unloading business in Europe,” said Rod Jones, President and CEO of The CSL Group Inc. in Montreal. “We are very pleased to have this opportunity to build off the base that Jebsens has created. CSL will bring its own brand of self-unloader operating prowess and customer service to this new venture and we are confident that CSL Europe will become a reliable and flexible industrial shipping partner for European industry.” “We have been very selective in who we chose to acquire this segment of our business and are confident that the customers will continue to benefit from excellent service from CSL,” said Bjorn Jebsen, Chairman of KJR. The CSL Group, headquartered in Montreal, Quebec, is the world’s largest owner and operator of belted self-unloading vessels having extensive operations in North and South America and Australasia with offices in Canada, U.S., Australia and Singapore. CSL has a substantial industrial customer base, particularly in the construction, steel and energy sectors. . Ballast Water Working Group releases new report The Great Lakes Seaway Ballast Water Working Group has released its 2010 summary report, with information on inspection procedures and compliance rates regarding ballast water management. The working group is a partnership between the U.S. Coast Guard, Transport Canada-Marine Safety, the Saint Lawrence Seaway Development Corporation and The St. Lawrence Management Corporation. In 2010, 100 percent of vessels bound for the Great Lakes/St. Lawrence Seaway from outside the Exclusive Economic Zone received ballast tank exams, through physical sampling or administrative review, on each Seaway transit. In total, 7,754 ballast tanks were assessed during 415 vessel transits. Vessels that did not exchange their ballast water or flush their ballast tanks were re- Miller named Great Lakes Legislator of the Year An unwavering commitment to ending the dredging crisis on the Great Lakes has earned Congresswoman Candice Miller (R-Mich.) an award as 2011 Great Lakes Legislator of the Year by the Great Lakes Maritime Task Force. Miller represents Michigan’s 10th District in the House of Representatives. She was recognized for having twice co-sponsored legislation requiring the federal government to take tax dollars collected for dredging and spend the full amount on keeping the waterways open for commerce. . CSL acquires Kristian Jebsens Rederi The CSL Group Inc. has acquired the assets and associated contracts of Kristian Jebsens Rederi (KJR) belted self-unloader business, intending to build on its self-unloader Duluth Seaway Port Authority REGIONAL CALENDAR MAY 4-6 Mari-Tech 2011 Canadian Institute of Marine Engineering Victoria, BC, Canada www.cimare.org/maritech 5 24th Annual Windsor Marine Night 2011 Port of Windsor St. Clair Centre for the Arts (519) 258-5741 or wpa@portwindsor.com www.portwindsor.com 10-11 Supply Chain & Logistics Association Toronto, Ontario www.sclcanada.org 25-26 Green Tech 2011 Fairmont Chicago Millennium Park Chicago, Illinois www.green-marine.org/annual-conference 29- Canadian Transportation Research Forum June1 Gatineau, Quebec, www.ctrf.ca JUNE 15-16 TRANSLOG Conference Hamilton, Ontario www.mitl.mcmaster.ca/translog JULY 10-13 TRP Joint Summer Meeting Boston, Massachusetts, www.trb.org GREAT LAKES/SEAWAY REVIEW January-March, 2011 5 REGIONAL CALENDAR D A T E L I N E quired to either retain the ballast water and residuals on board, treat the ballast water in an environmentally-sound and approved manner or return to sea to conduct a ballast water exchange. Vessels that were unable to exchange their ballast water/residuals and that were required to retain them onboard, received a verification boarding during their outbound transit prior to exiting the Seaway. In addition, 100 percent of ballast water reporting forms were screened to assess ballast water history, compliance, voyage information and proposed discharge location. The group anticipates continued high vessel compliance rates for the 2011 navigation season. Since 2006, ballast water management requirements in the Great Lakes/St. Lawrence Seaway system have been the most stringent in the world. The members of the working group enforce regulations that include saltwater flushing, detailed documentation requirements, increased inspections and civil penalties provide a comprehensive regulatory enforcement regime to protect the system. Independent research by Fisheries and Oceans Canada indicates that the risk of a ballast water mediated introduction of aquatic invasive species into the Great Lakes has been mitigated to extremely low levels. . Obama extends grant program for diesel engines There’s good news for vessel owners looking to make their operations more environmentally- friendly. A renewal of the Diesel Emissions Reduction Act, which provides grants to companies that voluntarily agree to reduce diesel emissions in their operations, could mean grants for shipowners to continue to rebuild, repower or replace older diesel engines or install alternate fuel systems. Under the program, created in 2005, private companies apply for grants through a partnership with either a regional, state, local or port agency which oversees transportation or air quality, or with a non-profit that promotes transportation or air quality. In 2009, the Great Lakes Commission served as the non-profit on behalf of American Steamship Company in replacing generators aboard two lakers. Other examples exist in the system. There are several programs under the act, but the one of particular interest to the shipping industry is the National Funding Assistance Program, which in 2011 has $32 million to distribute. . PORT of DULUTH-SUPERIOR CARGO CAPITAL GreatLakes Open for Business The 2011 shipping season is underway, and the top tonnage port on the Great Lakes is open for business. Close to 1,000 ships will visit the Twin Ports this year, moving roughly 40 million tons of cargo – iron ore, coal, grain, limestone, cement, salt, wind turbine components and more. The Port of Duluth-Superior links the heartland of North America to the rest of the world. Feel the connection. 218.727.8525 www.duluthport.com 6 www.greatlakes-seawayreview.com ADAM WASSERMAN Partner Global Logistics Development Partners PortCentric Logistics Partners The Great Lakes/St. Lawrence Seaway system is one of the most important inland water navigation systems in the world. It serves a globally important, consumer and production marketplace that bisects two countries and traverses a 3,700-kilometer route adjoining eight U.S. states and two Canadian provinces. As an international cargo transportation route, the forces that shaped the Seaway’s past may well be different than the forces that will shape its future. The state of public policy, market forces, changes in logistics infrastructure and shifting production and consumption markets are causing potentially significant shifts in global logistics. Following these trends, investors, logistics businesses, shippers and governments around the world are trying to make sense of these dynamics for their long-term growth. As the St. Lawrence Seaway has been in place for more than 50 years, it is easy to take for granted the role it plays in the continental economy. More importantly, with five decades of history it is very possible to overlook the potential of the future of the Seaway. Consider the economies of Canada and the U.S. as compared to the world: • Together, the two countries constitute roughly 5 percent of the world’s population. It is important to identify that 95 percent of the world’s consumer marketplace is beyond our borders and: a) our I N T E R N A T I O N A L T R A D E The evolution of global logistics Analyzing business development opportunities for the Great Lakes/ St. Lawrence Seaway system GREAT LAKES/SEAWAY REVIEW January-March, 2011 7 I N T E R N A T I O N A L T R A D E domestic companies rely on international freight transportation to import and export products to growing markets and b) our huge consumer economy requires efficient access to foreign-produced goods. • The combined economies have been economic powers for over a century and represent more than 20 percent of the world economy as measured by GDP. However, in 1970 that figure reached more than 40 percent of global GDP. The U.S. and Canadian economies are expected to grow substantially, but the reality is that the world economy is growing at a far faster rate, so every year we are growing less significant in size and in relative wealth. • International trade is a huge component of the global economy—with 23 percent of the value of world GDP representing the value of exported goods and services. The Seaway’s economic hinterland has been a globally powerful manufacturing region for the past century. For that manufacturing base to remain competitive in a global marketplace, the region needs to establish new and powerful advantages for exporting to large, fast-growing foreign markets. With a continental market hinterland that includes approximately 35 percent of the population of Canada and the U.S., the Seaway is a vital conduit for intra-continental and international trade to a large economic zone. If it stood alone as a country, this region would be the second largest economic zone in the world, larger than the economies of Japan, China, India, Germany or the United Kingdom. Built more than 50 years ago to function as an economic umbilical cord to important foreign markets, the Seaway performs an extraordinary function for many of our continent’s inland economies. Important commodities like steel and grain move in and out of its production and fabrication centers, enhancing the competiveness of this vast region’s business base. The Seaway performs two very different functions in that it serves to transport bulk and breakbulk commodities and also to import and export products bound for or coming from international destinations. The region boasts significant transport infrastructure that connects the system to a large market region. The Seaway itself is comprised of a vast network of maritime ports, including some with key intermodal connections. With dozens of Interstate and Provincial highways leading from docks and strong railroad connectivity, the Seaway is generally well-integrated to move cargo from and to these hinterland areas. Though it might be generally well understood what the Seaway has been and what it is today, it is more difficult to prospect what role it will perform in the future. Many people might portray the world as relatively flat and that the status quo will remain. Additionally, there are some obvious and well-documented constraints for the Seaway which offers serious challenges and perhaps limitations to growth. Understanding external forces. There are powerful forces reshaping the continental and global business superstructure and there are strong dynamics reshaping global logistics. Many of these changes are evolutionary, shifting markets, global business competition, infrastructure development and public policy. It is important to understand these external forces and adapt strategy to take best advantage. The old axiom that “cargo that needs to move from Point A to Point B generally finds its most efficient route” is a good place to start. References to transport solutions that are not based on the efficiencies of the market are somewhat dangerous. Instead, offering views that are based on future market efficiencies are more complex because the system of inputs that define the market are changing, some at a rapid pace. Those that can interpret those inputs best and apply them to their business or regional setting are likely to be winners going forward. This may require a willingness to make business judgments on the future before it is obvious to everyone, but that gets to the heart of how most business decisions are made. In fact, many knowledgeable onlookers believe that established patterns of cargo movement will be relatively unaffected by the geo-political dynamics that are shaping tomorrow’s economic forces. From a Seaway perspective, that viewpoint would have generally been proven correct in the past as the System’s cargo role has been somewhat static. The traditional cargoes associated with our agricultural and primary industries have been served well by the cargo carrying capacity of the vessels plying the Great Lakes and the St. Lawrence River while other manufactured cargo has had reasonably efficient access to markets domestic and international, via road and rail systems, to deep sea coastal ports. Underlying all of this going forward is concern about the future economic competitiveness of this large region. In some part, the answer to this question relates to the ability of domestic market connectivity to foreign markets—and whether the system will play an increasingly significant role in supporting economic competitiveness. It will be important to understand how factors such as shifts in market, rise in the cost of energy, public policy, challenges to the existing land transport infrastructure, evolving industry supply chains will impact logistics routes, locations and size of logistics hubs and economic competitiveness. Increasing cost of energy—Change in the cost of oil can be hugely destabilizing to the movement of cargo and expected rises may well make or break shippers that have cost structures with medium-to-high transport factors. Whether movement by truck, train, airplane or ocean vessel—all cargo movement costs today are correlated to the input cost of oil. For many years, shippers operated within a sphere of relative cost certainty—oil prices moved within a fairly predictable range. To illustrate, over a 15-year period from 1985 to 2000, the cost of oil ranged from about $10 per barrel to about $30 per barrel. That range was pierced in the middle of the decade as the price had risen to $57 in 2005. Three years later oil spiked to $134 before settling at a higher platform than ever experienced. Oil prices are now again rising past the $90 level with sustaining pressure upward. The input fuel cost of transport has tripled, having a certain and negative impact on many firms’ bottom lines. Few economic and commodity pricing experts are forecasting the cost of oil to decline, with most experts predicting increasing prices. This trend has changed the model for many businesses, with some regions benefitting and other become less competitive. Public policy—Following the lead of other countries, the U.S. and Canadian governments have increasingly shown policy interest to support alternative logistics solutions in support of environmental stewardship, economic development and toward easing congestion on existing infrastructure. One example of this policy emphasis is the U.S. Department of Transportation’s (DOT) introduction of a program described as America’s Marine Corridors. Here, cargo movements would be incented to move via water rather than highway to reduce road miles and the associated pollution and wear and tear on the highway system. These vessel/barge movements will, in many cases, call on smaller coastal and river ports, potentially creating new logistics activity and investment attraction opportunities for these regions. In Canada, the government has launched Gateway Strategies on both the Pacific and Atlantic coasts with substantial investment in transport infrastructure, border crossing improvements and business development alliances. The U.S. government has also made sig Ports of Indiana GREAT LAKES/SEAWAY REVIEW January-March, 2011 9 I N T E R N A T I O N A L T R A D E nificant investments in rail infrastructure to improve access to major coastal seaports and to improve north-south cargo connections. Recognizing that the U.S. rail system was largely built to move cargo east-west from deep-sea ports to inland locations, these are significant improvements. There are some fine examples of logistics hubs being developed alongside new rail investment in places like Columbus, Ohio at Norfolk- Southern’s Rickenbacker Intermodal Terminal, where more than 30 million square feet of development has occurred. The Marine Corridors effort gains strength from a combination of increasing environmental awareness, congestion at key logistics hubs and a long-harbored view by advocates that the waterways could play a more robust role in national commerce. Expanding environmental awareness— Governments, businesses and the general population are increasingly focused on environmental stewardship. New more stringent green standards are likely to cause shipping costs to rise over time. Federal, state and local governments are continuing to increase requirements on issues such as truck engine emissions standards, vessel fuel quality and emissions and tire disposal. Businesses, especially those that are global consumer-facing businesses, are increasing their intention to reduce their carbon footprint and much of this can happen via their cargo transport methodology. A number of global companies are developing significant brand elements around their concern for the environment. Though this has been more common in Europe, it’s a pattern beginning in North America. Transport congestion and road safety—By DOT evaluation, there are substantial problems in some important road and rail transport intersections and corridors, problems only expected to worsen in the coming years. Over the past 30 years, the road infrastructure has not kept pace with general traffic and cargo growth. Bottlenecks have appeared on key highways and rail corridors in the Midwest, the Northeast corridor, on the West Coast at and near a number of gateway seaports. Several years ago when the economy was strong, this congestion caused delays and reliability concerns for shippers and that translated to increased cost and time-to-market problems. Although the economic challenges of the past few years have lessened this pressure, the fundamental issue remains a serious concern. As the economy recovers, the capacity of our transport infrastructure will again become a serious long-term issue and our international trade capacity will be jeopardized. The central governments of Canada and Mexico are investing billions in new ports and supporting infrastructure to take advantage of U.S. cargo inefficiencies with the intention that creating logistics hubs that will translate to economic development. In the U.S., there are serious proposals for new, more-restrictive rules concerning daily truck driver hours. These propositions would seriously impact landside supply chain economics and would lead to a set of changes in distribution networks. All of these issues have an impact and effect existing patterns of cargo movement. In some cases, these issues will have an impact on moving cargo to and from the Seaway, but also on the Seaway’s competitive position with other modes and gateways. New railroad service patterns—Significant changes are occurring in the continental rail system as railroad companies aggressively look for ways to increase efficiency and reduce transit times. There are a number of examples where substantial improvements to existing rail lines and new construction are slicing delivery time. Some examples are a Norfolk-Southern (NS) project that connects East Coast deep sea port access (Port of Virginia) to Midwest markets. The Heartland Corridor is reducing transit times substantially by route modifications and raising tunnel height so double-stack container trains can travel through Virginia, West Virginia and Ohio on their way to the national rail hub in Chicago. The Crescent Line is another NS project that is creating far better rail connectivity from Louisiana to New Jersey, with significant intermodal projects in North Carolina, Tennessee, Alabama and Pennsylvania. CSX has developed improvements to the Liberty Corridor Freightway, which improves access and transit times to and from the Port of New York to Midwest destinations. These examples, among others, demonstrate that freight movement and the associated intermodal opportunity is dynamic. Trade lane opportunities. The Seaway’s market exists within a complex web of global market interconnections and the global transport relationships between markets. Historically, the major trade flows to and from Canada and the United States have been 1) via land-borders with each other (and Mexico), 2) across the Atlantic Ocean with European markets and 3) across the Pacific Ocean with Asian markets. New market routes to and from South America and Africa will become more important factors over the coming years. All of these trade patterns are transforming in response to a series of key global and continental trends. Expanding the Panama Canal—The longanticipated widening of the Panama Canal will probably reduce all-in transportation costs from East Asia to parts of the U.S. South and Midwest and the Canadian/U.S. East Coast. The approximately $5 billion expansion project is under construction now with announced plans for completion over the next two-to-four years. The expanded canal is expected to alter trade flows. There are significant disagreements about the extent and timing of this, but suffice it to say that the expanded canal pro- If it stood alone as a country, this region would be the second largest economic zone in the world, larger than the economies of Japan, China, India, Germany or the United Kingdom. Liebherr The Group Experience the progress. www.liebherr.com info.lnc@liebherr.com Fax: +1 305 889 0655 Tel.: +1 305 889 0176 33178 Medley, Florida 11801 NW 100th Road, Suite 17 Liebherr Nenzing Crane Co. The Group GREAT LAKES/SEAWAY REVIEW January-March, 2011 11 I N T E R N A T I O N A L T R A D E duces serious new alternatives for trade with South America and Asia to North America. With alternatives and with other factors shifting landside logistics, shifts will occur even if gradually. The canal widening will reduce costs and time by enabling larger ships and reducing congestion at the locks, making Asian service to the Gulf or Atlantic Coast seaports competitive with service to the Pacific Coast and transcontinental rail. Larger container ports will continue to focus on developing container trade with Asia; midsize and developing container ports will pursue regional carriers as well as feeder service. Growth in non-China container trade general cargo and bulk is also expected. In terms of container shipping, the canal’s current dimensions allow passage of Panamax container ships with capacity of up to 4,400 TEU. The expanded Canal will accommodate post-Panamax vessels carrying up to 12,600 TEU, which require 50 feet of draft. It is estimated that post- Panamax vessels account for about a third of all container vessels today and a large percentage of ships on order. More than 150 post-Panamax ships currently call on West Coast seaports and some can be redirected to the Panama Canal route if owners believe the overall economics warrant the change. There are serious impediments to having post-Panamax vessels on the Eastern Seaboard. Seaports desiring to serve the largest ships must provide navigation channels with 50 feet of depth and few East Coast ports have this capacity at present; however, some ports do have this capacity and others have this as an objective. New or expanded cargo routes will connect via: • All water routes between East Asia and the U.S. Atlantic and Gulf Coasts • Connections to trade hubs in Panama and the Caribbean Huge investments are being made in transshipment capacity in a variety of places, but the largest of them all is in Panama. The Colon Free Trade Zone in Panama is currently the world’s second largest Free Trade Zone after Hong Kong and has visions to become the largest and perhaps most important. It intends to greatly expand its function to serve Canada/U.S. markets via water service through a large hub-andspoke system just as exists in everyday practice in Europe and Asia. There are other examples of ports/regions that are vying to perform similar functions in the Caribbean and from South America. Although there is huge anticipation along the Gulf Coast about post- Panamax vessel calls, the key issue will probably be how successful Panama and its Caribbean counterparts are in attracting transshipment and free trade zone investment designed to service North America. Water service to the U.S. and Canada from places like Panama will likely be on smaller vessels providing flexibility to tailor cargo volume to market region. More to the point for the eastern seaboard and potentially the Seaway is the question of land logistics mode competition with road and rail in the U.S. The rise of India and Southeast Asia—Increased production and export activity in Asia, specifically in South and extreme Southeast Asia will favor trade lanes to the eastern United States through the Suez Canal. Trade with India grew by about 400 percent and Vietnam by about 10 times over the last decade, with aggressive continued growth expected in the decade to come. These same markets’ fast-growing industrial and consumer economies suggests that backhaul with North American agricultural products, manufactured goods, recycled materials and raw materials will become more important as the pattern increases. This market, especially to South Asian gateways, can be a substantial business opportunity for the Seaway. Africa’s rise in consumption—Trade with African nations grew by four times over the past decade and experts expect this trend to continue to grow at a fast pace. More stable economic growth and a shift in low-cost production to eastern and southern Africa are creating new trade lanes across the south Atlantic Ocean to the entire North American eastern seaboard. Again, this could be significant for Seaway region agricultural and manufactured goods exports. Exploding north-south trade—In the last decade, trade with Latin America grew by 82 percent, faster than trade growth with any other region. Continued growth among South American East Coast-U.S. trading partners in Latin America and the Caribbean, and the potential reopening of trading relations with Cuba, will increase north-south trade through the Atlantic Ocean, Caribbean and the Gulf of Mexico. The extremely large and fast-growing economy of Brazil is a major factor, but with the prospect of a busier canal there is further prospect for more ocean service to important South American West Coast countries like Ecuador, Peru and Chile. In some ways, this dynamic might be significant in its own right as the evolution of north-south trade routes is likely to accelerate, according to information from the Congressional Research Service. Positioning for growth. An educated observer might see inland production centers as highly disadvantaged in the future as compared to easy overseas market connectivity from continental coastal locations due to the factors and forces describe above. The days of unfettered, low-cost transport to and from places like Detroit, Milwaukee or Buffalo are probably behind us. In large part, it will only get harder and more costly to move cargo to/from international markets from our interior. Alternatively, this huge Seaway region marketplace could flourish if it can capitalize on its strengths. Both an agricultural and manufacturing powerhouse, the region has to be visionary about global transportation connectivity. This means more than a view about maritime traffic but a wider, integrated set of actions with landside assets and infrastructure. Work as one on transportation strategy— In order to grow and be prosperous, the Seaway region must have an integrated multi-modal transportation strategy. It does not have this today and Washington and Ottawa don’t have the Seaway region and system as a high priority, although there are remarkable people doing admirable work on both sides to support the Seaway. These are largely dedicated people, but otherwise, too few politicians are connecting economic development and transportation as a structural bi-national priority. There are ports and terminal operators working hard to tell their story to steamship lines and potential shippers. There are steamship lines marketing to potential clients. There are economic development organizations spending a lot of money marketing their regions. This must be more fully connected to enable success. The fact is that economic development experts largely do not understand the business of logistics and a fair part of their work is dependent on the growth potential from As an international cargo transportation route, the forces that shaped the Seaway’s past may well be different than the forces that will shape its future. Hamilton Port Authority 12 www.greatlakes-seawayreview.com I N T E R N A T I O N A L T R A D E international trade. Focus on long-term infrastructure—The long-term efficiency and effectiveness of the U.S. freight transportation system is under pressure by bottlenecks, inefficient use of some parts of the infrastructure components, vulnerability to disruptions, and crucial environmental and energy concerns, according to the Rand Corporation’s U.S. Freight System Modernization Necessary to Reduce Bottlenecks, Improve Security study in 2009. The Association of American Railroads predicts that by 2035, more than half of the national rail network will be operating near or above capacity, resulting in significant travel delays and limiting the ability to maintain tracks and equipment. Throughout the United States, railroads are projected to need nearly $200 billion in investment over the next 20 years to accommodate freight increases. We are spending only a fraction of the required investment at present, according to Free Enterprise Magazine/ U.S. Chamber of Commerce. Investments in the system’s transportation infrastructure and related industrial infrastructure is vital. The necessary approach is not about a central government agency or one state or province working on its own, but an integrated effort to enhance the system. Capital investment is the underlying blueprint for economic success and at present we generally have modest intentions. The region has an old and relatively inefficient infrastructure—not at all stateof- the-art as compared to other regions in terms of port infrastructure, intermodal transport connections and industrial property assets. If public infrastructure investment is critical, then we have an awfully long way to go in terms of communicating the opportunity of this vast economic region to policymakers. More importantly, government probably won’t be the full answer. Private investment will be required to fuel port and related industrial asset development and risk capital investors need to be invited to participate. Other parts of the world are far more sophisticated in setting the opportunity for blending public and private resources. With few public resources and huge amounts of private infrastructure and property cash searching for ready and viable investments there are solutions. The Seaway region sits at a crossroads. The world is changing rapidly and cargo movement patterns are going to evolve. Along with that evolution, the Seaway region can work to take advantage by connecting and improving its assets. Significant parts of its regional economies will depend on the health and growth of its agricultural and manufacturing sectors and they will be increasingly dependent on low-cost, reliable and time-competitive transportation of products. An integrated transport strategy is important and fundamental element of that strategy should be the promotion of a world-class intermodal system boasting water transport assets. . Part 2 of this article will be featured in the April-June edition of Great Lakes/Seaway Review, focusing on using public-private partnerships to fund system changes. Global Logistics Development Partners (GLDP) and PortCentric Logistics Partners (PCLP) specialize in global logistics, project finance and economic development focusing on project strategy and asset development around emerging logistics markets in North America and Europe. GLDP and PCLP advise public and private clients on market potential, business and project strategy and develop market analytics/packaging for financing from private and public sources. CAT Marine Power POWER OVER TROUBLED WATERS Marine transportation has a bright future even though rough seas remain in terms of ship emissions and operating costs. Navigating through this requires solid wisdom gained from past experience and the drive to understand and manage emerging realities. As your authorized Caterpillar and MaK dealers we can help. Talk to us about new engine-related environmental initiatives, planning and asset management. We know these waters well and can help you plot the most efficient and sustainable course. MaK sales and service in the: GREAT LAKES 1-877-MaK-Power QUEBEC, ATLANTIC CANADA AND NORTH EASTERN USA 902-468-0581 Caterpillar sales and service in: QUEBEC AND THE MARITIMES 902-468-0581 ONTARIO, NUNAVUT AND NEWFOUNDLAND 1-877- Cat-Power Visit us at: marine.cat.com The St, Lawrence Seaway Management Corporation F L E E T S GREAT LAKES/SEAWAY REVIEW January-March, 2011 15 its acquisition of Upper Lakes Group (please see related story on page 17). The new ships are part of the newly-designed Equinox Class containing the latest technology and design elements to improve performance, including: • Optimized, high-displacement hull form to minimize resistance and ensure maximum efficiency and performance of an enhanced propeller. • Advanced Tier II compliant engines which will be electronically controlled and designed to generate about 40 percent per metric ton-kilometer fewer air emissions than existing vessels. The engines are capable of burning low-sulfur fuels but are designed to use residual fuels in combination with scrubbers that remove 100 percent of the sulfur content from the exhaust and 80 percent of the particulate-matter emissions. The scrubbers will be installed as soon as pending regulations for air emissions are finalized. • Energy efficiencies involve using heat from the exhaust to reduce use of the thermal oil heater. Efficiencies are also resulting from the ships’ lighting, grouping and placement of the heated fuel-oil tanks and underwater hard coatings to reduce friction. • Ballast tank design and coatings for maximum ballast flow and minimizing sediment build-up in the tanks. In addition, space is being left to accommodate a ballast water treatment system, which will be installed upon determination of pending regulations and when systems to meet the standard are proven and potentially certified. • Cargo holds designed to minimize residue and facilitate cleaning by having the hopper slopes lined and exposed steel coated with impact and abrasion-resistant epoxy. • An enclosed self-unloading boom and variable-speed discharge belt system to help control cargo spillage and residues on the ship and in the environment. • Dedicated wash water holding tanks to control water discharges in environmentally- sensitive areas. Deck runoff can be captured and directed to these tanks. • Advanced wastewater management technology with a bilge water management system designed with mechanical seals on the pumps to reduce oily residues at the source. A drainage system will collect potential leakage for treatment with a highefficiency Oily Water Separator. High-tech sewage treatment units will treat both black and grey water to the latest standards with minimal water consumption. Vacuum toilets use 90 percent less water and storage tanks for wastes will be available for use in environmentally-sensitive areas. The vessels will have double-hull construction with the oil storage tanks separated from the shell by cofferdams; land-based remote monitoring of vessel position, conditions and equipment performance; mooring winches located on both sides of the unloading boom slewing trunnion for operational control on either side and improved visibility and safety; and a full-enclosed freefall lifeboat system. “The design team looked for ways to eliminate or mitigate environmental incidents from occurring,” said Eric McKenzie, SMT’s Vice-President of Technical Development during the Great Lakes Waterways conference in Cleveland, Ohio. “We’ve been Newbuilds making their way into system Canadian and U.S. fleets move vessels into next era This artist’s rendering provides a preview of an Equinox Class ship. When Canadian leadership removed the 25 percent import duty on new foreign-built ships, it opened the door for fleet renewal—and there will soon be new Seaway vessels sailing through it. On the other side of the border, the U.S. Maritime Administration has launched an exhaustive study to examine how to best modernize the U.S.-flag fleet. Another element includes owners recapitalizing existing ships and a vast number of ships changing hands. The onslaught of activity has been anticipated for years as the fleets age and environmental regulations require an increasing amount of modern technology throughout the Great Lakes/St. Lawrence Seaway system. According to Bruce Bowie, President of Canadian Shipowners Association, Canadian carriers have said they have maximized opportunities to improve the environmental performance of 30- to 40-year-old ships and recent announcements for newbuilds is creating opportunities for improved environmental performance. Ships on order. Algoma Central Corporation will oversee operation of seven new, full-Seaway sized vessels, with deliveries beginning in 2013. After more than two years of work, the ships are on order from the Nantong Mingde Shipyard in China, said Greg Wight, President and CEO of Algoma Central. The orders consist of four gearless bulkers and three self-unloaders, all to fly Canadian flags. Two of the bulkers will be owned by the Canadian Wheat Board, with the remaining vessels owned by Algoma Central, pending the finalization of Polsteam USA 16 www.greatlakes-seawayreview.com F L E E T S through the Canadian Wheat Board order and Algoma acquiring the interest in a ship on order through Upper Lakes. “The addition of these ships will give SMT the long term, efficient bulker fleet that it needs to serve our grain and iron ore customers on the Great Lakes,” Paterson said. “It is especially gratifying to be chosen by the Canadian Wheat Board for the key role of operator and manager for their new vessels.” The order represents the largest new vessel order on the Great Lakes in three decades. To view a video about the Equinox Class ships, go to www.seawaymarinetransport. com. From association to shipowner. In addition to new ships, a new carrier has entered the laker count: the Canadian Wheat Board (CWB). The board is spending C$65 million for two gearless bulk carriers to be operated and managed by SMT. The CWB is controlled by western Canadian farmers and is the largest wheat and barley marketer in the world. As one of Canada’s largest exports, the CWB will use the two Equinox Class vessels to continue to sell grain to more than 70 counties. According to the CWB, farmers should benefit from contributions expected to average at least $10 million per year when the ships are in operation, equal to about $1 per metric ton paid over the next four crop years. “As shipowners, we are moving forward to strengthen farmers’ positions in our grain supply chain,” said CWB Board Chair Allen Oberg, a farmer from Forestburg, Alberta. “This historic step puts us at the helm. Through the CWB, farmers will share in the control and the profits of Great Lakes grain shipping. This is a value-added investment with significant net benefits for Prairie producers.” The CWB’s chartered lake freight to eastern Canadian ports has increased by about one million metric tons over the past decade, reaching 3.8 million metric tons in 2009. It projects the export flow of wheat to increase over the next few years as demand strengthens in Europe, Africa and Latin America—destinations served through eastern Canadian ports. More than 80 percent of the wheat and barley marketed by farmers through the CWB is exported, and grain constitutes about 10.5 percent of the commodities transported on the Great Lakes by Canadian-flagged carriers. “This exciting initiative will modernize the Great Lakes fleet with larger, faster ships that consume less fuel and meet future environmental standards,” Wight said. “By working together with Prairie farmers, we have forged a relationship that has lasting value for all.” Janenne Irene Pung . working on the design for some time. It took six tank tests to find the most streamlined hull, creating smallest wake.” The design process was led by Algoma Central, in partnership with SMT, Upper Lakes Group and a Finnish counterpart. The new ships will carry more cargo—with up to 30,000 metric tons of capacity—travel at a faster pace and be introduced into the company as older vessels are retired. In addition, Algoma Central is preparing to receive the Canadian Mariner, a new Coastal Class self-unloader during the 2011 season. The Algoma fleet will soon exceed 40 ships, according to Wight. “It’s been many years since we’ve seen an investment like this in the Great Lakes fleet and it’s an encouraging sign,” said Collister Johnson, U.S. Saint Lawrence Seaway Development Corporation Administrator. Construction and details of four Algomaowned Equinox Class ships was announced at Marine Club by SMT President and CEO Allister Paterson. The additions have come F L E E T S Algoma Central Corporation is acquiring Upper Lakes Group Inc.’s partnership interest in Seaway Marine Transport and the vessels and assets owned by the group and its affiliates. Through the transaction, Algoma is acquiring 11 vessels currently owned by Upper Lakes Group (ULG), consisting of four gearless and seven self-unloading bulk freighters. It is also acquiring interest in two gearless and two selfunloading bulk freighters now owned jointly by Algoma and ULG, as well as ULG’s interest in a selfunloader currently under construction at Chengxi Shipyard in China. The purchase price of the acquisition is C$85 million, subject to certain adjustments. “The acquisition comes at a time when our domestic dry bulk fleet needs major investment,” said Greg Wight, Algoma Central President and CEO. “Our board of directors has committed C$400 million in capital between the new ships and the acquisition as a vote of confidence in this sector.” “The very difficult decision to sell to Algoma was based on a number of critical factors, including the large capital requirements required to take the business forward for another quarter century,” said ULG Chairman Jack Leitch in an announcement. “We were also motivated by the desire to ensure the future employment of our employees and continued trade for our vessels. We decided that this could be best achieved by coming to an agreement with a company that has an equally long history in this business. That a healthy and robust Canadian shipping company will result is of great comfort to me and should be for all of you.” Upper Lakes Group will hold onto its remaining assets in the grain, marine repair and industrial, liquid bulk and property development/ golf services. According to Wight, the ships moving from ULG ownership to Algoma will retain their crews. The stacks and ship names will change at points in the season that don’t interrupt commerce. Shoreside em- Consolidation takes another step Algoma Central acquires Upper Lakes’ fleet ployees, however, are not part of the contractual agreement. Announcements on a new corporate structure should be released in April. The partnership with the Canadian Wheat Board will be similar with what Algoma had with ULG in the sense that the ships will pool together for the benefit of the shipowners, with Algoma managing the vessels, crew and commercial management. “It will be a seamless change for the customers who use the ships,” Wight said. “With partnerships, sometimes different owners have different perspectives. At this time, it’s so important in our history to move forward with a single mind, a single team and a single purpose.” Consolidation takes another step Algoma Central acquires Upper Lakes’ fleet New ship announcements follow a variety of ship renewal efforts on both sides of the border. The projects range in size and scope, reaching extensive refurbishments such as installing a new hull, engine, generators, and self-unloading and navigation equipment on the Algobay in 2010. Over the last several years, ships in the U.S. fleet have been repowered, going from steam to diesel and had generator systems replaced. In February, the U.S. Maritime Administration (MARAD) held three stakeholder meetings—in Cleveland, Ohio; Duluth, Minnesota; and Chicago, Illinois—to gather information for the U.S.-flag Great Lakes Shipping Revitalization Study. The wideranging study was launched by inviting industry stakeholders to town-hall style meetings to discuss industry needs: from market needs and emerging trends to environmental solutions, ships, shore facilities and infrastructure. GREAT LAKES/SEAWAY REVIEW January-March, 2011 17 The Algobay has returned from a complete overhaul in China. Recapitalizing the fleet Shipowners preserve strong hulls, modernize inside Toledo Lucas County Port Authority “The U.S.-flag Great Lakes Fleet Revitalization Study will evaluate options for meeting emerging economic and environmental challenges for Great Lakes shipping,” according to MARAD. “The study will be completed through a two-phase effort that will culminate in a final options report. Industry and public input gathering during the three regional public outreach sessions will be a key element of that report, which will identify regional strengths and needs.” The study was prompted by U.S. Department of Transportation Secretary Ray LaHood and Deputy Secretary John Porcari, according to David Matsuda, U.S. Maritime Administration Administrator, who said it will provide information on how the second largest regional economy in the world can get ahead of some of the challenges it is facing—issues such as air emissions and ballast water treatment regulations. It will include an overview of existing market conditions, an inventory of U.S.-flag Great Lakes vessels and regional port infrastructure, an examination of private/public sector financing options and a benefit-cost analysis for each of the investment options. The final report will include suggestions for how the Maritime Administration can assist U.S.-flag Great Lakes fleet operators and port operators in complying with federal and state laws and regulations. During the Cleveland meeting, vessel owners of U.S.-flagged ships indicated their intended course as ship recapitalization— the direction Canadian shipowners were taking until the 25 percent tariff was removed for their newbuilds. In addition, hulls for the freshwater-sailing vessels don’t experience the same degradation as ships regularly sailing further down the St. Lawrence River, locking through more frequently and entering salt and brackish water. “Shipping is a service business and the onl

Maritime Editorial