Vol.40 No.1 JUL‑SEP 2011

J U L Y- S E P T E M B E R 2 0 1 1 Trillium vessel class . Demand for iron ore booming . New Seaway-sized unloader delivers . Ballast water science V O L U M E 4 0 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. Also available as a fully interactive digital magazine. 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 U LY- S E P T E M B E R 2 0 1 1 Dateline: Great Lakes/St. Lawrence Seaway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Administrator’s Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Guest Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Naval Architecture & Engineering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Regional Shipyard Activity Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Shipbuilding TRILLIUM VESSEL CLASS UNVEILED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Canada Steamship Lines introduces newbuilds to the system. WELCOMING A NEW SHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Fednav sails the first of three new Seaway-sized unloaders. Commodities THE HAVES AND HAVE-NOTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Mine owners gain advantage in evolving pricing structure. Legislation LEADERS SPEAK OUT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 State and national elected officials discuss issues of interest. Ballast Water Management SKID MOUNTED BALLAST TREATMENT . . . . . . 29 Pilot project taking place aboard American Steamship Company’s Indiana Harbor. Lake Levels GREAT LAKES WATER LEVELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 International Joint Commission group looks at depths and their impacts on shipping industry. Training & Recruitment TRADITION MEETS TECHNOLOGY . . . . . . . . . . . . . . 36 Maritime students prepare for employment. Interview TRAINING FUTURE MARINERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Admiral Achenbach focuses cadets on Great Lakes opportunities. International Trade THE BENEFITS OF NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Getting it right and getting it on time. Interview EUROPEAN CONNECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Hwy H2O continues to press for business development overseas. Propulsion INSIDE THE BOX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Looking at the benefits of charge-air cooler maintenance. Coatings CORROSION CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 EonCoat introduces new ceramic outer layer to outlast polymer points, more that a temporary covering. Maritime Heritage A LIVING SYMBOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Rechristening of the Col. James M. Schoonmaker brings Great Lakes legend alive. Marine Photography PERSPECTIVES OF STURGEON BAY . . . . . . . . . . . . . . . . . 68 Waterborne views round out photographic options. Meet the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Laker Library Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 On the Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 GREAT LAKER D E P A R T M E N T S GREAT LAKES/SEAWAY REVIEW July-September, 2011 1 New Trillium vessel class introduced by Canada Steamship Lines. Page 7. Federal Yukina enters Seaway system. Page 9. Future merchant mariners prepare for employment. Page 36. 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; Noel L. Bassett, Vice President-Operations, American Steamship Company; Dale Bergeron, Maritime Transportation Specialist and Educator, Minnesota Sea Grant; 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; 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; Mike Wallace, Member of Parliament, Burlington, Ontario; James H.I. Weakley, President, Lake Carriers’ Association; Greg Wight, President & CEO, Algoma Central Corporation. 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: Aerial view of the stair-stepped locks at the Welland Canal. Photo courtesy of the St. Lawrence Seaway Management Corporation. Great Laker Cover: Col. James M. Schoonmaker is re-christened at Toledo. 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 40 JULY-SEPTEMBER, 2011 NUMBER 1 ImPorEtxPort www.fednav.com GREAT LAKES/SEAWAY REVIEW July-September, 2011 3 DATELINE Algoma Central Corporation’s new maximum Seaway-size, coastal class self-unloader, the M.V. Algoma Mariner arrived in Canada from China August 2. The Algoma Mariner is 740 feet long and 78 feet wide, with six cargo holds and a maximum deadweight of about 38,000 tons. It is powered by a single, slow-speed engine, which combined with the controllable pitch propeller and an advanced control system, responds with the most efficient combination of engine speed and propeller pitch. The engine room has been designed as an Unmanned Machinery Space, which provides for remote and redundant alarm and monitoring systems. A power management system monitors vessel power demand, and starts and stops generators automatically based on the power demand, as well as having various operating modes to accommodate specific operating conditions, such as unloading and transiting the Seaway locks. All self-unloading equipment within the tunnel, loop and boom are certified for carriage of hazardous materials and dust control, and cargo handling enhancements have been included in the system design. Individual crew cabins feature specially-designed private washrooms, sleep, work and sitting areas and each cabin is equipped with connections to broadband Internet and satellite TV. There are also day rooms and a full gymnasium. Algoma has also announced an investment of approximately C$300 million to construct six new stateof- the-art Equinox Class vessels consisting of four full-size, self-unloading vessels and two full-size gearless bulkers. The first new Equinox Class vessel is expected to deliver in 2013. . New Marine Travelift christened The Great Lakes Towing Company and Great Lakes Shipyard have christened a new 770-ton Marine Travelift. Marine Travelift, Inc. of Sturgeon Bay, Wisconsin built the travelift and shipped it to Cleveland, Ohio by truck, where it was assembled by shipyard personnel. The installation of the travelift completes the third of four planned phases of the $24 million Shipyard Expansion Project. The last phase will include construction of a two-acre, year-round, covered manufacturing facility with the ability to accommodate the travelift. The new travelift is the largest on the Great Lakes and the second largest in the western hemisphere. It was christened America to commemorate a Great Lakes Towing Company tugboat of the same name, which was acquired at the company’s founding in 1899. The travelift will accommodate the simultaneous repair and construction of 10 or more vessels, including U.S. Coast Guard, U.S. Geological Survey and other government vessels, tugs, barges, ferries, workboats, dinner boats, yachts and truckable barges and platforms. The mobile vessel hoist allows for rapid emergency response and permits longer term projects to remain drydocked. Algoma Central sails new self-unloading bulk carrier into Seaway Great Lakes/ Seaway Review expands Editorial Advisory Board The staff of Great Lakes/Seaway Review welcomes the following industry professionals to the magazine’s Editorial Advisory Board: Noel Bassett, Vice President- Operations, American Steamship Company; Dale Bergeron, Maritime Extension Educator, Minnesota Sea Grant; Mike Wallace, Member of Parliament, Burlington, Ontario and Chair of the Marine Caucus; and Greg Wight, President & CEO, Algoma Central Corporation. The board members contribute to the value of the magazine in a variety of ways, including by occasionally contributing Guest Editorials and by sharing their views on matters critical to the continued success of the commercial shipping industry in the Great Lakes/St. Lawrence Seaway system. The new members join a list of esteemed decision-makers, some of whom have served in this capacity for decades. . 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 Merchant Marine honored by U.S. Postal Service The U.S. Postal Service has issued a quartet of stamps depicting ships that helped establish the U.S. Merchant Marine. The stamps feature a clipper ship, an auxiliary steamship, a Liberty ship and a containership. “This is a proud moment for everyone in the U.S. Merchant Marine,” said James Henry, President of the Transportation Institute and Chairman of the Board of American Maritime Partnership. “Ships play a vital role in the development and protection of our nation.” Clippers ships were used from the 1840s through the 1850s, passing the baton to auxiliary steamships. The 2,700 Liberty ships ferried supplies to U.S. troops worldwide during World War II. Containerships reinvented ocean transport in the 1950s and have remained the standard. The stamps were introduced in a dedication ceremony at the U.S. Merchant Marine Academy in Kings Point, New York. They are being issued as Forever stamps and will always be equal in value to the current First-Class Mail one-ounce rate. . Algoma Mariner D A T E L I N E 4 www.greatlakes-seawayreview.com parency, public engagement and accountability; and incorporating sustainable practices throughout port activities. For example, the port is purchasing a 23,551-square-foot office building on West 9th Street, adjacent to the port property. It plans to relocate its offices there as some of the current leases expire in 2014. In addition, the port will continue to lease some of the $3.1 million facility to provide revenue to pay for the building. Currently, the port is responsible for $1.08 billion in annual personal income, $112 million in annual taxes paid to local and state government, $508 million in annual local purchases and $1.81 billion in total annual economic activity. . Toledo Seaport dedicates rail line at Ironville Terminal Staff from the Toledo-Lucas County Port Authority and Midwest Terminals of Toledo gathered with state and local officials to dedicate the port authority-owned rail line under construction at Ironville Terminal. Golden Rail Spikes were pounded into the rail line by the officials in honor of the dedication. The port authority and Midwest Terminals also share future plans to use the 71 acres of waterfront property for material delivery and handling to support a new manufacturing base located on the 110-acre balance of the property. Ironville Terminal is currently in Phase One—rail installation—of the three-phased project made possible by a $5 million Job Ready Sites Grant awarded in 2008 by the State of Ohio to Lucas County to facilitate the rail infrastructure improvements. The grant funding reduced the development window by seven years. The port authority purchased the former Chevron property for $3.4 million in 2008 and formed a private-public partnership with Midwest Terminals of Toledo through a longterm lease for the property. That acquisition made the port authority the largest land mass seaport on the Great Lakes. . U.S. DOT creates maritime industry advisory panel The Marine Transportation System National Advisory Council has been established to advise the U.S. Department of Transportation (DOT) on matters relating to marine transportation. U.S. Secretary of Transportation Ray LaHood has announced the appointment of 29 members, which includes several stakeholders from the Great Lakes/St. Lawrence Seaway system. The council’s tasks includes developing recommendations on establishing new marine highway services and port infrastructure development. “Shifting some of our freight from the highways to open inland waterways is a fuel-efficient, cost-effective way to move goods and reduce Port of Cleveland proposes strategic action plan The Cleveland-Cuyahoga County Port Authority has presented a strategic plan to its Board of Directors for review. The plan includes abandoning plans to eventually move the port onto a yet-to-be-built and filled confined disposal facility (CDF). “There is ample capacity where we are today,” said Will Freidman, port President & CEO. “If we were to grow traditional cargoes, get a container feeder service going, contract for wind turbines and launch a crosslake ferry service, we could fit it in the existing footprint.” The plan is divided into seven areas: growing the port’s core maritime business; targeting the Development Finance Program to serve more communities and organizations; leading critical initiatives for river infrastructure and renewal; managing the Cleveland Lakefront Nature Preserve, formerly known as Dyke 14, to connect people and nature on the waterfront; ensuring the port’s financial sustainability; communicating for trans REGIONAL CALENDAR REGIONAL CALENDAR D A T E L I N E GREAT LAKES/SEAWAY REVIEW July-September, 2011 5 roadway congestion,” LaHood said. “The recommendations developed by the Marine Transportation System National Advisory Council will help us increase transportation efficiency, improve the environment and grow the economy.” In creating the council, the DOT sought members with exemplary experience in serving on other government and industry maritime advisory panels. The members include: • John Baker, President of the Great Lakes District Council, International Longshoremen’s Association, Cleveland, Ohio. • Mark Barker, President, Interlake Steamship Company, Richfield, Ohio. • Judith A. Druskovich, Great Lakes Maritime Academy, Traverse City, Michigan. • Mark Locker, Administrator, Office of Maritime and Freight Mobility, Ohio Department of Transportation, Columbus, Ohio. • Adolph Ojard, Executive Director, Port of Duluth, Duluth Seaway Port Authority, Duluth, Minnesota. For a complete listing of council members, please see the September 5 edition of Digital Dateline at www.greatlakes-seawayreview.com. . Davie Yards sold to Upper Lakes Group Embattled Canadian shipyard, Davie Yards, submitted a last-minute bid for a government contract after a Quebec Superior Court Judge approved the sale of Davie to a consortium of Ontario’s Upper Lakes Group, Korea’s Daewoo Shipbuilding and Montreal engineers SNCLavalin Group Inc. Davie Yards has been under creditor protection since February 2010. “We have deployed tremendous efforts to close a deal under enormous pressure and we are happy we have been able to sell the yard to a credible buyer who, together with its partners, can ensure a viable future for the yard,” said Gustav Nydal, President and CEO of Davie. The sale was approved just two hours before bidding on a C$33 billion government contract closed. The Canadian government will award two contracts: C$20 billion involving about 20 naval warships and C$8 million including Coast Guard icebreakers and naval supply ship replacements. Davie submitted its bid for the smaller, non-combat vessel contract. If selected, Davie could create as many 1,100 jobs at the Lévis shipyard. . SEPTEMBER 20-21 2011 Ohio Conference on Freight Toledo, Ohio http://tmacog.org 22-23 GLMRI, Fall Meeting Duluth, Minnesota, www.glmri.org/news OCTOBER 12-14 21st Breakbulk Americas Transportation Conference & Exhibition New Orleans, Louisiana www.breakbulk.com SEPTEMBER 20-21 Great Lakes Wind Collaborative 4th Annual Meeting Detroit, Michigan John Hummer, jhummer@glc.org www.glc.org/events/ NOVEMBER 8-9 Highway H2O Conference Toronto, Canada Kelly DiPardo, (905) 641-1932 ext. 5377 www.hwyh2o-conferences.com 16-18 SNAME 2011 Annual Meeting and Expo Hyatt Regency Houston Houston, Texas Alana Anderson (201) 499-5066 www.sname.org PORT of DULUTH-SUPERIOR CARGO CAPITAL GreatLakes Here for the long haul. Did you know the Port of Duluth-Superior is 2,342 miles from the Atlantic Ocean? Now that’s a long haul. Yet hundreds of oceangoing vessels (“salties”) make the trip every shipping season to get here – navigating 16 sets of locks along the Great Lakes St. Lawrence Seaway. That’s because this Port links the heartland of North America to the rest of the world…and because there’s no safer, more efficient or environmentally smart way to transport bulk commodities and dimensional cargo than by water. When it comes to delivering the goods, we’re here for the long haul. 218.727.8525 www.duluthport.com 6 www.greatlakes-seawayreview.com GREAT LAKES/SEAWAY REVIEW July-September, 2011 7 S H I P B U I L D I N G With three vessels already under construction at the Chengxi Shipyard in China and two more ordered in September, Canada Steamship Lines (CSL) and sister company CSL International are well on their way to receiving five new ships next season. The original order of two lakers and three Panamax vessels— all self-unloaders—is the third announced by Canadian shipowners since the 25 percent import duty on new foreignbuilt ships was removed a year ago. In September, CSL exercised its option for two additional self-unloading lakers, with scheduled deliveries for 2013. It retains an option for four additional vessels for delivery in 2013. All the ships, including the three Panamax vessels for CSL International, are part of the Trillium Class and share similar design and technology. “The decision is a reflection of the confidence our customers continue to show us in international trades and on the Great Lakes/Seaway,” said CSL Group President and CEO Rod Jones. “It also speaks to our corporate commitments of fleet modernization and sustainability. These ships will be the most advanced and environmentally friendly self-unloaders in the trade.” The 740-foot (225.6 meter) lakers, two of which are under construction, will feature: • EPA Tier II main engine to increase fuel efficiency and decreased release of nitrogen oxide and particulate matter. • A custom hull design to increase cargo lift, fuel efficiency and maneuverability. • The latest generation self-unloading equipment to increase spill protection and decrease noise. • Takeoff generators powered by the main engine to reduce fuel oil consumption. • Fuel tank cofferdams to prevent spills. • A variable speed fixed pitch bow thruster to increase maneuverability and improve safety. • Water-lubricated stern tube bearing to eliminate the need for oil lubricant. • Advanced systems motors to reduce the consumption of electricity. • 35,500 deadweight-metric-ton hull. The project has been in the planning process for years, during which time the engineering staff worked with Deltamarin in Finland on the new vessel design. “CSL has had a long-term relationship with Chengxi that dates to 2004 and includes the delivery of many of our international forebody vessels from the yard,” said Louis Martel, Vice-President, Technical Operations for CSL International. “We’re confident in the experience they have to build quality self-unloaders.” “We also wanted to make sure our return on investment in the areas of efficiency and environmental performance is immediate,” Martel added. “Both the Seaway- max and Panamax vessels will feature the latest cargo-handling systems and the most advanced and fuel-efficient engines in the industry.” The first steel for the domestic and international fleet renewal project was cut in March. Maria Danilenko, On-Site Support Manager with CSL’s Newbuilds Team, was chosen to activate the shipyard’s state-ofthe- art plasma torch and watched it cut a precise line in the plate for the first vessel, a 35,500-deadweight-metric-ton laker. “It was a thrill to press the button that kicked off a project that means so much to our company,” she said. “I was proud to represent our team.” Danilenko is one of seven CSL employees who have relocated to Jiangyin, China to oversee construction. She has been joined by Gerry Begley, Project Manager; Brian De- Roche, Contract Manager; Jean-David Cote, On-site Naval Architect; Igor Novikov, Electrical Engineer; Yuriy Glomin, Chief Engineer; Joseph Kennedy, Chief Engineer. The team is rounded out in Montreal with Kevin Begley, Director of Engineering Projects; Consultant Naval Architect, Garry Cooke; Project Assistant Sheldon Wong; and a variety of inspectors. “There’s obviously a lot of work to be done between now and the time we take possession of the vessels, but we’re anticipating their addition to our fleets, especially here on the Great Lakes where we need to look back to the early 1980s to see the last full newbuild laker to have come online,” said Claude Dumais, CSL’s Vice-President, Technical Operations. The new class of ships is named after the trillium, a flower native to North America and Asia, and the official wildflower of Ontario and Ohio. Its name represents its three petals and three stalks, which align with CSL’s three-fold sustainability philosophy and the advantages the vessels will bring to the fleet in the areas of energy, efficiency and the environment. Having three ships underway and construction on the remaining two Panamax ships launching soon to meet the 2012 delivery dates represents CSL’s approach to completing the project in a quick and calculated manner. “I guess you can say we’ve ratcheted things up a notch with the simultaneous construction of three vessels,” said Project Manager Kevin Begley. “It means more coordination on the part of the Newbuilds Team, but we’re up to the task. We have a good project management system, good people and good communication skills. We’re pretty well equipped.” CSL and CSL International are divisions of The CSL Group, the world’s largest owner and operator of self-unloading vessels. It delivers more than 80 million metric tons of cargo annually for customers in the construction, steel, energy and agri-food sectors. Janenne Irene Pung . Trillium Class unveiled Canada Steamship Lines introduces newbuilds to the system An artist’s rendering provides an introduction to the Trillium Class vessels currently on order by CSL. 8 www.greatlakes-seawayreview.com S H I P B U I L D I N G Fednav Group is building and introducing new vessels for the Great Lakes/St. Lawrence Seaway system. The first of three new ships—representing a C$100 million investment—delivered industrial slag from Japan to the Port of Hamilton in June. The 656-foot (200 meters) Federal Yukina joins the Montreal-based fleet that transits the system an average of 100 times per season. Fednav ships bring raw materials into the system, often carrying industrial slag for steel production, gypsum for drywall manufacturing and fertilizers for agricultural uses. In turn, grain serves as its primary export from the system. The state-of-the-art vessel was built at the Oshima Shipyard in Japan and delivered in October 2010, after being delayed by an earthquake and tsunami. It traveled to Australia and transited the Panama Canal to call at New Orleans and Baltimore before reaching Hamilton. The backhaul out of the system consisted of coke en route to Mobile, Alabama. An order for the latest series was placed during the 2007/08 season, according to Paul Pathy, President and co- CEO for Fednav Group. “It’s a matter of fact that we remain committed to the Seaway,” Pathy said. “It remains a fundamentally important part of the Canadian and United States economies. Welcoming A NEW SHIP Fednav sails the first of three new Seaway-sized unloaders Paul Pathy, President and Co-CEO of Fednav Group (left), and Bruce Wood, President and CEO of Hamilton Port Authority, stand next to the Federal Yukina at Federal Marine Terminals during a celebration welcoming the ship to the system at the Port of Hamilton. SOURCE: FEDNAV GROUP GREAT LAKES/SEAWAY REVIEW July-September, 2011 9 S H I P B U I L D I N G And despite what happens around the world, it will continue to be so. We’re committed to the growth of the trade route.” The dimensions of the ship enable it to travel through the system while still offering flexibility for international trade. The size and lifting capacity of the cranes are a key combination. The Federal Yukina has been constructed with the following upgrades, which improve its environmental performance and cargo-hauling efficiencies: • The vessel is 12 percent more fuel efficient than Fednav’s previous class of ships and will save 770 metric tons of fuel per year while preventing the emission of 2,200 metric tons of carbon dioxide per year— the equivalent of planting close to 5,000 trees. The hull design reduces friction in transit, another component in fuel savings and emissions reductions. • The Federal Yukina and its sister ships are equipped with Tier II engines, which reduce nitrogen oxide (NOx) emissions that contribute to acid rain formation and global warming. Fednav committed to the installation of these types of engines two years before international regulations for new ships require it. • The design incorporates more powerful ballast pumps and enough space to enable the installation of ballast water treatment equipment. This equipment, which will be installed once the U.S. Coast Guard sets the standard and type approval of equipment for the cold water of the Great Lakes, will further reduce the risk of introducing invasive species. To help facilitate this process, Fednav is testing a new ballast water treatment system on one of its vessels in the Great Lakes this year. • The bulk carrier has six holds, three 30 metric-ton gear cranes and the capacity to haul more freight than competitors of its size. “We’re building ships that are more efficient going through the water to save money and save the environment,” Pathy said, noting that while the ship was built in Japan at the same yard where most of Fednav’s fleet originated, an in-house technical team played an important role. “The difference between a good shipyard and a bad one is that a really good one will figure out how to squeeze a couple tons of cargo in there. Oshima is known for being at the front of the pack for building ships with increased efficiencies. I consider them to be a leader, if not the leader, in building bulk ships anywhere.” Federal Yukina’s sister ships are scheduled to deliver in 2012 and 2013. Janenne Irene Pung . Ship Stats Length . . . . . . . . . . . . . . . . . . .656 feet Height . . . . . . . . . . . . . . . . .37.3 meters Beam . . . . . . . . . . . . . . . . .23.76 meters Carrying Capacity . . . . . . . . . . . . .22,700 (Lakes) to metric tons (full draft) . .35,300 Crew . . . . . . . . . . . . . . . . . . . . . . . . .22 Flagged . . . . . . . . . . . . . . . . .Hong Kong Delivered . . . . . . . . . . . . . .October 2010 Named for . . . . . .its Japanese godmother The deck of the Federal Yukina shows its three 30 metric-ton gear cranes. SOURCE: FEDNAV GROUP ton, whereas the current world price, according to Platts IODEX, is about $220/ long ton, meaning costs run just under 25 percent of price. In North America, the price of iron ore is not as high as in the world market. However, at about $150/long ton, pellets make up approximately 18 percent of the price of HRB today, whereas they were only approximately 10 percent back in 2003. The difference in the price of iron ore in North America versus world export prices is the result of different pricing structures. The three largest world sellers (Vale, Rio Tinto and BHP Billiton) are selling on shorter term contracts and moving toward spot prices, whereas Cliffs Natural Resources, the key North American merchant seller, has longterm contracts. Cliffs’ contracts are based on several factors, such as the U.S. Producer Price Index and the price of HRB, as well as the world price of iron ore pellets. Demand for iron ore is strong. Despite high prices, demand for ore is booming everywhere. There are calls for increasing mining capacity and some steelmakers are considering opening new mines or buying back into existing operations. The vertical integration, in many cases, is what steelmakers had before 2003. In North America, two steel making companies remain vertically integrated into iron ore mining: ArcelorMittal and U.S. Steel. The difference between the companies that own pellets and those that must buy 10 www.greatlakes-seawayreview.com C O M M O D I T I E S ing consumes about 98 percent of all the iron ore mined and sold each year. Therefore, there is a close tie or co-dependency between iron ore mining companies and integrated steel mills. Prior to 2003, when the price of iron ore remained low, steelmakers dominated the co-dependence. Much of the iron ore mining capacity in North America was owned directly by steel companies. Internationally, the big steelmakers in Europe, Japan and more recently China dominated the iron ore seaborne trade price negotiations. As a result, the posted price of iron ore was held down and kept close to production costs for more than two decades. The sharp rise in iron ore prices that started in 2003 suggests the pricing power for iron ore has shifted from the steelmakers to the iron ore mining companies. The push by major international miners since 2010 to shorten the pricing period from annually to quarterly, from quarterly to monthly and now to spot-pricing, in some cases, is another indication of power shifting to the miners. North American iron ore. In North America, production costs are a little higher than elsewhere and the merchant selling prices a little lower. Therefore, the profit margin is considerably narrower in North America than for the largest world exporters of iron ore in Brazil and Australia. Even though the profit margin for North American iron ore sellers may be narrower than elsewhere, it is still about 100 percent over costs. Production costs at North American mines run around $70/long ton of 62 percent Fe pellets, FOB shipping port. Current prices for those pellets range from $140 to $155/LT. In the world market, for ore coming out of Brazil for example, mining and processing costs for pellets are about $50/long The iron ore mining companies have captured pricing power from the steelmakers. Recent increases in iron ore prices have divided steelmakers into two groups, those that own ore supplies versus those that must buy ore in the market. In North America, steelmakers with their own ore save about $120/ton of hot rolled band steel (HRB). In the world markets, steel companies owning ore save about $250/ton of hot rolled band, with HRB currently selling for $700 to $800/ton. Today, iron ore prices are at recordbreaking highs. Iron ore pellets have topped $220/metric ton at 62 percent Fe in the world market. Just eight years ago, the same pellets were selling for approximately $32.84/metric ton. As the main ingredient needed to make steel, iron ore prices have become a larger share of the cost to make steel. Iron ore prices traditionally made up only about 10 percent of the price of hot rolled band steel, but in 2009, iron ore prices had grown to about 19 percent of the HRB price. By July 2011, pellets made up approximately 29 percent of HRB prices in the world market. In addition, steel making is almost the exclusive consumer of iron ore. Steel mak- The haves and the have-nots Mine owners gain advantage in evolving pricing structure PETER KAKELA, Ph.D Professor Dept. of Community, Agriculture, Recreation and Resources Studies – CARRS Michigan State University LISA SZYMECKO, J.D. Ph.D Candidate Dept. of Community, Agriculture, Recreation and Resources Studies – CARRS Michigan State University Despite high prices, demand for ore is booming everywhere. in demand, especially in China, and 2) the rather long lead times needed to open new mining capacity and constructing the necessary transportation links to get it to market. There is nothing new here except the length of time that these factors have been operating (nine years), plus the growing power of the largest mining companies. Detailing pricing power shifts. A huge shift in power has occurred between the iron ore and steel industries. Prior to the 2001-02 recession, steel companies held the stronger hand. In Asia, ore prices were influenced by Japanese steelmakers until it shifted to China’s Iron and Steel Association. In Europe, mostly the German steel mills and English steelmakers wielded the power. With the recession, many of the smaller steel companies went bankrupt or shed peripheral operations, especially equity iron ore mines and coking coal, to stave off bankruptcy. These transactions during the 2001-02 recession fundamentally changed the structure of the North American iron ore industry. There are now just three companies that own 82 percent of the North American supply, one being a merchant seller and the other two steelmakers with captive supply. Cliffs Natural Resources is the merchant sell and holds 31.6 million long tons of annual capacity for sale or 31 percent of total. ArcelorMittal is the second largest owner of North American iron ore capacity, with a total of 25.5 million long tons—25 percent of the total capacity—of annual selfsupply capacity. U.S. Steel is the other major self-supplier with 25 million long tons of annual capacity in North America, Iron Ore’s Rise in Price Iron Ore’s Rise in Proportion of Hot Rolled Band Steel 2003 2011 2003 $32/ton 2011 $220/ton $47/ton $300/ton HRB $330/ton $700/ton HRB GREAT LAKES/SEAWAY REVIEW July-September, 2011 11 ing the 2001-2002 recession. Steel companies tried to stave off bankruptcy by shedding peripheral assets and, for a few, it worked. There was little risk in the mine sales as iron ore prices had been stable for about three decades, barely fluttering between $30 and $35/long ton. The wild run-up of iron prices in international seaborne trade during the 2001- 02 recession was not expected. Regardless, prices went from $30/long ton to today’s Q2-2011 price of approximately $220/long ton FOB port of export. Little did the haveiron ore has become a major factor in the price of steel today. Because iron ore pellets are not pure, it takes about 1.5 tons of ore at 62 percent iron to make a ton of steel. Because of this, steel companies in North America must pay about $120/net ton of HRB more than ore owners. In the international market, the difference is about $250/net ton of HRB. Currently, in the world market, HRB is selling for a total price of around $700 to $800 per ton. Mine ownership. The difference in the price of iron ore in the market versus selfnots know that the post-recession price would explode, increasing as much as 87 percent from one year to the next. Prices have now increased more than six-fold in the past nine years. Iron ore prices are not only at record highs, but the pricing system is in a state of flux. Some observers call it chaos. The current high prices are not expected to drop significantly before 2014 and maybe not then. The key forces driving the high iron ore prices are: 1) continued rapid growth supply ore costs is of great concern to many steelmakers. At the recent Steel Success Strategist conference, the steelmakers differentiated themselves as the “Haves” and the “Have-Nots,” based on whether they had captive mines (June 21, 2011; New York, NY, sponsored by World Steel Dynamics and American Metal Market). Many of the have-nots did own some or all of their iron ore supply, but shed it earlier when ore prices were around $30 per long ton. Much of the shedding came dur- Cliffs Nat. Res. Iron Ore Ownership in North America 35% 30% 25% 20% 15% 10% 05% 0% U.S. Steel ArcelorMittal Steel Rio Tinto Mitsubishi LIORI Fund There are now just three companies that own 82 percent of the North American supply, one being a merchant seller and the other two steelmakers with captive supply. SOURCE: KAKELA SOURCE: KAKELA C O M M O D I T I E S 12 www.greatlakes-seawayreview.com push by miners to drop the annual benchmark pricing system and go to much shorter price setting time periods. In Europe, the Swedish iron ore mining company LKAB is reported to have retained the annual pricing structure as negotiated with its major customers in Germany. However, quarterly pricing was introduced in 2010 in the Asian market, but there are signs of even shorten price-changing intervals. In the Asian market, Vale is currently understood to be using quarterly pricing with prices based on one of the new iron ore indexes, such as Platts’ IODEX or The Steel Index (TSI). Both are real-time daily indexes. When used for quarterly prices, the three-month average of the period ending one month prior to the quarter in question is used. Unfortunately, this becomes a backward looking price, relying on the conditions that occurred prior to the quarter in question. Also in the Asian market, Rio Tinto is understood to be willing to sell on the quarterly system or on a shorter-term basis if buyers prefer to negotiate to buy on-spot prices. BHP-Billiton appears to be pushing for even shorter term pricing with ore sales based on weekly or daily averages of one of the daily-spot indexes. All of this suggests continued change, with pricing dominance in the hands of the big iron ore miners. For decades before the 2001-02 recession, costs and price ran close and both ranged from about $30 to $35/long tons of pellets. Now prices in North America are about twice the cost of production. In the world market, prices run about four times the costs. Today, steelmakers have become the “Haves” and the “Have-Nots,” divided by iron ore ownership or the lack thereof. . The current high prices are not expected to drop significantly before 2014 and maybe not then. which is another 25 percent of the total capacity here. Internationally, the world iron ore business has three other major companies. All three are strictly mining companies that control the majority of the seaborne trade. Vale (formerly CVRD) in Brazil, along with Rio Tinto and BHP Billiton operating out of Australia, control about 70 percent of the annual shipments. All three are adding capacity. There are also many “junior” mining projects spring up. However, iron ore supply is not expected to exceed demand for at least four years, probably more like six to eight years. The biggest factor will be the slowing growth rate in China’s demand. Internationally, most iron ore mining is done by independent mining companies that are not owned by steelmakers. The pricing power that global steelmakers held for decades has clearly been taken by the big iron ore mining companies. This is apparent in the current high prices and in the $100 $80 $60 $40 $20 $0 Cost of Fines/Conc. Price of Vale Fines, 62%Fe, FOB-Tubarao 1982 85 90 95 2000 2005 2010 Cost N.A. Fines/Conc. vs Vale Fines, $/LT FOB-shipping port Cost vs Price of Iron Ore Fines $120 SOURCE: KAKELA 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 100 TONS OF ENGINE -NOT ONE OUNCE OF SPECULATION The Great Lakes and St. Lawrence Seaway is a unique operating environment. It challenges engines to accept a full spectrum of loads while delivering fast acceleration. Beyond this it requires that engines installed today are good for tomorrow. They must offer owners the opportunity to adjust to evolving emissions regulations and the flexibility to burn a wide variety of liquid and gaseous fuels. The goal of MaK is to provide marine engines offering maximum return on capital employed and optimum vessel performance over the long-term. 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Automatic ship-shore replication of crew and payroll information For more information, visit our website: www.adonis.no Tailor- made for the Great Lakes zpirit.no T H E A D M I N I S T R A T O R ’ S O U T L O O K GREAT LAKES/SEAWAY REVIEW July-September, 2011 15 BALLAST WATER SCIENCE AND FACTS Findings of two scientific studies contribute to public discussions The summer of 2011 may well become recognized as the moment in time when a comprehensive (and consistent) approach to regulating ballast water discharges in the United States finally began to emerge. The framework for the approach will be due in no small part to the findings of two scientific studies that were released this summer from the National Research Council (NRC) and from the Science Advisory Board (SAB). The results of the NRC and the SAB studies are crucial components to forging a realistic way ahead to protect the Great Lakes against aquatic nuisance species, as well as preserve the many benefits of commercial navigation. They represent authoritative and objective contributions to the public discussion on ballast water. Since 2008, the public discourse over ballast water discharges has focused on a number of key questions, including: • How effective are the various ballast water discharge standards being proposed? • What treatment technologies are currently available to meet the IMO or higher standards? • Are there recognized procedures to verify compliance with these various standards? The NRC and the SAB studies took on these questions and have provided either direct, well-supported answers or at least detailed what further inquiry is needed to obtain the answers. On June 2, 2011, the NRC of the National Academies released a report entitled: “Assessing the Relationship Between Propagule Pressure and Invasion Risk in Ballast Water.” The U.S. Coast Guard and the U.S. Environmental Protection Agency (EPA) requested the report. The study validated the scientific research that is underway assessing the risk of the introduction of aquatic nuisance species into the Great Lakes. Significantly, however, it noted that it is currently impossible, due to a “profound lack of data and information,” for anyone to claim that they can determine what is an effective discharge limit. The report singled out California’s “no detectable living organism” standard as having significant shortcomings since it focuses not on the actual protectiveness of such a standard, but merely the ability to count organisms at low densities. Most importantly, in my view, the NRC study supported the use of the IMO standard as an excellent baseline—in the here and now—for determining what an effective discharge standard should look like. The study cited: • The widespread familiarity with the IMO standard, the fact that it provides a “significant reduction in concentrations beyond ballast water exchange.” • A recognition that a significant amount of testing has already been done around that standard. • Notes the current scientific and practical limitations of going beyond that limit. In effect, the NRC study recognizes what a lot of people have been saying for a while: “We have to start somewhere and the IMO standard is the place to start.” You can find a copy of the NRC study at: http:// www.epa.gov/npdes/pubs/nas_final_report_ prepublication_version.pdf. On July 12, 2011, the SAB, which reports to the U.S. Environmental Protection Agency, released its report entitled: “Efficacy of Ballast Water Treatment Systems.” The EPA Office of Water requested that the SAB provide advice regarding the effectiveness of existing technologies for shipboard treatment of vessel ballast water, how these technologies might be improved in the future and how to overcome limitations in existing data. The SAB concluded: “there are currently ballast water treatment systems that are able to comply with the least stringent standard proposed by the USCG” (i.e., the IMO standard). However, due to technological, logistical and personnel constraints imposed by shipboard operations, the SAB also concluded that “wholly new systems would need to be developed in order to meet more stringent proposed standards” (i.e., standards that are 100 times or 1000 times more stringent than IMO). It is particularly important to note that the SAB concluded that there are currently no procedures to verify compliance with standards more stringent than IMO. As a way forward, the authors provide suggestions on how to improve current limitations of ballast water management using available ballast water treatment technology and verification protocols. You can find a link to a copy of the SAB report at: http://cfpub.epa. gov/npdes/vessels/programdevelopment.cfm. Other notable developments in the ballast water regulatory arena occurred over the summer. When the House Appropriations Committee considered the Fiscal Year 2012 Interior-Environment Appropriations bill in July, they approved on a voice vote an The results of the NRC and the SAB studies are crucial components to forging a realistic way ahead to protect the Great Lakes against aquatic nuisance species, as well as preserve the many benefits of commercial navigation. amendment offered by Congressman Steven LaTourette (R-OH) that would bar EPA funding for Great Lakes states that have enacted ballast water regulations that are more stringent than U.S. Coast Guard and International Maritime Organization standards. In addition, two subcommittees of the House Transportation and Infrastructure Committee held a joint hearing in July to focus attention on varying state ballast water regulations. The Subcommittee on Coast Guard and Maritime Transportation and the Subcommittee on Water Resources and Environment heard testimony from the Coast Guard, EPA, the chairs of the NRC and SAB studies and shipping industry representatives. The purpose of the hearing, entitled “Reducing Regulatory Burdens, Ensuring the Flow of Commerce and Protecting Jobs: A Common Sense Approach to Ballast Water Regulation,” was to focus on options to improve current regulations governing ballast water and other incidental discharges to ensure the free flow of commerce, grow maritime jobs and protect the environment. Following the hearing, the Committee issued a press release calling for a uniform national ballast water standard and indicated its intent to develop a new ballast water legislative initiative. Lastly, a number of foreign governments in addition to Canada have now officially registered their complaints about New York’s proposed ballast water requirements. The governments of Denmark and the Netherlands have written to the U.S. Department of State and Norway has officially contacted the U.S. Department of Commerce. The consistent concern of these governments is that no individual state should be allowed to interfere with international trade by imposing standards that are currently not achievable. Thanks to the two new studies, the ballast water debate can finally be governed by science and fact rather than conjecture and wishful thinking. The findings of these long-awaited studies are worth your review and attention. Furthermore, as Congress takes a renewed interest in the ballast water arena, it is important that you communicate your views on the need for a uniform national standard, one that can be supported by science. . COLLISTER (“TERRY”) JOHNSON, JR. Administrator Saint Lawrence Seaway Development Corporation 229 Voss Kovach Hall 1305 Ordean Court Duluth, MN 55812 (218) 726-7446 A University of Wisconsin – Superior and University of Minnesota Duluth Consortium Research Institute Great Lakes Maritime UNIVERSITY of WISCONSIN Wisconsin’s Leading Public Liberal Arts College The Great Lakes Maritime Research Institute brings together the strengths of the two host universities, along with the research capabilities of other Great Lakes Universities. Established in 2004, the Institute has been designated by the U.S. Department of Transportation’s Maritime Administration as the National Maritime Enhancement Institute for the Great Lakes. Learn more about us at: www.glmri.org Supporting Sustainable Maritime Commerce on the Great Lakes Photo by Chris Benson 16 www.greatlakes-seawayreview.com Together we’ve built a partnership that delivers. www.cn.ca With our reliable supply chain partners, worldwide network and robust infrastructure, no single company delivers North America like CN. Seamless transfer, transportation and delivery. Congressman Hansen Clarke (D-MI) is a first term member of the U.S. House of Representatives, representing Michigan’s 13th Congressional District (southeast Michigan). Clarke serves on the House Committee on Homeland Security and the House Committee on Science, Space, and Technology and is the Vice-President of the Democratic Freshman Class. He also is a member of the Congressional Black Caucus and the Congressional Asian Pacific American Caucus. Congressman Brian Higgins (D-NY) is a fourth term member of the U.S. House of Representatives, representing New York’s 27th Congressional District (eastern upstate New York). Higgins serves on the House Committee on Homeland Security and the House Committee on Foreign Affairs, the Great Lakes Task Force and as Co-Chair of the Revitalizing Older Cities Task Force. He previously served as a member of the House Ways and Means and Transportation & Infrastructure Committees. Senator Mark Kirk (R-IL) is a first term Senator who previously served five terms in the U.S. House of Representatives representing Illinois’ 10th Congressional District (northeast Illinois). Kirk serves on the Committees on Appropriations, Banking, Housing and Urban Development and Health, Education, Labor and Pensions, as well as the Special Committee on Aging. Congressman Steven LaTourette (R-OH) is serving his ninth term in the U.S. House of Representatives, representing Ohio’s 14th Congressional District (northeast Ohio). LaTourette serves on the House Appropriations Committee, subcommittees for Housing and Urban Development, Interior Environment and Related Agencies and is Vice-Chair of the Transportation Subcommittee. Previously, he served as Co-Chair for the Great Lakes Task Force and, in 2005, was named Co-Chair for the Northeast Midwest Coalition’s Manufacturing Task Force. Congresswoman Candice S. Miller (R-MI) is serving her fifth term in the U.S. House of Representatives, representing Michigan’s 10th Congressional District (southeast Michigan). Miller sits on the House Committee on Homeland Security, Transportation and Infrastructure Committee, Subcommittee on Highways and Transit, Subcommittee on Railroads, Pipelines and Hazardous Materials and Subcommittee on Water Resources and Environment. Prior to her election to Congress, she served as Michigan’s Secretary of State. Governor Rick Snyder (R-MI) is serving his first term as Michigan’s governor. Among his duties as governor, Snyder is focused on fostering economic growth, which includes creating new jobs and a stable economy. Before becoming governor, he was instrumental in creating jobs and opportunities throughout the country as a partner with Coopers & Lybrand and President and Chief Operating Officer of Gateway. He raised more than $200 million in venture capital funds to invest in building startup businesses. Congressman Fred Upton (D-MI) is serving his 12th term in the U.S. House of Representatives, representing Michigan’s 6th Congressional District (southwest Michigan). Upton serves as Chairman of the Committee on Energy and Commerce. He has previously served as the ranking member of the Subcommittee on Energy and Environment, Co-chair to the House Republicans’ American Energy Solutions Group, Chairman of the Oversight and Investigations subcommittee, Chairman of the House Subcommittee on Communication and Technology and the subcommittee on Health. 18 Great Lakes/Seaway Review queried a variety of elected officials regarding their thoughts on issues of importance to the Great Lakes/St. Lawrence Seaway system. Elected officials from throughout the eight Great Lakes states and the Province of Ontario were contacted. The following are the responses of those who chose to participate. Great Lakes/Seaway Review: How important is waterborne transportation to your district? Clarke: Metro Detroit may have the busiest international land crossing in North America by trade volume, but waterborne transportation is a critical source of economic activity, generating hundreds of millions of dollars for our local economy. From freighters that serve the steel mills in River Rouge or individuals who want to enjoy time on the water and take their boats from Grosse Pointe to Belle Isle, Detroit ports are critical to our economy and our way of life. Higgins: Waterborne transportation remains very important to the economy of Buffalo and Western New York. In 2009, port facilities in and around the City of Buffalo received or sent 1,262,637 tons of bulk commodities, including 596,043 tons of coal, 308,361 tons of grain, 257,538 tons of limestone, sand and other minerals and 100,695 tons of cement. Additionally, the Port of Buffalo and other local facilities are used for the trans-shipment of large manufactured goods such as windmill components. This commerce supports thousands of good-paying manufacturing and logistics jobs in Buffalo and Western New York. Kirk: Illinois plays a key role in transportation infrastructure across the nation. Illinois is a hub for major rail and interstate highways from the east and west and plays an integral role in the waterborne traffic for commerce. The Mississippi, Illinois and Ohio rivers, as well as the locks along the Chicago Area Waterway System (CAWS) are vital components of the nation’s waterway infrastructure. According to the Army Corps of Engineers national summaries for waterborne commerce, a total of 119,087 thousand short tons of cargo moved through Illinois in 2009. We rely on our ports, harbors and inland waterways for domestic and international trade, transporting precious commodities, such as agriculture crops and raw materials. For some industries, our waterborne transportation GREAT LAKES/SEAWAY REVIEW July-September, 2011 19 L E G I S L A T I O N system is the most effective and efficient means of transporting goods to and from North America. As our country struggles to right its economy, it is critical that we maintain support for our maritime infrastructure. LaTourette: The 14th District is home to the largest stretch of Lake Erie shoreline of any congressional district in Ohio, making waterborne transportation both useful and critical. We have a number of ports serving commercial shipping, helping move steel and other cargo, and supporting jobs in the area. Recreational boating also draws interest with many area marinas. Plus, depending on discussions with Canada, a ferry service transporting passengers and cargo across Lake Erie will hopefully soon come to fruition, serving as a great boon to our economy. Miller: Waterborne transportation is critical to Michigan’s 10th Congressional District. Not only is boating a way of life in my district for recreation, but coal-powered power plants are served by lake carriers. Michigan receives two-thirds of its energy in the form of coal power, so maritime transportation is vital not only for recreation in my district, but it affects every aspect of life. Snyder: Waterborne transportation is essential to Michigan’s economy. Our commercial ports typically handle 75 to 95 million tons of cargo annually. Michigan’s mining, construction and steel industries and electric utilities depend on the availability of efficient maritime transportation. Upton: Southwest Michigan’s harbors are an integral cog in our region’s economic engine. Not only does the industry itself generate local job growth and economic activity, moreover, our harbors are vital inlets for raw materials that drive our state’s economy as a whole. Continuation of this critical infrastructure is a matter of jobs, plain and simple. Great Lakes/Seaway Review: What role do you see waterborne transportation playing in establishing and maintaining a sustainable network of delivering goods to and from North America? Clarke: The Port of Detroit lies in the center of America’s industrial heartland. Our people and businesses depend on timely access to goods and services. The integrated supply chain of U.S. and Canada is critical to producing the products that are helping to reinvigorate our manufacturing sector. The prosperity of these businesses will depend on access to transportation and the Great Lakes can supply a reliable, low-cost shipping option. Together with other incentives to support U.S. manufacturing, waterborne transportation will be a critical piece of restoring the “Made in America” label. Higgins: The U.S. Energy Information Administration projects the cost of crude oil will increase approximately 25 percent between now and 2035, in addition to basic economy-wide inflation. In that context, it is reasonable to expect some degree of modal shift to waterborne transportation and other fuel-efficient modes and away from other modes which are less fuel-efficient; specifically, it will be interesting to see if these market changes will spur short sea shipping on the Great Lakes. It will also be interesting to see if the increasing congestion at coastal ports will cause some container traffic to shift to ports like Buffalo, despite the vessel size limitations associated with the St. Lawrence Seaway. LaTourette: It’s already valuable in reducing shipping times and could have many opportunities for growth, particularly if bills like the Short Sea Shipping Act pass Congress. A 2009 study by the U.S. Army Corps of Engineers found that Great Lakes shipping saves about $3.6 billion a year over the next leastcostly methods of transportation— by rail or truck. Just in my neck of the woods with the St. Lawrence Seaway system, industrial goods like i

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