Vol.42 No.2 OCT‑DEC 2013

V O L U M E 4 2 O C T O B E R – D E C E M B E R 2 0 1 3 N U M B E R 2 The 2013 harvest . Soo Locks vulnerability . European liner service . Shipyard projects abound G LGREAT LAKER Interlake Steamship Phone: 440-260-6900 .. 800-327-3855 FAX: 440-260-6945 Email: boconnor@interlake-steamship.com Website: www.interlakesteamship.com Anchored in the tradition of men and ships with names like Mather, Coulby, Dalton, Sherwin, and Hoyt, The Interlake Steamship Company has been a recognized leader in Great Lakes transportation for one hundred years. Harry Coulby, who combined several fleets into Interlake Steamship in 1913, was followed by other forward-thinking men who built new ships, modernized the fleet, and carried on the tradition of superior customer service. Over the years, Interlake Steamship has celebrated milestones such as the .. MV James R. Barker – the first 1000-foot ship built entirely on the Great Lakes in 1976; .. MV Paul R. Tregurtha – the longest Great Lakes vessel built (as William J. DeLancey) in 1981; .. Streamlined Inspection Program – implemented as a prototype aboard one ship in 1996, SIP is now a fleetwide standard; .. Tug/barge DorothyAnn-Pathfinder – self-unloading barge converted from the idle ship J. L. Mauthe in 1998 paired with Z-drive tug Dorothy Ann built in 1999; .. Certification to ISO standards – first US-flag Great Lakes fleet certified to the ISO 9002 standard in 2000; .. Diesel engine repowering – three steamships and one motor vessel have received new highly-automated, environmentallyfriendly diesel power plants between 2006 and 2012. Interlake’s commitment to providing safe, reliable, responsive and environmentally responsible customer service now extends into the next 100 years. 100 Years Committed to Excellence Delivering a Tradition of Service The Interlake Steamship Company 7300 Engle Road Middleburg Heights, Ohio 44130 GREAT LAKES/SEAWAY REVIEW October-December, 2013 1 The international transportation magazine of Midcontinent North America Duplicity needed at the Soo Locks in Sault Ste. Marie, Michigan. Page 11. Shipbuilding projects flow into system shipyards. Page 36. The St. Marys Challenger takes her final journey under her own power. Page 65. 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 Between issues of Great Lakes/Seaway Review, stay current with our free weekly news service, Digital Dateline, at www.greatlakes-seawayreview.com/digdateline/ A R T I C L E S Meet the Fleet END OF AN ERA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 St. Marys Challenger being converted to ATB. Passenger Cruising WELCOMING OLD FRIENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Passenger cruise industry picks up for 2014, C. Columbus to return. Lighthouses VISITORS GET GREEN LIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Historical Fort Gratiot light station reopens after tower restoration. Meet the Crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 On The Radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Dateline GREAT LAKES/ST. LAWRENCE SEAWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Commodities U.S. CORN AND THE SEAWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Can Trans-Atlantic Trade and Investment Partnership reopen the door? Infrastructure THE VULNERABLE SOO LOCKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Lack of duplicity could be a national security threat—again. GETTING THROUGH THE SOO LOCKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Corps presses for funding to complete St. Marys River and Soo Locks renewal. Interview WELCOME TO DULUTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Duluth Seaway Port Authority welcomes new Executive Director. Economic Outlook SEEING RECOVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Global economy expected to grow in 2014. Interview LEADING THE U.S. SEAWAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Betty Sutton weighs in on her plans and goals as Administrator. Ports A NEW LINER SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Port of Cleveland to launch scheduled freight service to Europe. Guest Editorial STEPHEN J. BROOKS, CHAMBER OF MARINE COMMERCE . . . . . . . . . . . . . . . . . 35 Sustaining short-sea shipping. Shipbuilding & Ship Repair FINCANTIERI COMPANIES BUSY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Winter signals annual uptick at Lake Michigan shipyards. NEW OPPORTUNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Great Lakes Shipyard enjoys the benefits of new equipment, expanding business. OFFSHORING, REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 How globalization has impacted domestic shipyards. END OF LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Toledo Shipyard scraps out Phoenix Star. DUAL-FUEL TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Combining fuel flexibility with efficiency and environmental performance. A NEW APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Ocean Group completes high-tech dredging vessel. NEW OWNERS, NEW OPPORTUNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Chantier Davie Canada upgrades shipyard, secures LNG ferry contract. MAJOR INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 McKeil Marine adds new deck barges to its fleet. Ports IMPROVING CONNECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Port infrastructure investments drive multimodal options. GREAT LAKER O C T O B E R – D E C E M B E R 2 0 1 3 Great Lakes/St. Lawrence Seaway Ocean Group 2 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 Cris Shankleton Creative 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 Patricia A. Rumpler Account Manager Ellen Trimper Account Manager William W. Wellman Senior Account Manager EDITORIAL ADVISORY BOARD John D. Baker, President, Great Lakes District Council, International Longshoremen’s Association; Mark Barker, President, The Interlake Steamship Company; Noel L. Bassett, Vice President-Operations, American Steamship Company; Dale Bergeron, Maritime Transportation Specialist and Educator, Minnesota Sea Grant; David Bolduc, Executive Director, Green Marine; Stephen Brooks, President, Chamber of Marine Commerce; 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; Peter Kakela, Ph.D., Professor, Department of Community, Agriculture, Recreation and Resource Studies, Michigan State University; Robert Lewis-Manning, President, Canadian Shipowners Association; Mark Pathy, President & Co-CEO, Fednav Limited; 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. © 2013 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: The Mesabi Miner surrounded by ice. Photo by Robert Welton Great Laker Cover: St. Marys Challenger prior to her conversion. 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 42 OCTOBER-DECEMBER 2013 NUMBER 2 Fmax F X . . t t Axe = Fdt = Fmax t . . 1 2 ( . (Hyp. : variation force) . t ) t t 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 October-December, 2013 3 DATELINE Reconstruction injects almost $100 million into regional economy A Seaway project involving the removal of timber tie-up walls and the construction of new tie-up walls using steel and concrete is valued at C$86 million. An additional C$14 million is being dedicated to engineering, supplies and inspections, according to the St. Lawrence Seaway Management Corporation (SLSMC). Oakville-based Dufferin Construction is doing the work on the Welland Canal. “We anticipate that a substantial amount of this investment will directly benefit the regional economy,” said Luc Boisclair, SLSMC General Manager Operations– Welland Canal. Over five years, SLSMC’s Asset Renewal Plan totals C$395, including replacement of the tie-up walls and continued development of hands-free mooring. The tie-up walls to be replaced in the recently awarded contract to Dufferin are located alongside Lock 1, in the vicinity of Lakeshore Road; Lock 2, in the vicinity of Carlton Street; and Lock 3, in the vicinity of the St. Catharines Museum. Work began in early October and is scheduled to conclude in the spring of 2017, with one tie-up wall being done per year. The winter work involves draining and flash freezing the lock area, demolishing the concrete covering the timber poles, removing the timber poles, replacing the poles and installing new rubber fenders where wooden ones were located before. Each wall involves about 10 weeks of work. The expected lifespan of the new, steelbased walls is 75 years. During construction, portions of the Welland Canal Parkway Trail, which runs alongside the tieup walls, will be closed periodically. In addition, portions of the Welland Canals Parkway—commonly referred to as Canal Road—will also be closed periodically. Under the current outlook, the project will not impact the flow of traffic crossing any of the bridges that span the Welland Canal. In addition to wall replacements, the fourth generation of hands-free mooring is being installed at the Beauharnois Lock near Montreal, Quebec. The new generation allows the pads full vertical agility when attaching to the ships. . Capt. Dean Hobbs passes Senior Captain of the carferry S.S. Badger, Capt. Dean Hobbs died November 21 at the age of 59. Hobbs was a graduate of—and instructor at—the Great Lakes Maritime Academy and also held a bachelor’s degree from the Maine Maritime Academy. In 1976, he became the youngest licensed Captain on the Great Lakes. At the time of his death, he was Secretary of International Shipmasters’ Association (ISMA) Lodge 23 in Traverse City, Michigan. He served as ISMA Grand Lodge President in 1999. He was also Senior Trial Master for Marinette Marine Corporation and assisted in the sea trials and delivery of vessels, such as new U.S. Coast Guard cutters and several U.S. Navy Littoral combat ships. Hobbs owned the sea trial and vessel delivery company ABCD Marine LLC. One of his most recent projects was the delivery of the new National Oceanic and Atmospheric Administration fishery research vessel Reuben Lasker. Early in his Great Lakes career, Hobbs sailed and was in fleet operations for the Inland Steel and American Oil Co. fleets. He started working for Lake Michigan Carferry in 1995. He served as Relief Master of the tug Ken Boothe Sr. for the early part of the 2012 shipping season. Capt. Hobbs is survived by his wife, Brenda, two children and three grandchildren. . Senate-House joint conference committee considers WRRDA Act of 2013 Legislators leading the House/ Senate conference committee on the Water Resources Reform and Development Act of 2013 (WRRDA) are considering the final version to be presented to President Barack Obama. Thirteen Senators and 34 House Representatives from the Great Lakes region sent the committee separate letters in November urging the final conference report to include the following priorities: • Dedication of at least 15 percent of all annual Harbor Maintenance Trust Fund appropriations for Great Lakes Navigation System operations and maintenance • Specific authorization of Great Lakes harbors, ports and navigation features as part of a single navigation system—the Great Lakes Navigation System • Limitations on expanded uses of the Harbor Maintenance Trust Fund to ensure currently authorized uses are addressed first, particularly in the Great Lakes The committee’s recommendation will go to U.S. Transportation Secretary Anthony Foxx to present to the Obama Administration. This recommendation is consistent with President Obama’s goal of doubling U.S. exports by 2015. “Congress has not enacted a WRDA since 2007,” said Bill Shuster (R-PA) in opening statements to the committee. “We can’t afford to delay. This legislation is about strengthening our infrastructure so we can remain competitive. It’s about economic growth. It’s about jobs.” . Capt. Hobbs U.S. Senator Amy Klobuchar (D-MN) is presented with the 2013 Great Lakes Legislator of the Year Award by the Great Lakes Maritime Task Force. Pictured (from left): Steve Fisher, American Great Lakes Ports Association; Jim Henry, Transportation Institute; Glen Nekvasil, Lake Carriers’ Association; James R. Barker, The Interlake Steamship Company; Gregg Ruhl, Great Lakes Fleet; Sen. Klobuchar; Bob Mondron, Carmeuse Lime & Stone; Betty Sutton, U.S. Seaway Administrator; Bruce Olsson, IAMAW; Mark Burtschi, ArcelorMittal. Stewart given Excellence in Service award Richard Stewart, Co-Director of the Great Lakes Maritime Research Institute, was named recipient of the University of Wisconsin-Superior Excellence in Service award. Dr. Stewart started his career as a U.S. Merchant Marine seaman, ship’s officer and vessel captain prior to entering the academic world. His service, as recognized during the award presentation, includes 26 years of teaching undergraduate and graduate students in the U.S. and overseas and being published in textbooks, journals and research reports. He has also been a principal investigator for more than $10 million in research grants in transportation, logistics and environmental management. . Senator Klobuchar named 2013 Great Lakes Legislator of the Year Minnesota Senator Amy Klobuchar (D) has been named 2013 Great Lakes Legislator of the Year by the Great Lakes Maritime Task Force. “Senator Klobuchar has been focused on Great Lakes issues since her first day in the Senate,” said Don Cree, President of Great Lakes Maritime Task Force. “These have been critical times for the Great Lakes Navigation System. The dredging crisis has severely impacted waterborne commerce, but thanks to her support for legislation that would require the Harbor Maintenance Trust Fund to spend more of the tax dollars it collects for dredging on dredging, we are a giant step to closer to ships once again carrying full loads.” Klobuchar has also been supportive of funding a second Poe-sized lock at Sault Ste Marie, Michigan and efforts to maintain the U.S. Coast Guard’s icebreaking fleet on the Lakes. A service life extension program for the oldest icebreakers will begin in 2014. With her selection as Great Lakes Legislator of the Year, Senator Klobuchar becomes the second Minnesota legislator to receive the award. The first was Congressman James L. Oberstar (D) in 1999. . Adonis D A T E L I N E David Bolduc awarded 2013 St. Lawrence Award The St. Lawrence Economic Development Council (SODES) has presented Green Marine Executive Director, David Bolduc, with the XXI St. Lawrence Award. The St. Lawrence Award is presented annually to an organization, company or individual who has stood out over the past year by making an exceptional contribution to or realizing a project that advances the St. Lawrence region’s economic development while encompassing the principles of sustainable development. An independent jury of leading individuals in their respective fields outside the marine industry chooses the award’s recipient. “David has been involved in the marine industry for 10 years,” said SODES President, Nicole Trépanier. “His commitment, dedication and professionalism have led Green Marine this year—the fifth consecutive year of its participants evaluating their environmental performance— to remarkable success.” Green Marine’s influence has grown beyond the Great Lakes/St. Lawrence Seaway region, showing the efforts to recruit new members and expand the environmental program throughout North American. Bolduc also serves on the Great Lakes/Seaway Review Editorial Advisory Board. . Port of Duluth sets specialized rail haul record to Canada In December the Port of Duluth broke a record for the highest count of independent, over-dimensional trains used for a single, heavyhaul project. A total of 16 huge electrical transformers— each weighing upwards of 300 tons—were shipped from Antwerp and discharged in the Port of Duluth during the 2013 shipping season. The transformers were then moved to the Province of Alberta on specialized 16-axle, Canadian Pacific railcars to be part of a major power transmission line that will run from north of Edmonton to south of Calgary. The German-built transformers arrived in Duluth in succession aboard Hansa Heavy Lift vessels and were discharged, along with nearly 500 crates of smaller components, at the Clure Public Marine Terminal in Duluth by crews from Lake Superior Warehousing, according to the port authority. . GLMA cadets can earn four-year degree in maritime technology Cadets at the Great Lakes Maritime Academy (GLMA) in Traverse City, Michigan can pursue a bachelor of science in maritime technology through Northwestern Michigan College. “For our students in the Northwestern Michigan College Great Lakes Maritime Academy, the degree means they can graduate earlier, join the workforce earlier and accumulate a more traditional number of credit hours in pursuit of their bachelor’s degree,” said NMC President Timothy Nelson. “Our estimate is that this degree path will save cadets in the neighborhood of $10,000 and allow some to go to work a semester earlier.” Jerry Achenbach, Superintendent of NMC’s Great Lakes Maritime Academy, said the new degree will benefit GLMA alumni as well. “The ability to offer a four-year degree will put us on an even playing field with the other six maritime academies in the nation,” he said. “I look forward to working with our alumni in an effort to create a path for them to earn a fouryear degree. It’s an option that many of them have never had before.” . David Bolduc Bring your ships and shore together in one integrated system A Complete Maritime Human Resource System: For more information, visit our website: www.adonis.no Tailor-made for the Great Lakes x Full US Payroll with built-in ta a Requirements .. Documents sc Crew Management .. Crew Pla Crew Portal with Ti and social security .. All AMO, SIU a canning .. Mail Merge .. Web Recruitm anning .. Course Planning .. Competen me & Attendance U and USW ment Portal nce Matrix and www payroll information System interfaces .. E-mail int calculations and reporting .. C w.terface .. Automatic ship-shore replic Check printing .. Direct Deposit interfa ation of crew and aces .. Accounting 4 www.greatlakes-seawayreview.com Duluth Seaway Port Authority REGIONAL CALENDAR REGIONAL CALENDAR GREAT LAKES/SEAWAY REVIEW October-December, 2013 5 D A T E L I N E New online service makes marine shipping easier One outcome from a study on Great Lakes/St. Lawrence Seaway system competitiveness identified the need to expedite quotes between shippers and vessel owners. A new online website is now matching bulk, breakbulk and project cargo with vessel capacity. MarineGateway.net is the tool currently serving the Port of Hamilton. It’s free to join the site and login. Once a member, users have access to postings made by shipping lines on capacity for loads of all sizes and shippers and agents will be notified of the upcoming capacity. Shippers and agents can also post cargo needing to be shipped. Confidential quotes on cost may even be sent through email to help match cargo with vessel availability. The online service is hoped to clear cargo backlogs from the roads and rail and move it on the waterway. The pilot project is being handled at the Port of Hamilton, but can be customized for other ports—making it a marketing tool for the entire system. According to Ian Hamilton, Vice President of Business Development for Hamilton Port Authority, anyone can join the site: freight forwarders, shipping lines, third-party logistics companies, insurers, stevedores, cargo owners and others. “For many years, we were hearing from users: ‘It can be difficult to get competitive quotes; the routings and support service requirements are complicated; or the system doesn’t seem designed to accommodate smaller loads,’” he said. “We’re responding directly to customer demand by making marine shipping easier and more flexible.” The website can also connect users to those representing insurance, storage and stevedoring. It’s being referred to as a one-stop-shop that creates key connections. Of particular benefit could be the pairing of three or four smaller cargoes together to make a shipment viable. MarineGateway.net is designed to find cargo for unused marine capacity. . JANUARY 12-16 Transportation Research Board Annual Meeting Washington, D.C. www.trb.org/AnnualMeeting2014/AM2014 Registration.aspx 17 Marine Club Annual Dinner Royal York Hotel, Toronto, Ontario www.themarineclub.org 29-30 Cargo Logistics Canada Vancouver, British Columbia www.cargologisticscanada.com FEBRUARY 4-5 Great Lakes Waterways Conference Marriott Downtown Key Center Cleveland, Ohio www.maritimemeetings.com/ 6-8 I.S.M.A. Grand Lodge Convention Kewadin Convention Center Sault Ste. Marie, Michigan www.ismatwinsault22.com/ MARCH 4-6 Great Lakes Days Washington, D.C. www.glc.org/greatlakesday MAY 7-9 Mari-Tech 2014 Niagara Falls, Ontariowww.maritech. org/index.php/mari-tech-2014-menu 12-15 Breakbulk Europe Antwerp, Belgium www.breakbulk.com MEET THE HEAVY HITTERS The Port of Duluth ranks tops in North America for highway and rail clearances, plus quality customer service. The PORT of DULUTH delivers a heavyweight performance second to none. Strategic location. Logistics expertise. Award-winning service. Make the right move. It’s worth the weight. ………………………………………………………… ……………………………………………….. LAKE SUP ER IOR WAREHOUSINGCO.,INC. Canfornav 6 www.greatlakes-seawayreview.com GREAT LAKES/SEAWAY REVIEW October-December, 2013 7 C O M M O D I T I E S DICK KASTING Director of Strategic Relations U.S. Grains Council U.S. corn has become a scarce commodity on the Great Lakes/St. Lawrence Seaway system. Old Seaway hands will recall that this was not always the case. In the 1960s and ‘70s, first Western Europe and later Russia were top export markets for U.S. corn and the Seaway carried a major share of that trade. Those days, however, are long past. Today, the major U.S. corn export markets are to Asia, the emerging economies of Latin America, North Africa and the Middle East and neighbors in Mexico and Canada. The bulk of U.S. corn bound for export flows down the Mississippi to the Gulf, with the remainder going by rail to Mexico or the Pacific Northwest en route to Asia. At the same time, changes in the European markets, compounded by policy barriers, have severely reduced not only the absolute volume but also the market share of U.S. corn exports to Europe. But markets continue to evolve. The current Trans-Atlantic Trade and Investment Partnership (T-TIP) negotiations pose challenges and opportunities. Among the most contentious of these—but also among the most potentially rewarding—is biotechnology, where artificial and unnecessary European regulatory barriers suppress free trade, at great cost to European consumers and U.S. producers alike. Progress in this area is essential to reopen the door to normalized U.S. corn exports to Europe. While a return to the grain export “glory years” of the 1960s and ‘70s is not in prospect, the Seaway system could again become an attractive avenue for a moderately increased share of U.S. corn exports if these barriers are removed. Expectations management. It is important to remain realistic. Asia today is the global driver of corn import demand. European markets are mature, affluent and growing only slowly; several major European countries, in fact, are now facing the prospect of declining populations. Still, the European Union (EU) remains an importer U.S. corn and the Seaway Can Trans-Atlantic Trade and Investment Partnership reopen the door? SOURCE: JERRY BIELICKI Ports o fIndiana 8 www.greatlakes-seawayreview.com C O M M O D I T I E S of feed grains and the Seaway system remains the closest North American export channel to northern Europe. Despite the advantages of the inland waterway-Gulf of Mexico route, the Seaway continues to ship approximately 5-6 percent of U.S. soybean exports, as well as Canadian grain. Absent Europe’s trade barriers on corn, it could likely regain a share of the U.S. corn trade as well. Winning marketshare, however, won’t be easy. The rise of Black Sea production and export pressure from South American producers make Europe a highly competitive market for U.S. exporters. Ukraine especially is a strong regional competitor with an inside track. Still, U.S. corn continues to enjoy important advantages in availability, agility, transparency and responsiveness. Since the Seaway continues to be an active channel for Canadian grain producers, as well as U.S. soybeans, U.S. corn could well get back into the Seaway traffic once the “Do Not Enter” signs (i.e., policy barriers) are removed. The EU and biotechnology. The impact of EU trade barriers is clear. Europe’s total corn imports have declined significantly from the level of the 1960s, ‘70s and ‘80s, but the EU remains a consistent importer, with purchases ranging typically between two and four million metric tons a year, varying due to the vagaries of weather and local production. Until 1997/98, the U.S. supplied most of these imports. And then— coinciding with the introduction of genetically modified corn events in the U.S. market—the bottom dropped out. EU corn imports continued approximately as before, with noteworthy weather- related spikes in a number of years. But U.S. marketshare collapsed. Some of this reflected the rise of Black Sea production. But much of it is attributable to Europe’s The bulk of U.S. corn bound for export flows down the Mississippi to the Gulf, with the remainder going by rail to Mexico or the Pacific Northwest en route to Asia. 120 100 80 60 40 20 0 . Sub-Saharan Africa . Southeast Asia . South Asia . South America . Other Europe . Oceania . North America . North Africa . Middle East . Former Soviet Union . European Union . East Asia . Central America . Caribbean European Corn Imports: Seaway “Glory Years” European Corn Imports Now: Can the Seaway Reclaim a Share? 1960/ 1961 1965/ 1966 1970/ 1971 1975/ 1976 1980/ 1981 1985/ 1986 1990/ 1991 1995/ 1996 2000/ 2001 2005/ 2006 2010/ 2011 Millions of Metric Tons/Year GLOBAL CORN IMPORTS BY REGION: 1960/1961-2011/2012 SOURCE: U.S. DEPARTMENT OF AGRICULTURE Andrie Inc. GREAT LAKES/SEAWAY REVIEW October-December, 2013 9 The Great Lakes premiere marine transportation company offering: • Asphalt & fuel oil transportation • Vessel & fleet management • Project management • Ice breaking • Ship assistance • General towing Stan Andrie President 231.332.9227 Mike Caliendo Vice-President—Transportation 231.332.9243 P.O. Box 1548 Muskegon, MI 49443 Fax 231.726.6747 www.andrie.com longstanding resistance to biotechnology and its exploitation of biotech issues as nontariff trade barriers. T-TIP is an important vehicle for addressing these issues. T-TIP and biotechnology. T-TIP has ambitious goals. It seeks a comprehensive, high-standard agreement between the U.S. and the EU that would open markets, eliminate all tariffs on trade, improve market access on trade in services, reach agreement on longstanding issues concerning intellectual property and state-owned enterprises, encourage regulatory harmonization, reduce non-tariff trade barriers and provide for effective enforcement. For U.S. agricultural producers and exporters, risk-based standards, transparency and enforceability are especially important objectives. Although agricultural biotechnology continues to grow rapidly around the world—with more acreage in 2012 in developing countries than in the developed world—the EU remains reluctant to embrace the technology. This may change in time. Biotechnology enables farmers to grow more with less, reducing energy consumption, irrigation, soil loss, insect damage and fertilizer, herbicide and pesticide use. With world population expected to reach nine billion by mid-century, these advantages will grow in importance. Even in Europe, Bt-corn is grown in Spain, Portugal, the Czech Republic, Slovakia and Romania, though acreage is limited. In addition, the EU countries accept biotech corn for feed use, after regulatory approvals are obtained. But as is so often the case, the devil is in the details. Among the key issues to watch in T-TIP negotiations are: C O M M O D I T I E S Record Canadian and American grain crops bolstered Great Lakes/St. Lawrence Seaway shipping this fall as vessels carried wheat, corn and other agricultural products through the waterway for export to Europe and North Africa, according to Marine Delivers. Total cargo shipments on the waterway were just over 27.8 million metric tons from March 22-October 31, down 6.7 percent compared to the same period last year, according to numbers released by the St. Lawrence Seaway Management Corporation. Total grain shipments were 5.5 million metric tons, down 8 percent over the same period in 2012. “The Canadian and U.S. grain harvests are now moving through the system—with record crops in both countries,” said Bruce Hodgson, Director of Market Development for the St. Lawrence Seaway Management Corporation. “We’re seeing more ocean-going ships coming into the waterway to pick up grain for export. We’re optimistic we’ll end the season close to last year’s cargo volumes.” Canadian ports saw increases as the harvest began moving through the system. At the Port of Thunder Bay, Richardson International opened a second grain elevator in October, doubling its capacity at the port. According to Tim Heney, CEO of the Port of Thunder Bay, Richardson was receiving two ships at a time during the first week of November. The Port of Hamilton saw 83 vessels and 1.58 million metric tons of cargo transiting the port in October alone, up 16 percent over last year through October 31. In the U.S., nearly one million metric tons of U.S. grain moved through the system through October. Record grain crop boosts shipping Ports see tonnage increases as harvest moves through system Great Lakes Shipyard 10 www.greatlakes-seawayreview.com • Timeliness of approvals. The EU has elaborate regulatory systems to review and approve biotech events. Unfortunately, the EU routinely fails to meet its own timetables and deadlines and runs years behind in approving events already commercialized in the U.S., South America and elsewhere. The pace of development of new biotech events is accelerating and chronic delay functions as a non-tariff trade barrier. • Approval of stacked events. Increasingly, biotech seed includes multiple “stacked” events, each of which confers a desired trait on the plant. In the U.S., stacked events are tested and approved concurrently. The EU insists on separate tests for each individual trait and then, once this is done, yet another test on the stack as a whole. Redundancy adds yet more cost and delay, functioning again as a non-tariff barrier. • Low-level presence. The EU lacks a workable policy on the low-level presence of unapproved events in corn shipments. Trucks, elevators, barges and holds are likely to contain trace residues of previous cargoes. In an integrated, efficient, high-volume shipping system, some commingling at trace levels is virtually inevitable. A reasonable tolerance standard for low level presence is essential. The T-TIP negotiations include all facets of U.S.-EU trade, from agriculture and other commodities to manufactured products, services, intellectual property, banking and investment. The Seaway shipping community will have myriad interests at stake. But agriculture is a U.S. trade champion and Europe is a market worth competing for. The Great Lakes/St. Lawrence Seaway system is a highway pointing straight at northern Europe. It is time to remove the artificial barriers that tend to fence U.S. corn out of the market. T-TIP gives us that opportunity. It is an opportunity we should seize. . C O M M O D I T I E S The Great Lakes/St. Lawrence Seaway system is a highway pointing straight at northern Europe. It is time to remove the artificial barriers that tend to fence U.S. corn out of the market. EU CORN IMPORTS: 1990/1991-2011/2012 SOURCE: U.S. GRAINS COUNCIL 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1990/1991 1995/1996 2000/2001 2005/2006 2010/2011 Thousands of Metric Tons TY Imports From U.S. GREAT LAKES/SEAWAY REVIEW October-December, 2013 11 I N F R A S T R U C T U R E PETER J. KAKELA, PH.D. Professor Dept. of Community Sustainability Michigan State University LISA SZYMECKO, PH.D. Community Outreach Researcher College of Medicine University of Michigan In the United States, the Soo Locks allow large cargo ships to traverse the 21-foot drop from Lake Superior to Lakes Michigan, Huron and Erie. Iron ore is by far the largest cargo shipped through the locks and, recently, it has become not only fundamental to industrial production, but highly valuable. In dollar value, iron ore has become the world’s second most valuable mineral resource, second only to oil. About 80 percent of the iron ore mined in the U.S. is shipped through the Soo Locks. What if the Soo Locks were damaged or destroyed? Or blocked? Or bombed? The vulnerable Soo Locks Lack of duplicity could be a national security threat—again Fednav FMT FALLine Fednav Direct GLOBAL FEDNAV Business Partner www.fednav.com We are committed to environmentally responsible business and operating practices. GREAT LAKES/SEAWAY REVIEW October-December, 2013 13 I N F R A S T R U C T U R E The Soo Locks are a critical link in the Great Lakes/St. Lawrence Seaway system. The locks allow major bulk commodities to be shipped from ports on Lake Superior to the lower Great Lakes and vice versa. According to the U.S. Army Corps of Engineer’s Traffic Statement for the 2012 Navigation Season, the most prominent commodities shipped on the Great Lakes through the Soo Locks during the shipping season of 2012 were: Of the four largest commodities, iron ore is the largest volume and the most valuable. This has long been the case because of the large volumes of iron ore, but now the high volumes of iron ore have been coupled with extremely high prices. Iron ore is the prime ingredient in steel and “steel is a strategic material,” according to the American Iron and Steel Institute’s Profile 2013. American-made steel is vital to the United States’ national security and is almost exclusively made from Americanmined iron ore. About 99 percent of the iron ore mined in the U.S. comes from two states, Michigan and Minnesota, according to a U.S. Geological Survey, Mineral Commodity Summaries. Most of the iron ore mined in northern Michigan and northern Minnesota is shipped on the Great Lakes. The domestically-mined iron ore feeds domestic steel mills clustered around the southern shores of the Great Lakes. Of the iron ore used to make steel in the U.S., 79 percent is shipped from ports on Lake Superior through the Soo Locks to steel mills on the southern shores of the lower Great Lakes. Like food, iron ore is the mandatory building block feeding the large industrial process in the U.S. Midwest. Global prices. The recent and rapid increase in the world price of iron ore has had a major impact on domestic prices as well. A key price to follow has long been the pellet price for the Brazilian mining company Vale S.A., the largest iron ore miner in the world. The standard for iron ore pellets was Vale’s 65 percent Fe shipped FOB-Tubarao, Brazil. For decades prior to the recent price escalation, Vale’s price for 65 percent Fe pellets ran from just over $23/metric ton in 1975 to never more than $35/metric ton, ending up at $30.78/metric ton in 2002. The lowest price during this 27-year period was $23.14/metric ton in 1986; the highest reached $34.81/metric ton in 1998. After the 2001-02 recession, the price of iron ore started to increase significantly. • In 2003, the Vale’s annual benchmark price climbed 10 percent. • In 2004, it increased an additional 19 percent. • In 2005, the price jumped another 87 percent. • It dipped slightly for 2006 and reclaimed 5 percent for 2007. • In 2008, it jumped 87 percent. SOURCE: JERRY BIELICKI 18% 62% 8% 6% 6% . Iron Ore . Coal . Wheat . Limestone . All (30+) others COMMODITIES SHIPPED THROUGH SOO LOCKS – 2012 About 99 percent of the iron ore mined in the U.S. comes from two states, Michigan and Minnesota. $- 50 100 150 200 70 80 90 2000 02 04 06 08 10 12 Year Annual Fines Annual Pellets Quarterly-fines Quarterly Pellets U.S. Dollars/Metric Ton 0 200 400 600 800 1000 1200 92 94 96 98 2000 02 04 06 08 2010 12 Year Millions of Metric Tons/Year China’s Imports World Seaborne M inus China World Seaborne Shipments portcalcite.com ………………………………………. ………………………………………… ………………………………………… …………………………………… .. .. .. .. .. .. .. .. .. .. .. • A significant drop of 48 percent occurred for 2009. • In 2010, the price nearly doubled again with a 90 percent increase. This fluctuating, but increasing price resulted in more than quadrupling the price of iron ore from 2002 to 2010. The annual benchmark pricing system eventually broke down in 2010. In the nine years leading up to the system change, world benchmark prices went from the $30.78/metric ton for 2002 to $161.10/metric ton by the second quarter of 2010. This 423 percent increase in price was connected to the substantial growth in worldwide construction and development, with its massive steel demands that, in turn, required huge shipments of iron ore. In the past 10 years, the volume of world seaborne traded iron ore has more than doubled, going from about 500 million metric tons in 2002 to almost 1,200 million metric tons in 2012. The trade is still growing. China was and is the leading consumer, requiring more iron CHINA’S IRON ORE IMPORTS AS PART OF WORLD SEABORNE TRADE IRON ORE PRICES SOURCE: PETER KAKELA SOURCE: PETER KAKELA 14 Saint Lawrence Seaway Management Corporation 0 200 400 600 800 1000 1200 92 94 96 98 2000 02 04 06 08 2010 12 Year Millions of Metric Tons/Year China’s Imports World Seaborne Minus China World Seaborne Shipments World Iron Ore Price – Fines -40 -20 0 20 40 60 80 100 120 140 can become Qualify as New Business on the Seaway and you save 20% on tolls If your cargo qualifies as New Business, you can add to your savings by shipping via the Great Lakes St. Lawrence Seaway System. New Business can include cargo that has a new origin, a new destination, or that was previously moving via a different mode of transportation. Or cargo that has not been previously shipped via the Seaway in the last 5 years in a volume larger than 10,000 tonnes. Visit our website for details and an application to qualify. www.hwyh2o.com 15 ore annually for the past 15 years. China’s share of the seaborne iron ore trade has grown from 23 percent in 2002 to 62 percent by 2012. China is still well ahead of the other major developing countries, but soon India, Brazil and Russia will be demanding more iron ore to make the steel that undergirds their large developing economies. Together these four nations have been labeled the “BRICs.” The rise in world iron ore prices in the last 10 years has caused the value of ore transported on the Great Lakes to stand well above all other commodities shipped on the Lakes. Prices remain high in 2013. Iron ore prices in North America are triple what they were a decade ago. As a result of the growth in volume demanded and the escalations of prices, the value of iron ore has expanded in the world market. Recently, it was announced that iron ore had become the second largest mineral commodity traded on the world market in dollar value, second only to oil, as reported by Mecklai Financial. Iron ore is more valuable than diamonds or gold with their high prices, but small volume. Also, iron ore is more valuable than coal or limestone with their high volumes, but lower prices. Domestic supply chain. Concern for the safe transport of commodities and manufactured goods has risen since the recent terrorist attacks on domestic soil. The September 11, 2001 attack on New York City and Washington, D.C., plus the more recent Boston Marathon bombing have alarmed many. Terrorist attacks on domestic soil have been focused on critical or high-profile subjects. Disruption of critical supply chains can also be caused by natural disasters such as Hurricane Katrina. These safety issues have led to the creation of the federal U.S. Department of Homeland Security. In a January 23, 2012 White House report, President Obama wrote: “The United States and nations around the world depend upon the efficient and secure transit of goods through the global supply chain system. We have seen the disruptions to supply chains caused by natural disasters—earthquakes, tsunamis and volcanic eruptions—and from criminal and terrorist networks seeking to exploit the system or use it as a means of attack can adversely impact global economic growth and productivity.” The document points out that the nation should acknowledge that: “The threat of natural disasters remains and the global supply chain and its components continue to be attractive targets for CHINA’S IRON ORE IMPORTS AND WORLD PRICE OF FINES SOURCE: PETER KAKELA 16 terrorist attacks and criminal exploitation. Understand and address vulnerabilities to the supply chain that stem from both exploitation of the system by those seeking to introduce harmful products or materials and disruptions from intentional attacks, accidents or natural disasters. We will focus our efforts on those risks that can bring the most harm to American citizens or threaten the functionality of the supply chain system, refine our understanding of the threats and risks associated with the global supply chain, [and] identify infrastructure projects to serve as models for the development of critical infrastructure resiliency.” Tom Ridge, First Secretary of the U.S. Department of Homeland Security said: “There is a direct nexus between a strong domestic manufacturing sector and America’s ability to prevent, mitigate, recover from and rebuild quickly in the wake of catastrophic events.” Robert B. Stephan, former Assistant Secretary for Homeland Security, went on to say; “The nation’s worn out infrastructure is the soft underbelly that provides an inviting target for attacks that can have a widespread, devastating impact.” If a terrorist or a natural disaster were to strike the Soo Locks, it could interrupt the free flow of a number of raw materials in addition to the major one, iron ore. This could have a devastating impact on the manufacturing economy of the U.S. Midwest. The simple action of the locks allows passage through the rapids connecting Lake Superior and the Lower Lakes. With the aid of the locks, the 1,000-foot ships carrying the raw iron ore are able to safely traverse the rapids area and its 21-foot drop in lake level. Ore from the “up north” mining areas around Lake Superior is shipped in the largest Great Lakes ore carriers down to the lower Great Lakes where the steel mills are located. U.S. national security. Iron ore and other bulk commodities moving through the Soo Locks are critical to feeding the industrial infrastructure of the Midwest, which is often referred to as the Heartland of the U.S.A. The locks have been a strategic focal point for many years. They are a bottleneck that can, if constrained, interrupt much of the U.S. steel production and halt the manufacture of many steel-intensive consumer products. The vulnerability and, in response, the security of the locks were highlighted during World War II. Even before the U.S. officially entered the war, British troops were posted on the Canadian side of the Soo Locks beginning August 26, 1939. One week later, just after Hitler attacked Poland, the U.S. sent a detachment of 20 soldiers with machine guns to protect the Soo Locks. They first erected barricades of snow fences with barbed wire on top. By October, just over a month later, there were anti-aircraft guns, machine guns, sky-piercing searchlights, squads of infantry men and a small fleet of craft added to protect the Soo Locks. By February 15, 1941, a force of 546 Military Police was detached to guard the locks. Later in 1941, J. Edgar Hoover, Director of the Federal Bureau of Investigation, recognized that shipping iron ore on the Great Lakes would be the “jugular vein” of the United States’ war production effort. Hoover wrote to the Chairman of the Lake Carriers’ Like food, iron ore is the mandatory building block feeding the large industrial process in the U.S. Midwest. Toledo Lucas County Port Authority 17 ……………………………… …………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………. …………………………………………………………………………………………………………………………………….. ………………………………………………………………………………………………………………………. ………………………………………………………………………………………………………………………. ………………………………………………………………………………………………………………………….. ……………………………………………………………………………. ………………………………………………………………………….. ………………………………………………………… …………………………………………………. ………………………………………………………… …………………………………………………………………. ………………………………………………………….. ……………….. …………………. Association, A.T. Wood, stressing his concern and support regarding this issue, saying the: “… extreme importance of maintaining an uninterrupted flow of iron ore from the mines in the Lake Superior Region to blast furnaces in various industrial centers during the present national emergency is readily apparent. … ship operators may be assured of this bureau’s cooperation in assisting them to minimize the possibility of sabotage or espionage affecting their facilities.” With the attack on Pearl Harbor on December 7, 1941, the fear of sabotage at the Soo escalated and a military force in excess of 7,000 troops was dispatched to the locks. Fear of German paratroopers, long-range bombers, torpedo-planes and dive bombers grew. Strategic thinking included enemy ships going into the remote Hudson Bay carrying torpedo-planes. From there, the planes could be launched and fly the much shorter distance to destroy the locks. Also, longrange German seaplanes could dispatch paratroopers in wilderness areas near the locks and they could mount an attack. Throughout the war, however, ships laden with iron ore were able to transit the Soo Locks in record amounts. After World War II, concern shifted to the potential depletion of iron ore in northern Michigan and northern Minnesota. In 1947, Republic Steel’s President, C. M. White, exclaimed in a speech reported by The New York Times that “at the present consumption rate the Mesabi open pits … will be exhausted within five to 10 years.” He went on to say that after the “cream of the Mesabi” is skimmed off, the rich hematite ore in the United States will be a “rusty memory.” By 1955, the same Times reporter had a different story to tell, exclaiming “Depletion Danger Met” and the U.S. News & World Report proclaiming “One More ‘Scarcity’ Ends for U.S. Industry.” Newly-developed technology allowed low-grade ores to be successfully up-graded and transformed. The pelletized taconite era began and iron ore mining was re-invigorated in northern Michigan and northern Minnesota. Advanced processing of low-grade taconite ores produced a highly superior iron ore pellet that revolutionized the American iron mining industry. Iron ore mine production boomed, shipping continued, a bigger lock was built and a new class of larger ships—the 1,000-footers—was created. Bulk shipping. More than 90 percent of the world’s goods are shipped by water. It is easier and more efficient to float heavy cargoes than haul them over land by rail or truck. The most efficient transportation of heavy commodities is found in the largest ships available, which can carry far greater loads than any train, truck or plane. The 1,000-foot ship on the Great Lakes can carry up to 70,000 net tons of iron ore, but in 2012 with the lower water levels, the largest cargo recorded was just 66,662 net tons of iron ore, according to the Corps. In 2012, 46,213,401 net tons of iron ore was shipped through the Soo Locks. If this amount was transported exclusively in the 1,000-footers, it would require approximately 710 ship loads or just about 55 trips for I N F R A S T R U C T U R E This fluctuating, but increasing price resulted in more than quadrupling the price of iron ore from 2002 to 2010. University of Findlay 18 www.greatlakes-seawayreview.com Therefore, ships are preferred because of their efficiency and because they can sail places where there are no roads or rail systems. Each 1,000-footer on the Great Lakes can carry as much as 6.5 trains, each with their 100 cars loaded with iron ore. Because of efficiency, the vast majority of the world’s bulk and/or heavy commodities are transported by ships or barges. This is true for the transport of goods on the Great Lakes just as much as it is true for transport on the oceans of the world. Iron ore and the locks. In addition to higher prices, the volume of iron ore demanded in the world market has continued to escalate as developing countries build their infrastructures. China and the four countries dubbed the BRICs are leading the feverish consumption of iron ore to make steel to build bridges and buildings, to forge tools and supply steel reinforcing rods to be buried in road construction. These deeach of the 13 1,000-footers operating on the Upper Lakes. If the Soo Locks were shut down, however, and there was an attempt to transport the same volume of iron ore by other means, it would be difficult, nearly impossible, to accomplish for several reasons. • If the 46,213,401 net tons of iron ore was attempted to be transported by railroad, it would require more than 4,600 train loads of 100 cars each, or 460,000 train cars, with 100 net tons of iron ore in each car. At most integrated steel mills in the U.S., there are not enough existing railroad links, in terms of gage, to receive the overland loads. • If trucks are considered, it would require more than two million truckloads, each with a 23 net ton capacity. It is doubtful that there are sufficient trucks available to make this haul or acceptable road and traffic conditions, especially around Chicago, to allow this added vehicular traffic. The very abrasive iron ore pellets would also create wear problems in the beds of current trucks and railroad hopper cars. I N F R A S T R U C T U R E The rise in world iron ore prices in the last 10 years has caused the value of ore transported on the Great Lakes to stand well above all other commodities shipped on the Lakes. KCBX GREAT LAKES/SEAWAY REVIEW October-December, 2013 19 DOCK SITE 100th St. and Calumet River, Chicago, IL 60617 Tel: (773) 375-3700 • FAX: (773) 375-3153 • E-mail: kramert@kochind.com Coal Blending STOCKPILING Transloading The most modern, innovative and customer-oriented transfer terminal in mid-continent North America will save you time and money in the movement, storage and transfer of your dry bulk cargo. With ease and dispatch. Worry free. KCBX will receive your cargo from rail cars, trucks and river barges. We will transfer it to any land or water mode or store it for you. We are ideally positioned to blend Western, Eastern and Illinois Basin coals as well as petroleum coke prior to transloading product to lake vessel, ocean vessel or river barge. We utilize our high speed bottom dump car unloading station or by blending from ground storage while dumping a single commodity from rail cars. Our portable material handling equipment can also provide customized on-site blending and stockpiling services at our 46 acre facility. We offer remarkably quick barge turn-around. If you are moving the products we most usually handle—steam coal, petroleum coke, metallurgical coal, taconite pellets or any other dry bulk commodity—call Tom Kramer’s marketing office at (773) 933-5302. Let us show you how it’s done best! veloping countries are growing in population, but even faster in material ways and basic infrastructure construction. The supply of iron ore on the world market is still meeting the growing demand, but it appears to be tightening. China’s growth is remarkable, with imports rising 11 percent in 2011 to 686.8 million metric tons, an additional 7.5 percent in 2012 to a record of approximately 740 million metric tons and 2013 is on course for another record year. In addition to rising demand, prices have been influenced by the threat of constrained supply. The impact of the growing global demand on domestic mines in northern Minnesota and Michigan is modest, but still positive. The growing demand has raised prices and drawn foreign sources of iron ore to offshore ports, especially in Asia. In North America, the ore being mined, processed and shipped in 2012 was at full or near full capacity. The amount of iron ore shipped through the Soo Locks totaled 46,213,401 net tons, according to the U.S. Army Corps of Engineers. Steel is the major and almost the sole (about 98 percent) consumer of iron ore. Also, iron ore is by far the most predominant component in making the highest quality steel, which is made at integrated steel mills with blast furnaces that can smelt the oxygen out of the iron ore and convert it to molten iron or pig iron. The integrated steel mills are dependent on iron ore as their primary ingredient. Most of the integrated steel mills in North America are located around the Great Lakes. In addition to demand for iron ore to be shipped south to feed blast furnaces in the lower Great Lakes, coal is the second largest commodity in making steel. The coal is often brought north from mines in West Virginia, Kentucky, southern Indiana and Illinois and along the Ohio River valley to meet the iron ore coming down to Chicago, East Chicago, Gary, Detroit, Cleveland and elsewhere in the U.S. and Canadian Midwest areas. Shipping traffic with the large bulk carriers, especially the 1,000-footers, is near capacity. Therefore, demand for iron ore to move through the Soo Locks is great now. These shipments through the locks, however, are simply the raw materials. They are the critical, first-stage materials for the production of more refined products like steel. These refined materials are then used I N F R A S T R U C T U R E More than 90 percent of the world’s goods are shipped by water. 20 in the manufacturing of end-use consumer products, such as automobiles and refrigerators. As one moves up the manufacturing scale from raw materials to end-use consumer goods, the economic value of the goods increase greatly. In 2012, the total mine production of iron ore in the United States was 53.2 million metric tons (or 58.6 net tons), according to a January 2013 U.S. Geological Survey. This was down slightly from the 2011 mine production of 55 million metric tons (or 60.6 net tons). With about 99 percent of the iron ore mined in the U.S. originating from two iron ranges—about three-quarters coming from the Mesabi Range in northern Minnesota and the other one-quarter from the Marquette Range in Michigan’s Upper Peninsula— most of this iron ore is shipped on the Great Lakes, passing through the Soo Locks. A relatively small amount, about 7.4 million net tons in 2012, of iron ore coming through the locks is destined for Canadian steel mills on Lake Erie or for export outside of the Great Lakes region. The value of the iron ore shipped through the Soo Locks is a small portion of the total value of the products made from it. In 2012, the value of the iron ore was less than 1.9 percent of the value of the cars that could be produced from it. And yet the cars (or refrigerators or other steel-intensive consumer products) could not be made in the Midwest without the steel made from the iron ore shipped through the locks. As an old saying goes, the shipment of iron ore is like “the tail that wags the dog.” The Soo Locks are a critical link in the production chain of the American economy. Although the locks are small, the role as a crucial connection makes them vulnerable to terrorism, natural disaster or other failure. If they were damaged, a significant portion of the U.S. economy would be disrupted. Much of America’s final consumer products are dependent on the free flow of iron ore through the open and functioning Soo Locks. . The Soo Locks are a critical link in the production chain of the American economy. Aircentric Corporation is a distributor and service provider for all types of heat exchangers and intercooler applications. Since 1980, we have been faithfully serving the Midwest and Canada with full reconditioning and re-fabricating capabilities. ……………………………. ………………………….. ……………. …………………………………. SERVING YOU Aircentric Corporation 12250 Inkster Road Redford, MI 48239 Ph: 888/937-2131 Fax: 313/937-2346 www.aircentric.com .. .. .. .. .. .. .. .. .. .. GREAT LAKES/SEAWAY REVIEW October-December, 2013 21 I N F R A S T R U C T U R E Since 1850, the St. Marys River navigation system has been a work in progress. Fraught with challenge from the beginning, the U.S. Army Corps of Engineers continues to tackle the job of maintaining and modernizing the vital Great Lakes link. The Soo includes 75 miles of federally maintained deep draft channels, the Soo Locks at Sault Ste. Marie, a hydropower plant and two canals handling more than 80 million tons of cargo annually. “This is the most critical stretch of the Lakes,” said Glen Nekvasil, Lake Carriers’ Association Vice President. “The impact of issues not being addressed would be the inability to use our vessels as efficiently as possible. The concern is that when the economy really gets going, we won’t be able to handle it. We would be hard pressed to meet all our customers’ needs.” The Corps’ multi-year St. Marys River Asset Renewal Plan updates the existing locks’ infrastructure to provide reliability

Maritime Editorial