Amajor facelift is coming to the transportation of grain and other commodities on the Great Lakes.
Algoma Central has announced it will acquire at least four new bulk carriers for service on the lakes and in the St. Lawrence Seaway. That comes on top of Canada Steamship Line’s plan to purchase five new seaway-sized bulk carriers.
It’s generally expected that Upper Lakes Shipping, Algoma’s partner in Seaway Marine Transport, will order new ships in the near future.
Back in October, Finance Minister Jim Flaherty announced the removal of a 25 per cent duty on imported freighters. The decades-old duty had outlived its usefulness “because the ships to which it applies are not capable of being made competitively in Canada.”
The duty added about $10 million to the cost of a ship built overseas and that combined with the uncertain returns of marine shipping kept the companies operating their existing vessels, which are at least 35 years old.
The shipping industry had lobbied federal officials for years to lift the duty. Canada Steamship Lines raised the pressure in mid-2010 when it announced an order in China for 10 new ships, five of which were designed to fit in the restricted space of the seaway locks and five for international work. However, none of the new ships would come to Canada unless the duty was removed, warned CSL president and CEO Gerry Carter.
Algoma Central’s $205-million contract gives the company an option to order two more of the seaway-sized ships from Nantong Mingde Heavy Industries of China. The first new vessel should arrive in 2013.
Algoma president Greg Wight said in an interview the company’s current plan is to retire existing vessels on a one-for-one basis as the new ones arrive. The company currently has 19 bulk carriers and seven tankers in its Great Lakes fleet.
However, Algoma might decide to refurbish some older ships instead of scrapping them “if business conditions are favourable,” Wight added.
Wight said Algoma had worked “with a leading vessel designer for almost two years to develop an innovative vessel design that will carry more cargo, at higher speeds and with improved fuel efficiency. “In short, these vessels will be considerably more efficient while at the same time they will have a significantly reduced environmental footprint.”