Optimistic Outlook For Seaway

The St. Lawrence Seaway accomplished a remarkable turnaround in 2010 and is hoping to perform even better this year as the North American economy recovers.

It wanted to start the 2011 navigation season with a splash so it picked March 22, an earlier- than-usual opening.

Then Finance Minister Jim Flaherty selected March 22 for his 2011 budget. As a possible trigger to a federal election, the budget will dominate the news that day. The seaway opening might get mentioned in passing.

Still the seaway and its supporters are feeling upbeat, partly because of better economic prospects.

But also Canadian shipowners have delivered a $1-billion-plus vote of confidence in its future in the new form of nine new freighters to work the system. Then in a surprise move, Algoma Central coughed up $85 million to buy the marine assets of the Upper Lakes Group.

Ray Johnston, president of the Chamber of Maritime Commerce, says the economic outlook has just about everyone in the marine sector feeling cautiously optimistic about the seaway’s prospects for 2011 and beyond.

DEMAND FOR STEEL

The demand for steel is strong enough to require plenty of loads of iron ore and coal while the high international grain prices and ongoing Russian wheat export ban should continue to pull a lot of American grain out through the waterway.

The case for the seaway could become even stronger this year when Canada and the United States release a report on the importance of Great Lakes transportation to the North American economy.

Beyond the strength of the American economic recovery, the biggest uncertainty hanging over the system may be New York’s stance on ballast water treatment. Wisconsin and California have moved to accept IMO standards while New York has merely delayed into 2013 the implementation of its rule requiring standards higher than current technology can accomplish. “New York’s action just perpetuates the uncertainty,” Johnston says.

Terry Johnson, administrator of the U.S. Seaway Development Corp. is in the cautiously optimistic camp when it comes to 2011 traffic levels.

UPGRADED ASSETS

Everywhere he looks he sees signs of companies and ports upgrading assets and he hopes Congress will continue to support efforts on the American side.

He also credits the Seaway Management Corp. for its toll rebates of up to 20 per cent for new cargoes or volume shipments because they bring new business and ships to the Great Lakes.

He lauds the Canadian government for rescinding the 25 per cent duty on imported ships which has paved the way for CSL and Algoma Central to invest in new ships. He said Algoma Central’s takeover of ULG sends a concrete message of confidence in the seaway’s future.

Terrence Bowles, who will be attending his first seaway opening as president and CEO of the Seaway Management Corp., said in an interview he’s hoping to see the waterway handle 39 million tonnes of cargo compared to the 36 million tonnes of 2010. “We hope to come in close to our pre-recession levels.” He certainly wouldn’t object to hitting 40 million tonnes.

MORE TRAFFIC

In addition to the prospect of new ships, he’s encouraged by developments on the Great Lakes ports that should entice more marine traffic and make what’s already there move more efficiently. He’s also buoyed by the development of the Melford container terminal in Nova Scotia, which could help move the Great Lakes into the container leagues.

Tom Brodeur, CSL’s vice-president of marketing and customer service, has a cautiously optimistic prediction for 2011. “On paper it looks good. Last year wasn’t a bad year. This year should be better.”

The best news for the seaway “is the customers are investing in new capacity,” he continues. The new vessels already announced for the lakes “aren’t the end of the good news. The higher value of the loonie, the duty removal and under-used capacity in foreign shipyards all contributed to the decisions.”

Last year, CSL announced the acquisition of seven new ships, which includes two ships that will be dedicated to Great Lakes trading. Work begins on them in April and the ships are expected to be in operation by next year, Brodeur said. They will join the company’s eight bulkers and 10 self-unloaders.

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