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Seaway Faces Uncertain Year With Some Optimism

“It will be slow to August but there will be a drawdown in inventories and customers will begin replenishing.”

– MICHAEL BROAD, SHIPPING FEDERATION OF CANADA

The St. Lawrence Seaway is opening on March 31 this year, a week later than normal, because of the sputtering North American economy and a lot of ice in the Great Lakes, but Richard Corfe thinks there are good reasons to believe the waterway will be busy by the time it closes in December.

“Opening on our usual date of March 21 or 22 would have been a problem because of the ice, but also the demand from our customers just isn’t there,” the president of the St. Lawrence Seaway Management Corp. said in an interview. The economic slowdown means “it’s not going to be a busy start.”

The seaway is also taking the unusual step of opening the Montreal-Lake Ontario section and the Welland Canal on the same day so it can hold simultaneous celebrations marking its 50th anniversary. He promises there will be ships to pass through the waterways.

Corfe hesitates in predicting how much traffic the seaway will have in 2009. “It’s tough because we know it’s going to be slow at the start. There may not be a lot of vessels in April and May. But we should be back to a normal operation by the fall. We could see a six to eight per cent reduction in tonnage from last year but it could be the same.”

Last year, traffic through the seaway was 40.8 million tonnes, about three million lower than in 2007. The decline was mainly in grain shipments and general cargo. The other commodities were actually higher.

Michael Broad, president of the Shipping Federation of Canada, expects an upswing in traffic by late summer. “It will be slow to August but there will be a drawdown in inventories and customers will begin replenishing. It will take time for the economy to rebound but we will see some movement.”

Broad predicts that government stimulus programs will help boost marine traffic within the Great Lakes – and that with lower freight rates and fewer cargoes, ocean ships will be more interested in picking up loads in Great Lakes ports than in recent years.

Bruce Bowie, president of the Canadian Shipowners Association, says the shipping lines have to deal with the reality that “a lot of industrial activity is turned down a bit because of the economy. There are signs that as the year progresses traffic will return.”

Gary Leroux, executive director of the Canadian Association of Port Authorities, pointed to the Baltic Dry Index, which has bottomed out and is climbing as one indication the economic mending may have started. “Everyone is feeling the pinch and it’s still quite unclear when the upturn will come.”

Seaway authorities have looked at traffic forecasts for this year on a commodity basis, he said. There’s plenty of grain to move, while iron ore will likely be down because of lower demand for steel, unless the U. S. and Canadian stimulus packages really spark a lot of building.

A bigger unknown is ocean shipping. “The cost of chartering ocean vessels has dropped and that improves the odds that some will come to the seaway,” Corfe said. “That could mean that exports that haven’t moved during the last couple of seasons because of a lack of ships could go through the waterway.”

The obvious one is U. S. grain, which is usually carried as a backhaul load for a ship that has brought goods into the Great Lakes.

Delaying the opening because of the ice wasn’t a hard decision, Corfe said. “We had 70 to 75 per cent ice buildup on the Great Lakes this winter. It’s like what we faced in the late 1990s. The forecast for February and March indicated the ice will have largely disintegrated by the end of March.”

Apart from events on the seaway’s opening day at the St. Lambert locks, there will be events all across the system on June 26, to mark the day in 1959 when Queen Elizabeth II and then-U. S. president Dwight Eisenhower officially opened the seaway. A book about the building of the waterway will also be released to mark the 50th anniversary.

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