Carriers closely involved in the Great Lakes/St. Lawrence waterway are hoping for more of the same in 2015 after benefiting from a stronger trend in commercial shipping activity in 2014.
Two ships passing through the Welland Canal of the St. Lawrence Seaway
Two ships passing through the Welland Canal of the St. Lawrence Seaway
The 2014 navigation season was not without its challenges, but also produced surprises on the positive side. Perhaps topping the list was the introduction by the Amsterdam-based Spliethoff Group of the first scheduled service for container and breakbulk cargo between Europe and the Great Lakes seen since Manchester Liners in the 1970s. Foreign-flag carriers generally, in fact, are increasing their presence. (U.S.-flag carriers in the Great Lakes restrict their operations to within the Lakes since their 1,000-ft vessels cannot pass through the locks of the St. Lawrence Seaway.) Better times are coinciding, too, with the coming on stream of more and more new state-of-the-art ships as an unprecedented Canadian fleet renewal attains cruising speed. A threatened disruption in activity was averted in the fall when management and the union representing Seaway workers agreed to refer their differences to binding arbitration. After handling 37 million metric tons in 2013, the St. Lawrence Seaway was moving late in 2014 towards a throughput of 39 million tons – thereby approaching pre-recession levels. As the 2014 navigation season was approaching its annual winter closing at the end of December, grain shipments and general cargo were up significantly, offsetting declines in iron ore and coal. Domestic coal consumption has been decreasing as steel plants have been reducing their coal capacity. Regarding iron ore, analysts point out that new supply patterns within the Great Lakes/Seaway System are cutting off some movements from Quebec sources to inland mills. In addition, the dramatically-fallen iron ore price in recent months to the $70/ton range does not allow for profitable exports to overseas markets. Insights of Industry Executives Commenting on highlights of 2014 and the outlook for 2015, Dan McCarthy, VP Marketing and Customer Service, CSL Group, said: “The year 2014 brought many surprises and a few reminders with severe ice delays lasting into May, strong grain, collapsing ore prices, relatively high water levels and a recovering economy. The ice delays ultimately created compression in the market and tested the limits of ‘just in time’ protocols. The importance of having a Plan B and C was never clearer. Many receivers have adjusted their supply chain and inventory planning as a result.
Polsteam ship reflects rising presence of foreign-flag carriers in the waterway.
Polsteam ship reflects rising presence of foreign-flag carriers in the waterway.
“In some ore, coal and grain trades, the interdependence of rail and marine modes became painfully evident. These rail and marine intermodal connections span vast distances and have allowed us all to penetrate new markets – and develop new gateways – but the ripple effects are far reaching when weather or capacity challenges impact one or more of the players.” Wayne Smith, Senior VP Commercial at Algoma Central Corporation, noted that 2015 is shaping up to be another busy year in the wake of a significant increase in grain exports in 2014. “Grain exports continue to look very strong for 2015, but other sectors such as iron and steel and salt shipments also had strong demand in 2014 – and this is expected to continue in 2015.” Dennis Pfeffer is Liner Manager of Federal Atlantic Lakes Line (FALLine). This division of Fednav International has been in existence for 55 years, providing continuous service to the St. Lawrence and Canadian/US Great Lakes of imported steel and general cargo. FALLine operates several sailings per month from its European base port of Antwerp, Belgium and once a month from Bremen/Brake, Germany, while other European load ports are called on an inducement basis. Recalling the highlights of the 2014 season, Pfeffer said, first of all: “This season commenced with a bang with healthy cargo bookings. In fact, the beginning of 2014 saw cargo bookings increase 55 percent over the same period last year. Of course, the severe ice cover of the Great Lakes in March and April put a damper on several of our voyages, where wait times upwards to a week or more for a Coast Guard convoy were experienced. Nevertheless, steel imports remained robust as the season progressed, particularly in flat and long products. “The usual slowdown over the summer months for mill maintenance did not occur. Construction projects continue to be strong, especially in Canada, as witnessed by the amount of steel beams lifted to date. The automobile industry continues to expand, translating into coil demand and an increase in liftings for this commodity. As we headed into the end of our season, imports continued to move where, in some cases, importers have ordered sufficient tonnage for the last laker to maintain their requirements over the winter months, when the Lakes are closed. This is somewhat new, as it has been a number of years when we last saw such last laker cargo being ordered. Overall, we expect to see an increase of 76 percent in cargo lifted in 2014 vs. 2013 to date.” Although steel is FALLine’s staple as a base cargo, heavy lifts and general cargo have always been very important for the line and will remain so for the future, Pfeffer stressed. “The importation of this type of cargo has held steady for the past decade. However, this semi-constant flow of inbound general cargo decreased a bit this year due to several factors including the type of general cargo moving, which could not be handled by our bulk carriers due to shore crane lifting limitations.” Commenting on the general market conditions and outbound business was Mark Pathy, president and co-CEO of Fednav Ltd., largest ocean-going user of the Seaway. “Although the international dry bulk sector experienced a difficult year, that was mitigated somewhat by a strong Lakes season which saw solid volumes both inbound and outbound,” said Pathy. “On the outbound leg, we saw a 30% increase in 2014 over the previous year in terms of both sailings and cargo volume. Grains represented a higher percentage of that increased volume, at 88% of the exports we carried in 2014 versus 78% in 2013.” Pathy indicated that “despite some apparent quality issues, the size of the 2014 North American harvest leads us to be optimistic about exports in 2015, while the recovering U.S. economy should continue to drive imports.” Foreign-flag Carriers Expanding Presence Meanwhile, foreign-flag operators are suddenly making a bigger mark on Seaway shipping activity as they seek to develop business deep in the industrial heartland of North America. Bruce Hodgson, Director of Market Development for Canada’s St. Lawrence Seaway Management Corporation, estimates the final 2014 contribution of foreign-flag carriers to total Seaway cargo at about 30%. This compares with one fifth on average in recent years. The main foreign-flag bulk operators include Canfornav, Polsteam and Wagenborg. Niche carriers for project and heavy lift cargoes include BBC Chartering, Hansa Heavy Lift and Jumbo Shipping. Summing up highlights of 2014, Errol Francis, Canfornav’s vp operations, said shipments encompassed “steel from the Baltic and Black Sea, sugar from Brazil into Toronto, and fertilizer from the Baltic to Hamilton and Contrecoeur on the St. Lawrence River.” Meanwhile, it’s full speed ahead for the Cleveland-Europe Express (CEE) service via the Seaway for breakbulk and container cargo launched last April by the Spliethoff Group partnered with the Port of Cleveland. It began with one vessel, the Fortunagracht, on scheduled monthly calls. A second ship is planned for the opening of the 2015 Seaway season – setting the stage for regular departures every two weeks from both Antwerp and Cleveland. The CEE is designed to appeal to shippers in the Midwest and Great Lakes region to offer customized solutions of better transit times to local shippers with smaller loads. “Never have we had so many ships passing through the Seaway as in 2014,” said John Szeistrup, Montreal-based Director of Spliethoff Canada. He suggested that with sufficient build-up of demand, present services on inducement to ports like Thunder Bay and Duluth could expand into scheduled calls.