Leo Ryan, AJOT

Following its best performance since 1998 in 2006, there was cautious optimism that the St. Lawrence Seaway was heading for further cargo growth this year. But a sharp plunge in steel shipments from Europe, especially, has compelled Seaway officials to revise their forecasts from moderate growth in 2007 to a decline in the high single digits.

Richard Corfe, President and CEO of the St. Lawrence Seaway Management Corporation (SLSMC) had initially forecast a possible throughput of 48 million metric tons following the 2006 total of 47.2 million tons (which represented a 9% increase over 2005). However, the numbers for the first few months of the current season are running well below expectations.

‘The revised forecast for the year now stands at 44 million tons, which will still ’ important to us ’ track above 2005,’ Corfe told AJOT.

The Welland Canal established a record for the earliest opening date on March 20, with the Montreal-Lake Ontario section opening the next day. Despite the few extra days gained, total traffic to the end of May fell to 9.2 million tons from the year-earlier 11.8 million tons ’ or a 20% downturn.

Vessel transits to the end of May were down significantly: 923 versus the year earlier’s 1,128. This especially reflected fewer ocean vessels, as opposed to the domestic fleet, passing through the waterway.

Cumulative preliminary statistics to the end of June show Seaway cargo still down about 12%.

Factors underlying the low cargo volumes include the reduction in the volume of steel imports due to high inventories in the US and Canadian Great Lakes region, coupled with slowing industrial production.

While in the period to the end of May, iron ore nearly matched last year’s volume and grain declined about 20%, the big plunge was in steel ’ which totaled 518,000 tons versus the year-earlier 1.4 million tons.

In an interview, Paul Pathy, VP and General Manager of Federal Marine Terminals, part of Fednav, Ltd., largest ocean-going user of the Seaway, noted, ‘There is hardly any steel coming in. With steel prices higher in Europe than in the United States, there is little encouragement for paying freight shipments into the Great Lakes region. European producers can sell locally in Europe for a better price than in North America.’

Pathy added, ‘There is no indication so far of the steel market bouncing back in the second half.’

For Montreal-based Fednav, brisk steel shipments into the Great Lakes constitute an important incentive to bring in vessels that would ship US grain, in particular, on the outbound voyage.

Moreover, with charter rates for ocean vessels perched at all-time highs, observers note there is less inclination for ship operators to enter the Great Lakes/Seaway system.