NE PORTS / CHEMICALS 2008 - Moderate upturn forecast in Seaway 50th season

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Leo Ryan, AJOTThe St. Lawrence Seaway launched its 50th commercial navigation season in late March under difficult weather conditions, with ice and snow provoking considerable delays for vessels in channels and on the Great Lakes. In many instances, ice-breaker support from both the US and Canadian coast guards was necessary to free up passages following the worst winter in several decades.
Just a moderate rebound in traffic was anticipated as steel imports from Europe remain stagnant and evidence mounts that Canada is beginning to feel the impact of the US economic slump.
The good news was that water levels, which attained record lows on Lake Michigan, Lake Huron and Lake Superior in particular last year, are trending upwards. This means carriers will not likely have to reduce their payloads by up to 20% at certain ports, as was the case last year.
In a similar pattern to 2007, Canadian Great Lakes carriers anticipate a good season in 2008, partly because ocean vessels were expected again to cut down their calls because profit margins are still more attractive in the ocean trades with freight rates hovering at summit levels. Some Canadian domestic carriers last year even had to turn down orders due to insufficient capacity.
“There has been no change in weak steel inbound movements, so it continues to be challenging for ocean-going operators to come into the Great Lakes,” said Paul Pathy, VP and general manager of Federal Marine Terminals, part of Fednav, Ltd., largest ocean-going user of the Seaway. “The US has in fact been importing more steel from China than Europe. This is bad for the Seaway because these imports go through the West Coast.”
Richard Corfe, president and CEO of Canada’s St. Lawrence Seaway Management Corporation (SLSMC), predicts a three to four per cent growth in traffic in 2008.
At a ceremony in Montreal, Terry Johnson Jr., head of the Washington-based Saint Lawrence Seaway Development Corporation, heralded the importance of the 10-year, $165 million asset renewal program accepted in the February federal budget.
‘I am confident that Congress will provide the requested funds to modernize the US Seaway assets, helping us follow our Canadian partner’s lead in renovating the Seaway to accommodate growing future traffic needs.’ Johnson said.
With support from Transport Canada, the Canadian Seaway corporation will be investing $270 million to refurbish the system over the next five years.
Total Seaway cargo in 2007 added up to 43 million metric tons versus 47.2 million tons in 2006. Accounting for most of the 10% overall decline was the sharp drop in general cargo (mainly steel) from 4.5 million tons to 2.4 million tons.
“Things are looking better almost across the board,” Corfe said, singling out the bullish outlook for Canadian and US grain shipments in light of the current soaring world grain prices. “The opportunities for grain exports are as promising as they have been for some years.”
Tom Brodeur, VP marketing and customer service for Canada Steamship Lines, concurred that “the pricing is there for strong grain activity.”
The outlook, in his view, was more negative for construction materials because of the credit crisis in the depressed US real estate sector.
Among other commodities, inbound coke and iron ore look solid, whereas steel imports are not showing progress due to the struggling US dollar and low demand in the auto industry, Corfe said.
Otherwise, he indicated the Seaway could gain one million tons of new business this year thanks to a revised toll structure coupled with various incentives and volume discounts.
In addition, Corfe said there are “several irons in the fire” which could result by early summer in the introduction of the first container service through the Seaway in several decades.
Such a development would constitute a major breakthrough. Efforts in the past few years to attract such a service have been handicapped by, among other factors, the limited, nine-month shipping season on the waterway.

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American Journal of Transportation