Binkley - Seaway shipping invisible

New NY state law would shut the system down

Seaway-Great Lakes shipping invisible

But are of major economic importance

By Alex Binkley
True North Perspective

Largely unseen and seldom mentioned in the media, marine shipping through the St. Lawrence Seaway and Great Lakes plays a major role the economies of Ontario, Quebec and eight American states.

A study funded by the Canadian and American Seaway authorities says shipping on the Seaway-Great Lakes accounts for $34.6 billion of total economic activity annually and close to 227,000 jobs in the two countries.

Terry Johnson, Administrator of the U.S. Seaway Development Corp., says the study gives the marine sector a valuable tool to approach government and business decision makers with. “We plan to start briefing and talking about the impact shipping on the Great Lakes has on everyone in the region.”

Terence Bowles, President and CEO of the Canadian Seaway Management Corp., says, “For more than 50 years, the St. Lawrence Seaway has served as a vital link connecting the Great Lakes region of North America to markets across the globe. The efficient movement of cargoes ranging from grain, iron ore, and steel products to heavy-lift specialty items such as wind energy turbines enables our industries to effectively compete in a global marketplace.”

The Seaway-Great Lakes has to get better at communicating its message about the waterway’s importance, he adds. “People don’t realize this so we have to tell them how what we do affects people’s jobs and livelihoods. We have an impact on peoples’ lives.”

Ray Johnston, head of the Ottawa-based Chamber of Maritime Commerce, which represents shippers that use the waterway, said the study clearly explains “how important the system is to various industries and the economic health of the region.”

The Seaway-Great Lakes also faces a more immediate threat. The State of New York is proposing to introduce ship ballast regulations that could result in the closing of the Seaway.

Two of the Seaway’s 15 locks are in New York and the State’s law, currently set to come into effect in 2013, would deny entry to any freighter that doesn’t have ballast sterilization equipment that’s 100 times more effective than the international standard. Shipping lines say such equipment doesn’t exist and isn’t even in development.

Johnson say his organization has presented the study’s results to New York Gov. Andrew Cuomo in hopes it will help change the State’s mind. The ballast law was introduced by a previous governor.

The shipping industry said the New York law would prevent most if not all freighters from passing between Montreal and Lake Ontario. Landlocked would be thousands of tonnes of grain as well as iron ore and other commodities vital to the steel industries of both countries.

“Despite the fact that the Great Lakes/St. Lawrence Seaway has the most stringent regulatory regime in the world to control the transfer of invasive species via ship’s ballast water, the State of New York seeks to impose ballast water treatment regulations that not only greatly exceed global standards set by the International Maritime Organization, they are impossible to comply with,” the Authorities have said in a joint statement. “Alongside industry and other government jurisdictions, the scientific community has determined that technology does not yet exist to meet New York’s ballast water standards,” it added.

Greg Wight, President and CEO of Algoma Central, the largest ship operator on the Lakes, says the closure of the Seaway would cost his company one-third of its business. It wouldn’t need all its ships and employees

This year has been a turn around time for the waterway.

While still a long way from operating at its potential, Seaway traffic has climbed in 2011 despite a sputtering North American economy. The first of a flotilla of new ships designed for Seaway-Great Lakes cargo service arrived. Ports bustled with economic development. Politicians talked about marine transport.

They were even some lucky bounces. What first looked like a poor year for the Western grain harvest turned around in late summer when the Canadian Wheat Board announced it would have a normal crop, which will keep the ships busy until the Seaway closes in December.

While the southern U.S crops have been hard hit by drought and flooding, the situation in northern states, which can ship through the Seaway, is more encouraging.

The Chamber’s Ray Johnston says the new ships that Algoma Central, CSL, FedNav and Canfornav are acquiring “speaks to the level of confidence they have in the industry’s future. There’s also a big commitment by foreign shipowners to include Seaway-sized vessels in their fleets.”

Bowles calls the new ships “a bullish endorsement of our system.” The entire SMC board attended the August christening of the newly arrived Algomarine to recognize the importance of fleet renewal. “That’s our future.” 

In an interview, he says the waterway “has suffered through the worst economic crisis since the Great Depression. The turnaround in traffic this year is very positive news for all we’ve been doing. Without the strike at the Stelco plant in Hamilton, our numbers would be even better.”

In a speech to the Association of Canadian Port Authorities’s annual meeting, Transport Minister Denis Lebel said getting the Ontario-Quebec Continental Gateway into gear is important for government and industry. “That’s why we are working diligently to launch this strategy as soon as possible. We've done significant work so far. Since 2007, our government has invested nearly $4 billion in transport infrastructure in Ontario and Quebec to support the Continental Gateway.”

The Canadian government triggered the ship buying spree by removing a 25% duty on imported ships. Until the new ones began arriving, the average age of the Canadian fleet was 35 to 40 years.

Mr. Bowles says a lot of uncertainty still surrounds the waterway’s future prospects. “The outlook is for slow economic growth in the immediate future. We haven’t felt this uncertainty in our business yet,” he adds in an interview. “Government plans in both countries to encourage economic growth are extremely important for us.”

One positive move for the Seaway-Great Lakes would be the successful conclusion of the Canada-European Union free trade talks, he notes. More trade agreements with Latin American countries, like the one recently concluded with Colombia, would also buoy the prospects for the waterway.

The strong economic growth in India and China is encouraging and could become even more important with the opening of the new Panama Canal in 2014, he says. He would also like to see other governments follow Quebec’s lead and recognize the low carbon emissions of the marine sector.    

Johnston says the government should Seaway upgrades in any plans for improving port infrastructure. Renewing the Coast Guard fleet is also important for ensuring Great Lakes-Seaway operations.

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