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Rehabilitation projects, growth outlook drive Seaway investment

Jun 1, 2015 05:28 PM
The Canadian-flagged bulk carrier Algoma Equinox unloads iron ore at the ArcelorMittal Dofasco mill in Hamilton, Ontario. The vessel is one of eight newbuilds on order for the Algoma Central fleet.

Courtesy Chamber of Marine Commerce/Roy Timm

The Canadian-flagged bulk carrier Algoma Equinox unloads iron ore at the ArcelorMittal Dofasco mill in Hamilton, Ontario. The vessel is one of eight newbuilds on order for the Algoma Central fleet.

A diverse, systemwide investment of nearly $7 billion in the Great Lakes St. Lawrence Seaway is reflective of a collective confidence in the future of the navigation system, stakeholders say.

The overhaul is happening because of factors including a favorable regulatory environment, lower building costs, increased cargo tonnage and overdue infrastructure concerns. Contributing to the boost in spending is participants’ expectation of a return on their investment.

“I think a confidence in the system is really evident here,” said Marc Gagnon, Fednav’s director of government affairs and regulatory compliance. The international shipping company has 20 ships on order, including six lakers that are scheduled to arrive this year and another six next year. It introduced nine handysize vessels in 2012.

“There are many stakeholders: public, private, on land, in the sea, but everybody seems to be of the same opinion — that it’s worth investing in the system,” Gagnon said.

The spending was revealed recently in a study by Martin Associates, a maritime trade consulting group. It indicates that $4.7 billion was invested in the system between 2009 and 2013, while another $2.2 billion is slated for 2014-18. Of that money, two-thirds came from U.S., Canadian and international companies. A third came from the U.S. and Canadian federal governments, which jointly own the St. Lawrence Seaway. 

The timing was right, according to regional port officials. 

“We’ve been living on infrastructure that was put down back in the early ’60s,” said Vanta Coda, executive director of the Duluth (Minn.) Seaway Port Authority. “This infrastructure has a definite life and we’re coming to the end of that life, and that’s across both Canada and the United States.”

A ship transits the Welland Canal in Ontario. A $97 million project to replace the approach walls at the entrance to the canal’s locks is the largest single public investment in the Great Lakes St. Lawrence Seaway System.

Courtesy St. Lawrence Seaway Management Corp.

When the U.S. portion of the St. Lawrence Seaway was built in the late 1950s, its original cost was $130 million. Since then, only $47 million in capital expenses has been invested in the Seaway locks, said Nancy Alcalde, congressional and public relations director for the Saint Lawrence Seaway Development Corp. (SLSDC).

Between 2009 and 2018, the U.S. development corporation will spend approximately $170 million on projects for its two locks, according to the study. Projects budgeted last year include a $3.7 million rehabilitation to the miter gate at Snell Lock, a $3.7 million rehab of miter gate machinery, $1.4 million in culvert valve upgrades and $1.1 million to upgrade the Eisenhower Lock highway tunnel lighting. 

“The significant investments in Seaway infrastructure are positioning the Great Lakes St. Lawrence Seaway System for future growth,” said SLSDC Administrator Betty Sutton. “The SLSDC’s Asset Renewal Program is doing more than just rebuilding the lock infrastructure; the introduction of new technologies is making the waterway even safer, more efficient and more reliable. These investments signal a long-term public commitment to shipping on the Great Lakes Seaway System.”

The Canadian St. Lawrence Seaway Management Corp. committed roughly $750 million between 2009 and 2018 to its 13 locks and structures. The largest project included in the public funding portion of investments is the $97 million replacement of approach walls at the entrance of the locks in the Welland Canal.

Private dollars are also being spent on infrastructure renewal. 

The Duluth Port Authority is one port of many that will invest its own dollars to upgrade its site. Duluth’s project is estimated to cost nearly $17 million. 

In an effort to rebuild and expand the Garfield Pier (Docks C&D), Duluth continued to apply for federal and state grants. After five attempts, the project was approved in 2013 for a $10 million Transportation Investment Generating Economic Recovery (TIGER) grant from the federal government. The port will receive about $2.7 million from the Minnesota Port Development Assistance Program and the port authority will contribute $3.9 million toward the renewal effort. 

When work is complete, dock walls will be strengthened to a 2,000-pound-per-square-foot holding capacity, and the port will be able to handle significantly more cargo. The site will connect to existing road and rail transportation routes. 

CSL Group’s new Trillium-class self-unloading bulk carrier Thunder Bay calls at Port Colborne, Ontario. 

Courtesy CSL Group/Thies Bognor

“Our intermodal project is definitely our star capital project here,” Coda said. “It’s the opportunity for us to take a dock that has been piered and has essentially been out of service since ’97 and rehabilitate it and put it back into a working waterfront. One of our main goals here at the Port Authority is to preserve that working waterfront for the people of our region and give them the access to generate industrial-type jobs that are connected to transportation and transportation infrastructure.”

Duluth isn’t the only port dedicated to rehabilitating and expanding. The Port of Hamilton, Ontario, has invested $29 million in the past five years in its infrastructure, while its tenants have spent approximately $194 million on capital projects that include new storage facilities and site improvements. The Port of Johnstown, Ontario, will complete a $34 million new wharf project this year, and the ports of Oshawa (Ontario), Detroit and Cleveland also will see investments. 

Shipowners have acted in concert with those investing in infrastructure. Timing was on their side as well. In 2010, the Canadian government lifted the 25 percent import duty on foreign-built ships. At the same time, the cost of building ships decreased significantly, as shipyards found themselves struggling to attract business following the recession. 

More recently, New York state backed away from imposing stricter ballast water regulations on ship operators — a move that would have prevented ships from passing through the St. Lawrence Seaway. 

Business has rebounded, too. Since the recession there has been significant recovery in lake commodities, including iron ore and limestone, according to Lake Carriers’ Association Vice President Glen G. Nekvasil. At the Port of Thunder Bay, Ontario, grain movement in January reached the highest level in nearly 20 years.

These events have caused shipping companies, including Fednav, Algoma Central, CSL Group, Lower Lakes Towing and Group Desgagnes, to update and expand their fleets over the past several years. 

“Fednav is 70 years old, but it’s safe to say it’s the biggest phase of investment that we’ve had for a long time, maybe the biggest ever,” Gagnon said.

Algoma ordered eight ships and CSL Group completed its newbuild program earlier this year, with the addition of six new Trillium-class lakers — two bulk carriers and four self-unloading lakers. 
 

The Port of Duluth-Superior has installed 1,800 feet of coated sheet piling on the CN Duluth dock. 

Courtesy Duluth Seaway Port Authority

“We have wanted to build ships for many, many years ... since the early 2000s,” said Louis Martel, president of CSL International. “And there were a couple of things that were not aligned for us.”

But after shipbuilding costs decreased and the duty regulation was lifted, that changed for Canada Steamship Lines. In 2012, it became the first company to introduce a newly built self-unloading laker into the Great Lakes St. Lawrence Seaway since 1985. 

Shipowners have taken the opportunity to not only expand their fleets, but also update them, ordering ships with features like variable frequency drives, LED lighting and custom hull designs that increase cargo lift.  

The investments have revitalized the Seaway, which will continue to see improvements in the coming years. 

“We’re a mature industry that has been here for a long time,” Nekvasil said. “And we have every intention of being here for a long time. As long as the United States and Canada have industrial capabilities, there will be raw materials moving on the Great Lakes.”

The Martin Associates study included participation from 454 stakeholders, consisting of U.S. and Canadian terminal operators, vessel operators, port authorities and government agencies. The geographic area covered includes all portions of the Great Lakes St. Lawrence Seaway navigation system from Duluth in the west to Sept-Îles, Quebec, in the east.

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