Marine Delivers Magazine 2016

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CONTENTS M A G A Z I N E

PUBLISHER

Chamber of Marine Commerce EDITORS

Leo Ryan and Julia Fields MARKETING AND BUSINESS DEVELOPMENT CONSULTANT

Sophie Belina Brzozowska DESIGN & LAYOUT

SPIN Visual Communications 613-254-5740

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EDITORIAL OFFICE

350 Sparks, Suite 700 Ottawa, Ontario Canada K1R 7S8 Tel. 613-233-8779

2016 SPECIAL PUBLICATION

Copyright 2016 Chamber of Marine Commerce The content of Marine Delivers Magazine may not be reproduced without prior written consent.

Printed in Canada.

Cover Photo: Martin Beaulieu, photographer

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7 FROM THE PUBLISHER

Welcome to 2016…the Year of the

Cargo Shipper

32 TRADE WINDS

Marine shipping critical in Quebec’s

“global model” for LNG production

9 Message from the Minister of Transport 11 Message from Chairman Duncan Hunter

34 The Cleveland-Europe Express:

Delivering container service to the

Great Lakes-Seaway

13 NEWS

Industry and government help build

marine training center

35 Seaway’s hands-free mooring receives

international recognition

14 New forecast system aims to improve

shipping operations

36 Going Dutch: from the Seaway to the Netherlands

15 More new ships for Canadian Great

Lakes fleet

38 PORT SPOTLIGHT

Sarnia Harbour

16 Year of the Cargo Shipper:

NA producers on improving competitiveness 21 New Canadian government offers

opportunities for dialogue on shipping 22 Grain business invests $50 million

in Great Lakes-Seaway 24 Marine Hall of Excellence to honor

‘first class’ of inductees

40 COMMUNITY IMPACT The Detroit River: A waterway of riches

42 How to Build a Bridge — Marine-style 43 LOOK AHEAD

BMO’s Great Lakes economic outlook 44 2016 shipping executive forecasts 46 Advertisers’ Index

26 IN CONVERSATION

ArcelorMittal Dofasco 30 U.S. Coast Guard Ninth District

commander June Ryan 5

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From the Publisher

FROM THE PUBLISHER

WELCOME TO 2016… THE YEAR OF THE CARGO SHIPPER STEPHEN J. BROOKS PRESIDENT, CHAMBER OF MARINE COMMERCE

THROUGHOUT 2015, THE CHAMBER SAW CONSIDERABLE FINANCIAL, REGULATORY, POLICY, CHARITABLE, AND ANECDOTAL SUPPORT FOR THE GREAT LAKES-SEAWAY. BUT WE’RE LOOKING FORWARD TO MORE IN 2016.

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fter another tremendous year, the Chamber of Marine Commerce is moving full steam ahead into a prosperous and productive 2016 advocating on behalf of the Great Lakes-St. Lawrence Seaway (GLSLS), which includes a renewed focus on the humble cargo shipper, aka the customer. After all, with no customers, there are no ships, no ports, no Seaway!

Throughout this issue of Marine Delivers Magazine, you’ll notice the theme of ‘the customer’ appearing consistently, alongside interesting and informative content detailing the state of the marine industry, current issues and opportunities as well as future challenges. It also includes a look back at some of the past year’s political and policy changes. No doubt, it will serve as a go-to resource you’ll want to refer to all year long.

Quite notably, former astronaut Marc Garneau was named the new Minister of Transport after a Canadian election in late 2015, and we’re thrilled to welcome Mr. Garneau to the pages of Marine Delivers as he pens a fine piece on marine shipping’s role in moving goods in and out of Canada on page nine. And another longtime friend of shipping, Minister Garneau’s colleague, Vance Badawey - the new Member of Parliament for Niagara Centre – has also contributed an op-ed on page 21.

Meanwhile, Duncan Hunter, Chairman of the House Coast Guard and Marine Subcommittee in the U.S. Congress, writes about the strong, longstanding partnership that countries on both sides of the border have as stewards in managing freight transportation.

2015 was also a year where there was much focus on the future of our industry. For example, Algoma Central Corporation and Lower Lakes Towing together invested $1.5 million towards the Marine Emergency Duties Training and Research Centre at Georgian College. You can find out more about this excellent initiative on page 13.

The Chamber of Marine Commerce also announced it was launching the Marine Hall of Excellence to honor leaders whose innovation and direction will ensure the future prosperity of our industry. The first nominees for the Hall – chosen from dozens of applicants from around the world – will be named early in the new year, and, each nominee will receive a beautiful hand-crafted medallion and lapel pin. You can find out more on page 24.

This issue also features a very informative Q&A with two members of ArcelorMittal Dofasco’s executive leadership team – Sean Donnelly, President and CEO, and Brian Benko, Vice President of Procurement and Information Technology (and Chair of the Chamber of Marine Commerce) – which can be found on page 26.

However, the real star of this issue – and especially the star for 2016 – is the cargo shipper. In our cover story, which begins on page 16, you’ll hear from some of the Chamber’s top cargo shipper members what GLSLS issues need to be addressed in order for those companies, and thus the entire GLSLS marine shipping world, to thrive and prosper.

Amongst the issues identified by cargo shippers is the need for more investment in public infrastructure as the last two winters have really highlighted how under-resourced the coast guards of the United States and Canada are. That said, the importance of harmonizing regulations by the two countries’ governments are equally important, along with a key focus on lowering user fees and outright elimination of unnecessary fees.

These priorities will form the basis of many of the Chamber’s activities in the year ahead.

Throughout 2015, the Chamber saw considerable financial, regulatory, policy, charitable, and anecdotal support for the GLSLS. But we’re looking forward to more in 2016.

More ships. More investments. More awareness. More advocacy. More results.

All of these factors are critical in driving the importance of the GLSLS, and we’re committed to continuing to strategically promote marine shipping as the most efficient, economical and environmentally friendly way to move goods; and to underline its very important contribution to the competitiveness of industries across North America.

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MESSAGE FROM THE MINISTER OF TRANSPORT AS THE NEW MINISTER OF TRANSPORT, I AM HAPPY TO EXTEND MY BEST WISHES TO THE CHAMBER OF MARINE COMMERCE AND TO THE READERS OF THIS EDITION OF MARINE DELIVERS.

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ransportation is a key enabler of global trade and Canada needs a transportation system that connects us to each other and to the world. As one of the world’s major trade corridors, the Great Lakes-St. Lawrence Seaway demonstrates the value of marine transportation for this country.

Some $7.2 billion in Canadian trade travels safely through the Seaway every year, supporting more than 100,000 jobs in Canada.

When you factor in all modes of transportation, more than half of all Canadian exports and close to three-quarters of our imports move through the region.

This is an impressive record, and I am confident that marine service providers along the Seaway and in its surrounding region will continue to address the needs of shippers and global markets.

As Canada enters into more diverse markets overseas, the marine sector will continue to play a key role in moving goods in and out of Canada. Ensuring that Canada has an efficient and competitive supply chain in support of shifting trade patterns is of great importance. Finding ways to ensure that all components of the transportation system function at peak capacity and impediments to trade are minimized is going to be an important challenge for us going forward.

Ensuring we have an efficient, safe, secure and environmentally responsible marine system that facilitates domestic and international trade will benefit not only Canada’s marine industry but transportation service providers, Canadian manufacturers and the economy itself.

Government cannot do this alone, and therefore we must work collaboratively on these important issues.

I commend the Chamber of Marine Commerce for its dedication to representing the bi-national Great Lakes-St. Lawrence commercial marine industry and I look forward to meeting with many of you as we work to maintain marine transportation that is efficient, safe and sustainable.

The Honourable Marc Garneau Minister of Transport

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MESSAGE FROM CHAIRMAN DUNCAN HUNTER CONGRESSMAN FOR CALIFORNIA’S 50TH DISTRICT AND CHAIRMAN OF THE HOUSE COAST GUARD AND MARITIME SUBCOMMITTEE

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Chairman of the House Coast Guard and Maritime Subcommittee, I am pleased to have the opportunity to share my thoughts in this edition of Marine Delivers Magazine.

Reliable and cost-effective transportation of freight is a vital component of American prosperity. In particular, marine transport in the Great Lakes and St. Lawrence Seaway provides a critical service to both the United States and Canada and greatly strengthens both nations’ economies. Improving the infrastructure that supports such transport is a key commitment for our governments and our communities.

The Great Lakes-St. Lawrence Seaway is one of the largest trade corridors in the world, supporting billions of dollars in trade and over 200,000 jobs in both the United States and Canada. The two countries have a strong, longstanding partnership as stewards in managing freight transportation in the region using forward-thinking, effective, and environmentally responsible practices. These shipping activities in the region are absolutely vital to countless industries on both sides of the border, including agriculture, natural resource extraction, energy, construction, manufacturing, and more. The goods that are transported affect nearly every aspect of American and Canadian citizens’ lives, from the food we eat, to energy and other products for our homes and employment. What’s more, the transportation provides high-quality North American products to people and industries beyond our borders to every corner of the globe. It is no understatement to say that the decisions and innovations we make here in this region, both in terms of policy and industry practices, serve as leadership models around the world.

Numerous recent studies have reinforced our knowledge that maritime transport is one of the most cost-effective, safe, and environmentally sustainable methods for the movement of goods. Now, more than ever, we must focus on making the necessary investments to expand and improve this mode of transport, as energy development booms and highways become more congested. It is therefore incumbent upon us to continue to foster this strong bi-national partnership and take effective, sensible, and deliberate actions to both sustain and improve our maritime transport infrastructure.

To that end, the House and Senate are working towards final surface transportation legislation that will spur investments in shipping infrastructure. The focus on increasing the movement of goods and promoting infrastructure improvements will lead to great advances in the safety, reliability, and efficiency of our maritime connections between the United States and Canada. Notable, are provisions that directly relate to ports, including directing the development of policies and planning related to multimodal freight transportation and expanding the National Highway Freight Network to include highway connections to ports and intermodal facilities.

I sincerely hope that this legislation will provide the industry with an unprecedented opportunity for growth, development, and innovation. The United States and Canadian governments, too, must do their part to improve management and to even further strengthen their partnership. Together, we can effectively optimize our nations’ maritime trade in order to not only remain competitive, but to retain our distinction as world leaders in marine transportation and infrastructure.

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THE FIRE-FIGHTING TRAINING FACILITY IS ALREADY OPEN AND WILL ALSO BE USED

BY THE LOCAL FIRE DEPARTMENT.

INDUSTRY AND GOVERNMENT HELP BUILD MARINE TRAINING CENTER

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eorgian College’s Owen Sound Campus will open its doors this September to the $7.5 million new Marine Emergency Duties Training and Research Centre following a successful fundraising campaign from federal, provincial, municipal and marine shipping donors.

training in their own province,” says Stephen Brooks, President of the Chamber of Marine Commerce. “More than $7 billion is being spent on infrastructure improvements to the Great Lakes-Seaway system and this is yet another investment that will help ensure the continued success of this vital trade corridor.”

Chamber members Algoma Central Corporation and Lower Lakes Towing Ltd. contributed $1 million and $500,000 respectively towards the center.

The 13,600-square-foot center will provide training in fire-fighting, survival craft, life raft and immersion suit training, as well as first aid. This training is mandatory for everyone who works aboard ships and must be renewed every five years. Ontario has been without a Marine Emergency Duties training center since 2013, thus requiring mariners to travel to the east or west coasts of the country.

The $1.5 million in private sector funding adds to federal and provincial government funding of $3.92 million and $2 million pledged by Grey County Council.

“These significant donations from the Great Lakes-Seaway shipping industry illustrate how the private and public sector can work together to ensure that future mariners and existing crew members have access to the highest standards of safety 13

The fire-fighting portion of the project opened last autumn and will have a dual role as a training facility for the local fire department. The full marine center will be completed by September 2016.

“Georgian and this entire region will become the marine training center of excellence for Ontario,” said Dr. MaryLynn West-Moynes, Georgian College President and CEO. “This is good news for students, working mariners, the marine industry and the local economy – it is a very smart investment.”

It is estimated visits by marine personnel could generate a substantial $5 million in spending in Owen Sound and the surrounding area each year.

In 2014, the Chamber of Marine Commerce worked with MP Larry Miller and Georgian College to organize a tour of Georgian’s Great Lakes Marine Training Centre for industry executives, federal and provincial legislators to showcase Georgian’s impressive training program in Owen Sound and to highlight the importance of building the new MED center. n

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NEW WEATHER AND WAVE FORECAST SYSTEM AIMS TO IMPROVE SHIPPING OPERATIONS

SYSTEM HIGHLIGHTS • 15-day, site specific, water (wave, tidal, current) and weather (wind speed, direction, visibility) forecasts • User-friendly dashboards and reports with access to interactive charts and analytics • Automated text and e-mail alerts when wind or wave forecasts exceed client-defined thresholds • Multi-scale wave surface and spectral energy time series plots and animations • Satellite imagery of cloud cover and fog conditions

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wo Canadian engineering firms have come together to launch a new weather/wave prediction system that could help ports and carriers prevent berthing and cargo-handling delays, cargo spills and even groundings in shallow channels.

RWDI and Baird, both of which have long histories creating environmental and engineering solutions for marine shipping, have developed a unique system that uses local, port-specific or channel-specific information combined with numerical models running in a super-computing environment to generate customized, high-resolution weather and wave forecasts. Model outputs are made available through a secure, customdesigned website.

“This isn’t about predicting major weather systems and crashing waves. Regional weather and open-water wave forecasting products already exist for this purpose. What we’re doing is forecasting how weather and water conditions react to local port or channel specific factors such as underwater terrain, coastlines, or marine infrastructure on a day-to-day basis,” says Wayne Boulton, a director at RWDI. “More subtle conditions such as wave focusing or wind channeling can significantly affect the motion of even the largest vessels. The ability to anticipate these ship motions can support critical decision-making and help reduce risks to

mariners, pilots, port operators and tenants.”

The system is currently being used to predict safe periods of operation to load LNG carriers at berth. “Our software is able to combine weather and wave information and how that will interact with the physical infrastructure of the berth to forecast the optimum time for the carrier to load without interruption due to adverse conditions. This not only improves safety but also prevents expensive delays for the carrier operator and other vessels waiting to berth,” explains Doug Scott, a director of Baird.

RWDI and Baird believe that there are numerous applications for the system in the Great Lakes, St. Lawrence River and at coastal ports, and are presenting the technology at the Real Property Institute of Canada’s Marine Infrastructure National Workshop in February. They are also exploring how this tool might be used to help determine risks in pilotage zones and be shared within a port community to optimize scheduling and reduce congestion. In shallow areas, such as east of the Soo Locks, the system could help prevent carriers from scraping the bottom or grounding, reducing damage to vessels.

Additional features currently under development include in-transit and at-berth ship motion predictions to produce under keel clearance forecasts. n

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MORE NEW SHIPS FOR CANADIAN GREAT LAKES FLEET

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anadian ship owners continued their unprecedented investment in Great Lakes fleet renewal with a flurry of new vessel orders and arrivals in 2015.

St. Catharines-based Algoma Central Corporation ordered two 650ft vessels that will serve a range of customers with particular focus on salt and aggregates industry shippers.

The company also signed contracts to build five new Seaway-max 740-ft selfunloading ships. The new vessels will be delivered in 2017 and 2018.

Wayne Smith, Senior Vice-President, Commercial, Algoma Central Corporation said: “These latest ships will have all the environmental advances and efficiencies of our new Equinox-class and are essential to supporting the competitiveness of our industry and our customers.”

Hamilton-based McKeil Marine, a tug and barge operator whose vessels operate

between Canada and the U.S., also added a bulker ship to the fleet for its customers throughout the Great Lakes and the east coast of Canada.

Port Dover-based Lower Lakes Towing Ltd., which transports bulk cargo to Canadian and U.S. Great Lakes ports, took delivery of its newest Canadian self-unloading vessel last autumn. The M/V Manitoulin, with a carrying capacity of 25,000 metric tons at Seaway draft, has the largest carrying capacity of any existing river class self-unloader and is expected to be the most efficient vessel of its class on the Great Lakes.

The new addition increases the size of Lower Lakes’ fleet to 16, including 10 Canadian-flagged and six U.S.-flagged vessels, and supports recent new long-term business that the company has been awarded.

“This vessel is the first new river class self-unloader to be introduced into Great Lakes service in over 40 years,” commented

Scott Bravener, President of Lower Lakes Towing. “This additional capacity reaffirms the company’s commitment to support the growth of its customers. The Manitoulin will carry limestone to various ports within the Great Lakes-Seaway system to support the construction industry.” n

These latest investments follow a first phase of fleet renewal. Since 2009, three Equinox Class bulk carriers and two coastal class self-unloaders have been added to the domestic dry-bulk fleet operated by Algoma Central. Montreal-based Canada Steamship Lines also has six new vessels now trading in the Great Lakes.

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YEAR OF THE

CARGO SHIPPER Industry executives speak out on priority Great LakesSeaway shipping issues

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or decades, North America’s industrial powerhouses have sought out locations and connections to the Great Lakes-Seaway to cost-effectively transport huge quantities of raw materials and finished products across the region and to markets around the world.

Now globalization and fluctuating commodity prices mean that these key sectors —manufacturing, mining, agriculture, food production and energy — are under more pressure than ever to be as competitive as possible. Efficient transportation that delivers materials on time, every time is essential to the success of these industries and ultimately to the growth of our economies.

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INVEST IN PUBLIC INFRASTRUCTURE INCLUDING PORTS, THE SEAWAY AND ICEBREAKING SERVICES

More than $7 billion is being invested in the Great Lakes-Seaway, two-thirds of which is by the private sector, but more is needed, especially by governments that continue to own and operate important system infrastructure such as ports, Seaway, icebreakers, navigational aids and technology.

The 2014 and 2015 winters and spring breakouts demonstrated just how under-resourced the Canadian and U.S. Coast Guards are for icebreaking services in the Great Lakes-Seaway system. The opening of the season was delayed significantly with commercial ships either stuck in port waiting for icebreakers to clear harbors or slowed down for days and even weeks as they tried to deliver iron ore and coal to steel producers, sail to Thunder Bay to load grain for export, and in many cases wait to voyage in convoys at snails pace through the ice-clogged Lakes.

In Canada, the vessels deployed in the region are often shared with other territories such as the St. Lawrence River, waterways in Quebec and the Maritimes and overstretched with other duties such as distributing aids to navigation. As a top priority, the Chamber of Marine Commerce is advocating for the government to build or purchase additional icebreaking vessels dedicated to the Great Lakes-Seaway region and, at least in the short to medium term, to bolster its resources by securing services from private sector suppliers.

In the U.S. Great Lakes, the Mackinaw is the only heavy icebreaker.

The rest of the fleet consists of smaller vessels many of which are more than 30 years old and unsuited for breaking thick ice. As a result, the Chamber of Marine Commerce joins other industry 16

The Chamber of Marine Commerce is declaring 2016 The Year of the Cargo Shipper to reinforce the vital role of marine cargo shippers – shipping’s customers – to the viability and future of Great Lakes-Seaway shipping and the underlying economy. As succinctly summed up by one large Chamber of Marine Commerce cargo shipper, “No customer = no ships, no ports, no Seaway!”

A number of the Chamber’s members — steel, construction, agriculture, mining and food manufacturing companies — have helped identify four priorities for increasing the competitiveness of Great Lakes-Seaway shipping and thus the competitiveness of their companies and the overall economy. Here are their views.

stakeholders in urging the U.S. government to build another heavy icebreaker for the Great Lakes region.

Investments in all-year navigation aids that do not have to be collected every winter and redistributed in the spring would also allow icebreakers to focus on mission-critical channel-clearing duties. The removal of seasonal buoys also typically requires transiting ships to have two government-mandated pilots aboard, thereby significantly increasing system costs and impeding industrial competitiveness.

WHAT OUR MEMBERS SAY: JONATHAN BAMBERGER, PRESIDENT OF REDPATH SUGAR LTD. “Continued investment in the St. Lawrence Seaway infrastructure is critical not only to Redpath but to the entire Ontario food manufacturing industry. This sector is the largest manufacturing industry in Canada employing 83,000 in Ontario. The efficient transportation of bulk products such as grain and raw sugar that must pass through the Seaway’s lock system to reach inland ports is vital. Without cost effective logistics the food manufacturing industry would lose competitiveness.

During the past few years, it’s been evident that we lack sufficient ice-breaking resources to break out the system in the spring. As a company, we need to be as efficient as possible and we run our inventory on the assumption that the Seaway is going to open at the end of March. If it opens even a week or two late, we don’t have enough raw sugar for our refinery. We need reliable services to make sure the waterway is open.”

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THE CHAMBER OF MARINE COMMERCE IS DECLARING 2016 THE YEAR OF THE CARGO SHIPPER TO REINFORCE THE VITAL ROLE OF MARINE CARGO SHIPPERS – SHIPPING’S CUSTOMERS – TO THE VIABILITY AND FUTURE OF GREAT LAKESSEAWAY SHIPPING AND THE UNDERLYING ECONOMY.

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News JAMES REZNIK, ST. MARYS CEMENT (VOTORANTIM CIMENTOS), DIRECTOR LOGISTICS – NORTH AMERICA

WARD WEISENSEL, SVP OF TRADING, PROCUREMENT AND RISK WITH G3 CANADA LTD.

“We’re a big proponent of having more ice-breaking resources.

Our cement vessels are usually among the last in at the end of the season and the first out at the beginning. During the last two years, the delays from ice on the Great Lakes forced us to put more products on trucks and rail to ensure our customers had sufficient supplies. That certainly impacted the supply of construction materials in the Great Lakes region.”

“The Seaway is vital, so we’re very supportive of continuing investments in Seaway infrastructure. Beyond that, having Seaway opening and closing dates as consistent as possible from year to year would greatly increase system confidence. We would also like to see a longer season and look at what resources are needed to allow for that, including icebreaking capability. If the shipping season could start even two weeks earlier and end two weeks later, it would allow us to ship more cargo by water.”

FRANCOIS ALLARD, K+S WINDSOR SALT’S VICEPRESIDENT – ADMINISTRATION. “Just in terms of the Ojibway Mine, we use the Great LakesSeaway for shipping 75 percent of our product from there.

That is why it’s so important to our company for the U.S. and Canadian coast guards to have the equipment and resources to effectively manage the ice during harsh winters.”

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WHAT OUR MEMBERS SAY:

HARMONIZE REGULATIONS AND REDUCE RED TAPE ACROSS BORDERS

The Great Lakes-Seaway region is shared by two federal governments, eight U.S. states and two Canadian provinces, with each jurisdiction having potentially multiple agencies that regulate shipping. Yet shipping is inherently cross-jurisdictional, with ships routinely sailing through many jurisdictions every day.

The ballast water issue is the poster child for the problems that arise from a patchwork approach to regulations, with New York state rules at one time threatening to shut down all shipping traffic through the St. Lawrence Seaway.

Now Canadian ship owners are faced with U.S. federal rules stating they must install ballast water treatment systems on many of their ships, systems that are not yet approved by the U.S. Coast Guard nor available, while U.S. domestic ships operating in the upper Great Lakes have been practically exempted.

Besides the potential serious cost implications of new treatment systems – that may require upgrading every 4-5 years to meet changing regulations – this constant state of uncertainty on how ship owners will comply with unachievable, unharmonious standards makes it difficult for the marine industry and its customers to continue to invest in marine transportation networks.

NO CUSTOMER = NO SHIPS, “ NO PORTS, NO SEAWAY! ” 18 18

CARSTEN BREDIN, VICE-PRESIDENT OF GRAIN MERCHANDISING FOR RICHARDSON INTERNATIONAL “If we can’t access transportation in the Eastern corridor because ships can’t comply with the regulations in certain jurisdictions or its not economically feasible to do so, that’s a major roadblock. Canada needs this corridor to export grain to key trade markets. Ballast water issues and the uncertainty around them make it difficult for long-term planning. It’s essential that the Lakes remain a viable transportation corridor and that these issues be resolved.”

WARD WEISENSEL, SVP OF TRADING, PROCUREMENT AND RISK WITH G3 CANADA LTD. “We need harmonized ballast water regulations for the U.S. and Canadian Great Lakes, regulations that are based on sound science and are cost-effective. Otherwise, if ballast water regulations unreasonably increase costs, it will hurt the Seaway and all of the industry that depends on it. If the Seaway gets even $2/per metric ton more expensive, Prairie grain could move west or south instead. It doesn’t seem like very much, but those are the margins in the grain trade.”

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LOWER, FAIRER FEES AND INCREASED COMPETITION FOR GOVERNMENT-MANDATED SERVICES

Marine shipping is sinking under wave after wave of escalating fees for government-mandated services.

Rates for pilotage services continue to be a major cost driver.

Marine services fees, primarily for Canadian Coast Guard services such as icebreaking and maintaining navigational aids, are now being reviewed with plans for increases. And the United States Department of Agricultural - Animal and Plant Health Inspection Service (USDA-APHIS) has imposed a significant rise in inspection fees charged for all cargo coming into the U.S. from Canada and other foreign ports. These are just a few examples.

All of these services are provided by either government departments or single source quasi-government entities.

The Chamber is advocating that these services be properly evaluated to keep fees as low as possible, eliminate duplication and identify areas where increased efficiencies and competition in service delivery can provide better service at reduced costs.

WHAT OUR MEMBERS SAY: JAMES REZNIK, ST. MARYS CEMENT (VOTORANTIM CIMENTOS), DIRECTOR LOGISTICS – NORTH AMERICA “We understand that some of these services are necessary, but the fees are not always being used appropriately. In the U.S., we pay Harbor Maintenance Fees (HMF) but only up to approximately 50 percent of the money is actually used for its intended purposes of dredging and maintaining ports and waterways. We frequently have to light load vessels because ports are not adequately dredged, which means more trips to carry our products and more costs.”

JOHN BUBOLTZ, BUSINESS UNIT RISK MANAGEMENT LEADER, CARGILL AGHORIZONS CANADA “In order to continue to ship via the Great Lakes Seaway we must continue to strive for efficiencies – the most efficient corridors will be able to grow and prosper.

Unnecessary regulatory burden and government mandated fees/services need to be cost-competitive.”

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JOHN HEIMBECKER, VICE-PRESIDENT, PARRISH & HEIMBECKER LIMITED: “The Great Lakes-Seaway is crucial for both Eastern and Western farmers to reach the extremely competitive global export markets and it’s imperative this route be as costeffective as possible. There are a lot of costs involved with Seaway shipping and these costs can affect access to global markets and have an effect all the way back to the price the producer receives at the farm gate. We should be evaluating whether these fees related to transportation as well as other fees imposed by governmental bodies are being spent wisely and to the benefit of the complete supply chain which starts with the producer. For example, with advances in navigation technology and mapping, are government-mandated pilots necessary for the entire journey through the system? Are there changes to this service that would make it more effective and competitive?”

RICK RUZZIN, SR. DIRECTOR OF LOGISTICS FOR COMPASS MINERALS “Sustainable marine freight is critical to our way of life. One vessel can carry as much as a 1,000 truckloads, and generates 4-8 times less emissions per metric tonkilometer. Using marine reduces truck traffic in our supply chain and extends our reach to support North American markets. We need continued collaboration between industry and government on the costs of mandated services to reach sustainable outcomes for all stakeholders. We saw great collaboration when vessel carriers, the Chamber of Marine Commerce, and other industry trade associations, worked together with government to remove a 25 percent import duty on foreign-built vessels. The result was $2 billion investment by Great Lakes carriers in state-of-the-art vessels that consume far less fuel and emit less emissions. All stakeholders benefited from this change, which improved the sustainability of industry, while maintaining the local jobs and competitive position of our businesses. When considering increases for pilotage and user fees, we need to be smart and draw from lessons learned through past successes. To raise marine costs such that companies look to rail or truck, instead of vessel freight, would compromise our ability to compete against imports and negatively impact local business.”

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WHAT OUR MEMBERS SAY:

ENVIRONMENTAL REGULATIONS MUST BE SCIENCE-BASED

Environmental regulations are pursued with the best intentions.

Often, however, these policies are developed with the broadest strokes: one-size-fits-all rules that are not fit-for-purpose for Great Lakes-Seaway shipping. U.S. APHIS inspections, intended to help prevent foreign pests from infesting cargo and American ecosystems, are a prime example. Thoroughly inspecting vessels carrying wood from exotic parts of the world is clearly a costjustifiable regulatory action. But should a Laker carrying inorganic materials originating from a country that shares the same water and a common border — be paying the same inspection fees, let alone any fees for pest inspection services at all?

Equally with air emission and ballast water regulations, the default has been to develop rules that don’t properly differentiate between domestic and global shipping. There needs to be greater consideration for existing science, rigorous research and other forms of data demonstrating what would be most environmentally protective and cost-effective for short-sea shipping, which competes with land-based forms of transportation.

In order to avoid unintended consequences, governments have to be open to more consultation, more devoted to rigorous analysis and better science before policy is formulated and rules are created.

“USING MARINE REDUCES TRUCK TRAFFIC IN OUR SUPPLY CHAIN AND EXTENDS OUR REACH TO SUPPORT NORTH AMERICAN MARKETS.”

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TOM BROWN, LOGISTICS MANAGER OF LAFARGEHOLCIM “Environmental regulations should absolutely be based on sound science. When regulatory requirements change it is very challenging from a planning perspective. It affects the development of new capacity and new business.

Transportation is a significant cost component for limestone and cement. It’s a pretty big impact.” “We also have to consider this from an environmental standpoint. Our quarries and plants are serviced by fuel-efficient ships that can carry 25,000 tons at a time. If we lose business to a land-locked competitor that transports only by truck, that could lead to more road congestion and air emissions.”

ROY HICKINGBOTTOM, VICE-PRESIDENT, TRANSPORTATION, MCASPHALT “By far, the greatest concern for us is the ongoing uncertainty over Canadian and U.S. requirements for ballast water treatment systems on our Canadian domestic ships. Often our ships are travelling short distances on the same body of water, Sarnia to Detroit, Windsor to Detroit, Montreal to Sarnia. Not only is there no technology that will treat the ballast water in the short time frame it takes to travel some of these distances, but it defies common sense that ballast water taken from the Canadian side of a river or lake would somehow have different species than the U.S. side of the same river or lake. Ships that operate within the Great Lakes-Seaway system that do not travel overseas and are not bringing in invasive species from around the world should be exempt from installing ballast water treatment systems. This is the perfect example of policy that is not supported by science and has no quantifiable benefit, but potentially has a huge cost implication. For us to be profitable, we would have to pass these extra costs on transport to our customers, paving contractors.

They will then pass it along to the provinces and states and local municipalities repairing and building roads, and ultimately to the taxpayer.” n

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NEW CANADIAN GOVERNMENT OFFERS OPPORTUNITIES FOR DIALOGUE ON SHIPPING THE CARGO THAT TRAVELS ON THE ST. LAWRENCE SEAWAY AND THE GREAT LAKES CONNECTS GRAIN FARMERS ON THE PRAIRIES, MINING COMPANIES IN THE NORTH AND STEEL MILLS IN ONTARIO TO CUSTOMERS ACROSS NORTH AMERICA AND AROUND THE WORLD.

Vance Badawey, Member of Parliament, Niagara Centre

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ransporting over 164 million metric tons per year, the Great Lakes-St. Lawrence Seaway is critical to both the Canadian and American economies.

Creating 100,000 Canadian jobs and $2 billion dollars in taxes for federal, provincial and municipal governments to invest back into communities, Great Lakes-Seaway shipping contributes significantly to a diverse and dynamic economy for Canada.

With a new government in Ottawa, there is an opportunity to help the next generation of Canadian leaders, businesses, and all Canadians learn how innovative, environmentally sustainable, and costeffective Great Lakes - St. Lawrence Seaway shipping can be for the economy.

The cargo that travels on the St. Lawrence Seaway and the Great Lakes connects grain farmers on the prairies, mining companies in the north and steel mills in Ontario to customers across North America and around the world. Electric utilities, construction companies, manufacturing interests, even municipalities sourcing road salt - all depend on the Seaway. Imagine who could be using Great Lakes-Seaway shipping in the future.

As this new Parliament and new Government get back to work in 2016, one of the first orders of business will be the Canada Transportation Act (CTA) Review and examining the findings and recommendations of the CTA Review Panel led by the Honourable David Emerson.

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This will be a wonderful opportunity to bring together Parliamentarians from all parties to speak with stakeholders, such as the Chamber of Marine Commerce, and discuss how to sustainably grow our economy. It is my hope that this review will spark a national dialogue on how to promote Canadian jobs, increase Canadian trade, and boost awareness of the environmental advantages of moving goods along the Great Lakes-St. Lawrence Seaway to Canadian and international markets.

With $7 billion being spent by the shipping industry and governments on both sides of the border to improve infrastructure at the same time that Canadians are demanding more environmentally sustainable transportation methods, there is great opportunity for growth along the Great Lakes-St. Lawrence Seaway.

There are many aspects of marine shipping that Canadians should be proud of and support. The following facts are a starting point for increased understanding and development of this important industry: • marine transportation results in lower Greenhouse Gas (GHG) emissions than either rail or road; • shipping on the Lakes saves $3.6 billion in transportation costs over land alternatives; • it would take 7.1 million truck trips to carry the same amount of cargo that the Great Lakes-Seaway fleet does each year;

•

•

•

•

shipping by water saves on road maintenance and lowers the number of heavy trucks on our roads. That means less congestion and less noise.

If Great Lakes-Seaway marine cargo shifted to trucks, it would lead to $4.6 billion in highway maintenance costs over 60 years; accident rates (and lost time) for marine professionals are much lower than for rail or trucking workers; Great Lakes ships have the lowest carbon footprint among comparable transportation options, (7 times more fuel-efficient than trucks and 1.14 times more fuel-efficient than trains); Shipping on the water rather than rail, emits a tonne less carbon dioxide for every 500 km travelled. Trucks would result in five times the GHG emissions carrying the same goods the same distance as shipping on the Lakes.

As the Federal Government looks at Canada’s entire transportation network now is the time for industry, communities, and other stakeholders to explore how to safely, environmentally responsibly, and cost effectively help grow our economy. Moving Canadian goods to customers around the world is critical, and Great Lakes-Seaway shipping will play an important role in accessing world markets. n

DISTANCE IN KILOMETRES ONE METRIC TON OF CARGO TRAVELS ON 1 LITRE OF FUEL

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News

GRAIN BUSINESS INVESTS $50 MILLION IN GREAT LAKES-SEAWAY

BY LEO RYAN “While trade with Asia (in media reports) garners most of the headlines, the Seaway continues to play a critical role in Canada’s grain export chain, and in most cases sees approximately 25 percent of all of Canada’s grain exports pass through it.”

“Direct access to the Great Lakes/Seaway system means the port is ideally located for agri-food exporters,” concurs Bruce Wood, president and CEO of the Hamilton Port Authority.

Great Lakes ports handle over 3.4 million metric tons of Ontario grain a year for domestic use and export.

LOCATION OF FACILITY AT THE PORT OF HAMILTON

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he Port of Hamilton, Canada’s largest maritime gateway on the Great Lakes, is poised for still bigger things in its fast-growing agribusiness sector, thanks to a $50 million investment in a year-round terminal that will ship grains and oilseeds grown in Southern Ontario for export to world markets. The 50,000 metric ton terminal on Pier 26 is slated for completion just prior to the 2017 harvest.

The project was announced by G3 Canada Limited, a Winnipeg-based agribusiness giant which is the successor to the Canadian Wheat Board, with part ownership stakes held by Bunge Canada and the Saudi Agricultural and Livestock Investment Company.

The grain products will be loaded from the Lake Ontario port onto Great Lakes vessels and rail cars destined for G3’s facilities in Quebec City and Trois-Rivières on the St. Lawrence River where they will be transferred onto ocean vessels heading to Europe and other overseas markets. As a result of the 22

“Our agricultural tonnage has more than doubled since 2009, driven by increases in terminal capacity, and almost $100 million in private sector investment. Global market demand for Canadian food products is strong, so we’ll continue to target agri-food as an area for further investment, including food processing and crop inputs,” adds Wood. connection with Canada’s two major railways, shipments are not interrupted when the St. Lawrence Seaway closes during the winter months.

Brett Malkoske, G3 Canada’s vice-president of business development, says choosing the Port of Hamilton was a “no-brainer.”

“The Port of Hamilton,” he says, “is the largest, and from our perspective, one of the best maintained ports in Southern Ontario.

Due to its proximity to the St. Lawrence, it has certain logistical advantages from an export perspective that other ports on the western side of Southern Ontario would not enjoy. The site has excellent access not only to the water but to rail and highway, which is critically important due to the nature of our inbound deliveries – most of which are expected by truck.”

Malkoske underlines the ongoing important role played by the Great Lakes/St. Lawrence System for exporting grains and oilseeds.

“We couldn’t be more pleased to welcome the new G3 terminal to the Port of Hamilton.

We have a long history with Bunge as an existing tenant, and this development is a great example of how we work with our tenants to help their businesses grow.”

Karl Gerrand, chief executive officer of G3, says the new terminal is “part of a vision to create a coast-to-coast grain enterprise.”

“Grain exports from Southern Ontario have been increasing for some time now,” he says. “We look forward to expanding our relationship with farmers in the province, and will work to establish G3 as the partner of choice in marketing their grain.”

Gerrand affirms that combined with the existing facilities in Trois-Rivières and Quebec City and the company’s extensive marketing connections, “G3 will present a very competitive new option for Ontario farmers.” n

News

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News

MARINE HALL OF EXCELLENCE TO HONOR ‘FIRST CLASS’ OF INDUCTEES

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he Chamber of Marine Commerce will announce the first class of inductees into the Marine Hall of Excellence this year, honoring those who have made significant contributions to advance marine trade and commerce in Canada and the U.S. The Chamber’s board of directors will select the inductees following a 10-month nomination process after the initiative was launched in 2015.

“JUST LIKE OUR ATHLETES, ENTERTAINERS AND AVIATORS, THIS ‘HALL OF FAME’ WILL RECOGNIZE TALENTED LEADERS WHO HAVE HELPED SHAPE OUR TWO GREAT NATIONS.”

“We’ve had dozens of nominations from all over the world for individuals that have played significant roles in the success of today’s Great Lakes-Seaway shipping industry.

Nominations have come from companies, stakeholder groups and members of the public,” says Stephen Brooks, President of the Chamber of Marine Commerce. “Just like our athletes, entertainers and aviators, this ‘hall of fame’ will recognize talented leaders who have helped shape our two great nations.”

Potential inductees can come from any profession but must have demonstrated vision, leadership and direction resulting in important impacts and significant tangible results for the world of marine commerce.

Inductees will receive a prestigious, hand-crafted award as well as a lapel pin, featuring one of the most recognizable marine symbols, the compass rose. Inductee profiles and achievements will be showcased at the Marine Hall of Excellence’s virtual home www.marineexcellence.com and through events, marketing and media relations efforts throughout the year.

“We are also very interested in partnering with Great Lakes maritime museums in Canada and the U.S. to display a Marine Hall of Excellence interactive virtual exhibit to showcase some of these amazing stories that have remained under the public radar for far too long,” says Brooks.

One prospective partner is The Marine Museum of the Great Lakes at Kingston, which opened a permanent exhibit 24

on the navigation system, The Marine Superhighway, in the summer of 2015.

“The criteria for recognizing achievements in leadership and innovation in the marine industry merges nicely with the theme of our new exhibit, which strives to tell the stories of what the modern shipping industry is today,” says museum manager Doug Cowie.

“The average person knows very little about how Great Lakes-Seaway shipping affects their daily lives, the cargoes transported, how more efficient and environmentally friendly shipping is compared to other modes of transportation, the technological advances in the new fleet of ships, the international and economic reach of the

Seaway, and the vast integral network that makes the Seaway the successful transportation system it is today. The primary objective of The Marine Superhighway exhibit is to show visitors the vision and innovations that make it all possible. The exhibit has been a great success!”

“We welcome any initiative from the Chamber of Marine Commerce that brings new stories to light that acknowledge new ideas and achievements that positively advance marine commerce, and a Marine Hall of Excellence virtual exhibit sounds like an interesting medium to deliver those stories to our visitors.” n

News

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In Conversation

“THE GREAT LAKES / ST. L CRITICAL BUSINESS ADVA A DIRECT, COST EFFECTIV TRANSPORTATION FOR RA BOTH DOMESTIC AND INT SEAN DONNELLY, PRESIDENT AND CEO

IN CONVERSATION WITH

ArcelorMittal Dofasco 26

In Conversation

An exclusive interview with Sean Donnelly, President and CEO, and Brian Benko, VicePresident of Procurement and Information Technology

LAWRENCE SEAWAY SYSTEM PROVIDES A ANTAGE FOR ARCELORMITTAL. IT PROVIDES VE AND SUSTAINABLE METHOD OF AW MATERIALS AND FINISHED PRODUCT FOR TERNATIONAL SHIPPING.”

O OF ARCELORMITTAL DOFASCO

ArcelorMittal is the world’s largest steel and mining company. Can you set the scene for us in terms of the scale of its operations in the Great Lakes-St. Lawrence region.

Q

ArcelorMittal operates nine facilities in the Great Lakes basin, SD

spanning both Canada and the United States. Together, the Great Lakes basin and the St. Lawrence Seaway are a critical element of ArcelorMittal’s business, transporting raw materials to its operations, shipping finished product to its customers and playing an important role in the steelmaking process.

ArcelorMittal employs nearly 10,000 Canadians across 19 Canadian locations in mining as well as tubular, long and flat carbon steel.

In total, ArcelorMittal’s four integrated mills on the Great Lakes consume more than 30 million net tons of iron ore and coal each year which is delivered via the Great Lakes-St. Lawrence Seaway system. Additionally, ArcelorMittal mines in Canada and the United States ship raw material via the waterways to sister sites and other consumers in North America, Europe and the Middle East.

Q What sectors of the economy do your Great Lakes steel products support?

SD Our steels are the fabric of life: they are helping to achieve aggressive fuel efficiency targets in autos through light-weighting; they are the foundation of sustainable green buildings; they are the backbone of skyscrapers and stadiums and are found in many of the products of modern life.

Our steel is shipped across Canada, into the US and into Mexico.

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Photo C

redit: C

arole & Ro

y Timm

Photog ra

phy

Q How does Great Lakes-Seaway shipping contribute to ArcelorMittal’s business strategy? Does marine shipping play a role in the global competitiveness of your operations?

The Great Lakes-St. Lawrence Seaway system provides a critical business SD advantage for ArcelorMittal. It provides a direct, cost effective and sustainable method of transportation for raw materials and finished product for both domestic and international shipping.

In Hamilton, our primary use of the Seaway is in having raw materials (mostly coal and iron ore) shipped to us by both vessel and barge. We do also occasionally receive steel slabs, which are rolled and finished here in Hamilton at our facilities.

We also ship outbound materials by water, with those primarily being by-products that are used in other industries and processes.

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In Conversation

ArcelorMittal • Nine facilities in the Great Lakes basin, spanning both Canada and the U.S. • Ships deliver 30 million metric tons of iron ore and coal to four integrated steel mills in the Great Lakes basin •

Additionally, ArcelorMittal mines in Canada and the U S. ship raw material via the waterways to sister sites and other consumers in North America, Europe and the Middle East

Q A recent study showed that

$7 billion is being invested (20092018) in Great Lakes-Seaway ports/ terminals, vessels and waterways. Has this investment in infrastructure had any impact on your operations?

BB Our supply chain is critical to our

business – that’s all of the organizations that play a role in our success including our customers and supply partners -- including the Seaway and the shippers that move our material.

Our success is dependent on theirs. To ensure a healthy supply chain, we are focused on continuous improvement and we look for it in everything we do and in everyone we work with.

There are many signs of improvement for the Seaway including new fleet investments with environmental, productivity and efficiency gains, as well as reliability improvements and an ongoing commitment to health and safety. These vessels represent a new era in Great Lakes shipping in terms of their lower environmental profile.

We are also pleased that the Seaway’s latest strategic plan calls for measures to sustain the long-term reliability and availability of all locks, which is crucial to our operations in both Canada and the United States.

Having a reliable and dependable Seaway system is critical to our supply chain and our sustainable future.

Q Have you made any marine shipping-

related investments in the Hamilton facility in the last few years? Do you have any expansion plans?

BB Recently, we undertook a unique

restoration project on our two ore bridges, which are cranes that unload vessels at our dock. The project saw 36 bridge bogi assemblies either rebuilt or replaced. As the work was undertaken while the bridges were in use, the project took two years. We also continue to make significant and ongoing investments in our facility, including nearly $300 million in our most recent projects including new galvanize and galvalume steel lines, a new temper mill and a major restoration project at our coke plants.

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Are there further improvements that the Q

Great Lakes-St. Lawrence Seaway system could make in terms of infrastructure or services to better serve one of its key industries?

BB There are a few areas that we believe have opportunity for further improvement.

One of the biggest challenges is the impact of the winter season with the Seaway closed for three months each year.

We encourage all transportation modes to work together to ensure continuous movement of goods through all seasons.

For many manufacturers, stockpiling materials and managing through various transportation modes presents significant challenges. Our customers expect deliveries all year round, regardless of the transportation mode and our goal is to get these deliveries to them at the lowest total cost of ownership.

With the Seaway closed for approximately a quarter a year, it is prudent to consistently explore maintenance schedules and opening and closing dates and even how to work with other modes of transportation in an effort to lengthen the navigation season, We believe cooperative ventures between Seaway – vessel – rail – truck could satisfy a large number of customers and provide a seamless shipping option throughout the year.

What are your views on the availability Q

of ice-breaking resources? Has this impacted your business during the past two difficult winters?

BB The weather presents challenges

in terms of icebreaking. The question is whether there are sufficient icebreakers in the Seaway to manage a smooth break when the system opens. The steel industry in general faced serious challenges during the winter of 2013/2014 when the Great Lakes were inundated with ice cover and many steel mills were forced to shut down due to raw material shortage. Thankfully, in Hamilton, we did not feel the impact as our inventory was sufficient to manage.

Turning our attention more globally, Q

world commodity prices for both iron ore and steel have plunged dramatically, with no relief in sight. How has this affected your business?

SD There’s no doubt that the past few years

have been challenging for our business.

Having said that, we continue to focus on those things within our control and approach everything we do with a continuous improvement mindset. We have a team of employees that are the best and brightest, and they are our competitive advantage.

In Conversation Our strong people coupled with strategic investments and an eye to continuously improving everything we do has resulted in significant success for our company. We continue to experience this despite the challenges in the market.

Q We have seen particularly in the

U.S., steel producers urging government to stop the import of low-price overseas steel. What is ArcelorMittal’s position on that issue? And ultimately, does that have any impact on domestic shipping?

SD As the world’s largest steel company

with operations in more than 60 countries, ArcelorMittal strongly supports fairly traded steel markets, devoid of dumping and subsidies that distort markets and cause harm to our respective economies. The North American steel market has experienced significant increases in unfairly traded steel from overseas markets, and U.S, Canadian and Mexican steel industries have responded with trade cases, to eliminate market distortions and bring back true competitive markets. Eliminating such distortions with strong trade remedy systems will support manufacturing activity, supply chain growth, domestic shipping in Canada and NAFTA. Q Despite the global economic picture,

the North American economy has seen growth in some areas in the past year. What are the sectors that are currently showing the most demand for Arcelor steel?

We supply to the automotive, SD

construction and manufacturing, distribution, tubular and consumer and industrial packaging sectors. Over the past two years, the automotive sector has shown strong demand and buoyed our business to record shipments in 2013 and 2014. You’ll find our steel in all of the major automakers’ vehicles. One of our largest product innovation pursuits is in the light-weighting of our auto steels, while maintaining crashworthiness. North American automakers are aggressively working to meet new fuel efficiency standards by 2020 and our steels are helping them to achieve these targets with no additional cost or compromise on safety. Looking ahead, we expect construction will present a growth opportunity for ArcelorMittal as well. For all of our customer sectors, we must continue to innovate and focus on new product development to succeed against our competitor materials.

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Q Looking forward, are there other

sectors/markets in North America showing new opportunities?

SD Another area of great interest to us is

in the construction of sustainable buildings. Our steel contributes to sustainable building designs and is used in everything from framing to decking and exterior panels to roofing.

Q In that context, do you think there

are opportunities for Arcelor to increase its use of Great Lakes-Seaway shipping for raw materials and even potentially finished steel products?

BB We utilize the Seaway to primarily

ship raw materials for our processes.

As our production capability is not infinite we don’t foresee an increase in our use of the Seaway. Finished steel, to date, has not been effective to ship via the waterways due to quantity, inventory and customer demands on timeframes.

Q E n v i ro n m e n t a l l y s p e a k i n g ,

ArcelorMittal Dofasco has been strongly pro-active on a number of fronts. Can you highlight some of your initiatives?

Steelmaking is a complex and BB energy intensive process and our site covers approximately 750 acres in an urban environment. This requires careful management, which we do through our ISO 14001 certified Environmental Management process.

We make significant investments in our equipment as well as regularly improve our procedures to ensure we minimize the impact of our operations on the environment.

Energy efficiency is a big area of focus for us. We recently commissioned a turbo generator that produces electricity from steam. This is the first time we have been able to produce power on our site. We are currently installing a second turbo generator and expect that together the two generators will produce approximately 12 megawatts of power. That’s enough to power 10,000 homes for a year. There are more efficiency projects being planned with the support of the Independent Electricity System Operator (formerly Ontario Power Authority).

We also have an $87 million restoration project underway at our two coke-making plants to improve their efficiency and environmental performance. Earlier this year we took one of our older coke plants out of service.

Q Does using marine shipping also

play into greening your supply chain?

BB Similar to our research and development

efforts to design and develop new lighter and stronger steels for the automotive industry in order to meet aggressive new fuel efficiency targets, Algoma Central Corporation’s Equinox vessels will carry more cargo, at higher speeds using less fuel; greatly reducing greenhouse gases.

And we are pleased that the Equinox ships also feature exhaust gas scrubbers which remove 97% of sulphur from all exhaust streams.

Q As we move into the New Year,

what is Arcelor’s outlook for the 2016 Great Lakes-Seaway shipping season?

BB Our shipping patterns year over year

are fairly stable. We will continue to utilize the Seaway and it will always be a critical element for our success. We will also work with our supply chain partners to optimize the modes and reduce everyone’s costs as a result. n

“MORE THAN A CENTURY HAS PASSED SINCE THE PORT OF HAMILTON WAS ESTABLISHED TO SERVE THE CITY’S BURGEONING STEEL INDUSTRY. OUR CLOSE RELATIONSHIP CONTINUES TO THIS DAY, WITH STEELMAKING COMMODITIES REPRESENTING MORE THAN HALF OF THE PORT’S ANNUAL TONNAGE. STEELMAKING HAS CHANGED A GREAT DEAL OVER THE YEARS, BUT ARCELORMITTAL DOFASCO HAS CONSISTENTLY BEEN A MODEL OF SOUND BUSINESS, AND A SOURCE OF COMMUNITY PRIDE.” BRUCE WOOD, PRESIDENT & CEO, HAMILTON PORT AUTHORITY

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In Conversation

CHALLENGES AHEAD FOR NEW COMMANDER OF NINTH COAST GUARD DISTRICT

BY LEO RYAN

W

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Rear Admiral June E. Ryan Commander, Ninth Coast Guard District

Photo Credit: PAC Lauren Jorgensen

hen a new commander takes over the U.S. Ninth Coast Guard District every couple of years, shipping lines trading on the bi-national Great Lakes-St. Lawrence waterway pay special attention to determine if new policies or initiatives are on the horizon.

Such has been the case since Rear Adm. June E. Ryan assumed the helm last June, succeeding Rear Adm. Fred Midgette who had occupied the strategic post since 2013.

This U.S. Coast Guard district encompasses a vast area that comprises the Great Lakes, the St. Lawrence Seaway, eight states, and a 2,400-km international border. The commander oversees a workforce of over 6,000 Coast Guard active duty, reserve, civilian and auxiliary men and women.

Ryan has an impressive career trajectory, having served as Military Advisor to the Secretary of Homeland Security, Military Aide to the President of the United States (Bill Clinton), plus assuming various shipboard commands and onshore assignments.

“Among the notable issues to be raised with Rear Admiral Ryan,” says Allister Paterson, President of Canada Steamship Lines, “is the need to advance a sound and balanced regulatory framework that supports a thriving and cost-competitive shortsea shipping industry.”

“On significant legislative issues like the North American Emissions Control Area (ECA) and carbon levy schemes, the Rear Admiral will have a vital role to play as a strong advocate for shortsea shipping with the U.S. delegation at the IMO (International Maritime Organization), and in building binational consensus to ensure a level playing field with less-efficient modes of transport,” he stresses.

Paterson adds: “CSL will also be calling on Rear Admiral Ryan to be pro-active in promoting a closer collaboration between Canada and the U.S. on ice management and parity of icebreaking assets to service the waterways our two countries share.

At all times, and particularly during the critical Seaway season opening and closing periods when icy conditions are at their most dangerous, the safety of marine transportation in all operating regions of the Great Lakes and Seaway must remain our top priority.”

VITAL ICEBREAKING COOPERATION WITH CANADA The 2014 and 2015 winters witnessed the harshest ice conditions on the Great Lakes in several decades, with Canadian Coast Guard vessels lending considerable support to the U.S. Coast Guard to free commercial freighters trapped in mountains of ice.

“Joint participation with the U.S. and Canadian Coast Guard as well as other fleets in the planning of vessel and ice-breaking asset deployment during the winter navigation periods is an especially demanding task requiring constant attention and flexibility in managing the challenge,” says Stewart Thies, executive director of the United States Great Lakes Shipping Association, which represents agents for international-flag vessels.

Does the new commander believe the U.S. Coast Guard has sufficient icebreaker capacity on the Great Lakes?

In an interview with Marine Delivers Magazine, Ryan candidly acknowledges: “You don’t always build an icebreaking fleet on the absolute worst case scenario but on the basis of an average ice season. We have the right ice-breaking capabilities for most winters. When we have the harshest winters, we do not.”

That’s why in those circumstances, she says, the U.S. Coast Guard so highly appreciates the continuing cooperation with the Canadian Coast Guard. “We value very much our close partnership with the Canadian Coast Guard on our shared waterway on search and rescue and many other operations.”

Otherwise, generally speaking, Ryan says “an overarching priority is to tell the good news about the Great Lakes – particularly as it relates to maritime transportation.”

THE COMPLEX BALLAST WATER FILE Turning to the controversy on ballast water issues and criticism by Great Lakes operators over enforcing regulations that are not yet technologically applicable, Ryan says, “I think all parties concerned understand the challenges with the invasive species.

Nobody wants to introduce invasive species in any waterway.

“Collectively, we are working on the technology. We are working on the procedural issues. We are working on the gaps between what the courts are saying, what are the EPA rulings, what are the Coast Guard rulings. Together, we are trying to tackle the same issues.”

“Various laboratories have been working on ballast water treatment systems and have tested some of these systems,” notes Ryan before concluding that in her view “the technology is beginning to move in the direction that everybody is in agreement we need to go.” n

Photo Credit: Roy Timm

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Trade Winds

MARINE SHIPPING CRITICAL IN QUEBEC’S “GLOBAL MODEL” FOR LNG PRODUCTION AND DELIVERY

BY LEO RYAN

T

wo major joint ventures involving Petro-Nav Inc., a subsidiary of Quebec City-based Groupe Desgagnés, have wide implications in terms of new shipping patterns on the horizon for the Great Lakes-St. Lawrence maritime corridor.

And much will be in place by the first quarter of 2016.

“These are very exciting times in the history of our company,” says Jacques Beauchamp, president and general manager of Petro-Nav.

Jacques Beauchamp, President and General Manager, Petro-Nav

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Last August, the Quebec government gave the green light to Stolt LNGaz for the proposed construction of a C$800 million natural gas liquefaction plant in Bécancour on the St. Lawrence River with a 2018 target date. Stolt LNGaz is part of powerful Norwegian conglomerate Stolt-Nielsen Limited.

Announced at the same time was the signing of major partnership agreements with Petro-Nav, which specializes in the transport of bulk liquids, and Servitank, a subsidiary of Groupe Somavrac in Trois-Rivières which is engaged in the warehousing and delivery of bulk products and hazardous materials. The huge project, which has received environmental approvals, aims to produce 500,000 metric tons of LNG annually for distribution, primarily by LNG tankers, to Quebec businesses on the North Shore of the St. Lawrence River not served by an existing natural gas grid.

Nils G. Stolt-Nielsen, chief executive of Stolt-Nielsen, was enthusiastic, declaring: “With the Bécancour project, Quebec will become the global model for the production and distribution of LNG on a regional scale.”

Trade Winds

“WITH THE BÉCANCOUR PROJECT, QUEBEC WILL BECOME THE GLOBAL MODEL FOR THE PRODUCTION AND DISTRIBUTION OF LNG ON A REGIONAL SCALE.” NILS G. STOLT-NIELSEN, CHIEF EXECUTIVE OF STOLT-NIELSEN

Beauchamp says a joint venture between Petro-Nav and Stolt-Nielsen will supply two LNG tankers, creating 100 new jobs aboard the vessels.

“The intent,” he says, “is that Stolt LNGaz time-charters one or two vessels from the JV. Petro-Nav and its affiliate, Transport Desgagnés will be the operators of the ship, including the required crewing, training, technical and day-to-day operations.

Petro-Nav will also be very active in the local environment communicating, and provide information to authorities and communities in which the vessels will operate.

Stolt-Nielsen’s technical group in Rotterdam will be fully responsible for the building project and to deliver the vessels.”

Beauchamp reveals that “an approximately 20,000 m3 (cubic metres) vessel,will be fitted accordingly so that it can also sail up and down the St. Lawrence Seaway and into the Great Lakes. This will maximize its trading range.”

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The second ship, with a capacity of about 40,000 m3, will be too large for Seaway navigation.

He indicates that a decision to actually start the construction of the vessels will automatically coincide with a final decision expected in the first quarter of 2016 by Stolt LNGaz to proceed with the mammoth project following a close review of the latest energy market conditions.

The other joint venture concerns the partnership formed in 2014 between Groupe Desgagnés and U.S. energy giant Valero. Under this accord, a joint venture called Transport Maritime Saint-Laurent will see two European-built 75,000-metric ton tankers, the Espada Desgagnés and the Laurentia Desgagnés, ferry Alberta oil from Valero’s Montreal East terminal to its Jean Gaulin refinery in Lévis opposite Quebec City. The chief objective is to allow Valero to reduce its dependency on importing overseas oil for its refinery.

The National Energy Board’s final stamp of approval this past fall paved the way for two vessels to carry up to 350,000 barrels of oil per trip in a shuttle service that kicked off in mid-December.

Beauchamp says that a determining factor in both joint ventures has been the recognition by the outside partners of the tremendous value of the local contacts and local knowledge amassed by the Desgagnés group through many decades. Indeed, although incorporated in 1972, its origins go back to the late 19th century.

“Prior to finalizing both undertakings,” Beauchamp explains, “we organized all sorts of town halls and information exchange meetings with many communities and with such environmental lobby groups such as Les Amis du Fleuve. Demonstrating the sustainability aspects of marine shipping were an important consideration in putting this project together.” n

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Trade Winds

THE CLEVELAND-EUROPE EXPRESS: DELIVERING CONTAINER SERVICE TO THE GREAT LAKES-SEAWAY

BY WILLIAM D. FRIEDMAN

barriers that have kept carriers and shippers away from the Great Lakes. We have faced headwinds from the fallout in the worldwide commodities market and the surge in the dollar vs. the euro.

William D. Friedman, President/CEO, Port of Cleveland

T

he Port of Cleveland and our partners at Amsterdam-based Spliethoff Group placed a big bet when we launched the Cleveland–Europe Express (CEE) in 2014.

Many were skeptical. The Great Lakes-St. Lawrence Seaway system had not seen a scheduled “liner”-type service in decades.

Despite this, we were confident the CEE could carve out a sustainable niche in the ultra-competitive shipping market. During our second season in 2015, the service experienced strong growth, especially with containerized freight, proving that the Great Lakes-St. Lawrence Seaway is a viable routing for a much broader range of shippers and cargo types.

The strategy behind the CEE is simple; we offer the shipper value through better door-to-door transit times and a more customized, hands-on service. Congestion in ports along the coasts is real and not going away, and that logjam wastes time, resources, and dollars for companies shipping goods in and out of the U.S. So, while the American Association of Port Authorities’ recent study shows an impressive 43 percent growth in the economic impact of U.S. port activity since 2007, there is an emerging role for niche ports and services. Savvy consumers recognize price is what you pay and value is what you get.

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That’s where the CEE steps in. While we may not sit directly on an ocean, our port still offers direct, global connection. The CEE leverages Cleveland’s position on the “Fourth Coast” – the Great Lakes and St. Lawrence Seaway system – a route established with the modern-day Seaway opening in 1959, but still far from reaching its potential to serve one of the great economic regions of the world.

The CEE offers a competitive, servicedriven alternative to those looking to avoid the long delays and excess costs of overwhelmed coastal ports focused on processing megaships. On average, we are saving our customers seven to 10 days compared to traditional routes to the U.S. Midwest.

Shippers are responding – in 2015, we doubled the number of calls the CEE made at the Port of Cleveland, and the total volume of cargo passing through our docks sharply increased. Containerized cargo was up five-fold over 2014, which marked the first time in decades the Great Lakes could boast regular containerized shipping.

The CEE has seen success despite some difficult market factors beyond our control and an unnecessary legacy of market

Closer to home, we urgently need policy and administrative reforms to put the Great Lakes-Seaway navigation system on a more level playing field with tidewater ports and the overland transport modes.

Regulatory barriers such as high pilotage rates coupled with a shortage of pilots, a needed extension to the Great LakesSeaway shipping season with enhanced ice breaking capabilities and a lack of adequate federal infrastructure funding are just some of the impediments to further growth of the CEE. We believe that the overall goal of Great Lakes-Seaway regulations should be the provision of reasonable reforms that lower the cost of the system and increase efficiency for shippers and carriers. Regardless of these challenges, we are convinced that the CEE has gone a long way toward reestablishing the legitimacy of the Seaway’s rightful place in global trade. And unlike our sister ports on the East, West and Gulf coasts, we have room to grow and we’re ahead of the demand curve.

To accommodate increased demand and strengthen our ability to compete, we’re building new warehouse space, repurposing existing terminal areas, and investing in new equipment, including two high-efficiency mobile harbor cranes to be delivered in the spring.

As the largest of our North American coastal ports continue to struggle with the swell in demand, the Port of Cleveland is ideally positioned to provide speedy, efficient, and reliable service to those seeking access to global markets. It’s time for the Fourth Coast to reach its true potential as a major trade lane for North America’s interior. n

Trade Winds

SEAWAY’S HANDS-FREE MOORING RECEIVES INTERNATIONAL RECOGNITION

BY LEO RYAN

C

anada’s St. Lawrence Seaway Management Corporation (SLSMC) has received international accolades for its pioneering use of Hands-FreeMooring to secure a commercial ship as it transits a lock chamber. HFM, as it is referred to in the trade, represents the most significant advancement in operations on the bi-national Seaway since its construction in the late 1950s.

The SLSMC was given a prestigious award by the Paris-based, 54 member Organization for Economic Cooperation and Development (OECD) for its world-first introduction of HFM on a waterway lock system with the aid of supplier Cavotec. The Promising Innovation in Transport Award was presented on May 28th in Leipzig, Germany, during the 2015 Summit of Transport Ministers.

The HFM system employs vacuum pads mounted on vertical rails to secure the ship during the lockage process, tracking the ship as it is raised or lowered while keeping it at a fixed distance from the lock wall. The last step in the lockage operation consists of releasing the vacuum suction, which retracts the pads, and the vessel can be on its way.

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At the time of the award, then Canadian Minister of Transport Lisa Raitt commended the Seaway as “truly a world leader in marine technology.”

The innovative HFM system, which originated in New Zealand to secure vessels to a wharf, is on schedule to be completed by 2018 on all Seaway high-lift locks (14 Canadian and two U.S.) that lift ships a total of 168 meters (551 feet) as they sail from Montreal to Lake Erie. Cost and safety benefits are significant for the Seaway as well as for ship operators.

“A substantial benefit from the adoption of HFM is the increase in productivity for the Seaway administration, as front-line staff can attend to other tasks,” says Terence Bowles, President and CEO of the SLSMC. “The improved productivity will also help to contain the rate of any future toll increases.”

“In addition,” notes Bowles, “safety is enhanced for Seaway employees and crew, with the elimination of line-handling and the attendant risks of line breaks or tangles.”

For Great Lakes-St. Lawrence carriers, it is estimated that the automated process translates into time savings of between five and seven minutes per lock. By taking less time to transit a lock, ships also save on fuel costs and reduce air emissions.

Another advantage of the new mooring equipment is that it will open up the waterway to some vessels from the world fleet, which cannot transit the Seaway at present without the need for specialized fittings related to line handling in the locks.

HFM was installed on eight of the Seaway’s locks by the end of 2015. The remaining highlift locks are slated to be completed for HFM capability in 2016 and 2017. n

Trade Winds

GOING DUTCH

Seaway figures big in Canada’s rising trade with the Netherlands

BY JULIE GEDEON

Port of Rotterdam

T

he Netherlands is North America’s biggest trading partner when it comes to the Great Lakes-St. Lawrence Seaway, and the future looks bright for expanding import-export opportunities.

“The relationship is long standing and is very strong in good part because of the balanced trade which creates the efficient movement of cargoes, utilizing the global marine fleet,” says Terence F. Bowles, president and CEO of the St. Lawrence Seaway Management Corporation (SLSMC).

Agricultural products are the main export to the Netherlands, with approximately 1.2 million metric tons of primarily soybeans being delivered from both Canada and the United States through the Seaway annually.

Dutch-made steel is the primary import into the Great Lakes. Approximately two million metric tons of manufactured steel and coils arrive through the Seaway every year, as well as 400,000 metric tons of petroleum products that range from gasoline to the coke used to make steel.

Bowles credits the strong partnership to the Seaway’s ability to seamlessly provide access to companies requiring steel

made in the Netherlands and elsewhere.

“The Seaway provides direct access to the companies that regularly use steel in Hamilton, Cleveland, Burns Harbor and Milwaukee,” Bowles explains. “So the final mile delivery is a short rail or truck distance from the port.”

Stephen Wilkes, director of U.S. governmental and regulatory affairs at Tata Steel, agrees. “For decades, Tata Steel and its predecessor companies have used the Seaway and Great Lakes as the primary route to serve its customers in the North American heartland,” he says.

“We continue to closely follow legislative and regulatory developments that could affect the route and potentially impact the substantial economic benefits that domestic and international trade bring to the region as a whole,” he says. “We’re talking about 160 million metric tons of waterborne cargo annually that is responsible for creating some 227,000 jobs.”

The SLSMC is further encouraging the use of the Seaway by having recently introduced toll incentives that help with the export of manufactured goods. Over the last

eight years, New Business Incentives have generated 18.2 million metric tons of new cargoes. It also ensures that the Seaway and its ports are well-represented at trade exhibitions in North America and Europe.

“Of course, we’re also in regular communication with our carriers in the Netherlands and throughout Europe to ensure that we’re doing everything possible to maintain the Seaway as their preferred routing,” Bowles adds.

“FOR DECADES, TATA STEEL

AND ITS PREDECESSOR

COMPANIES HAVE USED THE SEAWAY AND GREAT LAKES AS THE PRIMARY ROUTE TO SERVE ITS CUSTOMERS IN THE NORTH

”

AMERICAN HEARTLAND

STEPHEN WILKES, DIRECTOR OF U.S. GOVERNMENTAL AND REGULATORY AFFAIRS AT TATA STEEL

NETHERLANDS

SEAWAY

10 DAYS 2995 NAUTICAL MILES

36

Trade Winds

CANADIAN TRADE COMMISSIONER BULLISH ON OUTLOOK The extensive Dutch logistics sector is always working at how to make the best use of containers shipped between Canada and the Netherlands. “The Dutch see tremendous potential in Canada because of a similar cultural outlook and the relative economic stability in Canada that lends itself to long-term planning,” says Diederik Beutener, a trade commissioner for the Canadian Embassy based at The Hague.

Shipping to the Netherlands has increased exponentially over the past decade because of its strategic location as a European trading hub on the North Sea coast. “Rotterdam is now Europe’s largest seaport responsible for handling approximately 415 million metric tons of product annually,” Beutener notes.

He credits the port’s success largely to the Dutch government’s long-range thinking

and investments in port infrastructure and efficiencies, as well as the economies of scale gained by reducing and/or eliminating trade/shipment barriers.

“For instance, Canadian businesses can immediately have their Value Added Tax payment refunded, as opposed to the months it can take to obtain this refund from other European countries,” Beutener says.

“We’ve also found Dutch tax and custom authorities very helpful in answering questions about import duties or the harmonized code that should be used to categorize products,” he adds. “This helps companies with innovative new products to find out earlier what the import duties would be and make their export decisions accordingly.”

The Dutch are keenly interested in Canada as the world’s fifth-largest exporter of agricultural and agri-food products and recognize the Seaway as a major gateway

not only for Canadian exports to Europe, but for more shipments into U.S. markets by the 160-plus Dutch subsidiaries now operating in Canada.

“Dutch business investors like Canada’s favorable corporate tax rate as compared to the rate of some G-7 countries, and view Canada as an ideal springboard into the huge U.S. market,” Beutener says.

Canadian exports to the Netherlands and the rest of Europe are expected to increase when the Canada-EU Comprehensive Economic and Trade Agreement (CETA) is expected to come into effect in 2017.

“Removing a roughly nine percent import duty will undoubtedly make it more interesting for Europeans to import Canadian products,” Beutener says. “And we’re already seeing some positioning by Canadian importers and Dutch exporters in terms of processed foods and beverages from Canada.” n

“DUTCH BUSINESS INVESTORS LIKE CANADA’S FAVORABLE CORPORATE TAX RATE AS COMPARED TO THE RATE OF SOME G-7 COUNTRIES, AND VIEW CANADA AS AN IDEAL SPRINGBOARD INTO THE HUGE U.S. MARKET.”

Photo credit: Rotterdam Port Promotion Council

DIEDERIK BEUTENER, A TRADE COMMISSIONER FOR THE CANADIAN EMBASSY BASED AT THE HAGUE

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37

Port Spotlight

SARNIA HARBOUR EYES NICHE ROLE AS REGIONAL HEAVY-HAUL CORRIDOR

BY BRENT FREDERICK manufactured modules through the community to Sarnia Harbour to be exported both nationally and internationally,” Bradley says.

There are many fabrication shops in the Sarnia-Lambton region that are able to export oversized industrial modules to markets in Canada and around the world.

SIGNIFICANT FABRICATION NEEDS IN CANADA AND ABROAD

Peter Hungerford, director of economic planning for the City of Sarnia

L

ocated at the south end of Lake Huron on the eastern shore of the St. Clair River, Sarnia Harbour is seeking to play a key niche role in Great Lakes-St. Lawrence Seaway shipping under the helm of its new owner, the City of Sarnia.

The port already handles imports of raw materials and equipment for the substantial local petrochemical and refining centres, but promising heavy-haul business has now emerged as a special target.

The City of Sarnia took ownership of and responsibility for the harbor in March 2014 following divestiture of the port from Transport Canada. The transfer agreement included a contribution of more than $8.7 million from the federal government to cover operational costs and maintain the port’s infrastructure.

“The City of Sarnia is the largest city on Lake Huron and we are now in a position with the ownership of Sarnia Harbour to have control over our own destiny,” says Sarnia Mayor Mike Bradley. “Sarnia Harbour is very much a vital link in being a transportation hub with the twin Bluewater Bridges, CN’s gateway tunnel between Canada and the United States and the 402 Highway.

“Part of (our) development is looking at a heavy-haul corridor that would bring 38

A shipping study conducted in and around Sarnia-Lambton identified significant immediate and long-term metal fabrication needs in the Alberta oil sands, the Canadian East Coast and internationally. Developing a dedicated heavy-haul or oversized-load corridor through the city “would allow for the easier, less expensive and faster transport of these large objects to the harbor” for shipment to those markets during the shipping season, says Peter Hungerford, director of economic development and corporate planning for the City of Sarnia.

“This would create a competitive economic advantage for our fabrication industries.”

These oversized objects can be as large as nine meters square by 45 meters or more in length … too large to travel underneath highway overpasses in Ontario.

“We are in the process of laying the foundation for the creation of this corridor that would allow our fabrication industries to build more modules or reactor vessels and ship them to the harbor,” says Hungerford.

“That would increase our wharfage revenue, and at the same time create cost benefits for both the fabrication industries and local petrochemical and refining industries when large vessels are imported into the area,” he continues. “The harbor would assume an even larger role in maintaining and sustaining the economic health of the community.

“If the city did not have the harbor, then we would not be able to undertake this type of initiative. What we are doing is taking the asset that we have and maximizing its benefit for the whole community.”

Developing the heavy-haul corridor means rebuilding and expanding current

“THE CITY OF SARNIA IS THE LARGEST CITY ON LAKE HURON AND WE ARE NOW IN A POSITION WITH THE OWNERSHIP OF SARNIA HARBOUR TO HAVE CONTROL OVER OUR OWN DESTINY.” MIKE BRADLEY, CITY OF SARNIA

Port Spotlight

infrastructure: working with local utilities and road authorities to raise or bury power, telephone and cable lines so that they do not create an obstruction, putting street lights on arms so that they can be swung out of the way as large objects move through the city, and ensuring that underground infrastructure is sufficient to support objects weighing up to two million pounds.

Since divestiture, Sarnia Harbour has also embarked on an electrical service upgrade program to ensure that ships coming into the port have a secure supply of hydro.

Two dockside electrical facilities already have been rebuilt, one is currently being rebuilt, and one will be rebuilt next year.

“By the time we are done, we will have invested about $1.35 million to rebuild our electrical facilities,” Hungerford says.

Another major initiative will be a maintenance-dredging program in the harbor in 2016. The project will remove an estimated 10,000 to 15,000 cubic meters of sediments not collected when Transport Canada last dredged the harbor in 2012 plus accretion that has occurred since then.

FOCUS ON LONG-TERM SUSTAINABILITY From a financial and long-term sustainability perspective, Hungerford says that a business plan conceived prior to divestiture demonstrated that revenues from berthage, wharfage and other charges would offset the harbor’s operating and capital costs.

“The monies that we received from the federal government had not been factored

“One of the political imperatives when divestiture of the harbor was considered was to ensure that it could be run at no net cost to city taxpayers,” Hungerford explains. “So, in fact, it is actually creating a net benefit to the city because it creates employment and generates a fair amount of business for many of our local companies.”

Ship repair and maintenance is another major industry in Sarnia.

Algoma Central Corporation and Algoma Ship Repair rely on Sarnia Harbour for winter berthage and occasional berthage throughout the shipping season,” says Captain Tom Anderson, director ports and harbors, for Algoma Central Corporation.

“The harbor is a well-maintained facility and is suited for ship maintenance and repair.”

Cargill AgHorizons Canada is also an active partner in the operation of the harbor. About 600,000 metric tons of wheat, soybeans and corn are exported and some 100,000 metric tons of fertilizer are imported through its Sarnia transfer terminal annually.

“The port is very important to farmers in Southern Ontario as a large percentage of the grain they grow has to be exported,” says Terry Barros, general manager of the Sarnia terminal. “It is important to have a facility like Cargill AgHorizons Canada in Sarnia in position to export to markets around the world the excess grain that is not used domestically.”

Barros says Cargill AgHorizons Canada was very pleased when port divestiture occurred because it ensured that the port would be maintained, upgrades would occur, and the harbor would continue to be dredged to Seaway drafts.

SARNIA HARBOUR •

• • • • •

39

Comprised of lands and water lots collectively forming the Government Wharf and Warehouse Area, the East Dock and the North Slip 2.5 hectares of land and 1250 meters of berthage.

Cargoes: Grain, fertilizer and salt Total annual tonnage: between 750,000 – 1,000,000 per metric tons Terminal Operators: Cargill AgHorizons Canada Ship repair and maintenance: provides temporary layup and/or emergency repairs during the regular shipping season (60 to 80 vessels during a typical shipping season). Ten to twelve vessels berth at the harbor for layup and/or repair during a typical winter season. into our business plan,” Hungerford says.

“From an operating perspective, the revenues derived from the harbor are put into a reserve to ensure its long-term sustainability. The federal monies are being used to operate the harbor and to undertake capital improvements. We have 15 years to spend the federal monies.

At the end of 15 years, we’ll still have a reserve of similar proportion to continue to sustain the harbor.

“It gave us the assurance that the port would continue to operate as a commercial harbor and allow us to reach markets around the world,” Barros adds. “It’s good for other businesses, too. The city is very committed to the port. For us, it’s a commitment of a strong and positive relationship.” n

39

Community Impact

R E S V E I H R C T I I R O F R O T E Y D A THE WATERW A IE

BY JUL

N GEDEO

T

he Detroit River flows through the largest metropolitan area on any international border, intrinsically linking Canadians and Americans economically and otherwise. “Yes, there’s a borderline dividing us on maps, but our lives are so integrated in terms of business, employment, recreation and tourism,” says Matt Marchand, president and CEO of the Windsor-Essex Regional Chamber of Commerce.

and last because of the materials required for 100 acres of concrete and pavement to build the bridge’s new plaza.”

A second bridge is expected to create opportunities for multi-modal shipping. “It will certainly focus more attention on this region’s transportation possibilities,” Cree says. “However, it’s also critical to replace the existing rail tunnel with one that would

I HOPE GOING FORWARD POLICYMAKERS “ RECOGNIZE THE RIVER’S POTENTIAL TO DECREASE ROAD AND RAIL CONGESTION ..

40 40

Spanning 24 nautical miles (44 kilometers; 28 miles) from Lake St. Clair down to Lake Erie outside Amherstburg Channel, this narrow blue strait has long-served as an essential transportation route connecting the Upper and Lower Great Lakes and St. Lawrence Seaway. Already generating an estimated US$1.8 billion by carrying approximately 60 million metric tons of iron ore, cement, coal, limestone and other commodities, its potential for transporting additional cargo, as well as people, is significant.

The Port of Windsor is the third largest Canadian Great Lakes port by volume, handling up to six million metric tons annually with outbound salt and grain and incoming aggregates as the main commodities. “We also had two good years – 2012 and 2013 – importing stone for the roadwork connecting Highway 401 to the planned Gordie Howe Bridge,” says David Cree, president and CEO of the Windsor Port Authority, “and this year

”

accommodate the double-stack containers being used to move goods everywhere.”

K+S Windsor Salt is among the companies dependent on the river. “Just in terms of the Ojibway Mine, we use it for shipping 75 percent of our product from there,” notes François Allard, K+S Windsor Salt’s vice-president – administration. “That is why it’s so important to our company for the U.S. and Canadian coast guards to have the equipment and resources to effectively manage the ice during harsh winters.”

While the Windsor-area market is sound, according to Wayne Smith, Algoma Central Corporation’s senior vice-president – commercial, the additional shipments related to the new bridge have been welcomed. “It has certainly helped, given that Michigan and other U.S. states have been slow to recover from the 2008/09 recession,” he says.

“I hope going forward that policymakers recognize the river’s potential to decrease

Community Impact

road and rail congestion by taking a global view to transportation infrastructure planning, especially given that marine transport is more efficient, ecological and cost-effective on a cargo ton/ kilometer basis,” Smith adds.

From his office window, John Loftus can see passenger ferries operating a short distance along the Detroit River. The executive director of the Detroit Wayne County Port Authority came out of retirement to return to his beloved City of Detroit and play a hand in its resurgence.

“It’s not without its challenges,” he admits. “But having grown up in Detroit and then seeing it stumble, I appreciate the opportunity to participate in its recovery, and the river is obviously our primary conduit to domestic and international markets.”

Approximately 17 million metric tons of cargo either start out from or end up at the Port of Detroit, generating upwards of 15,000 related jobs. With the American economy rebounding, both the state and local economy are experiencing an upturn.

“The most recent numbers have Michigan’s unemployment rate at five percent, which is below the national average,” Loftus notes.

AUTO SECTOR RESURGENCE SPARK NEW CARGO SHIPMENTS Renewed investment by companies is prompting a significant increase in the amount of heavy machinery and project cargo being shipped to Detroit and other nearby ports.

The automobile industry’s resurgence is also generating new cargo shipments. The conversion of Ford’s F-150 truck – the largest-selling vehicle in the U.S. – to an aluminum-alloy body is resulting in a significant increase in the amount of aluminum being shipped to Detroit.

“Ford is exporting about 400,000 vehicles this year,” Loftus adds. “So we’re looking at how we might facilitate the marine transport of some of those vehicles, along with replacement parts, to the company’s new markets in Europe and potential growth opportunities in Africa and the Middle East.”

Having a new second bridge operation in 2020 will make a tremendous difference in Loftus’s view. “Almost a third of the trade between Canada and the U.S. now makes its way over the existing Ambassador Bridge,” he notes. “It handles traffic fine, but it’s 86 years old, and if something happens to it, there’d be a major economic disruption.”

Loftus is calling upon governments to provide more funding for maritime-related infrastructure. “It just boggles the mind that Michigan with the longest freshwater coastline in the U.S. invests

“IT JUST BOGGLES THE MIND THAT MICHIGAN WITH THE LONGEST FRESHWATER COASTLINE IN THE U.S. INVESTS ONLY $500,000 ANNUALLY (IN MARITIME-RELATED INFRASTRUCTURE)” JOHN LOFTUS, EXECUTIVE DIRECTOR OF THE DETROIT WAYNE COUNTY PORT AUTHORITY

only $500,000 annually and half of that is my port authority’s operating budget,” Loftus says.

He cites the State of Virginia as a positive example. The state designates 12 percent of its sales tax to marine infrastructure development, which amounts to approximately $36 million annually. The Florida Seaport Transportation and Economic Development Council is also making a huge investment. It aims to spend $4 billion in capital improvements at 15 ports by 2019 to significantly increase the region’s share of container cargo traffic.

Loftus says federal investment is also sorely needed for renewed infrastructure, starting with the closest 304-meter (1,000-foot) Soo Lock. “If that thing ever collapses, three percent of the U.S. economy could be shut down,” he warns.

Ed Wolking Jr., executive council with the Detroit Regional Chamber, and executive director of the Great Lakes Metro Chamber Coalition, also underlines the importance of renewed investment. “The coalition has been very active in encouraging the U.S. Congress to recognize the Great Lakes as a single navigational system under the Water Resources and Reform Development Act,” he says. “That would make it easier for the government to appropriate the necessary funds from the U.S. Harbor Maintenance Trust Fund.”

The investment would be well timed with the resurgence of Detroit City. The recession caused the city’s population to drop to 700,000 from its heyday of 1.8 million. It has climbed back up to 750,000 and is steadily increasing as a result of major investment in the city’s core, waterfront redevelopment and housing projects.

Crossing the border has also becoming smoother, according to Marchand. “People have become more comfortable with the procedures and Nexus passes have been great for frequent business travellers,” he says. “Now we just have to make it easier for agricultural products and smaller businesses that don’t necessarily have the resources to keep on top of numerous regulatory changes.” n

The 60 million metric tons of cargo – iron ore, cement, coal, limestone and other commodities - that transit the Detroit River each year represent an estimated US$1.8 billion in economic value to the region.

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41

Community Impact

HOW TO BUILD A BRIDGE — MARINE-STYLE

SHIPPING INNOVATION KEEPS 9,000 TRUCKS OFF MONTREAL ROADS

BY LEO RYAN

H

Photo Credit: Canada Steamship Lines

ow can you help build a massive bridge and protect the environment by keeping thousands of trucks carrying construction materials off the roads at the same time?

The answer was found in an innovative shortsea shipping solution provided by Canada Steamship Lines (CSL) last year when its new vessel, the Baie St. Paul, unloaded 269,000 metric tons of stone at the planned site of Montreal’s new Champlain Bridge, one of Canada’s busiest crossings.

The task was to build a laydown area in the St. Lawrence River for equipment being used in the bridge’s construction, a section that would eventually be used as a base for the soaring twin pillars that are key feature of architect Poul Ove Jensen’s sleek, cable-stayed design. The new bridge will replace a 3.4 km long cantilever structure built in 1962 that is showing considerable signs of wear and tear.

To complete the project, the CSL vessel transported 10 loads of stone over a 30-day period from two nearby Lafarge North America quarries to the discharge site. The ship moored at a temporary dock put in place by Quebec City-based Groupe Ocean.

Performing the same work by truck would have required an estimated 9,000 truckloads – or even more.

The complex operation required the Baie St. Paul to discharge her load of stone from the temporary dock in a restricted stretch of

the St. Lawrence Seaway, allowing passing ships to navigate between the CSL vessel and the opposing dyke.

Nathalie Sykora, CSL’s vice-president, technical services and environment, underlines the key roles played by the new ship’s advanced maneuverability technology and cutting-edge dynamic positioning system.

“The utilization especially of both our stern and bow thrusters was essential to make the operation work efficiently,” she stresses, adding: “The technology could be used in a great number of applications. We will continue to pursue market opportunities as they arise.”

“One of the reasons why the project worked so effectively and seamlessly is that CSL puts such high value onto a safety management system,” adds Sykora.

KEY ROLE OF INNOVATIVE TECHNOLOGY The vessel’s innovative, remote-controlled self-unloading system also contributed in a significant way to the success of the operation.

Allister Paterson, president of Canada Steamship Lines, notes: “The technology that’s built into Trillium Class ships to control the unloading rate, like the variable speed drive and the self-feeding gates, gives us incredible flexibility and the ability to meet any requirement.”

Environmental features like an enclosed, noise-reducing discharge boom and oil-

free propulsion train further contributed to minimal impact on the surrounding communities and marine ecosystem.

Paterson says: “This operation was a great example of how shortsea shipping contributes to economic development to the benefit of our communities and the environment. One ship can carry the cargo of 900 trucks and is over 500 percent more energy efficient – which means safer and healthier communities and lower infrastructure costs for taxpayers.”

Stephen Brooks, president and CEO of the Chamber of Marine Commerce, hails the project as “one of thousands of examples of Great Lakes-St. Lawrence shipping’s outstanding environmental and social benefits, augmenting the system’s incredible economic benefits to the tune of $35 billion a year for the Canadian and U.S. economies.”

Terence Bowles, president and CEO of the St. Lawrence Seaway Management Corporation, concludes that the CSL operation for the new Champlain Bridge symbolizes “the tremendous value brought about by Seaway activity. The Seaway and the state-of-the-art ships that carry cargo over Seaway waters provide the most cost-effective and fuel-efficient means of moving cargo. And what should not be lost amidst all of the details is that ships have the lowest carbon footprint of any transportation mode.” n

It would take 7.1 million trucks to carry the same amount of cargo the same distance as the Great Lakes-Seaway fleet

42

Look Ahead

Economic Outlook: Great Lakes Region

ECONOMIC GROWTH DESPITE SOME HEADWINDS BMO Senior Economist Robert Kavcic gives his forecast for the Great Lakes economy and the major sectors supported by marine shipping.

T

he Great Lakes region continues to be a vital driver of North American economic output, employment and trade, accounting for nearly a third of combined Canadian and U.S. output, jobs and exports. The region’s expansion continued in 2015 as manufacturing and exports in Ontario received a boost from a weaker currency and firm U.S. demand, while U.S. states in the region enjoyed an ongoing housing recovery. The region also benefited from the steep slide in oil prices, as consumers received an effective tax cut at the pump, and costs were reduced through the manufacturing supply chain. Still, the U.S. area of the region underperformed the national average in 2015, largely because the surging U.S. dollar dampened export activity, a trend that has rippled through parts of the factory sector. Looking ahead, the tailwinds should continue to outweigh the headwinds, and growth in the region is expected to accelerate slightly in 2016.

ONTARIO TO BENEFIT FROM WEAK DOLLAR, U.S. DEMAND The U.S. economy overall is expected to continue its expansion in the year ahead, growing at a 2.6 percent clip in 2016, up slightly from a 2.5 percent pace last year. While Canada is expected to lag with 2.0 percent growth, that will mark an improvement over last year’s performance, which saw oil-producing provinces hit hard by lower prices. Notably, Canada’s regional growth landscape is seeing a dramatic shake-up, with Ontario poised to benefit from the combination of a weaker Canadian dollar and firm U.S. demand. Against that backdrop, the economic outlook in Canada’s side of the Great Lakes region has actually improved, even as growth nationally has downshifted.

North American car and truck production held near record 15-year highs in 2015, and record sales levels should support activity right through the region’s supply chain. However, unlike on the Canadian side of the border, the strong U.S. dollar is a headwind on U.S. export activity, and kept GDP growth in the Great Lakes states running 43

slightly below the national average in 2015.

Regional manufacturing surveys in Chicago and Milwaukee, for example, have pulled back from multi-year highs on downshifting production and new orders, with some firms in the sector hit also by capital spending retrenchments in energy and agriculture.

HEALTHY RESIDENTIAL CONSTRUCTION ACTIVITY AHEAD The housing market continues to recover across the U.S. Midwest. Still-attractive affordability, healthy job growth and some easing in credit conditions should support continued gains in this sector.

Importantly U.S. housing affordability remains attractive enough that home prices will continue to rise even as the Federal Reserve raises interest rates. Importantly, the expectation is that this tightening cycle will be more gradual than in the past, ensuring that the housing recovery sticks. Meantime, Toronto’s market continues to set record price levels and conditions in Southwestern Ontario have firmed, supporting healthy, but not excessive, new construction activity.

For consumers across the region, the steep decline in oil prices is a clear positive, while jobless rates are below year-ago levels in almost every jurisdiction in the Great Lakes region. The biggest challenge on this front is demographics, with population growth in the region grinding down and some states, like Illinois for example, experiencing persistent net outflows to

LOOKING AHEAD, THE TAILWINDS SHOULD CONTINUE TO OUTWEIGH THE HEADWINDS, AND GROWTH IN THE REGION IS EXPECTED TO ACCELERATE SLIGHTLY IN 2016.

faster-growing states in West and South.

Finally, government finances remain mixed, and certainly not without some challenges. While most states in the region have seen their fiscal positions improve meaningfully in recent years, Illinois’ pension reform remains a problem area. The latest estimate from PEW Center on the States pegs the shortfall at 14 percent of GDP for fiscal 2013, near the highest in America.

Ontario is also grappling with challenging spending targets (and a recent credit rating downgrade) in order to balance the books

by FY17/18, while net debt has crept up to just under 40 percent of GDP, the second highest in Canada.

Adding it all up, the Great Lakes region continues to churn out sturdy economic growth. While some headwinds have kept the pace of growth in check, and will keep the region tucked somewhat below the national average this year, most signs point to a continued expansion in 2016. n

REAL GDP (% CHANGE)

2014

2015E

2016F

United States Canada

2.4 2.5 2.6 2.4 1.1 2.0

Great Lakes Region Ontario Illinois Indiana Wisconsin Minnesota Michigan Pennsylvania Ohio New York

2.7 1.2 0.4 1.0 1.4 1.9 1.8 2.1 2.5

2.0 2.4 1.7 2.0 2.2 2.3 1.9 2.2 2.1 2.4 2.5 2.4 1.5 1.7 2.0 2.2 2.3 2.4 43

Look Ahead

ECONOMIC OUTLOOK:

Industry executives in the know give their forecasts for the 2016 shipping season and share their upcoming ventures.

TERENCE BOWLES, PRESIDENT AND CEO, THE ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION Traffic levels on the Seaway in 2016 should be similar to those being observed in 2015. Economic forecasts are calling for a period of slow growth, which could lead to stable or slightly higher demand for the Seaway’s principal cargoes. Given that Canadian and U.S. agricultural yields cannot be predicted from one year to the next, we may yet be pleasantly surprised by a bumper crop that presents opportunities for our waterway to move higher volumes of grain. It is important to keep in mind that the Seaway has the available capacity and the appetite to accommodate any incremental traffic, and we stand ready to respond to our customers’ needs. n

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ALLISTER PATERSON, PRESIDENT, CANADA STEAMSHIP LINES For CSL and the shipping industry, the 2015/16 season represents a critical juncture in the commodity shipping cycle, with low product values and a depressed manufacturing sector driving down export cargoes. Weathering difficult cycles like this one means adapting our operations to new market conditions, minimizing our operating costs, parking our extra capacity and making tough decisions like recycling our older, less efficient ships.

CSL is setting its focus squarely on the future by developing and investing in our people, in safety and the environment, in operational excellence and in state-of-the-art technologies.

This includes our fully operational Trillium Class fleet that features the most efficient and modern Seaway size trading vessels in the market.

The longer-term challenge facing CSL and the Great Lakes business is ensuring a level playing field to promote a vibrant and cost-competitive short sea shipping industry.

By far the most efficient and environmentallyfriendly mode to move a ton of cargo, short sea shipping is susceptible to high regulatory costs and well-intentioned environmental legislation that can push marine transportation costs above land alternatives, driving more cargoes to rail and road.

In partnership with industry leaders and advocates, CSL is working hard to ensure that local and global regulations position short sea shipping prominently in the cargo transportation sector. We firmly believe that supporting a thriving short sea shipping industry benefits companies, communities, economies and the environment. n

WAYNE SMITH, SR. VICE-PRESIDENT, COMMERCIAL, ALGOMA CENTRAL CORPORATION While we are cautiously optimistic about the year ahead, experiences in 2015 demonstrate just how fine a line there can be at times between opportunity and an inability to realize full potential. Grain shipments in 2015 represent a case in point. Despite a strong crop in western Canada and the carry over of a record crop the year before, exports through the St. Lawrence lagged this potential due primarily to global competition.

Similarly, despite high demand for steel in some sectors, the significant drop in steel demand from the North American oil and gas industry and stiff global competition put significant pressure on this industry and reduced production.

The Great Lakes – St. Lawrence Seaway provides a tremendous opportunity for economic savings, improved safety and enhanced environmental performance but despite these advantages overall in 2015 shipments will be down from 2014 levels.

If governments and society truly want to realize the full potential of the Great Lakes – St. Lawrence Seaway we must start thinking about how to make the system work better so this potential can be realized. Hopefully 2016 will bring some needed progress on important industry issues, such as the challenge faced by domestic ship owners regarding compliance with ballast water regulations. n

Look Ahead

SYLVIE VACHON, PRESIDENT AND CEO, MONTREAL PORT AUTHORITY With its strategic location and strong intermodal connections, the Port of Montreal is an important container gateway into the continent. Quebec, Ontario and the U.S. Midwest account for 80 percent of our container traffic in North America.

Above and beyond our strength in the container sector, the Port serves as a vital marine link to the Great Lakes. Dry bulk cargo represents about 30 percent of our total traffic and includes grain, iron ore, salt and various other minerals, raw sugar, fertilizer and gypsum. Fifteen of our berths are dedicated to dry bulk products. Our grain elevator, operated by Viterra Inc., has a total storage capacity of 260,000 metric tons.

Projects to optimize our handling capacity will help the Great Lakes-St. Lawrence region move more highly diversified cargo to and from markets around the world. In particular, a new terminal that we are building in the Viau sector will increase our total container-handling capacity to 2.1 million TEUs (20-foot equivalent unit containers).

As part of a project that blends the container and dry bulk sectors, CanEst Transit Inc. has opened a new facility on port territory that specializes in the handling, storage, cleaning and containerization of agricultural products. Other businesses such as Ray-Mont Logistics and Logistec MtlLink, offering respectively transloading facilities and new warehousing facilities to meet customer requirements are also contributing to our Port+ strategy, a commitment that provides value-added services to port clients, and a strategy that we will continue to pursue in 2016. n

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JOE CAPPEL, VICE-PRESIDENT OF BUSINESS DEVELOPMENT, TOLEDOLUCAS COUNTY PORT AUTHORITY While some of our staple commodities such as coal and iron ore were trading at lower than average volumes in 2015, shipments of other commodities such as grain, salt, and aluminum were up significantly and are projected to continue to increase in the coming season.

At the Port of Toledo, we are also ready to rapidly respond to any new cargo opportunity.

Over the past several years, we have been concentrating on modernizing and expanding our facilities to improve the efficiency of material handling, facilitate multi-modal shipping solutions through our facilities and offer real estate solutions to accommodate new and expanding business. Significant progress towards our goal includes the acquisition of new mobile harbor cranes and equipment, enhancing our on dock rail, improving our terminal road network, and opening the new 180-acre Ironville terminal. Break bulk shippers have also taken note of Toledo’s capability and centralized location for handling project cargo.

Additional opportunities could include handling cargo related to domestic oil and gas production and trans-loading. Having a diverse group of terminal operators, multi-purpose facilities, and flexible -use material handling capability is the secret to a well-balanced maritime operation in Toledo. n

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ADVERTISERS’ INDEX

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Back cover

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Inside Front Cover

LLOYD’S REGISTER MARINE

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Inside Back Cover

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Port of

JOHNSTOWN

HAMILTON PORT AUTHORITY

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NEW465 meter berth with 19 acre dock Seaway draft at all berths Project cargo and bulk material handling 8 berths, 35 acres of dock and upland storage Located just south of Canada’s capital city, Ottawa, on the St. Lawrence Seaway

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PORT OF MONTREAL

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OCEAN

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