Economic winds slow Great Lakes ships

The last large blocks of snow-covered ice - the size of living room furniture - have floated slowly down the Detroit River, indicating that spring has come to the Great Lakes and that the shipping season is beginning. But the Great Lakes shipping industry, which was buoyed by good weather and increased Soviet grain orders late last year, suffered its worst season in half a century in 1986.

For more than a century, ships have brought more than just a touch of charm and beauty to the millions of people who live on the lakes. The ships played a significant role in turning the Midwest and America's heartland into the manufacturing center of the world and ``arsenal of democracy'' during World War II.

Shipping on the Great Lakes is essentially the movement of bulk raw materials - iron ore, stone, and coal - for the making of steel. Great Lake shippers also move large loads of grain, petroleum, cement, salt, sand, and other bulk products between ports in both the United States and Canada and overseas.

Last year, total cargo shipments on the Great Lakes were down about 4 percent compared with the year before, according to the Lake Carriers Association of Cleveland, which represents the majority of US shippers on the lakes. Iron ore, which accounts for about a third of all shipments on the lakes, was down 12 percent in 1986 compared with 1985.

The decline in shipping on the Great Lakes is best illustrated by the dramatic loss of vessels in its fleets. Many have been put to use in other parts of the world, some have been scrapped for steel or spare parts, while others have been turned into museums.

The Lake Carriers Association says its members have decommissioned nearly a third of their fleet since 1980. Today, there are only 83 vessels within the Lake Carriers group and close to half of them are not in service.

Last year, eight freighters were mothballed or sold for scrap and two others were sold to local groups to be used as museums.

Much of the reduction in the number of ships on the lakes has been the result of shippers becoming more efficient and switching to larger ships that will carry up to twice the load of the older, smaller ships. But no new ships have been built or commissioned on the lakes since 1982.

``It was a disappointing year to say the least,'' says Glenn Nekvasil, spokesman for the Lake Carriers Association. ``Our tonnage last year was the lowest since the Great Depression.''

As steel goes, so goes Great Lakes shipping. The steel industry's woes are related to increased competition from foreign steel, the downsizing of the automobile, and the growing use of plastics and other materials in everything from cars to computers.

Great Lakes shippers have also had to learn to cope with increased competition from deregulated train and trucking industries and the shipment of less coal because of the use of nuclear- and natural gas-powered generating plants. New port user fees and the possibility of Coast Guard user fees are also problems for the industry.

``Contracts are won and lost on a penny a ton, and [user fees] are hurting the competitiveness of domestic iron ore,'' Mr. Nekvasil says. ``Nobody's in a position to pass along the costs because [shippers] are all asking for price cutbacks.''

American Steamship of Buffalo, N.Y., has one of the largest and most modern fleets on the lakes. The company had 29 vessels in 1969, but today it is down to 17 ships and only 11 are operating.

``I guess imports are really going to make us or break us,'' says Jim Wager, vice-president of traffic for American Steamship. Mr. Wager says although shipments of western coal and construction materials picked up late in the year, he is now becoming worried about the import of steel from South America.

On the other side of the lakes, Canadian carriers aren't doing much better. The Dominion Marine Association, which represents the Canadian ship owners and operators, says cargo has dropped from about 95 million metric tons in 1981 to 75 million metric tons in 1985.

Dominion Marine represents 15 companies with 133 ships on the lakes and about 75 percent of the traffic that flows through the St. Lawrence Seaway.

Unlike their American counterparts, Canadian shippers carry much more grain and on smaller ships which can pass through the Seaway. The American flagships (most are owned by steel companies) are much larger and therefore too big to go through the Seaway.

``The beginning of the year will be very good because of the export of grains,'' says Leslie MacArthur, manager of operations and regulations for Dominion Marine. ``There's quite a rush to get ships ready because there is a suspicion that there was more damage to the Russian grain crop by Chernobyl than was first thought.''

Canadian shippers are worried about the possibility of a labor disruption this year because two labor contracts expire in the summer. The group believes shipments of steel and coal will remain the same throughout the rest of the year and that Canadian shippers will also begin to consolidate their fleets into larger vessels in the future.

Mr. MacArthur says the Canadian fleet owners are also concerned about increasing tolls and fees on their industry.

``There could be a slight increase in shipments this year because steel inventories are way down,'' Nekvasil says, ``but it's not going to have us singing `Happy Days are Here Again' either.''

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