Canada's drought hits farmers, Great Lakes shippers. US ships keep up business by carrying more ore
Boom or bust. For Great Lakes shippers, it all depends on what flag they are flying. For the United States and Canadian maritime industry, the season began on an upbeat note - looking as if it might be the best since 1984.
The Great Lakes and their gateway to the ocean, the St. Lawrence Seaway, were fully opened to traffic on March 22, tying the previous record for the earliest opening, notes Glen Nekvasil of the Lakes Carrier Association, which represents the 70-vessel US-flag lakes fleet.
Currently, 63 of those ships are in service, representing 97 percent of the fleet's cargo-carrying capacity. A year ago, only 54 vessels were plying the lakes.
``We've gotten off to a fast start,'' Mr. Nekvasil adds. ``Through the end of May, shipments of iron ore, coal, and stone [were] up 19 percent.''
The US dollar, which until lately had been falling, helped US carriers by boosting the competitive edge of American steel manufacturers, who are operating at better than 90 percent of capacity.
A strong construction industry has also helped shipping. Stone, coal, and iron ore make up the three largest cargoes for US-flag carriers.
Lakes Carrier Association members hauled a total of 29.2 million tons of stone, coal, and iron ore through the end of May, up from 25 million tons at the same time last year.
On the Canadian side of the border, the picture stands in sharp contrast, according to the LCA's counterpart, the Dominion Marine Association.
``We started strong in April,'' says research director Angus Laidlaw, ``but what's concerning us is that in any year, about 20 percent of our cargo is grain. Sometime in the fall, when we should be carrying this year's crop, we are going to find ourselves lacking cargo to a considerable degree due to the drought.''
Mr. Laidlaw says that grain cargo could be reduced by as much as 60 percent as the last of last year's supplies are moved out and this year's meager harvest is transferred to the big silos in Thunder Bay, Ontario.
Canadian shippers are already feeling the impact, however. A total of 18 ships are out of service, compared with 12 last year. That means the loss of about 850 jobs, Laidlaw estimates, including an average 22 sailors a ship and another 450 grain handlers already laid off in Thunder Bay.
``There will be yet more people laid off in Thunder Bay and at the five ports in the St. Lawrence that handle the transfer of grain from laker to ocean ships,'' he warns.
The drought may eventually also have an impact on the volume of cargo carried by foreign-flagged, oceangoing vessels that enter the Great Lakes system through the St. Lawrence Seaway, notes Gay Hemsley of the Canadian St. Lawrence Seaway Authority.
As of June 21, however, the number of ocean ships entering the Great Lakes had reached 386, up 12 percent over last year. Ms. Hemsley says that general cargo shipments, ``everything from soup to nuts,'' including finished steel, were up 19.6 percent, though grain and iron ore cargoes were each down about 1 percent.
``Whatever is happening from the drought,'' she adds, ``won't affect us until the fall.''
Although Canadian shippers should feel the pinch of the drought, American-flagged vessels are likely to experience little direct impact. Last year, grain accounted for just 860,000 of the 105 million tons of total cargo hauled by LCA members.
That is not to say the drought is having no impact on American vessels. Because of reduced water levels on the lakes, Nekvasil notes, the fleet's largest ships must reduce their cargo loads by as much as 4,200 tons a trip. Each vessel will take from 40 to 45 trips during the course of the season.
As a result, Nekvasil says, ``With our customers literally crying for cargo - they want every ton we can bring them - it's almost certain we'll continue sailing into January.''
The shipping season normally concludes before Christmas.
The threat of a further drop in water levels in the Great Lakes is the reason the Lakes Carrier Association has gone on record as firmly opposed to diverting water into the Mississippi River to help improve conditions for barges carrying cargo on that waterway.