The St. Lawrence Seaway, shippers and Canadian ports are investing heavily to upgrade their operations on the anticipation that an improving North American economy will continue to propel demand, despite the the vagaries of Mother Nature that delayed this year’s start to the shipping season.
The seaway plans to spend $500 million through 2018 in Canada and the United States, including about $100 million this year. Domestic and ocean carriers are investing $1 billion on modern, fuel-efficient vessels.
Money will be spent on lock gates, rebuilding seaway walls and automated gate and bridge operations. It is also extending a “hands-free” mooring system in place in Beauharnois, Que., to three more locks — St. Lambert, Welland and another unit in Beauharnois.
Seven additional locks in Canada and two in the U.S. will eventually get the system that replaces wires and ropes with suction cups to hold the vessels in locks.
The goal is to eventually operate the seaway from control centres and automatically put ships through the locks, said Terence Bowles, CEO of St. Lawrence Seaway Management Corp.
“We at the seaway are much more efficient, so we think that’s really a major step forward for the marine industry in terms of providing very, very competitive service to Canadian shippers,” he said in an interview ahead of the seaway’s official opening Friday.
The seaway’s 56th shipping season got off to its latest start in five years as harsh winter weather created some of the worst ice conditions in decades.
Canadian Coast Guard icebreakers have been working feverishly to clear a path from the Upper Great Lakes through the end of the key shipping route.
The seaway officially opened Friday at the Welland Canal in St. Catharines, Ont., with the Montreal end of the system launching its season on Monday.
That’s six and nine days later than last year, and the latest opening since 2009.
Bowles said the late start to the season puts stress on shippers and customers who count on it for transporting goods.
Among those most anxious are grain farmers who are eager to begin shipping last year’s bumper crop from a terminal in Thunder Bay, Ont., to markets in Europe, the Middle East, Latin America and Africa.
The head of Canada’s largest Great Lakes shipping line said he’s optimistic about the season despite early delays and financial stress caused by heavy ice cover.
“The early part of the season will be difficult but we think, looking at the big picture, there’s a lot of good things happening that should allow us to be fully employed,” said Greg Wight, CEO of Algoma Central Corp.
In addition to getting a lift from an improving economy, he expects Algoma will benefit from other factors, such as the record grain output and the need to replenish salt supplies used during the winter.
The company’s new Equinox vessel is the first ship to pass through the Welland Canal. The 222-metre-long, Chinese-built vessel is the first of eight cargo carriers the company will be adding to its fleet, or managing, during the next two years as part of a $400-million investment. They are faster, consume 45 per cent less fuel, and remove most sulphur emissions.
Stephen Brooks, president of the Chamber of Marine Commerce, which represents ship owners, ports and customers, said Canadian companies including Algoma Central, Canada Steamship Lines, Groupe Desgagnes and ocean carriers like Fednav began to invest in new state-of-the-art ships after Ottawa eliminated a 25 per cent tax on foreign-built vessels.
“It’s an exciting time for the industry because of all of these new investments and the new confidence in the system,” he said.
The late start to the shipping season shouldn’t prevent the seaway from having a stronger year in 2014, officials said.
Bowles said he expects at least 38 million tonnes of goods will move along the seaway this year, up from the 37 million tonnes transported in 2013.
“If I look at the economies of the U.S. and Europe, they’re certainly improving, the U.S. particularly, so we’re quite optimistic that business is going to be better than it was last year.”
A bumper grain crop of 76 million tonnes — 50 per cent more than average — should allow seaway shipments to increase this year after slipping 3.2 per cent in 2013 because the crop, although a record, was quite late.
“Obviously, rail has got to get that wheat to Thunder Bay and then we’ll haul it,” said Bowles, who is sympathetic to the winter challenges endured by railways Canadian National (TSX:CNR) and Canadian Pacific (TSX:CP).
“This recent week they’ve hauled a lot more grain so I’m encouraged by all that.”
The federal government tabled legislation this week aimed at increasing the movement of grain that has been left sitting in bins across the Prairies because of a railway transportation bottleneck. Earlier this month, it ordered rail companies to double the amount of grain they move each week, up to a minimum of one million tonnes in 11,000 cars each week.
The seaway had expected demand would recover more quickly after the economic crisis of 2008, but is forecasting higher shipments this year of iron ore, steel, automotive products and construction materials such as cement and aggregates.
“The economies have not gone the way a lot of us forecast. I think we were expecting a better year last year than what happened, so we’re being careful but I think I’m optimistic for next year,” said Bowles.
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