SMR: How has "the dredging crisis” impacted your members in terms of the shipping of iron ore and coal?
JW: The dredging crisis has significantly reduced the amount of cargo our members can carry each trip. Back in 1997, when water levels were near record highs, the 1,000-footers often were able to carry more than 70,000 tons each trip. Since then, most cargos have been less than 66,000 tons. Water levels were so low at the beginning of 2013 that some loads were less than 60,000 tons.
This is not just an issue for iron ore and coal. It’s impacting every trade: Limestone, cement, salt, grain...When the vessels aren’t carrying full loads, the carrier can’t offer the best freight rate. And in periods of high demand, this “lightloading” can make it very difficult for our members to meet all their customers’ requirements.
SMR: What measures have the Lake Carriers' Association members taken to mitigate the effects of the crisis?
JW: There really isn’t a lot a vessel operator can do. We have a fixed navigation season through the Soo Locks: March 25-January 15, and there isn’t much flexibility with those dates. The vessels are already operating at their optimum speed, so you really can’t make more trips each season. And since vessels operate 24/7, they need to take the boats out of service for a while in the winter to do maintenance and modernization. This winter our members are spending more than $70 million to get their vessels ready for 2014.
SMR: Members of Congress, Republican and Democrat alike, voicing an ongoing commitment to end the dredging crisis was seen as a positive move in 2013. What do you envision will happen in 2014 and will we see an end to the dredging issue this year?
JW: The House and Senate will soon conference over their respective versions of the Water Resources Reform and Development Act. We are certainly hopeful that the key provisions of each will be retained in the final bill. Both the House and Senate have called for increased funding for dredging. Right now the Federal government is spending only one of every two tax dollars it collects for dredging on dredging. That’s why the Harbor Maintenance Trust Fund has a surplus of nearly $8 billion.
The House version also designates the Great Lakes as a system in terms of dredging. This is critical to putting the Lakes on an even footing with other waterways. Currently the Corps views the Lakes as 60 individual ports and pits them against one another for dredging dollars. Taking the Lakes as a whole should bring back more dredging dollars.
The Great Lakes delegation has been incredibly supportive, but two legislators in particular have been honed in on ending the dredging crisis, Senator Carl Levin and Congresswoman Candice Miller, both from Michigan. Another key player has been Minnesota Senator Amy Klobuchar. In recognition of that, Great Lakes Maritime Task Force, the largest labor/management coalition promoting Lakes/Seaway shipping, named her Great Lakes legislator of the Year for 2013.
With a backlog of more than 17 million cubic yards of sediment, the dredging crisis can’t be resolved in one year, but there’s enough dredging capacity on the Lakes to get the job done in a few years if the Corps gets sufficient funding and we have enough Confined Disposal Facility capacity.
SMR: What was the state of the water level in St. Mary’s River in 2013 and how did it impact drafting for this year?
JW: Water levels did rebound a bit in 2013 and that allowed for deeper drafts, but the real issue here is the St. Marys River has not been dredged since 2008. As a result, the water level in the St. Marys River pretty much dictates how much cargo will move each trip. Even when Lake Michigan hit a record low, it was still the St. Marys River that set the draft for vessels moving Lake Superior iron ore to Indiana Harbor, Burns Harbor and Gary. One of the 1,000-foot-long vessels forfeited nearly 3 feet of draft when she delivered her final iron ore cargo in January 2013 because of low water levels in the St. Marys River. That meant nearly 10,000 tons of Minnesota iron ore stayed at the loading dock.
SMR: Since the steel industry is the Great Lakes’ largest shipping customer and you also use steel as the primary material in maintaining and modernizing the fleet, where is the majority of steel procured from each year?
JW: That’s a question that only the shipyards can answer in detail, but collectively our members will use more than 1,100 tons of steel maintaining and modernizing their vessels this winter.
SMR: The coffer dams for the new chamber which will act as a substitute if there is a failure at Poe Lock, but completion is delayed. You mentioned that the hindrance of the project is a result of flawed benefit/cost (b/c) studies. What are the setback issues that surround the study?
JW: The greatest error in the current assessment is the conclusion that the railroads can move the iron ore the fleet hauls if the Poe Lock is out of service for a lengthy period of time. That’s wrong on two counts. First, the railroads do not have enough rolling stock to fill in for the Lakes fleet while the Poe is being repaired. Second, many steel mills cannot receive iron ore by rail. The connections just aren’t there. Nor do the railroads have the capacity to handle all the western coal.
Remember too, Great Lakes shipping is the most cost-effective mode of transportation. The U.S. Army Corps of Engineers estimates Great Lakes shipping annually saves its customers $3.6 billion in freight costs compared to the next least costly mode of transportation. That’s why so many steel mills front the Lakes. A prolonged outage of the Poe Lock will have crippling effects for many industries.
SMR: How does the Lake Carriers' Association view the planned augmentation by Calumet Specialty Products of its Superior Wisconsin dock to accommodate carriage of heavy crude / tar sands over the Great Lakes?
JW: We have had no involvement in this project and understand it is on hold, but we would welcome any new commerce on the Lakes. The liquid-bulk trade has a long record of safe operation.
SMR: Do you anticipate in the near future any new types of vessels carrying heavy crude across the Great Lakes and would they be candidates to join the Lake Carriers' Association?
JW: It is not for a trade association to speculate on business developments or trends, but if a new U.S.-flag operator came to the Lakes, they would be welcome to join LCA.
SMR: What was the overall outcome of the December 2013 weather, were there any teachable “take aways” and did the occurrence of the "polar vortex" in January also set LCA members back?
JW: The early and brutal winter had a major impact on cargo movement. Lakeswide the iron ore trade was down 21 percent in December. Shipments of coal from Lake Superior in December were down almost as much. LCA members had been on track to register a slight increase over 2012, but the delays and cancelled cargos in December produced a year-end total of 89.2 million tons, a slight decrease from 2012.
Iron ore shipments this January were down 37 percent compared to a year ago.
The primary takeaway is that we can’t be lulled into a sense of false security by mild winters. We still and always will need U.S. and Canadian icebreakers to keep the shipping lanes open. Winters are like water levels, they vary, but we should always plan for the worst. That’s why we are so pleased that the Coast Guard will start modernizing the 140-foot-long icebreaking tugs this year. The first 140 will go to the Coast Guard’s yard in Baltimore in May. When that vessel is done, it will return to the Lakes and another 140 will go to the yard. The whole process should take about 5 years.
SMR: How are Lake Carriers' Association members able to make up for lost shipments due to harsher-than-normal December 2013 and January 2014 weather patterns?
JW: As I said before, there are not a lot of options with the fixed navigation season and finite vessel capacity. If the weather permits, I would anticipate some vessels might get underway early in March, but some trades, limestone for example, can’t really start early unless the weather is extremely mild. A lot of the stone that moves on the Lakes is rinsed prior to loading, so that trade can’t commence until temperatures are consistently above freezing.
SMR: Virtually every U.S. flag laker is a “self-unloader” which essentially means that unloading of cargo is almost completely automated. Can you explain the technology behind this?
JW: There are gates at the bottom of the holds that open and the cargo drops onto conveyor belts that lead to a boom on the spar deck that is swung over and positioned where the customer wants the cargo unloaded. Self-unloading allows our members to make more trips each season because it’s quicker than being dug out with Huletts or clamshell unloaders. Also, self-unloading means just about any waterfront property can become a working dock with very little investment required in shoreside equipment or personnel.
SMR: Iron ore trade is dependent on icebreaking, why is this model the most significant influencer for iron trading versus other commerce?
JW: It’s a mistake to say that iron ore is the primary factor driving icebreaking. Coal continues to ship from Lake Superior until the locks close, and the Lake Erie coal trade goes even longer if demand is there. Lots of cement and salt move in the ice season. Shipping during the ice season is important to many industries, not just iron mining and steelmaking.
SMR: Why did coal to be shipped in 2013 (whether the shipment was actually made or not) increase so much in 2013 over 2012?
JW: Again, it’s not for a trade association to analyze cargo movement in great detail, but the fact is that most of the coal that moves on the Lakes is for power generation, so obviously the utilities needed more coal last year. Also, Superior Midwest Energy Terminal exported 1.4 million tons overseas.
SMR: In retrospect, why was 2013 a better or worse year for cargo movement compared to 2012 when cargo movement remained below pre-recession levels?
JW: As I noted, the early and harsh winter denied LCA’s members the opportunity to register an increase over 2012, but 89.2 million tons of cargo is nothing to be ashamed of. It’s proof positive that America’s industrial heartland still needs Great Lakes shipping to deliver its raw materials. It’s proof positive that we need adequate icebreaking resources and a second Poe-sized lock. And most importantly, it’s proof positive that we need Federal regulations and policies that promote waterborne commerce. Ships are the low-cost provider for bulk raw materials and they move with them with the smallest carbon footprint.