Seaway Sets Stage for Busy Fall Season

Friday, September 10, 2010

Grain shipments through the St. Lawrence Seaway increased by 51 percent to 830,000 metric tons in August compared to the same period last year as international demand began to ramp up in the wake of production shortages in Russia.

The St. Lawrence Seaway reported that American grain shipments reached 303,000 metric tons in August, an increase of 62 percent compared to the same period last year, while Canadian grain shipments increased by 45 percent to 527,000 metric tons. Year-to-date numbers, however, reflect an 18 percent increase to 743,000 metric tons for U.S. grain shipments and a 15 percent decrease to 2.8 million metric tons for Canadian grain shipments from March 25 to August 31compared to the same period in 2009.

Commercial vessels carried a total of 18.7 million metric tons of cargo through the Seaway from March 25 to August 31 – an increase of 22 percent over 2009. The overall numbers were also helped by strong increases in iron ore, coal and steel shipments.

“Robust demand for our services during the month of August suggests that our key markets are continuing to improve, approaching in some instances the levels that we witnessed in 2008 before the onset of the recession,” said Richard Corfe, President and CEO of the St. Lawrence Seaway Management Corporation. “On a year-over-year basis, we note that ocean vessel traffic has risen sharply given a resurgence in the movement of steel products. The prospect of strong demand for grain exports to overseas markets leads us to believe that tonnage will continue on the positive side for the rest of the season.”

By mid-August, one quarter of Russia’s grain crops had been destroyed. Drought, followed by devastating fires, led their government to ban exports of grain through the end of the year in order to conserve supplies for domestic food production and animal feed. This situation has caused an unexpected boon for U.S. grain exporters.

One of the key Great Lakes grain ports, the Port of Duluth-Superior, has noted this uptick with vessel agent bookings up 25 percent from this time last year. Executive Director of the Duluth Seaway Port Authority, Adolph Ojard, confirmed that 14 ships were at the port last week loading product for international markets. “Grain is a world commodity and the U.S. not only grows high-quality spring wheat, we have been fortunate this year to have a bumper crop. That provides an opportunity to move the agricultural bounty of North America through the Great Lakes-St. Lawrence Seaway navigation system to benefit those in need around the world.”

The United States is the world’s top exporter of wheat. Media reports indicate U.S. wheat exports could reach their highest level since 1996, with future demand strong. And American farmers are poised to capture new market shares overseas. David Torgerson, executive director of the Minnesota Association of Wheat Growers explained, “We are located about as far away from our export customers as any farmers in the United States. But, with the Seaway and the Port of Duluth-Superior, we have a direct water link to markets around the world (in particular Europe and North Africa), which keeps transportation costs competitive and enables North Dakota and Minnesota farmers to compete globally. The farmers really rely on the Seaway to provide that service.”

Late last week Germany reached out to the United States for grain, an export they’ve not purchased from U.S. farmers for three years. The bulk load represents 20,000 metric tons of spring wheat. According to Ron Johnson, trade development director at the Duluth Seaway Port Authority, “Grain buyers in Turkey and Egypt, likewise, are sourcing spring wheat from Duluth-Superior. Not only are we seeing new customers this year, we’re seeing increased purchases from existing customers. We also expect to export feed barley to countries we haven’t shipped to for 15-20 years.”

This increase in business serves to emphasize the strategic value of the Great Lakes-St. Lawrence Seaway navigation system. Without the benefit of this water highway, the United States could not be as nimble in moving product to international markets. Canadian Lakers, which have been the backbone for bi-national movement between the U.S. and Canada, play an integral role in that process.

Allister Paterson, President and CEO, Seaway Marine Transport (SMT) based in St. Catharines, Ontario stated, “The Seaway provides a critical safety valve in being able to rapidly respond to sudden shifts in trade patterns. From a Canadian carrier’s prospective, there is no doubt that U.S. wheat bookings are on the upswing. Before the Russians announced their ban on grain exports, SMT had planned to lay up ships in August and September. With that announcement, we were able to book enough U.S. wheat cargoes to keep all of our ships sailing. In addition, we are spending significant dollars to mobilize one full seaway-size bulker from inactive status to provide additional capacity for another 150,000 metric tons of U.S. grain this season. In total, we have found capacity to move an additional 300,000-400,000 metric tons of U.S. export grain on short notice.”

Montreal-based Fednav Limited, the largest international marine bulk shipping company in Canada, has also noted an increase in its bookings due to the international demand for grain. According to Jean Lemay, Senior Vice President, Chartering, “We have noticed a substantial increase in inquiries for cargoes originating from the Great Lakes to Europe and North Africa, partly due to a bumper crop in the prairies and to crop failures in other parts of the world.” 

The Seaway navigation system is undeniably efficient; it functions without affecting other modes of transportation, which are already overloaded. In terms of capacity, a single Seaway-sized vessel carries 26,500 metric tons of cargo. It would take 1044 trucks or 270 rail cars to carry the same load. 

Additionally, in terms of fuel efficiency and environmental impact, a ship can travel 312 kilometers with one ton of cargo on one liter of fuel; a railroad car travels only 181 kilometers; and an 18-wheel semi-trailer truck goes only 75 kilometers. These efficiencies, in addition to the safety factor, make transport by water extremely attractive.

www.marinedelivers.com

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