A Seaway of Economic Stimulation

JUSTIN SORENSEN / NNY BUSINESS
The 728 foot Canadian ship, Cedarglen, passes by Just Enough Room Island on its way to Silver Bay Minnesota.

By: Marc Heller

Craig Middlebrook admits he’s a shipping nerd. In his office at the U.S. Department of Transpor-tation, the acting administrator of the St. Lawrence Seaway Development Corp. perks up a bit in his seat when he says he’d like to share a video of big suction pads that attach ships to the sides of locks on the St. Lawrence River.

    The hands-free mooring system is going to help change the way shipping is done on the Sea-way, Mr. Middlebrook says as the video, accompanied by soft music but no narration, rolls.

    Mr. Middlebrook may not be exaggerating. Hands-free mooring may help the Seaway expand two business ventures — project cargo and containerized shipping — that have eluded the sys-tem over the years, denying upstate New York of economic opportunities promised to the region when the Seaway opened to ocean shipping in 1959.

    “For us infrastructure nerds, it’s very exciting,”Mr. Middlebrook said, adding the Seaway’s use marks the first time the rubber pad technology has been used in a lock and channel setting.  After a series of design changes, he said, “this is what’s going to work, and it’s somewhat revo-lutionary, so I think that will improve our competitiveness and the number of vessels that can use it.”

    The mooring system is a piece of a puzzle Seaway advocates say they’re putting together to guide the transportation route into the decades ahead. While the system will always rely heavily on bulk cargo such as grain and steel, recent innovations show that the Seaway isn’t necessarily a hostage to its past.

    The Dutch company Spleithoff has begun scheduled, or liner, service to the port of Cleveland and is considering a similar move in Oswego. That’s a regular part of business in major ocean ports but new to the Great Lakes, offering a more cost-effective shipping route for containers and types of cargo the system hasn’t handled in great amounts.

    In Oswego, that could mean exports of dairy products, paper, air conditioner components and other goods, say companies looking to move goods through the port. And while Northern New York’s sole port capable of taking on ocean ships — Ogdensburg — isn’t part of that discussion, state officials see improvements at Oswego as a manufacturing boon to a large region of upstate New York. If regularly scheduled service is established on the lakes, it could spread to additional ports over time, advocates say.

    “It’s very encouraging, and very interesting, that the port of Oswego and their port director is ag-gressively looking at how can we be part of this.” Mr. Middlebrook said, referring to Zelko N. Kirincich, who came to Oswego from the major container port of Tampa, Fla.

    The Seaway has performed well at its original task as a shipping route for bulk commodities, but  Spleitoff’s initiative shows that “there’s a lot more that it can do,” Middlebrook said. “There’s a lot more potential there.” 

The Algoma Harvester is among a new wave of energy-efficient ships built to haul cargo through the Great Lakes system.

    Liner service doesn’t look to become a dominant way of doing business on the Seaway anytime soon, however. The system faces fundamental challenges, including the relatively small Eisen-hower and Snell locks on the St. Lawrence River in Massena that shut off the system to an in-creasing share of the world’s shipping fleet. The system closes in the winter, which has always been a hurdle for container shipping that relies on set, scheduled routes and service, said Steven Fisher, executive director of the U.S. Great  Lakes Ports Association, a group that advocates for Great Lakes shipping. Even if the St. Lawrence didn’t freeze in winter, the system would have to be shut annually to allow for lock maintenance, Mr. Middlebrook said.

    That limitation, for instance, has stymied efforts by the St. Lawrence Industrial Development Agency to convince Alcoa to ship alumina — its chief ingredient for aluminum — through the port of Ogdensburg instead of by rail, said the organization’s executive director, Patrick Kelly.

    Additional challenges face ports. Container shipping requires closer inspection by U.S. Customs agents, since goods are sealed away, and the Department of Homeland Security is already short-staffed, Mr. Fisher said. Ports also weren’t built with containerized cargo facilities, although Oswego has seen some improvements and is planning more work on rail connections to other parts of the state — particularly to the major container port of Elizabeth, N.J., — and has enlisted the help of Sen. Charles E. Schumer (D-N.Y.) and others to secure federal funding.

    Liner service and project cargo, which is time-sensitive, also require the system to be more reli-able, which means efficient passage through the locks, Mr. Middlebrook said. The Seaway Corp. and its Canadian counterpart, the St. Lawrence Seaway Management Corp., are putting hundreds of millions of dollars into facility improvements, including the mooring system at the U.S. locks.

    Of $120 million the Seaway Corp. has spent so far on asset renewal, half has gone to New York state, Mr. Middlebrook said. The work is the first major overhaul the system has seen since it opened, coming on the heels of a federal study of the system’s navigation capabilities.

    Bringing ships through the Seaway isn’t cheap, either. Although the U.S. did away with tolls in the 1980s, the cost of pilots to guide ships through the potentially treacherous St. Lawrence — a federal requirement — has grown and now costs more than maintaining a crew on a journey, Fisher said. Pilotage rates are negotiated between the Department of Transportation and three pilot associations, including St. Lawrence Seaway Pilots Association based in Cape Vincent.

    Environmental groups continue to see ocean shipping as a potential disaster on the St. Law-rence, both from groundings and from invasive species that ships can transport from foreign wa-ters — although mandated cleaning of ballast tanks and other measures have stemmed invasive species lately and the Seaway Corp. seems more environmentally aware than years ago, said Lee Willbanks, executive director of Save The River, the environmental group based in Clayton.

    “It only takes one ship to have a really bad day,” Mr. Willbanks said.

 Sister ships Federal Kivalina and Federal Rideau, Canadian lake freighters pass on the St Lawrence River, just east of Wolfe Island.

    Last year wasn’t a banner for the Seaway. Despite a record-long navigation season of 284 days, the system saw a 1.4 percent decline in goods moved through the Montreal-Lake Ontario section, for a total of 27.1 million metric tons. That’s ahead of the total 20 million tons moved in the recession-affected year of 2009, but trails the 39 million tons moved in 1998, Seaway agen-cies reported.

    Agricultural products accounted for 40.8 percent of cargo, the highest share in recent years, for a total of 11 million tons. Soybeans were the biggest U.S. export, at 776,636 tons, and corn was second, at 576,723 tons. Canola, a major commodity for Canada, has shown up in recent years on the U.S. side as well.

    Northern New York’s main exposure to cargo ships is through watching ships pass without stopping. The port of Ogdensburg saw eight inbound Seaway shipments, carrying 84,127 tons of cargo, the Seaway agencies said, providing a shipping point for grain, road salt and dried dis-tiller’s grains. The system’s biggest business is in Cleveland, Detroit and Toledo, which handle hundreds of ships a season between them.

    But Mr. Kelly, at the St. Lawrence Industrial Development Agency, sees potential rather than missed opportunities.

    “The more avenues and transportation links we have for getting material in and out of the region, the more competitive we are,” Mr. Kelly said, although he acknowledged that the system’s winter shutdown comes up in conversations with potential users. “We’re unique in that we have a port.”

    Seaway access and connections to freight rail are selling points in conversations with compa-nies, especially heavy industrial users, Mr. Kelly said. And officials have made improvements at the port, including a $1.8 million access road in 2012, allowing for bigger cargo. Ocean vessel traffic through the port hasn’t seen much change; the Seaway agencies said cargo tonnage in 2016 dipped by almost 5,000 tons from a year earlier; totals were over 100,000 tons in 2011 and 2010, before the road was built. The port’s worst recent year was 2014, when officials reported just two inbound shipments and a total of 42,343 tons of cargo.

    Fluctuations in cargo are business as usual on the Seaway. The system has long been depend-ent upon the greater U.S. economy and on trade patterns for specific commodities. Grain ship-ments to the former Soviet Union were good for business decades ago. Steel imports, robust now, may be imperiled by the Trump administration’s pledge to curtail them. The decline of coal has hurt the Seaway, Fisher said, while port directors seek ways to fill the gap.

    “We’re a transportation system, and we serve the underlying economy,” Fisher said. “When steel thrives, we do. It’s a system that’s been dependent on coal, so as that decreases, it hurts us.”

    Niche markets provide some of the answer. For a few years, windmill components were good business for Odgensburg, making for headlines and striking pictures as they came through the port.

    The Seaway could also take advantage of increased global demand for organic crops and food produced without genetic engineering, said Joe Cappel, vice president of business development at the Toledo Port Authority, which deals heavily in agricultural goods and has been shipping soybeans to Japan for use in soy sauce. A single ship can take more than 800 truckloads off the highways, he said. “It’s kind of an exciting time to be part of this industry.”

    Container shipping, too, is niche for the moment, Mr. Fisher said. “I think everyone’s trying to figure out whether the Great Lakes can break into containerized cargo. Typically, the closure of the system in winter has foiled that.”

    Cleveland is leading the way on containers. Spleithoff, the Dutch company, caught on to the idea after meeting with Seaway and Cleveland representatives on a trade mission a few years ago and saw the Great Lakes as an untapped resource, Mr. Middlebrook said. The venture started with one monthly transit between Cleveland and Antwerp, Belgium, and expanded in 2015 to service every two weeks. The company calls the route the Cleveland-Europe Express, and it’s the first liner service between Europe and a Great Lakes port. Last year, the company added service to India.

    In Oswego, port director Mr. Kirincich is looking to catch similar business, drawing on a potential connection to the Port Authority of New York and New Jersey. He has the equipment he needs to handle container cargo, Mr. Kirincich said, but worries that the Customs Service doesn’t have the staff to perform the inspections that would be necessary for a port expansion. Great Lakes port officials say they’ve discussed that issue with federal officials; the Trump administration has so far spared Customs from the sort of deep budget cuts proposed for other agencies.

    Lawmakers and companies in the region have been rallying behind Oswego, part of an initiative called the CenterState NY Inland Port. The Empire State Development Corp. has estimated that an inland port at Oswego capable of taking container shipments would reduce the cost of ship-ping to the Port of New York and New Jersey by 40 percent. New York has invested tens of mil-lions of dollars in rail improvements to boost the project, but the U.S. Department of Transporta-tion hasn’t awarded Oswego the $17 million grant officials sought in 2016, and a related ware-housing and rail shipping point proposed near Syracuse has faced opposition from neighbors worried about noise and increased rail traffic.

    One company pinning hopes on the plan is Felix Schoeller North America, which converts and distributes specialty papers and film at a plant in Pulaski. The company brings more than 2,000 containers into the United States annually, and ready access to an inland port with rail service would make the plant more competitive while easing truck traffic, the company’s president, Mi-chael Szidat, told Mr. Kirincich in a letter of endorsement last year.

    However that effort plays out, the Seaway’s supporters say they sense that the system may be entering a new era of competitiveness. An infrastructure investment survey completed by Martin Associates in 2015 showed that companies invested or planned to invest $4.6 billion in ships, ports and other elements of the system from 2009 to 2013— nearly double what governments on the U.S. side of the border spent. The study found similar results for the Canadian side.

    “That must mean there’s anticipation of good times ahead,” Mr. Fisher said.

    In the Seaway Corp. office, Mr. Middlebrook — a 20-year agency veteran who’s sitting in as administrator until the Trump administration puts someone in the job — says to mark his words as his video shows how the suction pads poke out from the walls of the dock, grabbing a vessel. They’re being installed at the Eisenhower lock this year, then at the Snell lock, and all 13 Canadian locks will have them by the end of this year, he said.

“Pay attention to that,” Mr. Middlebrook said, “because I think from an infrastructure renewal standpoint and a technology standpoint, that’s going to be a game changer for us, and for the system.”