USA: Lake Carriers Association Endorses MARAD’s Report

U.S.-flag shipping on the Great Lakes provides efficient, safe, and environmentally sound transportation services to industries that are the backbone of the American economy finds a report released on February 12 by the U.S. Department of Transportation’s Maritime Administration (“MARAD”).

The U.S.-flag Lakes fleet is “competitive with other modes of freight transportation in the movement of dry-bulk commodities and appears to be adequately capitalized to meet current market demands. Supported by responsible regulation and infrastructure maintenance, it will remain an essential part of the regional and national economies by providing reliable and inexpensive transportation of the raw inputs needed by the region’s steel mills, construction and manufacturing establishments, and power generation plants.”

The MARAD report notes that “studies have demonstrated that, on average, transportation cost savings from $10 to more than $20 per ton are associated with the use of lakers compared to the next most competitive transportation mode (rail or truck).” This is crucially important, for many of the industries served by U.S.-flag lakers are raw materials intensive. The production of one ton of steel requires 1.5 tons of iron ore and another 700 pounds of other Lakes-delivered raw materials. One mile of highway requires 85,000 tons of aggregate.

“Lake Carriers’ Association is pleased that this new report reinforces the economic and environmental benefits of U.S.-flag shipping on the Great Lakes,” said James H.I Weakley, President of the trade association that represents U.S.-flag vessel operators on the Great Lakes. “There’s a reason the Great Lakes basin has been, is, and always will be America’s industrial heartland and it’s Great Lakes shipping. The vast deposits of iron ore, coal, and limestone that are the foundation of our nation’s industrial might are not contiguous, but rather separated by great distances. Low-cost and reliable transportation in U.S.-flag lakers is what enables these raw materials to become the cornerstones of America’s standard of living and national defense capabilities.”

The MARAD report finds the industry “stable, with significant activity in recent years to repower and upgrade of older vessels, acquisition of vessels in 2011 and 2012, and no reports of pending vessel retirements.”

The report does however caution that there are issues that are or can negatively impact the industry. Many harbors are in need of dredging and MARAD estimates that the loss of 24 inches from authorized depths across the system would add $0.65 to $0.95 to the shipping cost of cargo delivered by larger lakers.

“The dredging crisis on the Great Lakes is worsening,” warned Weakley. “The water level on Lakes Michigan and Huron is at record lows and level in the St. Marys River is likewise in free fall. The larger U.S.-flag lakers were forfeiting more than 10,000 tons of cargo each trip at the end of 2012. We expect the loss could be even greater when shipping through locks at Sault Ste. Marie, Michigan, resumes on March 25.”

LCA cautions that failure to build the Congressionally authorized second Poe-sized lock at Sault Ste. Marie is another threat to the industry’s viability. “U.S.-flag lakers whose length and/or beam restrict them to the Poe Lock represent 70 percent of the fleet’s hauling power,” explained Weakley. “A lengthy closure of the lock would slow cargo movement to a trickle. The risk of an accident will increase in the years ahead, as the 78-foot beam on the new Canadian lakers will require them to transit the Poe Lock. The officers on Canadian lakers are certainly fine shiphandlers, but more transits statistically increase the risk of an accident that could put the Poe Lock out of service. Construction of a second Poe-sized lock can’t begin soon enough.”

The greatest uncertainty facing the industry is regulation of ballast water. “While Federal regulations generally require U.S.-flag lakers to use Best Management Practices instead of the treatment systems designed for oceangoing vessels, individual states may yet require lakers to treat their ballast,” said Weakley. “The costs would be significant and since lakers never leave the system, our position is there’s no need for them to treat their ballast. Their ballast tanks contain only what’s already in the Lakes and the non-indigenous species introduced by oceangoing vessels have been migrating freely throughout the system for years.”

These challenges are not insurmountable and the report affirms that “U.S.-flag lakers are workhorses of the regional economy of the Great Lakes states, providing efficient and economical transportation of commodities from their mines and quarries to the mills and factories where they are used.”

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Press Release, February 21, 2013