China cargo using St Lawrence Seaway via Suez to get to Chicago under serious consideration
 FROM the very first the St Lawrence Seaway was expected to fulfill dreams and nightmares of those it would enrich or impoverish. To those who saw the dark side, it was the death knell of the Port of Montreal, then the biggest port outside New York in 1959.
Montrealers feared its role at the head of inland navigation on the St Lawrence was at an end. No longer would the Lachine Rapids block the way to all but shallow-bottomed boats. Most freight bypassed this obstacle by barge using the 10-mile Lachine Canal, built in the 1820s, that was no wider than a four lane highway.
Curiously, the canal gets its name from the French word for China (La Chine). French explorers sought to find a route from New France to the Western Sea, and from there to China, and hence the name.
But the world changed for both those who had something to dread and something to celebrate with the coming of the Seaway. Yes, there was some cargo drainage to the Seaway but not that much, ocean ships, or "salties" as the Upper Lakesmen called them, were - and remain - a tiny percentage of traffic using a series of navigation locks, first at Montreal to bypass the rapids, then at Masenna, New York to bypass its shallows and shoals, and then through the Welland Canal to bypass Niagara Falls.
As it turned out the Seaway chiefly impacted bulk cargo. Even so, trains rolled into the Port of Montreal from the western prairies with wheat for Russia. But so too did grain-laden lakers fill the elevators for Russian ships to take away. Iron ore and pig iron moved through the Seaway from the northern Canadian mines to the steel mills of upstate New York and Ohio, and did not touch Montreal has it never. And that was a situation that prevail had done.
What changed was the shipping world in which the Seaway and the Port of Montreal were to play a role of greater insignificance as ships grew too large to call at Montreal which can only deal with 3,500-TEUers, which would rule out a fully-loaded old panamax. And the Seaway itself could only take 1,500 TEUers.
Yet, as shipping analyst Harry Valentine points out, in Jacksonville's Maritime Executive, there is profit to be made in accessing the tiny margins available to shippers by gaining cost savings by keeping cargo on the water vis-a-vis paying more for the speed afforded by pricey overland carriage.
For those who are prepared to wait for their cargo there are substantial savings, said Mr Valentine - not only for the traditional transatlantic cargo that that has been the mainstay of St Lawrence River containerised cargo. He is talking but for Asian cargo as well - not only cargo via Panama, but via Suez too.
"Some 500,000 containers arrive annually from Asia in each of the Greater Chicago and Greater Toronto areas. Diverting 20,000 containers in each area from railway to all-maritime transportation could save over US$1,000 per container, or $20 million annually to the business communities," said Mr Valentine.
"The potential savings to these communities could entice investment in developing additional container terminals on the Great Lakes with Port of Cleveland setting the precedent for such investment.
"Such investment would depend on the long-term viability of a new Antwerp-Cleveland containership service, with the next 12 months of that service being especially crucial," he said.
The key to making it work is patience. In the Greater New York City region, a percentage of customers are willing to delay arrival of containers by having ships carry containers from Asia to Newark, via the Panama Canal and bypassing the expensive overland journey is the key to profitability.
Much the same is true for shippers along the Seaway and Great Lakes with enough volume to sustain containership traffic to some Great Lakes ports.
Western Mediterranean transshipment ports provide such opportunities, he said, through ship-to-ship interlining. This offers competitive container transport to the Seaway and Great Lakes ports. This is achieved through avoiding expensive transcontinental overland transit.
For transshipment in eastern Canada, Halifax is the only port capable of transferring up to 5,000 containers from neopanamax ships of 13,000-TEU sailing to Newark from Asia via the Suez Canal, to smaller ships sailing Boston and to Seaway and Great Lakes ports.
One of the more interesting container shipping initiatives, Mr Valentine calls the "Cleveland precedent". This involves a small containership of 1,000 TEU carrying crossing the North Atlantic and through 15 navigation locks along the St Lawrence Seaway to Lake Erie.
A small percentage of the market delays arrival of their containers in exchange for savings on a per box basis compared to the rail journey between Newark and Cleveland. While Cleveland invested heavily in container port development to initiate the service, the economic performance of this service over the next 12 months will determine the future competitiveness of maritime container service to Chicago and Toronto.
"On a larger scale, neopanamaxes sailing from Asia to Newark via the Panama and involving a transit fee of $1 million per ship, would offer savings of $2,500 per container to customers willing to delay delivery of their containers by four days. The faster delivery would involve transferring containers to the railways at Long Beach. For small ships sailing from Europe to the Great lakes, the Cleveland precedent could be applied to the Greater Chicago Area with a population of 9.7 million and the Greater Toronto area with a population of 6.4 million," he wrote.
Then there is the Suez to consider. It was once reckoned that profitable access to the US east coast with Asian cargo was restricted to exports loaded in Singapore and points west, which would cut out the Philippines, Indochina and the Pearl River Delta, encompassing Hong Kong, Shenzhen and Guangzhou. But larger vessel size and reduced slot costs puts these ports within range of the Gulf of St Lawrence as least by distance travelled, he said.
The sailing distance between the Pearl and Gulf of St Lawrence is shorter via Suez than Panama. It is the same distance to Xiamen and Fuzhou. Shanghai involves slightly greater distance. "The combination of a mega ship from Asia interlining with a North America bound seawaymax at a western Mediterranean port could offer competitive rates to the final destination," said Mr Valentine.
"Western Mediterranean ports offer customers at Great Lakes cities, through transshipment to seawaymaxes, the option of competitive container transportation costs from such ports of origin such as Fuzhou, Xiamen Hong Kong, Shenzhen, Guangzhou, Shantou, Tai-Pei, Manila, Jakarta, Kuala Lumpur, Singapore and Colombo," he said.
The construction and recent opening of container transshipment terminals on the Mediterranean for mega ships represents a logistical game changer for smaller containerships sailing across the North Atlantic, he said. Ships that arrive at West Med ports carry trade from major Asian ports such as Hong Kong, Shanghai and Singapore, are much larger than neopanamax ships that sail via the Panama Canal to east coast American ports and involve lower slot costs.
Seawaymaxes could carry interlined containers from Asian directly from the Med to Great Lakes ports such as Chicago, Toronto and Cleveland.
While the Montreal, Toronto railway distance is shorter than the Newark, Cleveland railway distance, depth and height restrictions along the Lower St Lawrence River limit the maximum size of containership that can sail to Montreal to a third of the capacity of ships that sail to Newark. The voyage to Toronto involves passing through seven navigation locks compared to 15 locks for Cleveland and Chicago.
Even so these are massive markets. The metropolitan area populations of Chicago, Cleveland and Toronto are sufficiently large to provide a market segment interested in delaying delivery of containers from overseas origins, to save on transportation costs.
Seawaymaxes sailing from West Med terminals to Seaway ports will only cover a fraction of the total sailing distance from Asian ports of origin. The combination of mega ship interlined with Seaway-max ship on the Asia, Seaway/Great Lakes service offers the possibility of lower overall transportation rates from Asia, compared to faster delivery involving Pacific ports and transcontinental railway journeys. And that is something to think about. |
