Growing Thunder Bay's port in the 21st Century.

The Lakehead's economic history is inextricably bound with its transshipment role first as the rendezvous hub at Fort William during the Northwest Company fur trade era and later as the world's largest grain port during the course of the twentieth century.

With the opening of the St. Lawrence Seaway and Keefer Terminal in the middle of the twentieth century, the port seemed secure for decades to come. However, starting in the 1980s, shifting world grain markets and increased competition from other ports and transport modes have seen the decline of Thunder Bay's role as a port.

Total tonnage at the Port of Thunder Bay peaked at 23.6 million metric tonnes in 1983, declined and has stabilized since 1999 in the range of approximately 8 to 9 million tonnes. Nevertheless, the port is a tremendous source of opportunity and a major transportation asset for Northern Ontario.

There are signs that the stage is set for future growth in the port's activities. First, annual shipments through the port have stabilized with grain in the 5-6 million tonnes range, coal between 1.3 and 1.7 million tonnes, potash in the 500-600 thousand tonnes range, dry bulk ranging from 100 to 200 thousand tonnes and liquid bulk around 200 thousand tonnes.

Second, productivity in the port as measured by tonnes shipped per vessel has improved dramatically over the last three decades. Whereas the 1960s saw average tonnes shipped per vessel at 9,632, over the period 2000 to 2005, this figure essentially doubled to reach 18,922 tonnes per vessel.

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Future growth of the port requires it to capitalize on its role as the terminus of the Great Lakes Marine transport system, a 3700 kilometre system that provides access to the heart of the North American continent and beyond.

Under its current reincarnation as Highway H2O, the Great Lakes-St. Lawrence Seaway's forty ports represent on and off ramps to a system that also has additional connections via Lake Michigan to the Illinois/Mississippi river systems that allow it to reach the Gulf of Mexico and via Lake Erie and the New York State Canal System to New York City.

Essentially, Thunder Bay is at the intersection not only of an east-west transport system via the road-rail link from the west to our port, but also a north-south system.

The demands of western Canada's boom can lead to the use of the port as part of an east-west/rail-road-water transport link to ship dry bulk, and general cargo more cost-effectively than either road or rail alone. As well, future mining development in the Northwest may also create opportunities for bulk shipments.

Climate change might also create new grain markets that utilize the port as Canada's wheat frontier moves north while grain producing areas in the United States and Australia dry up. In addition, the proposals for tax incentive zones in the Northwest, if implemented, could generate economic activity that would also boost use of the Port.

All this activity would be further enhanced by the construction of modern container shipping facilities on a water front especially in the wake of such facilities beginning operation in Prince Rupert, British Columbia.

The Prince Rupert container shipping facilities are designed to access Asian traffic.

The existing rail link combined with container port facilities at Thunder Bay that cut the cost of east-west shipping can make Thunder Bay a key node for distribution of container traffic from Asia going east as well as south to Chicago and the U.S. mid west. Such a facility could also serve as an incentive for some manufacturers to locate in Northwestern Ontario.

In addition, the potential exists for a longer shipping season on the Great Lakes as global warming progresses though this must be counterbalanced with the effect of climate change on water levels in the Great Lakes. Nevertheless, a longer shipping season can lead to more economic opportunities. However, the benefits of a longer shipping season have been curtailed by the fact that the current seaway lock system accommodates fewer of the larger vessels that now exist. In many respects, the locks put in place in 1959 were built smaller than warranted even at the time and the full potential of the seaway has not been realized. Major investment in new locks including those at Sault Ste. Marie would be an asset not only to the port of Thunder Bay but all the ports on the seaway system.

Enhancing the future of the Seaway and the Port of Thunder Bay will require major political efforts to overhaul the governance and regulation of the entire system.

Trade along the system currently has to comply with approximately 30 sets of U.S. and Canadian regulations administered by 10 different departments at the federal, state and provincial level alone. Major institutional innovations could reduce the transactions costs generated by layers of national and bi-national bureaucracy and help boost traffic along the Seaway and the Port of Thunder Bay and ultimately benefit Ontario's North.

Livio Di Matteo is Professor of Economics at Lakehead University.