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Great Lakes short sea shipping and the domestic cargo-carrying fleet.

Abstract

This article examines aspects of short sea shipping on the Great Lakes, focusing on the current Great Lakes domestic cargo-carrying ship fleet. The age, capacity, and speed characteristics of the Great Lakes fleet are reviewed, and their implications on short sea shipping are discussed. We conclude that Great Lakes short sea shipping has it best potential for success in two areas: the bulk commodity market and short-distance Ro/Ro and container service. A case study illustrates some of the operational characteristics of successful short sea shipping, including the existence of a champion; simple, general-purpose loading and unloading; and few involved parties. Comparisons with European short sea vessels and experience are given.

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Short sea shipping refers to "the movement of cargo and passengers by water along coastlines, to and from nearby islands, or within lakes and river systems, but without crossing an ocean" (Materials Management and Distribution 2003). This definition encompasses a large variety of marine transportation activity, including a wide range of vessel types, cargoes, material handling techniques, port infrastructures, policies and regulations, and opinions and perceptions. Clearly, "defining short sea shipping is not an easy task, and often the definition varies from one study to another" (Paixao and Marlow).

Short sea shipping is not a new phenomenon. In recent years, however, as land-based transportation systems have become congested, delays to shippers lengthened, and waterway systems under-utilized, domestic water carriage has experienced a renewed interest in both North America and Europe. Short sea shipping initiatives have been proposed or implemented in several Canadian areas, including the Great Lakes, the Vancouver/lower mainland area of British Columbia (Cambridge Systematics Inc.), and the Canadian Atlantic provinces (MariNova Consulting Ltd. and Brooks 2003, Transport Canada 2005b). In the United States, short sea services have been suggested or established along the Atlantic Coast (Tirschwell et al.); from the Mississippi, Ohio, and Illinois Rivers to the Gulf of Mexico (Tirschwell et al.); and along the Pacific coast from southern California to British Columbia (Weyerhaeuser Company).

The basic purposes of this article are to review the key characteristics of short sea shipping, examine characteristics of the current Great Lakes domestic cargo-carrying fleet, and discuss how these characteristics will impact the development of short sea shipping on the Great Lakes. The discussion is focused primarily on ships rather than on ports, cargo handling, regulatory policies, or other issues.

This article begins with a review of the potential general benefits of short sea shipping and the prerequisites for its success. An overview of the Great Lakes/St. Lawrence Seaway system follows, leading to an examination of the current Great Lakes domestic cargo-carrying fleet and its characteristics. The article closes with a short case study illustrating some of the operational characteristics of successful short sea shipping, as well as some general conclusions.

BENEFITS AND PREREQUISITES OF SHORT SEA SHIPPING

The potential benefits of short sea shipping can be summarized as follows (Paixao and Marlow):

* Geographical advantages, such as a readily useable waterway system and ability to access existing population centers

* Financial advantages, such as lower transportation rates charged to shippers

* Energy advantages, such as reduced energy consumption by transportation activities

* Environmental advantages, such as fewer vehicle emissions, traffic accidents, and related social costs, and less need to build roads and rail facilities

* Human resource advantages, such as reduced truck driver shortages and shorter operating periods for drivers

* Capacity advantages, such as improved utilization of water systems with considerable room for expansion

* Positive effects in ancillary activities, such as increased investment and employment in shipbuilding, intermodal transportation services, etc.

To succeed, a short sea service must possess two major characteristics: (1) it must provide a time/cost tradeoff that is competitive with that of other modes (particularly trucking); and (2) it must be reliable and as seamless as possible. Even if these objectives can be achieved, a major hurdle is the perception of many shippers and freight forwarders that water transportation is slow and old-fashioned. Changing these opinions will require partnerships between participants and modes, more aggressive marketing, and an entrepreneurial attitude by short sea operators (Paixao and Marlow).

The North American auto manufacturing industry provides an illustration of shipper reluctance to ship via water. A study of the possibility of moving auto parts through the Port of Windsor concluded that the close proximity of suppliers and customers was the major reason that these manufacturers did not use water transportation (Friesen et al. 2005). When suppliers and customers were located far enough apart to consider shipping by water, the costs associated with setting up new logistics channels, increased time of delivery, and lack of infrastructure were sufficient to discourage manufacturers from further consideration of this mode. Some shippers will not even consider the possibility of using short sea shipping. A feasibility study of a ferry link between Cleveland and Port Stanley (Ontario) reported that "neither the automobile companies nor their logistics providers were willing to return the questionnaires despite repeated phone calls" (TranSystems).

Hurdles that short sea shipping must overcome if it is to win acceptance from shippers include a lack of supply chain orientation by carriers, doubts about schedule reliability, excessive government regulation and bureaucracy, high fees for ports and land-based services, and poor integration with other transportation modes (see, e.g., DiSanza, Hackett, Tirschwell et al.). In Europe, for example, short sea shipping's disadvantages "lie in the areas of port operations, corporate culture and structure, innovation, information technology/ information systems, marketing, and customer service approaches" (Paixao and Marlow).

Few of the problems encountered in European short sea shipping pertain to the ships themselves. Nevertheless, concerns have been voiced about vessel age, speed, and capacity in both European and Great Lakes short sea shipping (e.g., Schinas and Psaraftis, Paixao and Marlow, St. Lawrence Seaway Management Corporation 2005b). Later sections of this article discuss characteristics of Great Lakes ships. We first give a brief description of the Great Lakes waterway system and an overview of the domestic cargo-carrying fleet.

THE GREAT LAKES WATERWAY

The Great Lakes waterway stretches 2,342 statute miles (3,770 kilometers) from Anticosti Island and the Atlantic seaboard to Duluth, Minnesota, and the most westerly tip of Lake Superior. As well as the five Great Lakes, the system includes the St. Lawrence Seaway (191 miles from Montreal to Lake Ontario), the Well-and Canal (27 miles between Lake Ontario and Lake Erie), the Detroit River--Lake St. Clair--St. Clair River section (90 miles between Lake Erie and Lake Huron), and the Soo Locks channel (62 miles between Lake Huron and Lake Superior). Figure 1 provides a map of the system.

[FIGURE 1 OMITTED]

During 2004, 42.8 long tons (43.5 million tonnes) of cargo moved on the Great Lakes. This traffic volume constituted an increase of about 6.5 percent over 2003, the first annual improvement since 1998 (when total tonnage was 50.3 million long tons [51.1 million tones]). (2) One reason for this increase was 2004's 281-day shipping season (from March 25 to December 30), the system's longest season ever (St. Lawrence Seaway Management Corporation 2005a).

About 90 percent of Great Lakes tonnage moved consists of bulk commodities; the major ones in 2004 were iron ore (24 percent) and grain (21 percent) (St. Lawrence Seaway Management Corporation 2005a). This contrasts with European shipping, where the most common short sea cargo is liquid bulk (Amerini). Commodities that currently move, or have good potential to be moved, by short sea ships on the Great Lakes include aluminum, aggregates, lumber and wood derivatives, metal castings, calcium ammonium nitrates, feed pellets, brine, raw sugar, machine parts, auto parts, containers, and garbage, as well as the traditional Great Lakes bulk cargoes of salt, coke, coal, iron ore, and grain (St-Louis). Indeed, although several cross-lake ferries have been proposed for moving automobiles and trucks, the major short sea shipping market in the Great Lakes today is for bulk commodities.

GREAT LAKES DOMESTIC CARGO-CARRYING FLEET AND SHORT SEA SHIPPING

We define the Great Lakes domestic fleet as those ships (1) whose primary trade routes are on the Great Lakes system, and (2) are owned or leased by Canadian or American companies or individuals (hence fly the Canadian or U.S. flag). Table 1 summarizes the current composition of the Great Lakes domestic cargo-carrying fleet, while Table 2 provides statistics on several physical characteristics of these ships. Both tables are based primarily on data in LeLievre (2005). Although the accuracy of these data was confirmed via comparison with other sources (including Transport Canada, the Canadian Shipowners Association, the Lake Carriers' Association, and Web sites of various ship owners/operators and Great Lakes enthusiasts), the ever-changing nature of ship rosters and routings means that the numbers in Tables 1 and 2 should be considered approximations. Note also that the standard deviations in Table 2 tend to be somewhat large, indicating wide variability within each characteristic.

Approximately 484 other Canadian- and U.S.-flag Great Lakes ships listed in LeLievre (2005) have been excluded from Tables 1 and 2 because their major function is not the transportation of freight. These ships include passenger, auto, and railcar ferries; passenger and excursion vessels; buoy tenders; dredges; and ice breakers. Tables 1 and 2 do, however, include tug boats because of their importance in moving barge-loaded cargo.

Table 1 shows that the current Great Lakes short sea shipping fleet consists primarily of two types of vessels:

* Bulk carriers and self unloaders, carrying bulk cargos in typically large quantities

* Tug/barge combinations (primarily flattop [deck] barges), transporting break-bulk, near-bulk, and bulk cargoes

There also is a small number of general cargo vessels and tankers, and (not included in Tables 1 or 2) approximately 66 ferries which may or may not be capable of moving truck-loaded roll-on/roll-off (Ro/Ro) cargo. There are no dedicated container vessels currently operating short sea shipping service on the Great Lakes. Thus, at least in the short run, short sea shipping on the Great Lakes must focus on the bulk commodity market (which can be served by bulk carriers, self unloaders, and tug-barge combinations) and the short-distance Ro/Ro market (which can be served by tug-barge combinations and by ferries with truck Ro/Ro capability).

In contrast, five types of ships are common in European short sea shipping (Hoogerbeets and Melissen; Paixao and Marlow):

* Single-deck bulk vessels, transporting near-bulk cargoes (such as forest and metal products), but typically physically unable to carry traditional dry bulk cargoes

* Container feeder vessels and (a shrinking fleet of) general cargo vessels, carrying break-bulk and high-value cargoes

* Ferries carrying passengers, palletized cargo, small containers, machinery, trailers (both accompanied and unaccompanied by drivers), and rail cars

* Bulk carriers and tankers, smaller in size than conventional bulk carriers, transporting conventional dry and liquid bulk cargoes

Table 1 also notes that ownership of the Great Lakes domestic cargo-carrying fleet is highly concentrated; for example:

* Bulk carriers: 19 of the 27 ships in Table 1 are owned by four different owners

* Self unloaders: 47 of the 83 ships are owned by four owners, and 77 of the 83 ships are owned by eight owners

* General cargo ships: 13 of the 17 ships are owned by two owners

* Tankers: 12 of the 16 ships are owned by three owners

The implications of owner concentration on short sea shipping are unclear. While larger carriers have the experience, expertise, and capital, to implement and operate new services, the entrepreneurial spirit and willingness to take risks necessary in short sea shipping may be lacking in more established water carriers. This has been noted in Europe (Paixao and Marlow), and is supported by the fact that many of the new or proposed Great Lakes short sea services have been developed by port authorities, rather than by carriers. (3)

Observations and implications relating to vessel age, capacity, and speed are discussed in the following sections.

Vessel Age and the Declining Great Lakes Domestic Cargo-Carrying Fleet

Table 1 shows that many Great Lakes cargo-carrying ships are not young. Even with the relatively newer tankers and excluding tugboats and barges, the average original year of construction is 1965. This characteristic also occurs in Europe, where use of forty-year-old ships in short sea service has been common for many years (Ovrebo, University of Marine Technology, AMRIE), and in water service between Puerto Rico and the U.S. mainland (The Wall Street Transcript).

The 1965 average should be approached cautiously. First, it varies greatly across vessel types. For example, although ten of the fifteen general cargo ships (accounting for about 71 percent of total general cargo ship capacity) were built before 1965, 60 of the 85 self unloaders (69 percent of self-unloader capacity) and 14 of the 16 tankers (99.9 percent of tanker capacity) were built after that year. Second, the 1965 average build date excludes rebuilding. Since Great Lakes ships often spend their lives exclusively in fresh water, they do not experience corrosion from salt water; this encourages the modernization, rather than replacement, of older ships.

The age of the Great Lakes fleet does echo the decreasing size of the Great Lakes fleet. Table 3, based primarily on data in Manse (1978), compares the size of the current fleet with that of 1977. Again, these numbers should be taken as approximations, as verifying and grouping thirty-year-old data is difficult.

An obvious observation from Table 3 is the decline in general and package cargo on the Great Lakes. Although some ferries transport freight as an ancillary to automobile/passenger traffic, scheduled cargo service has been virtually nonexistent on the Great Lakes since the late 1960s (Stewart). Canada Steamship Lines offered scheduled package freight service on the lower Great Lakes into the early 1970s. Container shipping, introduced in the 1960s, quickly lost out to land-based transportation. Mayer (1978) makes reference to a Chicago company that "recently developed" a weekly cargo service using small all-container ships (with rail movement during winter months), but adds that the company declared bankruptcy in late 1977. There is limited evidence that small-quantity general cargo service will continue on the Great Lakes, but on an on-demand basis and primarily on the western lakes and the St. Lawrence River east of Montreal. (4)

One of the most striking observations when compiling Table 3 was the disappearance of entire fleets between 1978 and 2005, due to sale, merger, bankruptcy, or repositioning as salt-water service. (5) United States Steel's Great Lakes fleet is illustrative. In 1977, when Great Lakes iron ore shipments peaked at almost twenty million tons, the fleet consisted of forty-four ships (thirty-five bulk carriers, eight self unloaders, and one supply boat). Total iron ore movements on the waterway had declined to about ten million ton by 2004; in parallel with this decline, the U.S. Steel Great Lakes fleet had shrunk to twelve ships (eleven self unloaders and one supply boat) by 2000, before being sold. All twelve ships are still in service. However, several needed extensive rebuilding by their new owners. The newest had been built in 1980; the oldest in 1929.

The demise of the U.S. Steel fleet reflects the decline of the steel industry in the Great Lakes region (due to increased imports of foreign steel, increased competition from other transportation modes and routes, and reduced demand for products [including automobiles] manufactured in the region). Similar declines in demand have occurred for virtually all commodities shipped on the Great Lakes (Transport Canada 2005a), resulting in the retirement of numerous older and smaller ships and the conversion of many bulk carriers to self unloaders. As a result, ships of the current Great Lakes fleet are larger than those of 1977. The average capacity of a bulk carrier was about 16,100 tons in 1977 and 23,000 tons in 2004: for self unloaders, the corresponding capacities are 20,500 and 34,000. Increases in capacity have also been noted for Great Lakes tanker ships (Transport Canada 2005a).

The lack of a healthy shipbuilding industry in Canada and the United States, and restrictive government policies on the acquisition of foreign-built ships (such as the American Jones Act and the Canadian 25 percent duty on these vessels) have further discouraged the addition of new vessels to the Great Lakes fleet, and have created "a serious impediment for investment in short sea shipping" (MariNova Consulting). Capacity considerations in short sea shipping are discussed in the next section.

Capacity Characteristics of the Great Lakes Domestic Cargo-Carrying Fleet

Many definitions of short sea shipping have focused on the size of vessel. Crilley and Dean (1992) define short sea ships as cargo-carrying vessels of between 100 and 5,000 gross tonnes (98 and 4,920 long tons, respectively). (6) Colton Company (1997) sets the average deadweight capacity to be between 1,500 and 2,200 deadweight tonnes (1,476 to 2,165 long tons), which corresponds to an average gross tonnage of 6,000 tonnes, and considers ships larger than this as "deep-sea vessels." Peeters et al. (1995) define short sea ships to be vessels with an average gross tonnage of 6,000 tonnes (5,904 long tons) or 10,000 deadweight tonnes (9,840 long tons).

These are all European definitions, and are considerably smaller than the traditional Great Lakes bulk ships (see Table 2). They do, however, reflect the development in European short sea shipping of faster and smaller (6,000 to 7,000 tonne capacity) (5,904 to 6,888 long tons) "fit-for-purpose" Ro/Ro vessels (Leback). These ships provide feeder links for deep-sea container vessels involved in international service, and have been replacing traditional general cargo vessels in the movement of break-bulk cargoes (Paixao and Marlow).

Also, in Europe, small barge companies provide LTL-like service between ports, resulting in "hub-and-spoke water feeder services from ports such as Rotterdam, Le Havre, Antwerp, and Hamburg" (Leback 2004). Although proposed as a way for smaller Great Lakes ports to flourish (St-Louis 2004; Transport Canada 2005b), such feeder service currently does not exist on the Great Lakes, and is considered to be uneconomical due to insufficient demand (MariNova Consulting Ltd 2005).

The use of barges to move containers on a short-distance, port-to-port basis (without serving as a feeder to other vessels) is one area where Great Lakes short sea shipping has good potential. Since cargo handling is the major cost of most short sea services, the use of containers and the smaller size of Great Lakes deck barges (both in absolute terms and in comparison to European feeder ships) (7) could reduce loading, unloading, and transshipment times, making such service more time-competitive. Currently, however, most Great Lakes barge traffic is bulk or near-bulk cargo.

The development of barge-based container service could be encouraged by the increased popularity of integrated tug-barge combinations (ITBs). (8) Ten of the 412 tug boats in Table 1 are of this type. Besides providing greater control and maneuverability, faster speeds, and improved fuel efficiency over towed barges, integrated tug-barges are cheaper to build, are more flexible to operate, and require smaller crews than do conventional ships of the same capacity, thus are cheaper to operate.

Barge-based container service could also be aided by the growing trend of North American trucking companies to own 53-foot containers (for example, Schneider National 2004), which simplifies the transfer from road to water, and the successful use of 53-foot containers in barge-based short sea shipping between Puerto Rice and the U.S. mainland (The Wall Street Transcript). However, most Great Lakes ports do not have the necessary equipment to handle containers efficiently, and justifying such investment is difficult. Ships or barges in Great Lakes container service must therefore be capable of self-loading and unloading, or at least be designed to allow loading and unloading to be done with general-purpose equipment such as multiple-purpose land-based cranes.

Containers (as well as trucks and trailers) may also be handled as Ro/Ro freight. While traditional Ro/Ro vessels tend not to be much faster than many bulk carriers (as discussed in the next section; also see Table 2), the faster loading and unloading resulting from the elimination of cargo transshipment allows for more frequent service and lower carrier operating costs. Securing sufficient backhaul traffic to sustain short sea shipping also should be easier with Ro/Ro service than with bulk commodities. Indeed, the use of smaller capacity vessels with Ro/Ro capability has frequently been cited as a requirement of successful short sea shipping (St. Louis 2004; Cambridge Systematics Inc. 2004).

Ro/Ro service faces some unique regulatory problems. Issues related to cabotage may arise if Ro/Ro service is sold on a round-trip basis. In the United States, time spent by drivers with their vehicle on a ferry is considered to be on-duty time, thus providing no benefit with regard to driver hours-of-service regulations (TranSystems 2006). And the U.S. Harbor Maintenance fee (an ad valorem tax levied on all cargo and passengers unloaded at U.S. ports) has resulted in the interesting situation where some trucks move by water from the United States to Canada, but return to the U.S. by bridge to avoid paying the tax. Nevertheless, many of the Great Lakes short sea services currently being considered are based around Ro/Ro vessels (Pung 2005). Types of Ro/Ro ships are discussed in the next section.

Speed Characteristics of the Great Lakes Domestic Fleet

As transportation costs increase, inventory holding costs become relatively less significant and larger buffer stocks become more justifiable. The point at which shipping larger quantities by slower modes outweighs the higher cost of faster modes has always been a major consideration in transportation decisions.

Competing with the shorter transit times of trucking is difficult, although some of the time disadvantage may be compensated for by lower costs. Edmonson (2003) quotes a Dutch conclusion that European short sea shipping is more economical than trucking for distances greater than 500 kilometres (311 miles). One European study of several years ago found that shippers would be more open to short sea shipping if "short sea rates (including land rates) were 35 percent less than the cost of transport performed by road only, to offset the additional inventory costs in the logistics pipeline" (European Commission 1996). While this figure does not adequately reflect the current transportation market, it reinforces calls for lower waterway user fees (MariNova Consulting Ltd. 2005). Indeed, the St. Lawrence Seaway reported 81,581 tonnes (80,296 long tons) of new cargo (approximately one-half of which was domestic short sea freight) during the first three months of 2005 as a result of reductions in lockage fees on the Welland Canal (Canadian Transportation Logistics 2005).

The topic of high-speed vessels arises in most discussions of short sea shipping. A "high-speed vessel" typically is taken to be one with a cruising speed of at least 20 knots (23.0 statute miles per hour). (9) In comparison, the cruising speed of the average Great Lakes bulk carrier is about 13.9 knots (16 statute miles per hour) (see Table 2), although as Fischer (2005) notes, such a ship "may spend only 40 to 50 percent of its trip time at full power, with speed reduction in the connecting rivers, locks, and shallow water." Indeed, speed restrictions in some sections of the Great Lakes and St. Lawrence Seaway will slow most ships, whether a high-speed vessel or not.

Virtually all high-speed vessels are ferries (Schinas and Psaraftis); there is little need for most bulk cargoes on the Great Lakes and in Europe to move faster than they currently do. Thus, high-speed vessels have concentrated on transportation of passengers and automobiles, and to a lesser extent, trucks.

TranSystems (2006) identifies five different types of ferries:

* High-speed passenger-only vessels, with average speeds exceeding 30 knots

* High-speed automobile-carrying vessels, with limited truck-carrying capacity (speeds ranging from 20 to 30 knots)

* Ro-Pax(roll-on/roll-off vessels designed for carrying passengers, automobiles, and trucks) (speeds from 18 to 23 knots)

* Traditional Ro/Ro vessels, for transporting trucks (15 to 18 knots)

* Tug-barge combinations, for transporting trucks and containers (12 knots)

Only the latter three types of ferries are useful in transporting Ro/Ro freight. None is really "high speed" and none is without problems: the truck/cargo capacity of Ro/Pax vessels may be constrained by automobile traffic and the existence of passenger amenities (which may be necessary to economically justify service), while tug-barge combinations often do not encourage drivers to accompany their vehicles. However, unlike the two types of high-speed ferries listed above, the latter three types would be better able to maintain schedules during winter weather due to heavier hulls (discussed in the next section).

Sauer (2003) has suggested that the optimal length of a route for a high-speed vessel is between 100 and 1000 kilometers (62 and 621 miles), since high-speed vessels cannot compete with trucks over distances of less than 100 kilometers (62 miles), and the amount of fuel required for distances greater than 1,000 kilometers (620 miles) reduces cargo capacity appreciably. Ultimately, the economic feasibility of a high-speed vessel will be impacted by a number of non-vessel factors, including the times required for loading and unloading and the amount of cost and time savings it offers to users. In several areas of the Great Lakes, for instance, gains from higher speeds will be lost while traveling through locks and restricted-speed zones. For example, traversing the 27-mile Welland Canal between Lake Ontario and Lake Erie requires approximately 11 hours.

Even in Europe, the need for high-speed vessels in short sea shipping has been debated. One study of the short sea shipping market in Europe concluded that EU policy makers "should not focus on promoting high-speed vessels for short sea freight transport. If there is a need for speed in short sea shipping, market parties will seek high-speed vessel solutions by themselves" (Becker et al. 2004).

One other major characteristic of Great Lakes shipping deserves attention: the impact of weather on the ability to operate year round. This is discussed in the next section.

THE IMPACT OF WEATHER ON GREAT LAKES SHORT SEA SHIPPING

The St. Lawrence Seaway locks close during the winter due to ice. Lake Erie, being shallow (average depth of sixty-two feet), also freezes, as do parts of Lake Ontario nearer to the shores. Lake St. Clair often is frozen between December and March, and it is not uncommon for the St. Clair River to become blocked in early spring as ice moving downstream from Lake Huron accumulates. Ice flows in Lake Erie may be of such a depth that ice breakers are of little use; even if they were, government-run icebreaking service is not guaranteed (TranSystem 2006).

The impact of winter weather varies: During 2004, the Seaway was open for its longest season ever (forty weeks). However, extreme cold weather during March and April of 2003 severely hampered shipping schedules and resulted in port congestion as ships arrived out of schedule. Adverse winter conditions create a major physical and attitudinal barrier to consideration of short sea shipping by shippers, and suggestions to shippers that they use short sea shipping for nine months, then temporarily switch to other modes during the winter, are difficult to sell.

In Europe, considerable short sea shipping occurs in areas with severe cold weather conditions (including the English Channel, North Sea, and Baltic Sea [Leback]). About 29 percent of European short sea shipping occurs on the North Sea (Amerini 2006), and approximately 15 percent of the world's water transportation occurs on the Baltic Sea, even though it freezes between November and April (Koslowski and Glaser note a trend toward greater amounts of ice in the Baltic since 1900). In both locations, navigation during the fall and winter seasons can be challenging due to adverse weather.

Numerous studies done from the mid-1960s to the early 1980s (and again in recent years) have examined the economic justification and physical feasibility of extending the navigational season on the Great Lakes (for example, Carroll et al., Thomchick et al.). A common conclusion has been that, by itself, a longer shipping season will not necessarily result in greater use of the waterway, increased demand for water transportation, or switching of existing cargoes from other transportation mode or routes (Thomchick et al., MariNova Consulting Ltd.). Simply, the length of the Great Lakes shipping season is "not as important as other service factors" (Thomchick et al.).

Maintaining sailing schedules during winter weather requires ships with ice-strengthened (steel) hulls, rudders, propellers, and ballast systems, and ice-breaking capability. This kind of design tends not to be high speed. Ships with shallow drafts, allowing the ship to ride up over the ice and use its weight to crush the ice, have been suggested; however, a shallow draft design may not be economical on the Great Lakes due to the resulting shape of the vessel hull. Great Lakes bulk carriers and self-unloaders (and also barges) have very rounded hulls and fairly deep drafts, which results in a very large cargo capacity but increases the ship's hull resistance, reduces speed, and is less suitable for ice breaking. Tug boats and Ro/Ro vessels have more angular hulls, hence less hull resistance, and so can travel at higher speeds; the smaller hulls, however, reduce their cargo capacities. A 1979 study concluded that using traditional round-hull Great Lake bulk carriers during the average nine- or ten-month Seaway sailing season was more economical than more angular-hulled ships used year-round (Fischer 2005). As well, ports must be able to load and unload at all times of the year, which will require ice-breaking capability due to their shallow berths.

In the end, the ice problem may be overstated. All studies of global warming have predicted higher winter temperatures and reduced ice accumulations, leading to longer shipping seasons. Lofgren et al. (2002), for example, estimate 31 percent to 61 percent more ice-free winters on Lake Erie by 2030, while Sanderson (1987) foresees shipping seasons of at least eleven months. Unfortunately, gains from a longer shipping season due to climatic change may be more than offset by lower water levels, resulting in considerably higher unit costs for shippers. (10)

Even with the current climatic conditions, much of the Great Lakes system (particularly the western three lakes) do not normally freeze. As a result, short sea shipping that does not traverse Lake Erie or pass through canals and locks (thus remaining entirely on Lake Ontario or on the upper three lakes) should not be affected during the winter months (Stewart). As well, increased short sea shipping is seen to lessen ice accumulation simply due to the increased agitation of the water resulting from greater ship traffic.

CASE STUDY (11)

We cap this review of short sea and Great Lakes shipping conditions with a short case study illustrating some characteristics of successful short sea shipping.

In 2005, Aluminerie Alouette, an aluminum smelting partnership (53.3 percent Canadian-owned), contracted with Logistec Stevedoring, a third-party logistics service provider, to operate a distribution center in Port of Trois-Rivieres, Quebec (on the north shore of the St. Lawrence River approximately 56 miles [90 kilometers] east of Montreal). Aluminum ingots are moved by barge to Trois-Rivieres from Aluminerie Alouette's production facilities in Sept Isles (on the north shore of the St. Lawrence River approximately 405 miles [650 kilometers] east of Trois-Rivieres). It is forecasted that approximately 250,000 tonnes per year (254,000 long tons) (almost half of Aluminerie Alouette's annual output) will use this service. Some of the product eventually moves from Trois-Rivieres via barge through the St. Lawrence Seaway and Great Lakes to a distribution center in Toledo, Ohio, from where shipment (typically by truck) to customers occurs (Aluminerie Alouette is not involved in the sale or movement of product from Trois-Rivieres to Toledo).

The Trois-Rivieres distribution center provides a buffer between aluminum production and distribution. Haulage is done once per week using a Canadian-flag tug/barge combination, capable of carrying 11,000 tonnes (11,000 long tons), operated by McKeil Marine of Hamilton, Ontario. Barges currently return to Sept-Isles empty; this empty backhaul is justified by the high value of aluminum ingots. Loading and unloading of the barge takes approximately one day for 5,000 tonnes (5,080 long tons), and requires only general purpose equipment. Tug/barge sets operate with a crew of approximately eleven persons.

The choice of Trois-Rivieres as the distribution point was dictated by several factors. Its location just east of the first lock of the St. Lawrence Seaway resulted in the longest possible movement by barge (and hence greater transportation cost savings) while avoiding the problems with Seaway ice west of Montreal. As well, the two major Canadian railways provide direct service to Montreal and Trois-Rivieres, while other ports on the north shore would require convoluted rail routings and non-competitive rates.

Four reasons have been given for the success of this service: First, roads between Sept-Isles and Trois-Rivieres are two lanes and have been described as "treacherous." Second, Aluminerie Alouette in Sept-Isles has avidly championed the implementation of this service. Third, significant cost savings result in transportation and handling, the latter because the ingots can be loaded and unloaded using forklift trucks, thus reducing stevedoring costs greatly. And fourth, the number of participants, including government, is relatively small.

CONCLUSIONS

Although the volume and value of cargo moved on domestic waterways will never approach that of ocean transport, short sea shipping appears to offer important potential benefits to shippers, carriers, and the broader economy (Schinas and Psaraftis). The conditions necessary for its success on the Great Lakes are not much different from those required elsewhere, including schedule reliability, fast loading/unloading and transshipment, competitive times and costs, and someone (preferably the shipper) to act as a champion. Most important, short sea shipping must be seen by shippers as a potential part of an integrated supply chain. As Hackett (2004) notes, "success (in both USA and Europe) has come through the linkage of a dedicated product base (paper and autos) or industrial group from producer to distributor." Indeed, it has been suggested that the adoption of Great Lakes short sea shipping is greater in those Canadian industries with heavy foreign ownership whose parent companies are accustomed to water transportation. (12)

Short sea shipping on the Great Lakes has its best chances of success in two distinct markets: the longer-distance bulk commodity market and the short-distance Ro/Ro market for trucks and containers.

The bulk commodity market, although already existing, requires revitalization through promotion of smaller quantity shipments, including reduced lockage fees for small vessels, development of efficient tug/barge combinations (including converting older ships to barges), and improved transshipment connections in ports. Although fleet capacity currently is sufficient, much of this capacity is in large ships, whereas growth will come from smaller quantity shipments moved on smaller vessels. Thus, the development of smaller vessels will be important not only in ensuring that these services are economically feasible, but also in convincing new shippers to use water transportation. As well, the liquid cargo market, although often omitted from discussions of Great Lakes short sea shipping, should not be overlooked.

Success in the short-distance Ro/Ro (truck and container) market will depend on guaranteeing frequent, fast, and reliable service year-round, which will require, for example, restricting service to routes that do not go through locks. This also will be the major hurdle in selling such service to shippers. While tugs/ barges can be supplied domestically through re-builds, larger Ro/Ro ships aimed at shippers who demand truck-competitive times probably would have to be imported from outside Canada and the United States. To be economically feasible, service using larger Ro/Ro ships will have to include passengers and automobiles, and for the shipper, may not offer a sufficient number of sailings per day to be time-competitive. Although facing numerous hurdles (as illustrated by the failure of the Rochester-to-Toronto service), the continued interest in cross-lake ferries shows that although the Great Lakes has traditionally been seen as an east-west route, the potential for north-south short sea services should not be ignored.

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ENDNOTES

(1) Discussions of government policy considerations in Canadian short sea shipping can be found in Brooks and Frost.

(2) One tonne (metric ton) equals 0.984 long tons (one long ton = 2,240 pounds) or 1.102 short tons (one short ton = 2,000 pounds). Unless otherwise indicated, the term "ton" in this article refers to long tons.

(3) For example, from Hamilton, ON, to Oswego, NY, developed by the Hamilton Port Authority; from Nanticoke, ON, to Erie, PA, developed by Port of Erie and Upper Lakes Group (an owner/operator of ships, grain terminals, and ship/industrial repair facilities); from Toronto, ON, to Rochester, NY, developed by the City of Rochester (service was discontinued in 2006); from Cleveland, OH, to Port Stanley, ON, developed by the Cleveland-Cuyahoga County Port Authority.

(4) This conclusion follows from an analysis of vessel ownership and operations when verifying the data in LeLievre (2005) used to develop Table 1.

(5) Some examples include Hall Corporation Shipping (eighteen ships included in 1978 count; ceased operations in 1987), Socanav Inc. (eight ships of predecessor company included in 1978 count; declared bankruptcy in 1997), National Steel Corporation (four ships included in 1978 count; declared bankruptcy in 2002).

(6) "Gross tonnage is the capacity in cubic feet of the spaces within the hull and of the enclosed spaces above the deck of a vessel, divided by 100. Thus, 100 cubic feet of capacity is equivalent to one gross ton. However, capacity of a cargo carrying ship can also be expressed as the deadweight tonnage required to immerse the hull at a particular draught (usually the maximum summer draught)" (Transport Canada 2005a).

(7) The average capacity of a Great Lakes deck barge is approximately 56 twenty-foot equivalent units (TEUs), versus a capacity between 150 and 500 TEUs for European feeder ships (Paixao and Marlow 2002). The 56 TEU statistic is based on data used when developing Table 2, limiting the analysis to deck barges, and assuming that a standard twenty-foot dry container has a maximum gross weight of 52,900 pounds.

(8) With an integrated tug-barge, the tug is connected to the barge via a rigid or articulated connector, rather than by a towline, allowing the barge to be pushed rather than towed.

(9) One knot equals one nautical mile per hour, or 1.151 statute miles per hour, or 1.852 kilometres per hour.

(l0) Global warming is expected to reduce Great Lakes water levels between 2 and 33 feet (depending on the water body). This will decrease a ship's draft, thus decreasing its cargo-carrying capacity, increasing the number of trips that must be made to transport the same volume, and increasing total costs. Congestion may also occur at locks and channels if the reduced capacities result in a greater number of vessels in operation. See Lofgren et al. (2002), Marchand et al. (1988), Quinn (1999), Sanderson (1987).

(11) Much of the information in this case study is taken from Aluminerie Alouette (2005).

(12) This comment was made by a representative from one of the major Great Lakes port authorities, attending the Highway H20: Auto--Marine Transportation Logistics workshop in Detroit, June 29, 2005.

Mr. Higginson, EM-AST&L, is assistant professor in marketing and management science, Odette School of Business, University of Windsor, Windsor, Ontario, Canada. Ms. Dumitrascu is lecturer in economics, St. Clair College, Windsor, Ontario. The authors wish to thank the following persons for their comments: Mr. Aldert van Nieuwkoop, The St. Lawrence Seaway Management Corporation; Mr. Dan Friesen, Odette School of Business; Mr. George Di Sante, Logistec; Dr. John Spychalski; and several anonymous reviewers. Special thanks are due to Sophia Stepanenko, who researched parts of an earlier version of this article. Financial support for this work was provided by The Natural Sciences and Engineering Research Council of Canada, grant #OPG 239147-2001.
Table 1. The Great Lakes Domestic Cargo-Carrying Ship Fleet

 Number of Number of Average Build
Vessel Type Ships Owners Date (Note A)

Bulk carriers 27 (Note B) 12 1959
Self unloaders 85 12 1968
General cargo ships 15 4 1960
Tankers 16 7 1981
Ro/Ro ships 2 (Note C) 1 1974
Container ships 0 n/a n/a
Small-cargo vessels (Note D) 11 10 1946
Subtotal 156
Dry-cargo barges 53 n/c 1959
Liquid-cargo barges 29 n/c 1967
Tug boats 412 114 1952
Total 650

Note A: does not consider year of rebuilds
Note B: includes six ships recently laid up
Note C: includes one ship recently laid up
Note D: includes package freighters, bum boats, grocery launches, etc.
n/a: not applicable
n/c: not calculated

Source: LeLievre (,2005)

Table 2. Great Lakes Domestic Cargo-Carrying Fleet: Vessel
Characteristics (mean given first, standard deviation in brackets)

 Speed
 Cargo (statute
 Number Capacity miles per
Vessel Type of Ships (Note A) hour)

Bulk carriers 27 22,881 16.1 (2.4)
 (10,003)
Self unloaders 85 34,197 16.1 (1.6)
 (16,668)
General cargo ships 15 5143 (4515) 12.7 (3.2)
Tankers 16 7140 (5262) 15.3 (1.1)
Ro/Ro ships 2 9238.5 (8611) 15.8 (2.0)
Small-cargo vessels 11 129 (181) n/c
Unpowered barges 29 5767 (8556) n/a
Tug boats 412 185 (368) n/c

 Width (Beam) Depth (feet)
Vessel Type Length (feet) (feet) (Note B)

Bulk carriers 766.6 (549.3) 69.6 (8.9) 38.2 (4.9)

Self unloaders 748.8 (114.8) 77.7 (12.7) 43.1 (6.7)

General cargo ships 287.2 (138.1) 45.5 (17.9) 23.5 (12.4)
Tankers 382.4 (148.4) 57.4 (20.0) 31.3 (11.4)
Ro/Ro ships 425.0 (140.0) 68.5 (6.5) 32.5 (12.5)
Small-cargo vessels 75.4 (33.2) 20.6 (8.6) 8.1 (2.3)
Unpowered barges 308.0 (162.1) 55.8 (15.8) 20.0 (10.7)
Tug boats 78.2 (33.8) 22.0 (8.6) 10.4 (4.8)

Note A: Cargo capacity is measured as:
* for general cargo ships, tankers, liquid-cargo barges,
and tugboats: gross tonnage ("the internal space of a vessel,
measured in units of 100 feet = 1 gross ton" [LeLievre 2005])
* for bulk carriers, self-unloaders. Ro/Ro ships, small cargo
vessels, and dry-cargo barges: maximum cargo capacity at
midsummer draft (in long tons)

Note B: "Depth" refers to the distance from the top of the keel
to the top of the upper deck. "Depth" does not refer to draft.

n/a: not applicable

n/c: not calculated

Source: LeLievre (2005)

Table 3. The Great Lakes Domestic Cargo-Carrying Fleet, 1977 and 2004

Vessel Type 1977 2004

Bulk carriers 209 27
Self unloaders 88 85
General cargo ships 41 15
Tankers 70 16
Ro/Ro ships 0 2
Container ships 0 0
Small-cargo vessels 18 11
Total 426 156
Total tonnage moved through Great Lakes/St. 73.295 43.482
Lawrence Seaway (millions of tonnes; millions (72.122) (42.786)
of long tons in brackets)

Sources: Manse (1978), LeLievre (2005), St. Lawrence
Seaway Management Corporation (2005a), St. Lawrence Seaway,
Management Corporation and Saint Lawrence Seaway Development
Corporation (2006)
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Date:Jan 1, 2007
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