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Industry's survival credited to self-unloaders.

Efficiency overcomes poor prices

Even though 1991 has been a good year for the shipping industry on the Great Lakes, a pair of Northern Ontario companies credit the use of self-unloading ships with the survival of the firms.

"No doubt about it. If it wasn't for the self-unloaders we would be out of business," commented Lou Quinlan, president of Sault Ste. Marie-based A.B. McLean Limited.

Quinlan's firm hired between 35 and 50 ships this year to haul its aggregates to destinations along the Great Lakes. Calling 1991 a good year, Quinlan said that during the first 10 months the firm hauled approximately 700 tons of constructive aggregates.

Without the self-unloaders the company would not be able to compete with other firms in the industry, according to Quinlan.

Dennis McPhee, the supervisor of marketing and sales for Algoma Marine, a firm hired by A.B. McLean, said the use of self-unloaders has also made the difference for his operation, a division of Algoma Central Corporation. Of the division's fleet of 18 vessels, 12 are self-unloaders.

"Without them we'd be in trouble," McPhee commented, noting that the division competes against a formidable U.S. Great Lakes fleet, a fleet which is exclusively self-unloaders.

What separates self-unloaders from other Great Lakes ships, known as bulkers, is that they are fitted with a conveyor system which allows them to be unloaded with a minimum or, in some cases, no dock-side unloading facilities.

"You just swing a 250-foot boom out and start unloading," McPhee quipped.

The system does carry a hefty price tag. Refitting a ship to become a self-unloader can cost a company between $15 million and $20 million, while a new ship can cost between $35 million and $50 million. The relatively high cost forced one Thunder Bay shipping firm to decide against converting some of its fleet to self-unloaders.

"It's just too costly, and it's the wrong time to do it," explained Robert Paterson, president of Western Engineering Service Ltd. and executive vice-president of N.M. Paterson and Sons Ltd.

Paterson said uncertainty in some of the commodity markets makes instituting a conversion program a risky proposition.

While the self-unloaders offer shipping companies more flexibility in delivering goods, it is primarily restricted to use for bulk commodities such as iron ore, potash, limestone and salt. Depending on the commodity, the vessels can be unloaded at a rate of close to 6,000 tons an hour. An entire ship can be unloaded in about five or six hours.

The ease and speed of the unloading are necessary to compensate for the low prices the bulk commodities are presently fetching on the market. Since most of the products being hauled by the self-unloaders are directly tied to the slumping U.S. construction industry, prices are low and companies need to deliver sizable quantities in order to make a profit.

Reduced prices also makes construction of dock-side facilities cost-prohibitive - so despite a premium paid for the use of self-unloaders, the customer still saves because there is minimal capital costs involved in setting up unloading facilities for these vessels.

In addition, the reduced time for unloading a ship is also necessary for such customers as Ontario Hydro, which uses the ships to unload coal for some of its generators.

"Self-unloaders are the only way to get the type of capacity needed for the generating station to operate," pointed out Paul Kennedy, director of marketing for the Thunder Bay Harbour Commission.

"On the Great Lakes, bulkers are a thing of the past - except for grain," said McPhee.

While the self-unloaders can, and have been, used to move grain, it is unlikely that they will force the disappearance of bulkers in the near future.

According to Kennedy, the infrastructure currently in place at the grain terminals along the St. Lawrence Seaway precludes the large-scale use of self-unloading ships for grain movement.

"Most of the grain is still hauled by bulk carriers," Kennedy pointed out. "The terminals have the ability to unload those types of ships quite effectively."

In one instance where a self-unloader was used to ship oats to Duluth, a hole was cut in a grain elevator to facilitate the unloading.
COPYRIGHT 1991 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:Transportation Report; shipping industry
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Article Type:Industry Overview
Date:Dec 1, 1991
Words:695
Previous Article:Surveys, focus groups identify market potential.
Next Article:Over-capacity blamed for industry's woes.
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