Cranes as tall as 10-story buildings hoisted steel coil, rods and plate last week from the Detroit port’s first seagoing vessel of the season, cargo that may fuel a third straight yearly gain in Great Lakes shipping.
An economic recovery in the U.S. Midwest is boosting demand for millions of pounds of commodities such as limestone and iron ore as well as steel like the 4,000 tons (3,629 metric tons) unloaded in Detroit from the Federal Yukina, a freighter owned by Montreal-based Fednav Group.
“We’ve seen a steady increase, not a giant increase, in 2010 and 2011,” said Daniel J. Deane, president of Nicholson Terminal and Dock Co., where the Hong Kong-flagged Federal Yukina was berthed. The growth will probably continue in the Great Lakes season that began March 24 as auto and manufacturing companies “start to retool and expand their manufacturing since the low point in 2009.”
Great Lakes states, led by Michigan, are posting economic gains that are among the strongest in the U.S. since the recession ended in June 2009. Spurred by rising auto sales after a bailout by President Barack Obama’s administration, the rebound is now extending to steelmaking and shipping and boosting the region’s employment and spending.
In January, the end of the 2011 shipping season, Great Lakes cargo on U.S.-flag freighters rose 14 percent from a year earlier as companies such as GATX Corp.’s American Steamship Co. and Rand Logistic Inc.’s Grand River Navigation Co. carry more freight.
Economic activity in Michigan rose to its highest level since 2006 that month, according to Comerica Inc.’s monthly index. The state showed the best improvement among the five states Comerica monitors, and every component of the index improved, including measures of continuing claims for unemployment insurance and sales tax revenues.
“The heart of the recovery in Michigan is the auto industry,” said Robert Dye, chief economist at Comerica Bank in Dallas. “We are seeing that that momentum’s starting to broaden and to be that rising tide that lifts all boats for the Michigan economy.”
The U.S. automakers all returned to profit in 2011 after more than $80 billion in federal aid to Chrysler Group LLC and General Motors Co. and their lending units and suppliers in
2009. Ford Motor Co. restructured without government funds.
U.S. sales of cars and light trucks rose 13 percent in March, sending the industry to the best quarterly pace since 2008, as buyers who put off purchases returned to dealerships to find more fuel-efficient models.
The auto market’s revival means more shipments of iron ore for U.S.-manufactured steel. U.S.-flagged deliveries of the raw material on the Great Lakes increased 21 percent in January from a year earlier.
“The mood in the industry is that we are moving in the right direction,” said Glen Nekvasil, vice president of the Lake Carriers’ Association, a trade group representing 17 shippers. The association doesn’t provide shipping forecasts.
“We have seen iron ore and limestone rebound and in the case of iron ore, it has rebounded very nicely,” he said.
GATX, whose business includes rail-car leasing as well as lake shipping, climbed 70 percent in New York trading from 2009’s third quarter through the end of 2011. Rand rose 94 percent.
GATX’s American Steamship, which generated about 17 percent of the parent’s $1.31 billion in sales last year, expects volumes to advance in 2012. The forecast is “mostly driven by demand for iron ore if North American auto demand forecasts are accurate,” said Jennifer Van Aken, a spokeswoman.
Improving business last year meant the Nicholson dock company in Detroit didn’t lay off any workers during the seaway’s winter close for the first time since 2004, Deane said.
Nicholson Terminal’s operations sit on the shore of the Detroit River, one of the waterways traversed when sailing between Lake Erie and Lake Huron. With Lakes Superior, Michigan and Ontario, they connect to the Atlantic Ocean via the St. Lawrence Seaway.
Tonnage to U.S. ports along the Great Lakes-St. Lawrence system rose 19 percent in 2010, the first gain in four years, to
129.5 million short tons, according to the U.S. Army Corps of Engineers.
“Port activity is certainly increased over the recent past and in general getting back to solid footing,” said Steven Olinek, deputy director of the Detroit/Wayne County Port Authority. “The better economy is helping everybody and it’s reflected in port activity.”
Shipments through the Soo Locks, which connect Lake Huron to Lake Superior, rose about 1 percent in 2011 from 2010, suggesting Great Lakes shipments continued to improve, according to U.S. Army Corps data. In October, one of the locks broke a tonnage record set in 1975.
Back to Work
The shipping rebound has also benefited Duluth, Minnesota, at the westernmost tip of Lake Superior, where deliveries have recovered steadily since a 2009 low, said Adolph Ojard, executive director of the Duluth Seaway Port Authority. He said he expects another year-to-year improvement in 2012.
A 35 percent reduction in tonnage in 2009 meant about a quarter of the 1,800 workers employed by companies at the Duluth port were laid off, he estimates. Most of those workers, who aren’t paid by the port authority, are probably back on the job now, he said.
“There certainly are some good trends in the Great Lakes and it’s getting better ” Ojard said in an interview. “It was bleak there in 2009.”