Ever Given Owners Make New Offer To Suez Canal Authority
By Yusri Mohamed (Reuters) The owners of a giant container ship that blocked the Suez Canal in March have made a new offer in a compensation dispute with the canal...
By Ira Breskin
THUNDER BAY, ONTARIO– The deepwater port here will modestly increase volume this year by offering shippers attractive transit options for international cargo displaced by trade disputes.
“With disruptive trade patterns, we win because the lack of alternatives,” said Tim Heney, the port’s chief executive, during a recent interview.
In 2019, Thunder Bay will handle 8.9 million metric tons of cargo, up from about 8.7 million in 2018. Port officials welcome incremental grain and breakbulk shipments until the facility can attract the next big commodity to supplement core grain traffic. Candidates include synthetic crude oil from northern Alberta, wood pellets or biofuel.
This port, at the north end of Lake Superior, is leveraging supply chain disruptions tied to President Trump’s aggressive three-year-old trade policy. Simultaneously, local officials are counterbalancing the port’s inherent geographic disadvantage to modestly increase throughput in this roiling freight market.
“Nothing changes in a 100 years, then everything changes in (the past) three years” Heney added.
Thunder Bay is registering modest traffic gains, while offsetting several longstanding challenges. For example, this remote port, more than 3,000 nautical miles from the mouth of the St. Lawrence River in Quebec, the entrance to blue water, is icebound several months each winter. Also, shipping costs are high here because foreign-flagged carriers must hire well-paid Great Lakes pilots to command their ships for the entire Great Lakes transit; depending on the routing, a one-way trip can take more than two weeks.
The impetus for the port’s gains is two-fold. The first is increased inbound shipments of structural steel emanating primarily from Arcelor Mittal mills in Luxembourg. Canadian consignees are purchasing the European steel in order to avoid high export surcharges imposed by the Trump administration on the steel shipments produced by nearby American mills, the traditional supplier.
Initial Canadian purchases of European steel pre-date the US-imposed surcharges, Heney said. That’s because Canadian mills don’t make such high-quality structural steel, he added.
Large volume inbound European shipments began last summer and peaked between July 1, 2018, and May 17, 2019. That’s when Washington imposed trade-restrictive countermeasures on up to $16.6 billion on imported steel, aluminum, and other products from the US. The $16.6 billion represents the 2017 value of Canadian exports affected by earlier U.S. measures.
Canada reacted in kind when it imposed similar measures.
Steel shippers primarily have chartered foreign-flagged oceangoing salties, more specifically handymax multipurpose ships, to deliver their cargo here. Not surprisingly, some opportunistic carriers lifted backhaul grain cargo from here, specifically western Canadian output bound for Europe, Latin American, the Middle East, and North Africa.
Generally, it’s cheaper to move eastbound grain across Canada by ship, rather than to use rail to transport the cargo to major storage terminals in eastern Canada—in Toronto, Montreal, Quebec City, and Sorel, PQ—before its loaded onto handy-size oceangoing ships.
Separately, a spate of Canadian-flagged bulkers recently have begun calling here to lift grain eastbound through the Great Lakes and St. Lawrence Seaway to Europe and beyond. They arrive in ballast, after discharging premium Luxembourg steel at sister ports further east in the Great Lakes, Heney said.
Most of these grain shipments are routed here via rail from the prairie provinces —Manitoba, Alberta, and Saskatchewan— rather than further west for export to Asia and West Africa via British Columbia load ports in Vancouver and Prince Rupert.
Incremental grain shipments began arriving here in January 2019 when China blocked imports of Canadian canola in retaliation for Vancouver police a month earlier detaining Meng Wanzhou, Huawei Technologies Co. Ltd.’s chief financial officer, on a US arrest warrant.
Business of Shipping is a column from Ira Breskin, a senior lecturer at State University of New York Maritime College in the Bronx, NY and author of The Business of Shipping (9th edition, 2018), a primer that explains shipping economics, operations and regulations.
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