There were smiles all around in the Great Lakes this week- especially around the Soo Locks in northern Michigan. These locks link Lake Superior, where steel-making raw materials from Wisconsin and Minnesota are loaded, to Lake Huron (and receivers throughout the Lakes) via the St. Mary’s River.
The largest pathway, the Poe Lock, which opened in 1968, allows passage of giant “Lakers”. Indeed, before the mid January 2022 seasonal ten-week shutdown last week, one of the last vessels pushing through was American Steamship’s 1,000-ft (loa) Laker “Indiana Harbor,” built in 1980 originally for Bethlehem Steel Corp, which took an ore cargo into the giant mill at Gary, Indiana.
Why all those smiles up in Michigan and surrounding states? Continued funding for work on a new lock at the Soo, similar in size to the aging Poe Lock, has now been set in motion.
In 2018, Congress had authorized construction of the new lock-with an estimated project cost of $922.4 million (including $32 million spent prior to 2019), but the money was not allocated. The nearly-decade duration construction project consists of three main phases:
- Deepening the upstream approach channel (2020-2021).
- Rebuilding the upstream approach walls (2020-2022).
- Construction of the lock chamber (2022-2027).
Two months ago, in mid November, 2021 the historic Infrastructure bill (actually, the Infrastructure Investment and Jobs Act, or IIJA) was passed with the promise of (unspecified) big big big maritime projects. This week, U.S. Army Corps of Engineers (USACE) published a breakdown of actual projects that would be funded with part of the $17 billion that had been authorized in the IIJA.
The American Great Lakes Ports Association (AGLPA), an influential organization supporting Lakes stakeholders on Capitol Hill, has said that “highlights include $479 million – to complete and close out the new Soo Lock project, and $37.3 million to complete and close out the major rehabilitation project for the existing Soo Locks” (with its oldest lock dating back to the 1850s). They add that: “The $479 million announced today (from the IIJA) will provide the remaining funding needed to complete the new lock project – above and beyond the $480 million provided in FY2022.”
Cutting through the confusing intricacies of Federal budgets, ALGPA explains: “…the Biden Administration had budgeted $480 million for the project in FY2022. While Congress has yet to complete work on the FY2022 appropriation bills, the Biden Administration has committed to provide the project with the full $480 million even if Congress fails to enact the appropriation bills and the government operates under a year-long continuing resolution.”
Why is this important? Roughly 75-80 million tons of cargo move through “the Soo” annually. Though not on the popular radar, except perhaps for folks engaged in the Lakes trades, it has strategic importance for the steel industry. A 2015 report from the Department of Homeland Security (DHS), always looking around at worst cases, estimated that a six-month closure of the Poe Lock would likely temporarily reduce gross domestic product by $1.1 trillion. Other impacts noted would be the loss of an estimated 11 million jobs within the first year in the United States, and as many as 16 million jobs across North America, as ripple effects would impact auto production and other heavy industry in the Midwest.
The maritime history and reinvention surrounding this story goes beyond the allocations of funds from the USACE for the new lock at the Soo.
American Steamship, owners of the “Indiana Harbor” mentioned above, had its origins in the pre-World War I early 1900’s as Boland & Cornelius, based “upstate” in Buffalo, New York. Boland & Cornelius, which in turn sold the vessel owning company to GATX in the early 1970s, was one of the first owners to use “self-unloading” vessels. American Steamship was purchased from GATX in 2020, for approximately $260 million, by Rand Logistics, based in the “downstate” area of metropolitan New York.
Previously, Rand had built up its Lakes presence with purchases of both Canadian and U.S. fleets. Rand, in turn, is owned by private equity investor American Industrial Partners (also in Jones Act shipping through its ownership of Seacor Holdings).
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