May 27, 2009
Chances are you know a thing or two about short-sea shipping on the Great Lakes St Lawrence Seaway System (GLSLS)—or HWY H20, as it’s commonly branded. You probably know it comprises the St Lawrence River, the St Lawrence Seaway and the Great Lakes. You probably know it’s an artery for grain, iron ore, steel and other bulk commodities, and that it holds great potential for containers and project cargo. You’ve likely also heard that it is significantly underused, operating at about 50 percent of its capacity. But do you really know if—and how—you can use it to your supply chain’s advantage? Deborah Aarts consults the experts and lists what you can expect.
You’ll get economies of scale
The factor that most draws shippers to short-sea shipping is the price structure. On a pound-by-pound basis, it’s tough to beat the rates marine offers.
“At the end of the day, the more cargo you can carry, the more money you save,” says Paulo Pessoa, vice-president of sales at McKeil Marine Limited.
The recession is causing shippers to reconsider the value of marine, says Tim Heney, CEO of the Thunder Bay Port Authority.
“Right now some of those shipping rates are lower than they’ve been in some time,” Heney says.“People are looking for opportunities to save that extra dollar.”
Brent Kinnaird, marketing development manager at the Hamilton Port Authority, has witnessed a similar phenomenon.
“A year ago…people would look at a value proposition that would save $10 per tonne of cargo and say ‘looks interesting, but it’s not really enough of an incentive to make me switch from what I’m doing now,’” he explains. “Now, that’s a lot of money because everyone’s margins have shrunk.”
The value of short-sea shipping really emerges for heavy loads. Unlike trucking and rail companies, marine carriers tend not to add premiums for extra weight. McKeil Marine, for example, can carry TEUs of up to 27 tonnes—roughly twice the weight of an average container.
Marine is also valuable to shippers who can afford longer lead times. If a product does not have to be at destination right away, there’s a sound economic argument to be made for sending it by a slower—and cheaper—mode.
“A lot of commodities in the trailers you see on the highways—those aren’t all necessarily just-in-time needs,” points out Bruce Hodgson, director of market development with the St Lawrence Seaway Management Corporation (SLSMC), which runs the Canadian side of the waterway.