Posted:
March 2, 2016
By Paul Doell
National President
How deep and how durable is the cargo crisis affecting the U.S. Great Lakes fleet? How will it influence the fast approaching 2016 Lakes shipping season? Are there effective ways to overcome it?
These were among the gnawing questions influencing Fitout 2016 planning by Great Lakes vessel operating companies and by American Maritime Officers, the dominant union of merchant vessel officers sailing the Lakes.
On March 1, the AMO administration, the Great Lakes engineers, mates, captains and stewards we are privileged to represent, and our Great Lakes employers were still smarting from 2015, an especially difficult year in which uneven economic conditions forced Lakes vessels into uncommonly early seasonal layup.
We were mindful of the discouraging cargo totals recorded for 2015 by the Lake Carriers' Association - the U.S. Great Lakes bulk fleet last year carried 87.2 million tons, down 3.3 percent from the system-wide total logged in 2014. The 2015 total was the lowest since 2009 - the second year of the Great Recession - when Lakes vessels delivered a combined 66.5 million tons.
Considered individually, the numbers tied to the fleet's staple cargoes in 2015 were no less troubling. Iron ore shipments fell a stinging 10.4 percent to 40.9 million tons, and coal cargoes declined by less than one percent to just below 18 million tons. Limestone in 2015 defied the disturbing trend, rising eight percent to 23.1 million tons.
Economic indicators suggest that the crisis will not ease this year, and this means fewer vessels will be activated for Great Lakes service in 2016.
Which brings me to the only certainty for American Maritime Officers at this point - fewer active vessels mean fewer jobs for vessel officers. Idle vessels also mean a proportionate reduction in employer contributions to AMO Plans, the benefit funds that serve all deep-sea, Great Lakes and inland waters AMO members and their families.
Our union will ride this out in a practical, responsible and realistic manner - we are, in fact, old hands at enduring and adapting to cyclical difficulties confronting the Great Lakes shipping industry, even as the Lakes fleet was transformed so dramatically by the U.S. basic steel industry's decline over some 30 years.
An important difference now is that the difficulties confronting the Great Lakes shipping industry are not exclusively home grown.
Domestic industrial consumers have indeed pared orders for U.S.-made steel, which in turn has caused a decline in demand for the taconite (iron ore pellets) that Great Lakes vessels carry. But this has nothing to do with the cost or quality of U.S.-made steel and everything to do with easy access to foreign-made steel "dumped" into the U.S. market at prices at or below the cost of production. In some cases, foreign governments subsidize steel made for sale in the U.S.
"On average, it takes about 1.5 tons of iron ore to make a ton of steel, so foreign steel that is 'dumped' into the U.S. market takes ore and other cargoes off the Lakes," LCA President James Weakley observed recently.
"It is imperative that the government enforce our trade laws, and if they (the laws) are ineffective, our legislators need to enact ones that protect American workers and industries," Weakley continued. "Unfair trade has decimated the American steel industry and its suppliers more than once since the early 1980s."
The U.S. has brought 73 steel trade cases successfully against foreign interests since 1980, and steel "dumping" cases are pending today against China, Russia, Japan, South Korea and Brazil. But these proceedings tend to drag on, sometimes lasting longer than the domestic steel mills at the center of specific complaints.
But there is cause for restrained optimism.
On February 24, the President signed into law the Trade Facilitation and Trade Enforcement Act of 2015, sponsored principally by Rep. Jack Reed (R-NY). A section of this measure is intended to tighten current trade laws, quicken consideration of complaints and put greater bite into such unfair trade remedies as tariffs and countervailing duties.
Other federal lawmakers from the eight Great Lakes states are mobilizing as well against unfair trade in steel. Indiana Democratic Rep. Peter Visclosky, for example, filed a bill early this year to require exclusive use of domestic steel in all public works projects financed by all federal agencies.
Despite the value of such initiatives, it is far too early to assess their effect on Great Lakes shipping. More immediate relief for the fleet could result from the potential priority use of domestic iron ore and stone in infrastructure construction and repair projects (bridges and roads) resulting from the five-year highway and surface transportation bill signed into law late last year.
This administration will keep all AMO members informed as the 2016 Great Lakes season progresses. Meanwhile, I welcome your questions, comments and suggestions.
'Excellence, peak professionalism'
I had the honor of joining senior vessel officers in the American Steamship Co. fleet on the Great Lakes for three days late in February during ASC's annual week-long pre-shipping season conference, held this year in Niagara Falls NY. This was my first opportunity as national president of American Maritime Officers to connect with Great Lakes engineers, mates and captains, and my first chance to field their thoughtful comments and intelligent questions directly during many hours of candid conversation.
This ASC vessel officer complement was clearly representative of all AMO members sailing the Lakes. Like AMO members everywhere in domestic and international trades, our union's Great Lakes bloc reflects excellence, peak professionalism and real commitment to the job at hand and to each other - standards that distinguish AMO in the licensed seagoing labor community.
I thank these vessel officers for their time and for their input. I look forward to seeing them and many other Great Lakes AMO members aboard their vessels during the forthcoming shipping season.
Cargo crisis casts doubt over Great Lakes Fitout 2016
By Paul Doell
National President
How deep and how durable is the cargo crisis affecting the U.S. Great Lakes fleet? How will it influence the fast approaching 2016 Lakes shipping season? Are there effective ways to overcome it?
These were among the gnawing questions influencing Fitout 2016 planning by Great Lakes vessel operating companies and by American Maritime Officers, the dominant union of merchant vessel officers sailing the Lakes.
On March 1, the AMO administration, the Great Lakes engineers, mates, captains and stewards we are privileged to represent, and our Great Lakes employers were still smarting from 2015, an especially difficult year in which uneven economic conditions forced Lakes vessels into uncommonly early seasonal layup.
We were mindful of the discouraging cargo totals recorded for 2015 by the Lake Carriers' Association - the U.S. Great Lakes bulk fleet last year carried 87.2 million tons, down 3.3 percent from the system-wide total logged in 2014. The 2015 total was the lowest since 2009 - the second year of the Great Recession - when Lakes vessels delivered a combined 66.5 million tons.
Considered individually, the numbers tied to the fleet's staple cargoes in 2015 were no less troubling. Iron ore shipments fell a stinging 10.4 percent to 40.9 million tons, and coal cargoes declined by less than one percent to just below 18 million tons. Limestone in 2015 defied the disturbing trend, rising eight percent to 23.1 million tons.
Economic indicators suggest that the crisis will not ease this year, and this means fewer vessels will be activated for Great Lakes service in 2016.
Which brings me to the only certainty for American Maritime Officers at this point - fewer active vessels mean fewer jobs for vessel officers. Idle vessels also mean a proportionate reduction in employer contributions to AMO Plans, the benefit funds that serve all deep-sea, Great Lakes and inland waters AMO members and their families.
Our union will ride this out in a practical, responsible and realistic manner - we are, in fact, old hands at enduring and adapting to cyclical difficulties confronting the Great Lakes shipping industry, even as the Lakes fleet was transformed so dramatically by the U.S. basic steel industry's decline over some 30 years.
An important difference now is that the difficulties confronting the Great Lakes shipping industry are not exclusively home grown.
Domestic industrial consumers have indeed pared orders for U.S.-made steel, which in turn has caused a decline in demand for the taconite (iron ore pellets) that Great Lakes vessels carry. But this has nothing to do with the cost or quality of U.S.-made steel and everything to do with easy access to foreign-made steel "dumped" into the U.S. market at prices at or below the cost of production. In some cases, foreign governments subsidize steel made for sale in the U.S.
"On average, it takes about 1.5 tons of iron ore to make a ton of steel, so foreign steel that is 'dumped' into the U.S. market takes ore and other cargoes off the Lakes," LCA President James Weakley observed recently.
"It is imperative that the government enforce our trade laws, and if they (the laws) are ineffective, our legislators need to enact ones that protect American workers and industries," Weakley continued. "Unfair trade has decimated the American steel industry and its suppliers more than once since the early 1980s."
The U.S. has brought 73 steel trade cases successfully against foreign interests since 1980, and steel "dumping" cases are pending today against China, Russia, Japan, South Korea and Brazil. But these proceedings tend to drag on, sometimes lasting longer than the domestic steel mills at the center of specific complaints.
But there is cause for restrained optimism.
On February 24, the President signed into law the Trade Facilitation and Trade Enforcement Act of 2015, sponsored principally by Rep. Jack Reed (R-NY). A section of this measure is intended to tighten current trade laws, quicken consideration of complaints and put greater bite into such unfair trade remedies as tariffs and countervailing duties.
Other federal lawmakers from the eight Great Lakes states are mobilizing as well against unfair trade in steel. Indiana Democratic Rep. Peter Visclosky, for example, filed a bill early this year to require exclusive use of domestic steel in all public works projects financed by all federal agencies.
Despite the value of such initiatives, it is far too early to assess their effect on Great Lakes shipping. More immediate relief for the fleet could result from the potential priority use of domestic iron ore and stone in infrastructure construction and repair projects (bridges and roads) resulting from the five-year highway and surface transportation bill signed into law late last year.
This administration will keep all AMO members informed as the 2016 Great Lakes season progresses. Meanwhile, I welcome your questions, comments and suggestions.
'Excellence, peak professionalism'
I had the honor of joining senior vessel officers in the American Steamship Co. fleet on the Great Lakes for three days late in February during ASC's annual week-long pre-shipping season conference, held this year in Niagara Falls NY. This was my first opportunity as national president of American Maritime Officers to connect with Great Lakes engineers, mates and captains, and my first chance to field their thoughtful comments and intelligent questions directly during many hours of candid conversation.
This ASC vessel officer complement was clearly representative of all AMO members sailing the Lakes. Like AMO members everywhere in domestic and international trades, our union's Great Lakes bloc reflects excellence, peak professionalism and real commitment to the job at hand and to each other - standards that distinguish AMO in the licensed seagoing labor community.
I thank these vessel officers for their time and for their input. I look forward to seeing them and many other Great Lakes AMO members aboard their vessels during the forthcoming shipping season.