The Laker fleet continues to grow, but one carrier has hit a snag along the way with its fleet renewal plans.
Canada-based shipowners have been on an investment spree in recent years. Fleet owners have been replacing older vessels for two major reasons: higher operating costs associated with older vessels, and growing environmental pressure to make ships that ply the Great Lakes cleaner.
In 2012, Canada Steamship Lines (CSL) and Algoma Central started taking delivery of new vessels following orders placed two to three years earlier. The timing of the orders was also motivated by the removal of Canada’s 25% import duty on new ships in the late 2000s, a rise in the value of the Canadian dollar, and a collapse in world shipbuilding prices.
CSL designated its fleet additions as Trillium Class, while Algoma developed its Equinox Class fleet. The construction of the Trillium and Equinox ships represented the biggest addition of new tonnage to fleets working the St Lawrence Seaway since its opening in 1959.
A total of 11 newbuild Trillium Class vessels were put into operation from 2012 onwards. The fleet includes four self-unloading Lakers for CSL’s Canadian fleet (BAIE ST PAUL, BAIE COMEAU, THUNDER BAY and WHITEFISH BAY), three Panamax self-unloaders for CSL Americas (RT HON PAUL E MARTIN, CSL TECUMSEH and CSL TACOMA), and two other vessels of the same class and design for pool partner, Norway-based Torvald Klaveness. Two gearless bulk carriers, CSL WELLAND and CSl ST LAURENT, were added in late 2014.
The Trillium self-unloading Lakers have a dwt of 34,500t, and measure 225.5m in length with a beam of 23.76m. They are equipped with five holds and have a net hold capacity of nearly 42,000 m3 . The average unloading rate is 5,450 tph.
The three Panamax selfdischarging carriers are of 71,319 dwt, 228.6m long and have a beam of 32.26m. Hold capacity is 71,476 m3 and they operate an 80m boom for self-discharging.
In May this year, CSL and Germany’s Hartmann formed a 50:50 joint venture to build and operate a 40,000 dwt gravity self-unloading vessel to trade in Europe.
The new ship will be built at Chengxi Shipyard in China, and is scheduled for delivery to Germany in 2020. It will service Mibau Stema Group on a long-term charter.
The joint venture represents an expansion of existing activities in Europe for both Hartmann and CSL. Hartmann owns a fleet of belt self-unloading ships that are chartered to Mibau Stema, a joint venture of HeidelbergCement and Hartmann Family.
The carrier is also acquiring 50% of Eureka Shipping Ltd, the pneumatic cement vessel business of Cyprusbased SMT Shipping.
The acquisition will allowEureka and CSL to combine resources to expand services in seaborne cement powder and fly ash markets around the world. CSL’s Australian cement shipping business is not included in the venture.
“The joint venture represents an important step in CSL’s strategy to increase its presence in the global construction materials sector,” said Louis Martel, president and CEO of CSL Group.
Eureka operates a fleet of self-unloading cement carriers in the Baltic, the Atlantic, the Mediterranean, the Caribbean and Asia.
At Algoma Central, however, the fleet renewal programme has hit a snag. The carrier had already added seven vessels to its domestic dry bulk fleet, with further orders in the pipeline.
But in October, Algoma announced that it was taking steps to cancel four newbuild contracts with Croatian shipbuilder Uljanik. The vessels were scheduled for completion in 2019 at Uljanik’s 3 Maj shipyard in Rijeka.
Algoma said that the cancellation notices were sent to the shipyard as a result of the yard’s “failure to secure refinancing”. Moreover, the shipowner had received no assurance that the shipyard would be able to complete the four vessels.
“The company will now initiate the process to be reimbursed for contract instalments paid to date, including issuing demands under related refund guarantees. Every effort is being made to replace the cancelled vessels and the company remains confident of their ability to provide capacity in the interim,” Algoma said in a statement.
Uljanik Group has been struggling with cash flow problems in recent years. In January 2018, the Government of Croatia secured a €96M loan to help the shipbuilder with its restructuring plans. The loan was targeted at materials needed for the construction of ships, loan repaying, and commitments towards suppliers.
In the past 12 months, Algoma has welcomed four new Equinox class vessels, three of them built in China – ALGOMA NIAGARA, ALGOMA STRONGFIELD and ALGOMA SAUIT. One vessel, ALGOMA INNOVATOR, did make it out of Croatia and joined the fleet in spring this year.
For 2017, Algoma reported revenues of C$451M, an increase of 15% over the prior year. Domestic dry bulk volumes were up across the majority of sectors, reflecting a 14% increase in revenue compared with 2016. A higher demand for iron and steel provided a bright spot, and Algoma saw more normal salt volumes during the year compared with 2016, with a 26% volume increase.
Operating days were up 16%, reflecting the increase in volume and the addition of two vessels during the year.
Algoma also reached agreement with rival Laker fleet owner American Steamship Company (ASC) to acquire two vessels for its domestic fleet to ship salt, aggregates, and other commodities. The availability of these vessels presented Algoma with an opportunity to expand the domestic fleet capacity at attractive prices, and to create new opportunities in its river-class shipping.
In its half-year stock exchange report, Algoma said the outlook for domestic dry bulk for the remainder of 2018 remained positive. The fleet was fully booked, reflecting tight vessel supply in the market generally, itself exacerbated by challenges sourcing crew.
“Algoma, along with its industry peers, is facing a national shortage of qualified seafarers, particularly in the officer ranks,” the company said. “Recruiting senior engineers and deck officers with pilotage certificates s particularly challenging. Algoma has partnered with other shipping companies through the Chamber of Marine Commerce to advocate for regulatory changes that would benefit the industry
and its customers.”
Ongoing trade tensions between the United States and Canada have added uncertainty but, to date, Algoma says it has seen limited impact. Some iron ore shipments previously bound for export were diverted to US destinations, and therefore onto Jones Act carriers. However, the Canadian carrier has been successful in filling the resulting available days with replacement business.
Among the US-flagged carriers VanEnkevort Tug & Barge has contracted Fincantieri Bay Shipbuilding to construct a new self-unloading barge for shipping bulk products throughout the Great Lakes region.
Measuring 740ft in length and weighing 37,512 dwt, the vessel will be constructed in Sturgeon Bay, Wisconsin. VanEnkevort, which is based in Escanaba, Michigan, is a growing company operating three articulated tug barges (ATBs) on the Great Lakes. This newest self-unloading barge will be environmentally friendly and delivered with the first Great Lakes ballast water treatment system meeting Environmental Protection Agency (EPA) standards. The vessel is scheduled for completion in mid-2020.
VanEnkevort president Dave Groh said the carrier chose Fincantieri Bay because of its history of building these type of vessels, and the investment the company has made in its facilities over the past decade.
“While there are multiple shipbuilding facilities along the US East and Gulf coasts, our partners in the Great Lakes have the reputation and expertise to craft the vessel we need for our fleet,” commented Groh.
VanEnkevort is a privately owned bulk transport company servicing the mining, steel and construction industries on the Great Lakes. The carrier also operates a modern self discharging bulker, GREAT LAKES TRADER, and has been a forerunner in converting older, obsolete, selfpropelled steam turbine, straight deckers into self-discharging ATBs. Of the seven ATBs on the Great Lakes, VanEnkevort has been involved in the conversion and/or ownership of five of them.
Earlier in the year, Interlake Steamship Company, through its subsidiary Interlake Logistics Solutions, time-chartered a barge from the US East Coast to operate on the Great Lakes during the spring. The 418ft monTVille, a single-hold, covered hopper barge with a 14,400 short ton capacity, is able to carry a wide range of cargoes, from bulk products to steel, and specialty project cargoes such as wind turbines, generators, heavy equipment and other large structural components.
The MONTVILLE barge features a rail-mounted gantry that can support a large materials handler capable of digging or lifting cargo out of the hold and onto shore.
“We’re seeing an increasing need for moving other types of cargo than the free-flowing bulk cargoes that we have traditionally moved,” said Mark W. Barker, president of Interlake. “We felt that it was important to respond and fulfil the needs of our customers.”
Brendan O’Connor, Interlake’s vice president of marketing and marine traffic, added: “While barge service is available in the region, we believe the MONTVILLE is a unique asset. Its sheer size and versatility sets it apart. The MONTVILLE is the largest US-flagged barge of its kind on the Great Lakes. With its large, open cargo hold, which is completely covered, it will be able to carry high cubic cargoes, as well as heavy cargoes, protected from the environment.”
In the second quarter of 2018, ASC reported profits of US$8M, compared with US$6.5M in the same period of 2017. Profits for the first half of the year rose to US$8.8M, against US$6.3M for the same period of 2017. This was despite a fall in cargo carried – 9 Mt through the second quarter, compared with 9.5 Mt during the same period in 2017. The improvement in profits was primarily driven by more efficient fleet performance, the carrier said.
For the whole of 2017, the GATX-owned carrier benefited from strong demand for iron ore spot business, as well as favourable sailing conditions. ASC carried 27.8 Mt of freight in 2017, compared with 25.4 Mt in 2016 and 26.5 Mt in 2015.
During 2017, ASC sold three of its vessels for a total of US$8.3M, resulting in a net loss of US$1.8M. In addition, the company returned two vessels that were previously leased.
Profits for the whole of 2017 jumped an astonishing 142% to US$24.5M. ASC operated 12 vessels during the year, compared with 11 in 2016.
The increase in profits was primarily due to higher volumes and a favourable commodity mix, as well as the absence of US$5M of expenses recorded in 2016 related to an accrual for asbestos-related litigation, and costs associated with the scheduled return of the leased vessel.