Northeast Ohio needs to look to Cleveland's port
as an unexploited economic access point to the world.
Head north from any point in Northeast Ohio and you'll inevitably meet the
shores of Lake Erie.
To many, the Great Lake is a natural stopping point; the end of the journey. But those with a clear vision for invigorating the regional economy see this freshwater inland sea as the business route too often left untraveled.
Idealists foresee an influx of international trade into the regional economy if the St. Lawrence Seaway receives its proposed revamping to handle super-cargo ships. They envision increases in tourism and a more efficient route for business travel and shipping via a daily ferry passenger service between Cleveland and its neighbor to the north. And they take solace in the fact that, with the rebound of Cleveland's steel industry well under way, 'silent' business traffic that accompanies this industry is increasing.
Steel's Impact
Just consider the steel industry's impact alone on Great Lakes and regional
commerce.
When the steel mills went silent at LTV after declaring bankruptcy last year, it had a direct impact on the Cleveland port because up to 65 percent of the bulk cargo it receives — iron ore and limestone — are the raw materials needed to manufacture steel products. Limestone is also used as a base for highways and in other construction projects. Cement, sand and salt are other main raw materials delivered to the port. About 90 percent of the raw materials unloaded at the port are consumed within a 60-mile radius of Cleveland.
'Through November, we're down 22 percent [of iron ore tonnage] compared to a year ago, and if you turn the clock back to 1997, we're down 50 percent to 60 percent,' says Glen Nekvasil, vice president of corporate communications for the Lake Carriers' Association (LCA) of Cleveland. LCA, a trade group that represents U.S. flag vessel operators, is made up of 12 companies that sail 57 vessels on the Great Lakes. 'In 1997 the port of Cleveland handled 8.5 million tons of iron ore and [in 2002] we might handle 3.3 million [tons].'
Those figures are a far cry from the glory years of Cleveland's steel industry during the early 1970s, when the port handled 20 million tons of iron ore annually.
In addition to the LTV bankruptcy, the economic recession made matters worse as international cargo to Cleveland's port plummeted to just 365,000 tons in 2001, down from a record of 1.15 million tons posted in 1998. In 2002, international cargo increased slightly to 420,000 tons, according to the Cleveland-Cuyahoga Port Authority, which oversees the port's operations. Saltwater vessels deliver general cargo to Cleveland and depart with Cleveland-made steel.
'Great Lakes shipping is really the grease that keeps the economy moving,' says James H.I. Weakley, LCA president. 'So where the economy goes and where the economy of Northeast Ohio goes, so goes the port of Cleveland. I think the economy is going to turn around, and when that happens so will Great Lakes shipping.'
Although there are signs that the U.S. economy is improving, what's equally important for Northeast Ohio is that the local steel industry appears to be getting a new life. The assets of LTV purchased last year by International Steel Group Inc. (ISG) seem to be making positive strides.
For example, in late December ISG and the United Steelworkers of America announced a tentative labor contract; both sides praised it as a groundbreaking pact that would retain high-paying jobs while allowing business flexibility for ISG to be competitive in the global steel industry. In addition, ISG boosted its steel manufacturing capacity by purchasing Acme Steel Co. in Riverdale, Ill.
'This acquisition is another step in our program to enhance productivity at our facilities and to expand our product range, both of which are key to the long-term viability of any steel company,' says Rodney Mott, president and chief executive officer of ISG.
What's more, ISG will move its iron ore transfer station from Lorain to property west of Whiskey Island in late spring or early summer. The land will be used to transfer iron ore from 1,000-foot vessels to smaller 600-foot cargo ships that can better navigate the Cuyahoga River and deliver the iron ore to ISG's riverfront steel mills.
From a competitive standpoint, ISG and other companies that consume raw materials depend on an efficiently run marine transportation system. A Great Lakes cargo ship can move a ton of iron ore from Duluth, Minn., to Cleveland's port — nearly 800 miles — for less than it costs to buy a double cheeseburger, large fries and a soft drink at McDonald's.
'That demonstrates our ability to take advantage of our economies of scale and the advantage of moving cargo through the water,' Weakley says. 'It takes a lot less fuel to move that ton per mile via the marine mode than any other mode. That cost savings is what makes us cost-competitive against the rail mode [the marine industry's chief competitor] and makes us an efficient transporter for commerce.'
Going Global
While the majority of cargo unloaded at the port of Cleveland mainly originates
from raw materials mined from the Great Lakes states, international trade may
become a bigger player.
By 2020, international trade is projected to triple. Much of the foreign products that enter the U.S. are shipped in freight-train-size containers that are unloaded at harbors on the East and West coasts. The containers are loaded on rail cars or trucks for delivery to customers throughout the United States.
Although the coast harbors efficiently load and unload cargo, the problem is that there isn't enough rail and road infrastructure to handle the growth projection even if they began building more highways and railroads today, says Steve Pfeiffer, maritime director for the Cleveland-Cuyahoga County Port Authority. Pfeiffer, a 30-year veteran of the transportation industry, sits on the Marine Transportation System National Advisory Council, which advises U.S. Transportation Secretary Norman Y. Mineta on the conditions and needs of the nation's marine transportation system.
The advisory council needs to look at the ports of the Great Lakes — such as the port of Cleveland — to help meet the projected increases of container cargo ships, Pfeiffer says.
Foreign vessels that cross the Atlantic Ocean access the Great Lakes ports through the St. Lawrence Seaway. Utilizing the ports of the Great Lakes would allow foreign companies to bring products closer to the final marketplaces of the Midwest states and Canada.
Nearly 100 million people, about a third of the combined U.S.-Canadian population, live alongside eight Great Lakes states and the provinces of Ontario and Quebec. What's more, several Great Lakes ports, including Cleveland, are closer to European markets than the East and Gulf coasts, saving shippers considerable time and money.
For example, a ship sailing from Baltimore to Liverpool, England, would log nearly 4,000 miles. A Cleveland-Liverpool journey would be a little more than 3,500 miles.
But utilizing the Great Lakes ports to handle the projected increases of international trade would also create environmental and social advantages.
'Ships come into Cleveland every day; they unload and leave and a lot of people don't even know that it happens,' Pfeiffer says. 'And that's the kind of mode of transportation you want to have working for you because you know when there are more trucks going through your community, and you know when there are more trains moving through your community. It's not going to be a function of just building more roads and more railroads. Besides the cost, it's a social function, and it's an environmental function.'
But for the Cleveland port to handle additional container cargo ships from foreign countries, it would have to build a new facility on lakeside land. That land may become scant as Cleveland Mayor Jane Campbell pushes to develop more of the lakefront into public parks.
Improving the Seaway
If there is not enough lakefront to build a new facility, Pfeiffer says, the
port authority would have to develop an alternative plan. But an even bigger
problem that might impede the growth of international trade for the Great Lakes
ports is the St. Lawrence Seaway itself.
The St. Lawrence Seaway, which stretches from Cape Vincent in upstate New York (near Watertown), to the northeastern tip of Quebec, was completed in 1959. Since then, vessel sizes have dramatically increased.
Today only 13 percent of the world's merchant fleet, and just 5 percent of the world's container fleet, can be accommodated by the seaway's locks and channels, according to a study completed last June by the U.S. Army Corps of Engineers.
The Corps of Engineers' study, titled the 'Great Lakes Navigation System Review,' identified the problems, opportunities and potential improvements of the Great Lakes-St. Lawrence Seaway navigation system. Proposed improvements include deepening Great Lakes connecting channels, replacing St. Lawrence Seaway locks to make them larger and deeper, and deepening individual ports and harbors throughout the Great Lakes including Cleveland, Ashtabula, Fairport Harbor, Toledo and Conneaut.
These proposals, however, are being opposed by dozens of environmental groups, including the Washington, D.C.-based National Wildlife Federation (NWF), the nation's largest member-supported conservation group.
'This massive construction project — which could cost taxpayers up to $15 billion — would require the dredging of hundreds of millions of cubic yards of sediment and, in some cases, the removal of portions of islands in order to widen channels,' according to an official NWF statement on the topic. 'It could have devastating impact on public health, water quality and the fish and wildlife that rely on the Great Lakes ecosystem.'
Nevertheless, the Corps of Engineers' study was only conducted to determine if there is a 'federal interest' in providing commercial navigation improvements to the Great Lakes-St. Lawrence Seaway system. That federal interest would be ultimately determined by the U.S. Congress, which appropriates the funds for such projects.
While environmental groups are pressuring Congress to sink the waterway project, many powerful interests are promoting the economic merits of renovating the Great Lakes-St. Lawrence Seaway system. The system currently generates $2 billion and supports some 50,000 jobs in the U.S. economy, according to the Corps of Engineers' study. For the Canadian economy, the system generates $3 billion and supports up to 17,000 jobs.
Considering Ferries
Another project that could create direct economic benefits for Ohio's Northcoast and Ontario is the development of passenger, auto and freight ferry service.
In 1999, the Cleveland-Cuyahoga County Port Authority commissioned a study to determine the feasibility of establishing a ferry business. The study's bottom line says that a ferry service is not only feasible, but it could be profitable.
'If these Great Lakes were anywhere else in the world, I guarantee there would be ferries running across it,' Pfeiffer says. 'When you look at anyplace in the world that has a water system like we have here in the Great Lakes, they have ferries going across it. Go to England, go up to Sweden, Norway and Finland, and they've got ferries running everywhere. In Cleveland we don't even have one.'
But that wasn't always the case. At the end of World War I, the Theodore Roosevelt, a propeller ship, was put into service between Cleveland and Port Stanley, just south of London, Ontario. The ship routinely carried crowds of up to 1,000 to attend dances and baseball games in Port Stanley.
In the 1930s, the fare to Cleveland from Port Stanley was $3. On some weekends, admission to a Cleveland Indians game was included in the price. The ferry service, however, was discontinued in 1939.
The port authority's feasibility study determined the market for passengers between London and Cleveland could be as high as 400,000 a year. The study also indicates that, based on conservative market penetration rates, there are about 55,000 motor carrier, or cargo, transits that would be available for a Cleveland-Port Stanley ferry service.
Among other businesses, Ford Motor Co. might capitalize on such a ferry service. For example, Ford assembles full-sized vehicles in London. The engines for those vehicles are produced at Brook Park. Trucks transport the engines from Brook Park to London and the assembled vehicles are transported from London back to the United States. An efficiently run ferry service could save considerable time and money in transportation costs for Ford.
Indeed, Canada is Ohio's largest international customer. In 2001, Ohio shipped $13.8 billion in products to Canada, which accounted for 51 percent of the state's export total. By comparison, U.S. exports to Canada were 22 percent of the national total.
'The ferry service makes sense,' Pfeiffer says. 'It will happen and we are going to work toward that.'
The Cleveland-Cuyahoga County Port Authority has secured federal funds to update the 1999 feasibility study.
'The last study looked at different scenarios, but we want to go a little
bit further with the information so that we can take this document and plug
it into a business plan, identify who are the potential customers, what will
be the real volumes, what kind of schedule would have to run and what kind of
vessels would be needed,' Pfeiffer says. 'We need to refine the study and take
that information to companies who run ferry systems in other parts of the world.'