Slowing economy has some ships tying up early for winter

It was still October when news came that the 730-foot long ship Edward L. Ryerson would be tying up for winter. That was with more than two months left before ice closes lake shipping for the season.

Since then, more ships have joined the Ryerson, tied up at docks including those in Superior's Frazier shipyards. Dozens more are idled in other Great Lakes harbors.

It was a surprising turnaround to a promising shipping season, according to Adolf Ojard, who directs the Duluth Seaway Port Authority.

"This year started out very strong," Ojard said. "We expected to see record coal, and we still may, as well as record iron ore. These are near-term records on iron ore that I'm talking about.

"All of a sudden, October started to hit and by November, tonnage was falling off drastically," Ojard continued. "Now we're into early layup, so we're not going to have anywhere near the season that we had originally anticipated."

October is when the economy took a drastic turn for the worse, pushing down the Dow Jones industrials, the steel industry and the region's taconite mines with it. A harbor feels it when cargo stops moving. There's money made for every ton of cargo moved. It creates jobs for railroad and dock workers, the people who sell ship provisions like food and fuel, and others, like ship inspectors.

James Weakley is president of the Lake Carriers Association, whose members own the cargo ships that ply the Great Lakes. Weakley said two of the lakes' three primary bulk cargoes have been hard hit by the economy -- limestone, which is used in construction, and taconite for the steel industry.

"Towards the end of the year, the bottom fell out quicker than certainly I anticipated, so we had ships laying up early in the season," Weakley said. "And more of them laying up than probably I've seen since the early '80s."

The first ships to tie up were the least efficient, including older and smaller ships that can't compete with the efficiency of the bigger vessels.

"The smaller the boat, the less efficient the carrier, the more likely it is to lay up earlier in the season. Our thousand-footers, our largest boats, will be out towards the end," Weakley said. "We still have quite a bit of coal to move out of the Duluth-Superior harbor to the lower lakes. So, we'll still have boats that will be out right until the locks close on the 15th of January, and hopefully some of those ships will be out when the locks open up again."

Now, Weakley wonders how the coming season might shape up. He describes shipping as a lagging indicator that won't pick up until the industry does.

"The last report I heard was 20 of the 29 blast furnaces in North America are currently idled, so we'll have to see how that plays out and how our business can get back," he said.

Eleven ships are scheduled to winter in Duluth and Superior. That's not a bad thing, according to port director Ojard. Each ship will generate $500,000 or more in local business. There's a small industry maintaining the ships for winter.

"There's a lot of work that goes on during the winter months," Ojard said. "This is two months of catchup on maintenance. There's main engine overhauls. There's a lot of inspection that goes on."

And there's always reason to be hopeful. While the next shipping season may start off slowly, Ojard thinks a federal program to build new infrastructure could quickly help shipping.

"If we have a stimulus package, we're going to see a lot of limestone being moved for aggregate business, for highway construction, etc.," Ojard said. "And if there's any recovery in steel capacity that, again, is tied to the stimulus package, we could see a rebound in the iron ore production by the second quarter or start of the third quarter."

It may not be a bad year to tie up early for another reason -- winter has set in with a vengeance. There's already 18 inches of ice in the Duluth harbor. That puts harbor tugs to work pushing ships through the ice, but it drives up the cost to ship owners.

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