Great Lakes-Seaway News Posts New Readership Records

Readers of Great Lakes-Seaway News pushed the nearly five year-old to new readership records in May, smashing previous high-water marks for unique readers, page-reads and overall website hits.

The total number of hits on the publication's webiste in May bested the previous record, set just two months ago in March, by 13.1 percent.  Similarly, the number of unique readers of Great Lakes-Seaway News for May eclipsed the previous record, set in October of 2011 by more than 14.1 percent.

What was astonishing about the May readership statistics was the number of page-reads.  Total monthly page-reads in May destroyed the previous record, set in July of 2011 by a whopping 102 percent. 

We at Great Lakes-Seaway News are grateful to our readers and advertising partners for the trust you have placed in us and for the success which you have made possible.      

Wheat, Weather and the Winds of Change

In recent weeks expectations of hot, dry weather in a number of the world’s major wheat exporting regions have set global grain markets on edge.  Some grain traders fear that a relatively small crop, such as the one that was harvested in 2010 may roil trade patterns and government policies this year.  

According to the U.S. Department of Agriculture (USDA) Foreign Agricultural Service (FAS) estimate released earlier this month, a global wheat trade measuring 145.1 million metric tons (mmt) will account for 21 percent of this year’s wheat consumption for the planet. 

Since the 2000/01 crop year, annual international wheat trade has ranged between 17.4 and 22.4 percent of overall wheat consumption.

According to the FAS report, more than 90 percent of the world’s wheat production comes from a relatively modest number of wheat growing regions of the globe.  The largest supply region is North America at 44.8 million metric tons (mmt), (30.8 percent of the total, with the U.S. at 27.5 mmt and Canada at 17.3 mmt).  The Black Sea region is the second largest supply region at 35.5 mmt, (24.5 percent of the total, with Russia at 21.0 mmt, Kazakhstan at 9.5 mmt and Ukraine at 5.0 mmt).  Australia is the third largest region at 21.5 mmt, (14.8 percent of the total). The European Union is fourth at 16.5 mmt, (11.4 percent of the total)  Argentina is fifth at 10.5 mmt, (7.2 percent), and Turkey sixth at 4.0 mmt, (2.8 percent).

Forecasts for an extremely hot, dry summer in the U.S. southern plains states have raised concerns about the hard red winter wheat crop that is grown in that area.  While normal weather is predicted for the rest of the North American continent’s wheat growing areas, anticipation of rising prices may incite some farmers to hold back their crops for better returns in the future.

The Black Sea region is also facing some dire weather conditions that either have had or may have an inpact on winter and spring wheat crops.  Grain traders still have in their collective recent memory drought conjditions and devastating wildfires in Russia and Ukraine that forced exports controls that disrupted markets in the 2010/11 crop year.  Grain industry analysts are already reducing their estimates of Russian production and exports for the new crop year. 

Total global wheat end-of-crop-year supplies are projected to be 197.0 mmt, slightly less than the 200.1 mmt level of two years ago, before the Black Sea drought.  Despite all the concerns about adequate supplies in 2010/11, end of year stocks fell only 3.4 mmt to 196.7 mmt. 

Earlier this month, the FAS projected that global stocks of wheat on June 30, 2013 will be 188.1 mmt, down 8.9 mmt from this year.  This includes a forecast for a global wheat production decline of 17.0 mmt in 2012/13 to 677.6 mmt, with U.S. production up 6.7 mmt and Canada up 1.7 mmt. 

FAS forecasts that the other major exporters will see production go down. Russian production is expected to decline by 0.3 mmt, Ukraine by 8.9 mmt, Kazakhstan by 7.7 mmt, the EU by 5.4 mmt, Australia by 3.5 mmt, Argentina by 2.4 mmt and Turkey by 1.3 mmt.  

While demand for low quality wheat for animal feed may be off slightly this year, demand for high quality wheat products remains high.  The world’s leading wheat importer for the 2011/12 marketing year is Egypt at 10.5 mmt, (56 percent of consumption).  The EU-27 countries are the second largest importer at 7.5 mmt for 2011/12, (6 percent of consumption).  EU wheat buyers tend to focus on high quality wheat delivered to various country locations for bread and pasta making.  The third largest importer is Brazil at 7.0 mmt (63 percent of consumption).  Indonesia imports 6.7 mmt, (100 percent of consumption); Japan 6.4 mmt, (95 percent of consumption); Algeria 6.1 mmt, (68 percent of consumption); South Korea 5.4 mmt, (100 percent of consumption); Mexico 4.8 mmt, (64 percent of consumption); and Nigeria 3.9 mmt, (100 percent of consumption). 

The importance of both the supply of wheat and its accessibility in terms of price can be important not just in an economic sense but also in a political context. Most foreign policy analysts now agree with an assessment published in the February 24, 2011 edition of Great Lakes-Seaway News highlighting the importance of wheat prices and supply in the political uprisings in the Middle East now known as the “Arab Spring”.  Grain traders and political leaders would be wise to exercise caution in a world where wheat supplies fluctuate.

Port of Monroe, Michigan Seeks Port Director

The Monroe Port Commission is now accepting resumes of experienced transportation professionals to fill the full-time position of Port Director at the Port of Monroe, in Monroe, Michigan.

The position will provide a challenging opportunity for an aggressive professional to manage, develop and execute strategic action plans for the Seaport of Monroe, Monroe-Custer Airport and the Industrial Properties operated under the oversight jurisdiction of the Monroe Port Commission. 

Located on Lake Erie and bisected by the River Raisin, the Port of Monroe is Michigan’s only Port on Lake Erie. It is located 35 miles south of Detroit, Michigan and 17 miles north of Toledo, OH.

For more information about the Port of Monroe or about the position, please refer to the Port of Monroe website www.portofmonroe.com . 

Qualifications

The ideal candidate will have 3-5 years experience in executive management at a major U.S. commercial seaport (Great Lakes Port would be a plus) with operations, cargo development and marketing responsibilities.   A Bachelor’s Degree is required.  Other qualifications that would enhance a candidate’s appeal would include:  strategic planning, fiscal management, team-oriented management style, grant writing and grant administration experience, public speaking, and media relations skills. The position provides the opportunity for the appointed Director to be a creative port developer, as well as an astute and effective port manager. 

Compensation

The compensation package for the successful candidate will be reflective of industry standards for comparably situated ports and scope of the Director’s responsibilities.  (American Association of Port Authorities Salary data will be utilized).  A employment agreement will be offered along with arrangements and timing for taking the position.  The employee agreement will be reviewed annually with the Director for extension and salary adjustment.   

Contact

Dale H. Brose, Vice-Chair Strategic Business Development, PORT OF MONROE, PO Box 585, Monroe, Michigan 48161-0585; Tele. 734 241-6480;  E-mail: dale.brose@portofmonroe.com

China, Europe, Weak Demand and Growing Supply Hit Dry Bulk Freight Market

The Baltic Exchange's main ocean vessel freight rate index, the Baltic Dry Index (BDI) which follows freight rates for ships carrying dry-bulk cargos, fell again today for a seventh consecutive day.  Most analysts surmise that the most recent round of losses are due to weakness in dry-bulk shipments, over-supply of available ships and market jitters about the economies of China and Europe.       

The BDI reflects the daily freight market prices for capesize, panamax, supramax and handysize dry-bulk ocean vessels, fell another 36 points earlier today, a 3.65 percent from yesterday’s close. Yesterday the dry-bulk freight market suffered a 2.57 percent decline.  The recent fall-off more than erases gains made in April and early May.

The weakening economy of the People’s Republic of China has put Chinese steel producers in a “wait and see” posture regarding inventories of key industry inputs such as iron ore tend to drive dry-bulk freight demand, especially in the capsize sector.  Shipments of iron ore, a raw material for steel, account for around a third of ocean vessel freight volumes carried on the larger capsize vessels.

Growing ship supply, which is currently out-pacing commodity demand, is also putting downward pressure on dry-bulk freight rates. Additionally, the potential ramifications of a financial collapse in Greece and other teetering European economies are adding to market jitters and putting pressure on businesses to keep raw material inventories low in case the global economy weakens further.         

The main composite Baltic Dry Index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry-bulk ocean vessels together, has fallen by slightly more than 43 percent this year.

U.S. Marine Highway Program More Talk Than Action So Far

Its always refreshing when one of our colleagues in the non-maritime electronic press posts a cogent article about the challenges associated with getting policymakers to understand the importance and potential of maritime transportation.  Last week, at Politico.com, Jessica Meyers wrote such a piece about the U.S. Marine Highway Program entitled, "Federal Marine Highways Program Hard to Launch".  We thought the piece was good enough to share with our readers and it follows below:

Mention America’s highways and notice the nods. Talk about its marine highways and watch the blank stares.

A Department of Transportation initiative intended to promote the country’s water routes has failed to make substantial inroads despite a 2007 federal law, escalating highway congestion and a push for greener transport.

These river and coastal corridors, known as marine highways or short-sea shipping, thrive in Europe and exist in a handful of U.S. regions. They’re billed as the future — a cheaper and more fuel-efficient option for an overburdened transportation system.

But marine highways remain more a political talking point than an industry reality.

Trucks and railroads maintain the upper hand on speed. Waterways have less experience carrying container goods than bulk cargo. And companies remain leery of an uncertain market filled with tax hurdles and ship shortages. Without greater demand, the water road concept won’t float.

“It’s a chicken-and-egg type of thing,” said Sean Connaughton, a former DOT maritime administrator who created the department’s America’s Marine Highway Program. “Shippers won’t commit until there’s reliable service, but you can’t have that until shippers commit.”

To do that, the industry needs an almost mythical nexus of federal incentives, public recognition and state support.

Connaughton, now Virginia’s secretary of transportation, told POLITICO that the federal DOT’s marine highway push languished partly because it coincided with the economic downturn. Transportation funding disappeared for paved roads, much less a quiet transportation mode still trying to prove its worth.

“The bottom line,” he said, “is freight doesn’t vote.”

Transportation Secretary Ray LaHood has designated 18 marine highway corridors in recent years and directed more than $110 million toward marine highway projects. The agency backs the Marine Highways Cooperative, a public-private partnership dedicated to developing the country’s 25,000 miles of water routes.

“The Obama administration is committed to investing in innovative marine transportation services along America’s coast and waterways, in order to relieve congestion on our roadways, make our transportation system greener and develop the vast unused capacity on our waterways,” said DOT spokesman Justin Nisly.

Not all Democratic lawmakers agree.

“I personally don’t think it has happened as well as it should,” Rep. Rick Larsen (D-Wash.), ranking member of the House Coast Guard and Maritime Transportation Subcommittee, told POLITICO. “This administration has yet to request any funding goals for a marine transportation system. We still have a ways to go.”

Maritime groups point to the elimination of a so-called double tax as the place to start.

All cargo that comes into the country is subject to a harbor maintenance tax. But shippers have to pay an additional tax if goods are off-loaded in one location and shipped to a second port. When freight moves by land, it doesn’t face this second tax.

“Putting this forward would be an indication of how serious the government is to help the industry into existence,” said C. James Patti, the president of the Maritime Institute for Research and Industrial Development. “It’s a lightning rod.”

Several lawmakers have keyed on the issue. “This system encourages people not to use the water,” Rep. Patrick Tiberi, (R-Ohio), a Ways and Means Committee member, told POLITICO. He has sponsored a bipartisan bill to gut the tax. “It levels the playing field and achieves some balance in the movement of goods,” he said.

Like similar bills in previous sessions, it hasn’t gotten far. The tax issue also delves into transport equality. Trucks already pay higher user fees and railroads are mostly self-financed.

Even if the bill were to pass, the industry would need enough ships to carry the goods. A longtime law known as the Jones Act allows only American built and manned ships to operate between U.S. ports.

The problem: American companies don’t want to build container vessels for an invisible buyer.

“When financing a vessel, it’s great to have an established market to point to,” said Paul Bea, a maritime adviser who specializes in marine highways. Back to the Catch-22.

American Feeder Lines just ended its nine-month container ship service along the Northeast largely because of a shortage of suitable vessels.

“The markets aren’t there,” said Chris Coakley, the vice president of governmental affairs for Saltchuk Resources, a company that started with marine transport and now manages a variety of trade operations. “There’s not a retail connection to the maritime industry.”

Waterways are a bit of a public relations nightmare. UPS stops at the front door. Rail toots by towns. Container ships don’t pop up on the drive to work.

Maritime advocates still see cause for optimism. The Navy is contemplating shared use of vessels, which would help both commercial and defense costs. The transportation bill currently under negotiation includes maritime provisions for the first time. And the upcoming expansion of the Panama Canal could promote more waterway opportunities.

Some states see an opening.

Virginia offers shippers tax credits for moving containers from highways to water and rail routes. The state has set up a barge service to slough off traffic from a truck-heavy interstate, provided funds to connect rail and water service along the eastern shore and established a top-level office of intermodal planning.

Alaska has created a ferry service that stretches as far south as Washington state. And California has planned a water corridor between Stockton and Oakland, partly with federal backing.

But until that mentality gains broader acceptance, marine highways have limited potential.

“When the Kmarts and Costcos get together and say we have to find a better way to move this cargo, we can’t find drivers for these trucks and the highway tolls are becoming excessive, that’s when the two come together,” said James Henry, the chairman and president of the Transportation Institute. “When there is sufficient cargo to support a marine highway operation, that’s when it will happen.”

The industry has been waiting for decades.