Great Lakes' shipping's 'untapped potential': Duluth-Superior port sees opportunity in crisis
With its newly announced ability to accept maritime cargo containers, sources wonder if the Great Lakes might offer future relief in the face of supply chain pressures.
The Duluth Seaway Port Authority announced this week it would begin accepting maritime cargo containers at its Clure Public Marine Terminal for the first time.
Until now, the Port Authority and its multimodal service with Lake Superior Warehousing, Duluth Cargo Connect, could only handle cargo containers moving through the terminal on rail and truck, not off ships.
“Being able to receive containers by ship makes us only the second U.S. Great Lakes port able to do so, and the only one west of Cleveland,” Port Authority Executive Director Deb DeLuca said.
DeLuca said the Port Authority had to meet regulatory requirements, beginning the process in the middle of 2020, while also building out aspects of its facilities in order to gain the ability to accept cargo containers.
The news this week, exclusive to the News Tribune, comes at a time when cargo containers loaded aboard massive ships are bottlenecked in places around the globe, particularly at ports along the West Coast of the United States.
“There’s untapped potential to use this marine highway in a way that would benefit North America,” DeLuca said, referring to the Great Lakes-St. Lawrence Seaway System, which connects Duluth to the rest of the world.
In September, a team of University of Wisconsin-Superior Transportation and Logistics Management students toured the port at Long Beach, California, during an annual multimodal conference.
They saw the backlog of ships up close. Senior Kayleigh Seagraves recalled this week how there were so many vessels that some were circling in deeper water, unable to anchor because there were so many backed-up ships already at anchorage depth.
“It was so full of ships,” Seagraves said. “You could see through some haze that there were just ships in every direction you looked.”
Fast forward one month, and container ships remain stacked outside that port. President Joe Biden this week called for crews to work around the clock to move along a backed-up supply chain.
Richard Stewart, professor and the director of UWS’ renowned Transportation and Logistics Management program, explained the supply chain bottleneck, saying that viscerally, it reminded him of supply bottlenecks during the Vietnam War, when he was a merchant marine.
“I only make the comment because any time you’re trying to move massive amounts of goods not designed to take that quantity, you’re going to get bottlenecks,” he said.
But practically, today's supply chain crisis is a larger, international problem — one that’s raising the price of numerous internationally traded goods. The pace of inflation over the past year rose to a 30-year high in September of 5.4% compared to the same month a year ago.
Stewart and DeLuca both explained the current supply chain phenomenon as one being rooted in the prevailing model of companies holding lean inventories and operating “just-in-time” manufacturing processes. Doing it that way, they say, creates cost savings and financial rewards.
“But the current crisis represents the downside,” DeLuca said, “and that’s the potential for catastrophic failure.”
Stewart further explained that lean supply chains became discombobulated after spring 2020 and the pandemic's first wave domestically. Early in the pandemic, consumer spending waned and demand forecasters adjusted their manufacturing outputs. Months into the pandemic, consumer behavior changed.
“What appeared to happen to the economy in the United States, for a variety of reasons, was American citizens decided to buy more,” Stewart said, sending everyone who’d backed off their forecasts into a frenzy to ramp up production and distribution.
Raw materials for manufacturing and finished goods for shelves, transit the same supply arteries, and every movement affects another. Simply restarting the supply chain isn't possible. Rather than a nice, smooth flow, "you get this ripple; we call it the bullwhip effect."
“I tell my students it’s like watching a locomotive take off,” Stewart said. “The locomotive moves and the cars go 'bing, bing, bing' all the way through the train before the final car starts to move.”
For Seagraves and the other transportation and logistics students, the real-time supply chain emergency is ripe for study.
“Even before the pandemic, our classes focused on current events,” Seagraves said, describing how the port of Long Beach suffered for not having chassis to keep up with unloading.
“What’s happening is you don’t have enough chassis to put containers on to take them out,” she said. “You can’t unload until you have capacity to take them out.”
But if global supply chains are suffering for having gone through the pandemic, why are the Great Lakes enjoying a bounce back to pre-pandemic levels? And what can a local container service do to alleviate pressures elsewhere?
The sources fielded those questions, beginning with Stewart explaining that the domestic mining and production processes used to make steel have benefitted in 2021 from the Great Lakes’ comparatively short supply chain that goes from the Iron Range through ports on Lake Superior to mills on the lower Great Lakes.
“One can assume we have a competitive advantage because of a much shorter supply chain in feeding U.S. markets,” he said. “If you’re a major company that needs rolled steel to make washing machines, can you really wait months (internationally)? I can’t.”
The Great Lakes saw shipments of iron ore from U.S. ports total 5.4 million tons in September, an increase of 38.8% compared to the same month during the depressed pandemic season one year ago. In the Twin Ports, overall tonnage of 22.7 million tons through September is 37% ahead of last season’s pace, and 3.4% ahead of the five-season average.
Stimulus packages, too, have created a wave of road and building construction, making limestone another key cargo moving efficiently on the lakes. Steel, coal and petcoke are also leaving the country from the Great Lakes, helping prop up St. Lawrence Seaway figures as internationally there are coal shortages.
DeLuca said the Port Authority has been keeping an eye on a computer chip shortage, concerned it may result in automobile manufacturers ordering less steel and impacting the taconite iron ore trade locally.
“There’s been no slowing in the pace of iron ore shipments,” she said.
The Port Authority is also keeping a close eye on a truck driver shortage.
“The truck driver shortage in our area is very real,” DeLuca said. “It is tight, and I know it’s a struggle for our regional trucking companies, but they’re great at delivering.”
On the topic of the port of Duluth-Superior taking in container cargoes, DeLuca said the port “is capable of being a relief valve for supply chain pressure.”
“It could play a strong role in providing North America with a stronger, more diverse and resilient supply chain,” she said.
But the Great Lakes won’t be able to handle the massive “Panamax” containerships, so named for their ability to transit the Panama Canal. Instead, the familiar foreign vessels that transport grains, project cargoes, and windmill components to and from the local port will be the ones involved in carrying any containers in or out of the Twin Ports.
And because the Port Authority couldn’t advertise itself as a maritime cargo container port until this month, it’ll take time to present the Clure terminal as a viable option for movers of container-shipped goods in the Midwest.
“We’re looking into how that will fit into the supply chain,” DeLuca said. “It’s very exciting. We're efficient, we're uncongested, and we offer direct access to the Midwest and North American heartland."