A new nonprofit wants to transform Detroit’s logistics assets into an inland port linked by rail to the deepwater facility in Halifax, Nova Scotia, to take advantage of the newest generation of massive cargo ships.
Organizers of the Great Lakes Global Freight Gateway say Halifax is one of just two ports on the East Coast — the other is Newport, Va. — that can handle the “Ultra Post-Panamax” container ships that will ply the seas by 2014.
The group believes it can convince logistics providers, maritime operators and manufacturers that it’s cheaper and faster to ship goods to the Midwest through the Detroit-Halifax link.
“In the end, they all want the lowest price,” said Michael Belzer, an economics professor at Wayne State University and CEO of Great Lakes Global Freight Gateway. “Detroit has never sold itself as an inland port before. It has all the assets.”
Goods would arrive by mega-freighter in Halifax and then be shipped the 1,300 miles to Detroit via Canadian National Railway Co. trains (and CN’s tunnel in Port Huron). From there, they would be offloaded for truck shipping locally and to the Midwest.
The process would be reversed for Michigan goods shipping out.
The project’s selling point is the claim that moving containers between Detroit and Halifax, rather than through other ports, can reduce shipping costs by $250 to $930 per container, and shipping time can be cut by between three days and two weeks, depending on point of origin, said Belzer, whose group will create a business plan for the effort and recruit management to implement it.
Trade industry sources were estimating shipping costs to the U.S. East Coast earlier this year at $3,240 per 40-foot container.
Halifax is the first North American port on Atlantic Ocean trade routes from Europe and India, he said. The port has been investing in infrastructure to boost its cargo handling capacity, and CN has been marketing its operations there, as well.
The effort also seeks to increase cargo movement through Montreal, which is a busier port than Halifax but unable to handle larger ships.
The freight initiative’s goal is to create $11 billion in new economic activity for this region, along with 210,000 new jobs over the next decade. It wants to boost the number of cargo containers moving into Detroit by rail by 1,000 percent in the next four years.
To reach those numbers, Detroit would need $5 billion in new infrastructure — everything from a new tunnel and bridge across the Detroit River to cranes and train yards — to handle the cargo containers, Belzer said. That cost would be assumed by private industry as it builds expanded intermodal rail yards and other facilities to handle the cargo growth that the nonprofit intends, he said.
“If we had the (cargo) volume, there would be a rational business demand for more infrastructure,” he said.
It also includes the proposed $2.1 billion New International Trade Crossing bridge in Detroit.
Selling Detroit-Halifax abroad
Key to the initiative is going on trade missions to market the inland port concept overseas, Belzer said, and targeting the new big ships.
“You have to get out and meet with customers and figure out what their needs are,” he said. His group would pay to piggyback trade missions with local governments and industries, and its immediate goal is to be funded and have full nonprofit status within a year.
Goods that Belzer envisions being shipped through Detroit include chemicals, auto parts and raw materials for the auto industry, and agricultural products from soybeans (headed to Japan) to cherries (headed to East Asia).
The initiative has applied for federal nonprofit status and funding from the Michigan Economic Development Corp., Belzer said. The organization currently operates with volunteers and private donations, he said.
Other project officers include Thomas Linn, chairman emeritus of Detroit-based Miller, Canfield, Paddock and Stone PLC, and Roger Lane, former manager of contracted labor and services for Detroit Edison Co.
The group held a stakeholders meeting at the Westin Hotel at Detroit Metropolitan Airport on Oct. 11 to introduce the effort. Participating were the Port of Halifax, Wayne County and the Michigan Economic Development Corp., Business Leaders for Michigan, along with logistics companies and trade unions.
Tom Jones, senior vice president and general manager of supply chain solutions at the Novi office of Ryder System Inc., which contracts logistics services to firms such as Van Buren-based Visteon Corp., isn’t familiar with the details of the gateway initiative, but isn’t surprised about it because the region has a heavy emphasis on logistics.
“There is a tremendous amount of logistics talent in the area because of the auto industry. It’s a big deal for automotive, so they’ve really focused on it and done a great job,” he said.
The freight gateway project is allied with the Detroit Regional Chamber‘s TranslinkeD initiative, which is aimed at mapping the transportation, distribution and logistics assets in metro Detroit, northwestern Ohio and southwestern Ontario. TranslinkeD is aimed at growing jobs in those industries and promoting the area as a hub nationally and internationally.
Deep water, big ships
Halifax is one of the few ports that don’t need dredging to accommodate the new mega-cargo ships, which need water 50 feet deep.
The ships are called “Ultra Post Panamax” — Panamax being the industry term for the largest ships that can navigate the Panama Canal.
The biggest cargo ships today are too big for even a forthcoming canal expansion, which calls into question their likelihood of using Halifax as a regular port.
Also, most of the very largest ships are on pure Europe and Asian trade routes and don’t often serve the east coasts of the U.S. and Canada. And many shippers are looking for a blend of local cargo delivery and long-range shipping. Nova Scotia itself is a small market for trade goods; fewer than 1 million people live in the peninsular province.
“On the East Coast, in a lot of the U.S. ports, you have the combination of the ability to service not only the Midwest but also local markets with those containers,” said Christopher Gillis, the suburban Washington, D.C.-based editor of Jacksonville-based American Shipper trade magazine.
He said Halifax has been marketing itself for some time as a port option.
“Halifax has a lot of potential, but it’s probably going to be a big job for them to attract that level of carriers to the port on a regular basis,” he said.
The large container ships typically deliver cargo to several ports because few ports can handle an entire delivery of shipping containers. Cargo trains are usually about two miles in length, and each mile has about 400 shipping containers.
Ships and trains deal in cargo measurements known as TEUs and FEUs — Twenty/Forty Foot Equivalent Units. These refer to the corrugated steel intermodal shipping containers, generally 20 or 40 feet long.
Now, the canal can handle ships carrying up to about 5,000 TEUs, and the expansion will boost its capacity to 13,000-TEU ships.
A Halifax port spokeswoman, who declined to give her name, said the harbor now handles ships carrying 5,000-7,500 TEUs.
The canal is too narrow to handle the Triple-E class of the
Maersk E Series of mega-container ships from Denmark’s A. P. Moller-Maersk Group — the sort of ships the Great Lakes Global Freight Gateway says it wants but that sail mainly between Asia and Europe.
Moller-Maersk earlier this year awarded South Korea’s Daewoo Shipbuilding & Marine Engineering Co. Ltd. a $1.9 billion contract to build 20 of the Triple-E class vessels with delivery starting in 2014, according to shipping industry reports. The 1,300-foot ships will be able to carry 18,000 TEUs and are designed to be more economical for shippers by using a combination of freight volume and fuel-efficient slower speeds.
Moller-Maersk’s current eight E Series ships carry 14,770 TEUs and are also too large to navigate the canal. Its smaller ships service Halifax.
An 18,000-TEU ship can require up to 40 trains. CN runs one train a day now from Halifax, said Mark Hallman, the railroad’s director of communications and public affairs. He said cargo volume details about that train are proprietary.
The $5.3 billion Panama Canal expansion adds a third set of locks that will more than double its cargo container vessel-size capacity when complete in 2014. The expansion, approved by Panamanian voters in 2006, will permit vessels of with a cargo capacity up to 13,000 TEUs.
The need to expand the canal has been largely driven by U.S. imports from China.
The logistics industry is split on whether the new locks will siphon much cargo from West Coast ports. And how much would bypass other ports to reach Halifax is unknown.
“There’s an ongoing debate about whether Asian traffic will switch to the East Coast, with some experts believing there could be some shift in traffic away from the West Coast,” said John Taylor, an associate professor of supply chain management and director of supply chain programs at Wayne State. “Halifax may gain some traffic, but they could lose some traffic, as well.”
Also, the trans-Atlantic is not as big a market as the trans-Pacific when it comes to shipping, American Shipper‘s Gillis said.
Still, other East Coast ports are in a race to lure the new ships, according to trade industry reports.
The Port of New York-New Jersey is spending $2.3 billion to dredge its harbor so that it can handle them.
The Port of Baltimore is spending $105 million on a massive new terminal to handle the mega-freighters, and the Port of Savannah is seeking a similar amount to deepen its harbor.
Florida ports in Miami, Fort Lauderdale and Jacksonville have begun, or plan to begin, similar dredging projects.
Halifax handled 2.7 million cargo containers in 2009, according to the most recent statistics available from the Alexandria, Va.-based American Association of Port Authorities, a trade group of 160 port authorities in North America.
That amount ranked Halifax third among Canadian ports after Vancouver (19.2 million) and Montreal (11.2 million).
Thirteen U.S. ports handle more containers, led by Long Beach at 30.1 million, according to the AAPA. Halifax was closest in container traffic to New Orleans, which dealt with 2.8 million.
Halifax has two container terminals, one of which has a pair of cranes designed for Super/Ultra Post-Panamax containers, and it services 11 shipping lines. CN’s facility at the port handles 150 TEUs daily.
Calgary-based Canadian Pacific Railway Ltd. runs cargo between Montreal and Detroit via the 100-year-old rail tube below the Detroit River. CP doesn’t link to Halifax, however.
Another issue is the size of the tunnel.
The increasingly used 9-foot-6-inch shipping containers are known as “high-cube” and are newer than 8-foot-6-inch freight boxes. The units of both heights are typically 20 to 40 feet long and are used to ship products and raw materials over long distances via ship and rail.
The old rail tunnel can’t handle two high-cube containers stacked.
An investment partnership called the Continental Rail Gateway is trying to build a $400 million new tunnel near the old one. The coalition is in the environmental assessment process required to allow it to construct a larger rail tunnel that could accommodate double-stacked 9-foot-6-inch cargo containers and some new generations of multilevel rail cars used by shippers and auto manufacturers.
The primary investors in the tunnel project include Canadian Pacific, Toronto-based Borealis Infrastructure Management Inc. (the $47 billion investment arm of the Ontario Municipal Employees Retirement System) and the Windsor Port Authority.
The current rail tunnel, along with the land needed for a new tube, is also owned by Borealis and Canadian Pacific. Backers of that effort have said that $21.5 billion of the $137 billion in U.S.-Canadian trade that moved through the Detroit-Windsor corridor in 2008 was via rail, according to the most recent numbers available.
Now, only the $200 million, 6,129-foot-long freight and passenger train tunnel built by Canadian National in 1994 underneath the St. Clair River between Port Huron and Sarnia, Ontario, can handle the largest trains.
The inland port effort also plays off the $445 million Detroit Intermodal Freight Terminal project. CSX, Norfolk Southern, Canadian Pacific and Canadian National are jointly developing the consolidated terminal near Wyoming Avenue and I-94 that is designed to accommodate existing and future freight demands.
The project, launched in 2001, got its federal environmental approval in 2010 and is now in the design phase.