U.S. Great Lakes Ports Concerned About Commercialization


By MarEx 2018-02-15 18:24:15

The American Great Lakes Ports Association (AGLPA) has issued a statement regarding a proposal to commercialize the seaway. 

On February 12, the U.S. Department of Transportation released its proposed budget for Fiscal Year 2019.  While the budget primarily focuses on program funding, it also includes a number of policy decisions.  Among those is a statement announcing that the Department will study commercialization of the U.S. portions of the Seaway, and notes that Canada has already commercialized its portion of the Seaway. The text reads:
"Explore Options for Commercializing the Saint Lawrence Seaway Development Corporation (SLSDC): In 1998, Canada commercialized the management and operations of the Canadian portion of the St. Lawrence Seaway on behalf of its federal government. The Department is examining the feasibility of adopting a similar model for the U.S. portion of the Seaway."

The study effort will be managed by the St. Lawrence Seaway Development Corporation (SLSDC) and will begin immediately utilizing existing funds, so the study is not dependent on the FY2019 budget being approved.
While there is no technical definition of what "commercialization" means, if it follows Canada's example, it means turning operation and maintenance of the facility over to a private party, says AGLPA. In Canada's example, that private party is the St. Lawrence Seaway Management Corporation (SLSMC), a not-for-profit corporation made up of system users. However, a private party could also be a large engineering firm, or other infrastructure management company.

AGLPA says commercialization can be attractive in that it frees the managing entity of government red tape and allows it to operate in a more efficient, business-like manner. “The down-side to commercialization of the U.S. Seaway is that it could bring back tolls - and that's bad.”
After the Seaway's completion in 1959, both Canada and the U.S. charged vessel tolls on the system. U.S. ports lobbied Congress for many years to eliminate tolls, arguing that they disadvantaged the competitive position of our ports relative to coastal ports and alternative modes of transportation. Congressman Jim Oberstar (D-MN) would often note that vessels calling on the Port of Baltimore don't have to pay a toll, why would a vessel calling on the Port of Duluth be so disadvantaged?  

The Water Resources Development Act of 1986 took the first step toward elimination of U.S. Seaway tolls. The legislation funded the SLSDC out of the Harbor Maintenance Trust Fund and provided for the rebate of U.S. tolls. Several years later (in 1994), Congress eliminated the tolls altogether.
“The current operation and maintenance budget of the SLSDC is $19.1 million,” says AGLPA. “Presumably, under a commercialization scheme, this cost would be transferred to system users. Doing so would erode the competitive position of the navigation system.
“Commercialization was attractive in Canada because the Canadian Seaway was being managed inefficiently. Private management promised an opportunity to control costs and tolls. In the case of the U.S. Seaway, users currently pay no toll. Thus, efficiencies have no value to users.”
AGLPA believes all Seaway system stakeholders should engage in the upcoming study process and share strong concerns regarding "this threatening proposal."

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.