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On The Waterfront
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On The Waterfront

The Port of Duluth-Superior saw increased tonnage last year. But the real story might be its industrial base.

It’s easy for visitors, and even many Duluth residents, to overlook the Port of Duluth-Superior, even with its prominence on the waterfront as large ships move with stately grace through the harbor. The picturesque downtown area focused on Canal Park is what tourists in particular look at as they descend into the city from Spirit Mountain on Interstate 35.

But there is “hardly anyplace you can drive in this city without seeing a working harbor,” notes Adele Yorde, public relations manager for the Duluth Seaway Port Authority, which oversees management of the port. It’s not just the ships. South of downtown are the massive ore docks, with mountains of iron ore pellets and limestone nearby, along with older industrial buildings and innumerable ribbons of rail lines.

The port is a vivid reminder that there’s still a part of post-Rust Belt Duluth that remains an industrial city.

The industrial sector has its own vibrancy, despite the brutal winter of 2013-14. At the port, it was rough at both ends. In early 2014, Lake Superior iced over, which slowed the shipping season’s opening to a glacial crawl. Icebreakers struggled to open up a lane when the shipping season opened in March. The delayed ships forced U.S. Steel to idle its huge Gary, Ind., production for about a week in early April due to a lack of ore.

Winter also arrived early. “Right after Thanksgiving into December, we experienced some rather severe cold, and that caused a good amount of product to be left on the docks,” says Vanta Coda, the Port Authority’s executive director.

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Despite that disruption, the Duluth-Superior port experienced a small increase in tonnage in 2013 (see chart.) Coda expects more growth this year, thanks largely to demand for iron ore.

The ore that ships from Duluth-Superior goes primarily to Midwestern steel mills, whose biggest customers are automakers. With projections for the auto industry to produce a million more vehicles in 2014, “the expectation is for a healthy demand in the steel market, which is the main driver for the lakes traffic,” Coda says.

Coda notes that all the ice does have a silver lining. “The water levels [on the Great Lakes] have increased,” he says. “That is going to allow more lading to go in the ships.” In other words, deeper lakes mean the ships can carry more cargo throughout the season than they’ve been able to during the past few low-water years.

The overall tonnage for northeastern Minnesota ports is still below the boom years of the middle of the last decade, when the ports saw shipments of about 68 million tons. In 2007, tonnage that flowed through the Duluth-Superior port was 47.9 million, followed by Two Harbors with 13.7 million, the port at Silver Bay with 5.5 million and Taconite Harbor at under 1 million. The numbers in the past few years have been a big improvement from 2009, when the area’s tonnage plummeted to 41.5 million.

Ore, grain and coal have long been the port’s chief cargo, but they’re far from the whole story. Among the other goods shipped into Duluth-Superior last year were road salt and kaolin clay for producing glossy paper in the regional mills. And hardly a season goes by without something really big coming in. In 2013, 16 300-ton transformers arrived from Antwerp for a transmission line in Alberta. Once off the ship, they went to Canada via specialized 16-axle rail cars.

There also has been talk over the past couple of years of transporting North Dakota and Canadian petroleum by ship from the Superior side of the port, where there’s an oil refinery. This is probably years away, however—if it ever comes to pass. Coda doesn’t believe it makes business sense to ship oil at this point, particularly with two pipelines running through Minnesota to Superior—an expanded Alberta Clipper and proposed Sandpiper—that could handle transport on their own.

Instead, the Port Authority is focusing on expansion projects. This year, it plans to begin upgrading its C and D docks (also called the Garfield pier). This project will include rehabilitating the crumbling dock walls and adding rail and road connections to make C and D completely multi-modal, says Jeff Borling, the Port Authority’s director of industrial/economic development. The upgraded docks will allow heavier cargo to be moved more efficiently.

The C and D docks renovation will open up more port-owned land for industrial development. And the Port Authority thinks that land is in demand. Borling says he regularly gets calls from companies and developers looking for land for building industrial facilities, but such land is all but nonexistent in the city. There’s plenty of acreage at the old U.S. Steel mill site, but that will require millions, if not billions, in remediation. The Port Authority has an option on 123 acres of the site, a purchase that could occur if and when the site is delisted from its current Superfund status.

The Port Authority also owns and manages the Airpark industrial park near Duluth International Airport. One of its longtime tenants is Northstar Aerospace, which manufactures specialized metal components for aviation and aerospace companies nationwide. Northstar Aerospace president and CEO Gary Corradi notes that when his firm was struggling to pay its rent about four years ago, the Port Authority and the company “really became business partners” instead of merely having a landlord-tenant relationship. He emphasizes that the Port Authority cared about his company’s success, and he says business is now substantially better for Northern Aerospace.

The Airpark is just about full. The port’s harbor-side land is all spoken for, where tenants include Fraser Shipyards (ship maintenance), Holcim (a Switzerland-based cement manufacturer) and Alltec HiLine (a manufacturer of truck-mounted equipment for utilities and other users). There is some nearby land open.

Industrial development might not be “sexy,” as Borling notes. But the port continues to quietly thrive, and the Port Authority would love to help usher in a broader revival of the city’s manufacturing base.

“We have a great infrastructure transportation system,” Coda says of the Duluth region, citing the water, rails and highways. Ships in the Duluth-Superior port carry goods not only to and from North America; the trade lane includes Europe, too.

With great potential for U.S. manufacturing, it would be marvelous to see more forward-thinking entrepreneurs and investors look to the port region as fertile ground for their innovations.

Gene Rebeck is TCB’s northern Minnesota correspondent.

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