Issue 57
Prairie Grains





Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, Montana Grain Growers Association and South Dakota Wheat, Inc.

Copyright Prairie Grains Magazine
January 2004

A Gateway for Grain:

Profile of the Duluth-Superior Port, Great Lakes-St. Lawrence Seaway

By Tracy Sayler

The amount of export grain that moves through the Port of Duluth-Superior is limited compared to export grain volume out of the Gulf of Mexico and the Pacific Northwest. Gulf ports handle almost half of total U.S. wheat exports, and Pacific ports nearly that much. Wheat shipments via the Great Lakes and St. Lawrence Seaway comprise less than 10% of the total.

Still, the Port of D-S is the largest of the Great Lakes, and handles more grain than any of the other 15 major ports within the system.  Further, it is a major hub for terminal elevator activity, including grain that moves in and out by truck and by rail to markets throughout the U.S. and Canada. 

There are three terminal elevators on the Duluth side of the Port (General Mills Elevator A, Cargill, AGP) and three on the Superior side (General Mills Elevator S, Cenex Harvest States, Peavey Connors Point). Altogether, the six facilities have 55 million bushels of licensed wheat silo capacity.

The Port of D-S is the top ranking Great Lakes port in total cargo volume, and moves more iron ore than any other U.S. port.  The three major cargoes that move out of the Duluth-Superior Port are ore (about 40% of the total), coal (40%), and grain (10%).

An economic analysis conducted in 2001 indicated that the Port of D-S has an economic impact of $200 million annually, and directly supports 2,000 jobs.  The Port averages about 40 million metric tons of cargo each year in a navigation season that usually begins in late March and continues until sometime in December for ocean vessels, and about mid-January for Great Lakes traffic.

Domestic and international trade in and out of the harbor is fostered by the Duluth Seaway Port Authority, an independent public agency created by the Minnesota Legislature in 1955. Revenue is generated through land leases, operating fees, economic development investments and related financing activities. The State of Minnesota, St. Louis County and the City of Duluth also provide some financial assistance. The Port Authority is governed by a seven-member Board of Commissioners: Two appointed by the Governor of Minnesota, two by the county, and three by the Duluth City Council.

You can find information about the Port on its web site,, including tonnage statistics.  Click on the link “News and Numbers.” Under tonnage statistics, you’ll find cargo stats that go all the way back to the 1870s. Reviewing the historical information, it’s interesting to note that grain shipments out of the Port peaked over nine million metric tons (about 330 million bushels) twice, in 1973 and 1978.  Soviet Union grain purchases may have influenced shipments in both cases.

Bulk grain shipments out of the Port were 3.3 million tons in 2002.  Grain export traffic out of the Port has been soft in recent years, for a number of reasons, according to Ron Johnson, the Duluth Seaway Port Authority’s trade development director.  Those factors include a weaker U.S. export market to destinations out of the Atlantic, a weak U.S. dollar in recent years, and increased freight rates. Steel tariffs have also been a discouraging factor (see related sidebars on freight rates and steel tariffs).

Spring wheat, durum, and soybeans usually make up the bulk of grains shipped out of Duluth, says Johnson, although there are occasional shipments of sugarbeet pellets, flax, malting barley, sunflower, and field peas.The Minneapolis Grain Exchange keeps track of grain shipments out of Duluth on its web site, .  Click on the link “Market Information,” then “Monthly Reports.”  Under “Elevator Volume,” you’ll find grain volume handled by Duluth/Superior elevators, as well as commodities in and out by kind and by mode of transportation.  “Stocks Reports” tracks wheat stocks at Duluth-Superior, Minneapolis-St. Paul, and Red Wing, Minn., and “Vessel Report” tracks weekly vessel clearances of grain from the Port of Duluth/Superior to domestic, Canadian and overseas destinations.

Great Lakes-St. Lawrence Seaway: Connecting Port of Duluth-Superior to the World
We have a tendency to view grain traffic at the Port of Duluth-Superior as going from point A (Duluth-Superior) to point B (export markets via the north Atlantic Ocean), and skipping what’s in between. That’s an incomplete picture of this waterway, however, just like thinking of the U.S. in terms as New York on the East Coast and L.A. on the West Coast (which we in the Midwest are used to, but still bristle about, thank you very much).

Connecting point A to point B is the 2,300-mile Great Lakes St. Lawrence Seaway system, which allows uninterrupted navigation nine months of the year from the Atlantic Ocean to the western extremity of the Great Lakes at Duluth.

Grain merchandisers from Europe watch grain being sampled and graded at the AGP Elevator in Duluth. The Port of Duluth-Superior is a regular stop for wheat-checkoff sponsored trade teams, to help educate prospective grain buyers about the U.S. grain system, from field to port. (Photo: David Torgerson)

Maritime commerce on the Great Lakes St. Lawrence Seaway System annually generates more than 200 million tons of cargo, more than 150,000 U.S. jobs, $4.3 billion in personal income, $3.4 billion in transportation -related business revenue, and $1.3 billion in federal, state and local taxes. The system has more than 15 major ports, with more than 40 provincial and interstate highways and nearly 30 railroad companies that connect Seaway ports with cities in the U.S. and Canada. 

The waterway’s shoreline serves as gateways to eight U.S. states (Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wisconsin) and two Canadian provinces (Quebec and Ontario).  The region served by the system is home to almost 100 million people, roughly one-third of the combined U.S.-Canadian population. There are 25 U.S. cities over 100,000 residents that reside within 100 miles of a Great Lakes port.

Connecting the Great Lakes to the Atlantic, and providing navigation ability to deep-draft ocean vessels, is the St. Lawrence River and Seaway. Approximately 800 miles long, the St. Lawrence River can be divided into three broad sections: the freshwater river, which extends from Lake Ontario to just outside the city of Quebec; the St. Lawrence estuary, which extends from Quebec to Anticosti Island (located northeast of Maine); and the Gulf of St. Lawrence, which leads into the Atlantic Ocean.

The St. Lawrence River drops 226 feet between Lake Ontario and Montreal, Canada. To allow vessels to pass through the river and in and out of the Great Lakes, the St. Lawrence Seaway, a massive American -Canadian navigational project, was begun in 1954 and completed in 1959. The Seaway created the final link in the Great Lakes-St. Lawrence River system, connecting Duluth with the head of the Gulf of St. Lawrence, through a complex system of lakes, rivers, deepened channels, locks, and canals.

The Seaway system is connected by 6 short canals with a total length of less than 60 nautical miles. There are 19 locks, filled and emptied by gravity, that make up the world’s most spectacular lift system to lift and carry vessels through the system.  In each lock, ships twice as long and half as wide as a football field are routinely raised about as high as a 60-story building, then continue on their waterway voyage. Each lock is 766 feet long and 80 feet wide. A lock fills with approximately 24 million gallons of water in just 7 to 10 minutes. Getting through a lock takes about 45 minutes.

Traffic tonnage in 2002 totaled more than 41 million metric tons through both sections of the Seaway, and there were 3,865 ship transits in the 40 -week navigation season, which typically runs from early April through the end of December. International cargo moving to and from the Great Lakes ports and passing through the St. Lawrence Seaway grew from 5.9 million tons in 1991 to 8.8 million tons in the year 2000. Almost 50% of Seaway traffic travels to and from overseas ports, especially in Europe, the Middle East and Africa.

Agricultural products represent about 40% of all Seaway trade. Grain shipped both by the U.S. and Canada is primarily for export. Cargoes include wheat, corn, soybeans, barley, oats, and flax.

Mine products (including iron ore, coal, coke, salt, and stone) make up more than 40% of total Seaway trade each year. There is strong demand by European utilities for low-sulfur coal from the Powder River Basin in Wyoming and Montana shipped via the St. Lawrence Seaway.

Iron and steel products are the highest value of goods shipped on the Seaway and their handling is the most labor-intensive. Other processed cargoes on the system include fuel oil, petroleum products, chemicals, forest products, and animal products.

While the Great Lakes St. Lawrence Seaway is navigated mostly by commercial vessels, there is some cruise traffic. In 1997, the first foreign-flag cruise vessel in 22 years transited the Great Lakes St. Lawrence Seaway System. That vessel, Hapag-Lloyd’s 400-passenger luxury cruise ship C. Columbus, has returned every year since 1997, and other cruise ships have followed.

Since 1997, the number of cruise passengers traveling the System has increased dramatically from 1,500 to 14,000. It has been said that many passengers, North American and European, describe a sense of security that comes from sailing these inland waters.

You can find a wealth of information about the Great Lakes St. Lawrence Seaway online at .  Click on “News” and then “tonnage information” for detailed cargo and traffic information. Also, click on the “Seaway Map” link for an excellent interactive map summary and links to ports on the system, including the Port of Duluth-Superior.

As Freight Rates Soar, Markets Realign
Worldwide freight rates have risen to unprecedented levels in 2003, impacting U.S. wheat exports in several regions, according to Ann Courtmarche, market analyst, U.S. Wheat Associates. 

Freight rate increases have been fueled by massive purchases of bulk commodities by China, combined with a limited supply of new ships. In October, for example, rates skyrocketed to a record 50% above September rates. As an example, October ocean freight was contracted from the U.S. Pacific Northwest to Taiwan at rates between $34.50 per metric ton (MT) to $38.80 per MT, compared to similar shipments that were contracted at $21.73 and $21.35 per MT the month before. Recent Panamax shipments from the U.S. Gulf to Japan have been quoted at more than $50 per MT.

Although the rates have caused some to delay their wheat purchases from the U.S. and its competitors, other importers have shifted suppliers. For instance, according to USW regional director George Galasso, some north African importers are purchasing wheat from local European markets to take advantage of lower freight costs. (Estimates of freight rates from the U.S. Gulf to Algiers/Tunis were $36-$40 per MT this fall as compared with $20-$22 per MT from Rouen, France to Algiers/Tunis.)

Courtmarche says countries with no near-port exporter are feeling the price changes the most, since shipping distances from Australia or the U.S. and Canada are often roughly the same. In cases like this, the buyers face high ocean freight costs wherever they turn. The higher rates have increased landed costs, and the thing to watch is the extent to which those costs will increase the cost of flour, which may reduce the demand and thus imports in some countries which historically rely on other staples (like rice).

Each of the major exporters faces a somewhat similar situation, she says. When financing the freight, the longer hauls at the higher rates cost more. Thus, shorter hauls save interest because of the shorter transit time. This disadvantages North America when the customers are in South Asia, but will disadvantage Australia in Europe.

The severe and special disadvantage that the U.S. wheat industry faces comes from the administrative abilities of the wheat boards in Canada and Australia, according to Courtmarche.  Mitch Skalicky, USW vice president in Central America, points out that “the lack of transparency in the Canadian pricing scheme allows the CWB to subsidize the freight and buy into markets where they otherwise might be, or often are, uncompetitive.”

Clearly, the rates and associated issues are causing some concern and speculation, says Courtmarche, but she notes that while there appears to be some realignment in the market, with distant suppliers experiencing a disadvantage over near suppliers, and almost everyone complaining about the outrageous freight rates, U .S. commercial export sales of wheat this fall were still up over sales at the same time last year.

Steel Tariffs Have Impacted Cargo Imports
Tariffs on imported steel in effect since March, 2002 have not been a help to U.S. grain exports. President Bush implemented the imported steel tariff program, scheduled to run three years, to revive the struggling U.S. steel industry. The World Trade Organization ruled those tariffs illegal in November.  Bush still has the option of continuing the tariff program, but risks over $2 billion in retaliatory sanctions on U.S. imports by the European Union.

According to the trade publication New Orleans CityBusiness, maritime officials report a 40% drop in cargo imports at the Port of New Orleans and a 40% drop in longshoreman working hours due to the tariffs.   The Port of New Orleans has focused efforts on developing its cruise and container cargo divisions to keep afloat.  The Port of South Louisiana as a whole accounts for about 60% of all U.S. grain exports.

In the CityBusiness article, John Hyatt, with The Irwin Brown Group, a commodities trading business, pointed out that while Bush catered to constituents in Pennsylvania and Ohio, keeping foreign steel from coming into the American market, his policy kept American grain from going out. Hyatt explained that steel is a “breakbulk” commodity, and breakbulk ships are often cleaned out and reloaded with grain—similar to trucks hauling one commodity to a destination, and carrying a different commodity on the return trip. With fewer ships coming into ports, transportation costs have risen as ports struggle to attract ships from other locales to move grain, Hyatt said. 

Since the tariffs, foreign steel prices have increased about $80 to $85 per ton, while domestic prices have increased about $50 to $60 per ton, said Hyatt. A Bush Administration decision on whether to continue the tariffs is expected in December.