Come Hell Or High Water: Can Great Lakes Shipping Make A Resurgence?By Jake Smith
Come Hell Or High Water: Can Great Lakes Shipping Make A Resurgence?By Jake Smith
Sitting at his desk in his Gold Coast apartment, Mike Couzens often gazes out his window toward the east. He looks out beyond the bustle of cars on Lake Shore Drive, beyond the leisure boats cruising along the shores of Lake Michigan.
“And beyond that even further — you really need a good pair of binoculars to make them out — are boats that look like shipping boats,” he says.
Mike happens to own a good pair of binoculars. He works as a play-by-play announcer for ESPN, and he uses them to watch basketball games from the announcer’s box. Yet he hasn’t been able to discern much about the mysterious boats in the distance.
“They’re too far away,” he says.
The nagging uncertainty led him to bring his questions to Curious City: What are these ships carrying? How much cargo is transported on Lake Michigan these days, and how does it compare to the past?
Mike has some hunches. Last year he visited the Upper Peninsula of Michigan, where he saw iron ore being loaded onto ships.
“So my guess is, it might be some type of natural resource that’s getting mined in one area and shipped to another,” he says.
But he also suspects that new modes of transportation have made maritime transit less critical.
“I would imagine now that you have a highway that can get you from one spot on Lake Michigan to another, there’s just not quite as much of a need to move things across the lake that way,” he says.
Mike is onto something. The Great Lakes once played a critical role in turning the United States into an industrial behemoth, but they’ve been suffering for decades from the shocks of an evolving and increasingly global economy.
And today, amid surging calls to revive America’s industrial might, the choppy waters of Lake Michigan just might be poised for a comeback.
The current view from the loading dock
There’s a straightforward answer to Mike’s question: Ships carried more than 52.4 million tons of cargo on Lake Michigan in 2014, according to the most recent data available from the Army Corps of Engineers.
In 2014, the top three cargoes were iron ore (accounting for 50 percent of total traffic), limestone (15 percent), and coal (7 percent). The Lake Carriers Association, a trade group that represents the 13 Great Lakes shipping companies in the United States, estimates that the total value of commerce moved by American ships on the Great Lakes is roughly $2.8 billion.
But these seemingly impressive numbers don’t show how far traffic on the lakes has fallen.
“I would say our current business is mediocre,” says Jim Weakley, president of the Lake Carriers Association.
In 1970, Lake Michigan carried 131 million tons of cargo, meaning that traffic has decreased by 60 percent in less than 50 years. Over the same period, total shipments on the Great Lakes dropped by more than 40 percent.
So what went wrong? To answer that question, we first have to understand what made Lake Michigan shipping so great to begin with.
The siren song of steel
Perhaps unsurprisingly, the story of Lake Michigan’s modern shipping industry begins with Chicago.
“In 1871, Chicago had more ships coming and going than New York or Boston or Charleston or New Orleans or San Francisco combined,” says Theodore Karamanski, a professor of urban history at Loyola University Chicago. Tall-sailed schooners hauled wheat from Chicago to Buffalo, and brought timber down from Wisconsin and Michigan to be distributed across Illinois and surrounding prairie states.
But the nascent steel industry would cement Lake Michigan’s status as a domestic shipping powerhouse.
Steel-making requires massive quantities of iron ore, coal, and limestone. In the 19th century, steelmakers set up shop along the Ohio River basin, most famously Pittsburgh, an area rich with coal.
“But as they’re beginning to operate on a larger and larger scale, they need iron ore and limestone in large quantities,” Karamanski says.
And so steelmakers turned westward to Lake Michigan, with its easy access to vast iron ore reserves from Minnesota (via Lake Superior), limestone from Michigan, and ample coal reserves in Illinois and other nearby states. Steel mills sprung up around Chicago, and the United States Steel Corporation in 1906 began building the world’s largest integrated steel plant at the time — the Gary Works in Gary, Indiana.
For the next several decades, demand for steel exploded across the fast-industrializing nation, keeping Lake Michigan busy with freight shipments, even as Midwest timber supplies dwindled and Duluth, Minnesota surpassed Chicago as the nation’s grain capital.
During World War II, traffic across the Great Lakes grew chaotic, Karamanski says. Freighters rushed steel-making supplies to Chicago, Gary and other cities near the Great Lakes where workers and machines labored day and night to satisfy the government’s urgent need for guns, tanks, and submarines.
“They kept trying to push the shipping season,” Karamanski says. “Normally the shipping season would begin in April. They would start it in March. And a couple of times, vessels got iced in.”
After the war ended, the steel industry, and the shipping industry it supported, continued to grow — not only because steel plants had improved their capacity and efficiency, but because the war had demolished the manufacturing capabilities of competitors like Japan and Germany. Shipments of building materials also increased as new roads and buildings sprung up in the post-war boom.
Nelson Haydamacker worked as a deckhand on the Great Lakes during two shipping seasons in the early ’60s. While onboard, he recalls, the sailors saw some auspicious signs that their industry was prospering.
“You had meat and potatoes and gravy twice a day,” he says. “And once a week we had steak night — porterhouse steaks, as many as you could eat.”
Global currents rock the Great Lakes
It wasn’t all smooth sailing, however.
When domestic steel production suffered a slight downturn in 1962, the shipping industry also took a hit. Several vessels spent the shipping season sitting empty in ports, and a few of Haydamacker’s shipmates were laid off.
“In addition foreign steel was making inroads in the U.S. market, further weakening the domestic steel producers,” he writes in his memoir, Deckhand: Life on Freighters of the Great Lakes.
Karamanski says several factors contributed to the decline in shipping but “the biggest, heaviest one is the steel industry.
By the ’70s, cheap steel was pouring into the U.S. from Europe and Japan, Karamanski says. American steelmakers accused them of “dumping,” or selling for below market value, which violated trade agreements. Meanwhile the costs of making steel — particularly labor costs — had shot up in the U.S., at the same time that other countries were building sleek new steel plants that ran much more efficiently than aging American plants.
The largest drop in shipments on Lake Michigan came in 1981, when a severe recession rattled the already brittle industry. In a single year, Lake Michigan traffic plummeted 24 percent, from 95 million tons of goods shipped in 1981 to 72 million tons in 1982.
From there, the downward slide continued. Since 1982, Lake Michigan cargo shipments have decreased by more than 600,000 tons per year on average.
Beyond steel, other factors likely played some smaller role in the decline. For instance, water levels on Lake Michigan decreased by four feet in the 1990s according to the National Oceanic and Atmospheric Administration—a big deal, since a 1,000-foot freighter loses 267 tons of carrying capacity for every inch of depth lost.
As Mike suspected, highways also chipped away at shipping on the lake. Until the 1920s, cherries and blueberries from Michigan would arrive at Navy Pier (then a passenger and cargo dock) by boat. But shipping by truck became faster and cheaper as the nation’s highway system improved.
By 1950, the highways had also killed passenger ferries from Chicago to Michigan, says Joseph Schwieterman, director of DePaul University’s Chaddick Institute for Metropolitan Development.
“From Chicago, going along the Lake isn’t that difficult,” he says.
But Karamanski and Weakley agree that neither highways nor rails had much of an impact on the shipping industry’s main three cargoes: iron ore, coal, or limestone. Trucks or railcars can’t compete with the carrying capacity of modern ships, and maritime transport remains the most efficient way to get steel supplies around the Great Lakes region.
“We can move a ton of ore 600 miles for the cost of lunch,” says Weakley.
That means the fate of the Great Lakes’ shipping industry remains inextricably tied to the dubious fate of American steel — a fact that’s not lost on modern sailors.
Meredith Floyd says when she graduated from Great Lakes Maritime Academy in 2016, she had no illusions about her increasingly limited job prospects.
“It’s definitely a declining industry,” she says. “You just have to realize that at one point there were thousands and thousands of boats on the Great Lakes. Now pretty much every boat I pass, I know it.”
Make Great Lakes shipping great again?
Mike’s question comes at a potentially pivotal moment for Great Lakes shipping. Some industry insiders expect that President Donald Trump’s vows to buoy domestic industries will boost Great Lakes shipping, but some economists warn there could be devastating consequences.
During his presidential campaign, Trump suggested imposing tariffs as high as 45 percent on goods from China. Such a policy move could have gargantuan implications for domestic steel, and thus, for shipping on the lakes.
“I’m a fan of the America First policy,” says Weakley of the Lake Carriers Association.
He argues that much of Chinese steel is unfairly subsidized, an accusation supported by the U.S. Department of Commerce but disputed by the Chinese government.
“I think the policies that President Trump is talking about will have a positive effect on the steel industry. And if that’s the case, it will certainly impact our industry,” Weakley says.
Even before Trump, the federal government pushed to protect domestic steel. In 2016, the U.S. Department of Commerce imposed tariffs of 500 percent on certain Chinese steel products.
However, some economists warn that tariffs may not be such a boon for the Great Lakes region. In addition to igniting a dangerous trade war, they could increase steel prices, forcing the industries that rely on steel — such as the domestic auto industry, also largely based in the Midwest — to cut or export jobs, says Linda Lim, an economist at the University of Michigan.
As a result, tariffs may help those working in steel and closely related industries like shipping, but hurt the overall economy.
“You’re transferring money into the pockets of the few steel industry workers and shareholders,” Lim says.
While Weakley acknowledges there are downsides to trade protection, he says he still supports some form of tariff — and he’s confident that most Great Lakes mariners would agree.
“I would say they all like their jobs, and we’d all rather keep sailing than look for shoreside jobs,” he says.
There may be other ways for Great Lakes traffic to bounce back. Weakley says some shipping companies want to compete with trucks and trains to ship manufactured goods like clothing, furniture and electronics, and others are reconsidering tourism.
Transit expert Schwieterman says he could envision a revived passenger service on the lake that catered to tourists.
“There’s a novelty factor in boat transportation that seems to be a magnet for travelers.” (Others have their doubts, as a previous Curious City story found).
Steady as she goes
For all its decline, the Great Lakes shipping industry isn’t about to disappear any time soon. The U.S. Department of Transportation’s Maritime Administration reports that, after decades of turmoil, “the integrated steel industry in the United States is well positioned to withstand competition from steel imports,” and that shipping on the lakes is likely to follow suit.
Today’s newest sailors are ready to roll with the changes. If cargoes continue to drop, Floyd says she is confident she can find work as a ship pilot, because a federal law requires American sailors to navigate foreign ships moving between U.S. ports.
“For me that’s the future,” she says.
(Another good sign: Floyd confirms that sailors continue to be fed well. “Saturdays are usually steak nights.”)
Economists expect that 2017 will be a good year for the industries that Great Lakes shipping depends on, according to William Strauss, a senior economist at the Federal Reserve Bank of Chicago. However, he cautions not to expect any immediate results from the new president.
“The U.S. is a thousand-footer,” he says, referring to the largest boats on the Great Lakes. “It does not turn very easily. If you’re going to do things, it takes a lot and takes a while to get a reaction.”
For all his optimism, Weakley says he isn’t predicting wild growth. He acknowledges that coal isn’t likely to bounce back from its long decline. He also concedes that certain cargoes will always be more practical to transport via truck, since the lakes only cover a limited geographic region.
Still, he remains altogether hopeful for the future. Where does Weakley expect the industry to be in 50 years?
“Steady as she goes,” he says.
More about our questioner
Mike Couzens is a play-by-play announcer covering football, basketball, and baseball for ESPN. While he’s glad to have an answer to his question, he’s not so optimistic that new trade policies will help Lake Michigan shipping. “If these tariffs were such a feasible idea, don’t you think that would have happened already?” he asks.
Jake Smith writes and produces radio stories in Chicago. Follow him at @JakeJeromeSmith.