Global trade tensions fuel St. Lawrence seaway shipments as grain demand soars

MONTREAL—The St. Lawrence Seaway saw its highest cargo numbers since 2007 last year, propelled by a spike in grain shipments and global tariff wars that worked in Canada’s favour.

Traffic hit 40.9 million tonnes in 2018, a seven per cent year-over-year increase, according to the St. Lawrence Seaway Management Corp.

Grain made up nearly one-third of all tonnage on the 60-year-old waterway, rising 20 per cent from 2017.

The towering grain figures come in spite of a major backlog in grain shipments last winter, which Canada’s two main railways responded to with more grain cars, employees, tracks and rail yard expansions.

Trade tensions between the U.S. and other countries worked to the advantage of Canadian exporters, said Bruce Burrows, president of the Chamber of Marine Commerce.

A Chinese tariff on U.S. soybeans and retaliatory European tariffs on U.S. corn spurred more shipments from Canada, which enjoyed a strong corn crop last year, he said.

“Clearly the trade negotiation environment that we saw in 2018 has been a driver.”

Meanwhile a drought and summer heatwave across parts of Russia and northern Europe wilted cereal production levels and prompted livestock farmers to import more corn from North America as regional prices rose.

The free-trade deal between Canada and the European Union has also boosted shipping, Montreal’s Maritime Employers Association said last fall.

Corn exports have more than doubled year over year to 782,000 tonnes since Aug. 1, according to the Canadian Grain Commission. Soybean exports shot up 15 per cent to 3.2 million tonnes in the same period.

Iron ore traffic on the St. Lawrence Seaway dropped 10 per cent to 7.4 million tonnes, however, amidst last summer’s ongoing tariffs of 25 per cent on steel—composed largely of iron—that crosses the Canada-U.S. border.

As housing and manufacturing markets gyrate, Burrows brushed off concerns over a potential economic downturn in 2019.

“Yes, there may be some slowdown later on in the year, but I think we’re anticipating a strong season again,” he said. “Our capacity is tight, with a lot of demand left over, so I think we can absorb any potential softening in the system.”

Shipment of liquid bulk—mainly refined petroleum products and asphalt—shot up 22 per cent to 4.6 million tonnes in 2018. The “surprisingly robust” gasoline and jet fuel figures emanate partly from the refinery in Quebec City, Burrows said.

Infrastructure demand across the eastern part of the continent drove asphalt demand and yielded slightly higher volumes of other dry goods such as gravel and cement.

“It’s been a bit of a surprise to some extent, given the trading relationship between Canada and the U.S.,” Burrows said.

Early snowfalls also fuelled more road salt shipments, he said.