MUSKEGON — A West Michigan marine transportation firm is significantly increasing its freight capacity in response to higher demand from a key customer.
Port City Barge Inc. of Muskegon last month took delivery of the Commander, a 495-foot by 72-foot freight barge that it plans to use to haul cement for St. Marys Cement US LLC.
When paired with a tug, the articulated tug barge will be able to haul 14,500 tons of cement from the St. Marys Cement plant in Charlevoix primarily to ports in Michigan, Illinois and Wisconsin.
Chuck Canestraight, president of Port City Barge, told MiBiz the company invested “$40 million-plus” into the expansion project to serve a growing need from St. Marys.
The addition of the Commander grew Port City Barge’s cement-hauling capacity by more than 72 percent.
“It was a pretty big expansion, and it’s to align ourselves with the significant expansions (St. Marys Cement is) making in their Charlevoix production facility,” Canestraight said.
Port City Barge and affiliated operator Port City Marine Services Inc. worked with Fincantieri Bay Shipbuilding LLC for the design and conversion of the vessel at its Sturgeon Bay, Wis. shipyard. The build-out process took 21 months.
The Commander originated in the 1950s, when it was built in Texas as a pipe-laying and cable-laying barge for use in the Atlantic Ocean. It was later named Cleveland Rocks and used as a self-unloading bulk material barge.
For the conversion for cement hauling, Fincantieri Bay Shipbuilding installed new cargo holds, a trunk deck, bow section and cargo unloading systems.
“This conversion was quite unique and challenging as it utilized the full breath [sic] of our skilled shipbuilders and the trades they represent along with our engineering and program management team,” Todd Thayse, vice president and general manager of Fincantieri Bay Shipbuilding, said in a statement.
St. Marys signed an unspecified long-term charter with Port City for the Commander, according to Canestraight. Fifth Third Bank financed the conversion project for the vessel.
“Although we did talk with others, Fifth Third Bank really listened to us and had a lot of faith in both the customer and us to back the project,” Canestraight said.
Under the Jones Act of 1920, marine transportation firms shipping from one U.S. port to another must use U.S.-built vessels, which often leads to companies doing what they can to extend the lives of existing vessels rather than bite off the cost of a complete new build.
Canestraight described the conversion of an existing hull as “very tricky,” given the amount of engineering attention to the twist and bend of the vessel needed once various parts are removed or added.
“It’s funny how these vessels find their way throughout their lifespan (into) different trades,” Canestraight said. “We found value in it because of the fact that it had an existing U.S.-built, Jones Act-compliant hull that fit the size needs of a major conversion.”
As well, the conversion marked repeat business between Fincantieri Bay Shipbuilding and Port City.
“The products that Bay Ship has put out over the last 20, 30, 40 years have been consistent, and they’re well-known as the premier yard in the Great Lakes for doing those kind of projects,” Canestraight said.
Shipments dip
Throughout the Great Lakes last year, shipments via U.S.-flag lake vessels, known as lakers, dipped 2.3 percent to 83.7 million tons of cargo, according to the Cleveland, Ohio-based Lake Carriers’ Association. The trade group includes 13 member companies, including Muskegon-based Port City Marine Services, with a combined total of 45 vessels that operate exclusively on the Great Lakes.
Compared to a decade ago, the lakers’ overall cargos, which primarily include iron ore, limestone, cement and coal, slid more than 17 percent.
Year-over-year coal shipments in 2018 slipped the most, down 11.4 percent to 11.8 million tons, according to the Lake Carriers’ Association data, particularly as utilities move away from coal-fired power plants in favor of natural gas and renewables. Shipments of iron ore were essentially flat at 45.8 million tons, while limestone loadings rose nearly 2 percent to about 22 million tons.
Despite the mixed results for 2018 — which the trade group attributed in part to ice-related delays at the start of the 2018 shipping season — Canestraight at Port City Barge remains bullish on the prospects for Great Lakes shipping.
His company’s investment in the new bulk cement carrier signals that St. Marys Cement also is expanding, “which is good for the Great Lakes economy.”
St. Marys Cement, a subsidiary of São Paulo, Brazil-based Votorantim Cimentos S.A., is in the middle of a previously announced $130 million investment at its Charlevoix plant to increase production by 40 percent.
The Charlevoix location produces more than 4 million metric tons of cement annually, according to its website.
Maritime investments
In Muskegon, the Port City investment in a new barge came just prior to another local shipping company finding a partner to fund its continued growth.
Andrie Inc., a 31-year-old, family-owned company that operates a fleet of 19 tugs and barges throughout the Great Lakes system, sold a majority stake to Auxo Investment Partners, as MiBiz was first to report in late February.
The Muskegon-based Andrie transports bulk goods such as liquid asphalt, cement, light oil petroleum products and calcium chloride. The company employs 150 people.
With the deal, Grand Rapids-based private equity firm Auxo builds its platform of marine transport companies, which includes New Orleans, La.-based M/G Transport Services.
“Andrie is a great fit for us,” Managing Partner Jeff Helminski told MiBiz last month. “The guys really do set the gold standard on the Great Lakes.”
Meanwhile, Port City Barge operates as a division of Muskegon-based Sand Products Corp., which also runs West Michigan Dock and Market Inc., known as the Mart Dock, on Muskegon Lake.
Increasing traffic out of Muskegon harbor, West Michigan’s only natural deepwater port, has become a focus of various port-centric economic development efforts in recent years.
“With maritime and especially coastwise trade, which is when you trade from a U.S. port to a U.S. port, we see a lot of opportunity in coastwise trade as land-based transportation modes get more congested,” Canestraight said. “We do in fact see other projects on the horizon in coastwise marine operations in the U.S. as the economy continues to grow.”
