Great Lakes-St. Lawrence Seaway: Assessing Risks and Measuring Performance Could Improve Maritime Transportation

The Great Lakes-Seaway system extends 2,300 miles and serves more than 100 ports in the United States and Canada. Four of the 17 locks that enable navigation are managed by the Army Corps (within the Department of Defense) and U.S. Seaway Corporation (within the Department of Transportation). The rest are managed by Canada. A 2007 U.S.-Canada study noted the system could absorb additional traffic and led to U.S. asset renewal plans to improve lock infrastructure condition.

GAO was asked to review efforts to modernize the Great Lakes-Seaway. This report examines (1) shipping trends since 1980 and factors affecting recent trends, (2) stakeholder views on challenges to use, and (3) the extent to which the Army Corps and the U.S. Seaway Corporation have made progress on and measure performance of lock renewal efforts. GAO analyzed Seaway and Army Corps shipping data from 1980 through 2016, the agencies' asset renewal plans, and interviewed 24 stakeholders, including port and shipper representatives, selected to represent a range of perspectives.

The tons of cargo moved by domestic Great Lakes and St. Lawrence Seaway traffic have declined since 1980—by 32 and 48 percent, respectively, according to U.S. Army Corps of Engineers (Army Corps) and Saint Lawrence Seaway Development Corporation (U.S. Seaway Corporation) data. Stakeholders identified various factors for this decrease such as the U.S. economy's shift away from manufacturing. Traffic on the Great Lakes-St. Lawrence Seaway (Great Lakes-Seaway) is traditionally dominated by bulk commodities like iron ore, although stakeholders noted emerging uses like containerized cargo and cruises.

Stakeholders identified a range of challenges to using the Great Lakes- Seaway—such as inadequate portside infrastructure for intermodal transfers of shipping containers—that together pose risks for both traditional bulk cargos and emerging uses. Although the U.S. Seaway Corporation's mission is to improve the system's utilization and reliability, the Corporation has not fully assessed the risks that challenges pose to the system's users. Establishing a process to assess and monitor risks, in accordance with federal internal control standards, would help inform future actions to address identified and emerging challenges.

The U.S. Seaway Corporation and the Army Corps have made progress on lock asset renewal efforts, but the Army Corps lacks goals and measures to assess performance and outcomes of these efforts. According to estimates provided by the Army Corps, it has completed 18 projects totaling about $53 million to date, and has about $257 million in remaining and ongoing work through 2035. Meanwhile, the U.S. Seaway Corporation has completed 16 projects totaling $45 million and has almost $144 million in remaining and ongoing work through 2023. The Army Corps has not developed goals and measures to assess its asset renewal results, as the U.S. Seaway Corporation has done. As a result, the Army Corps lacks tools to assess the outcomes of these efforts and demonstrate the extent to which its asset renewal efforts have improved operational performance of the Soo Locks.

GAO recommends that (1) the U.S. Seaway Corporation establish a process to identify, analyze, and monitor risks to the system's use to inform future actions, and (2) the Army Corps develop and adopt goals and measures to assess the performance of the Soo Locks and assess of asset renewal outcomes. The Departments of Transportation and Defense concurred with our recommendations and provided technical comments which we incorporated as appropriate.

Since 1959, the Great Lakes-St. Lawrence Seaway (Great Lakes- Seaway) navigation system has provided an important transportation  route to the manufacturing and agricultural heartland of North America.  The Great Lakes-Seaway extends 2,300 miles from Duluth, Minnesota to  the Atlantic Ocean and serves more than 100 ports in eight U.S. states  and two Canadian provinces (see fig. 1). In 2007, a joint U.S.-Canadian  study found that the Great Lakes-Seaway was operating at about half of  its potential capacity and could absorb additional traffic. Further, in 2016  the Congressional Research Service reported that U.S. domestic cargo  volume within the Great Lakes was about half that of the 1950s and  1960s. The 2007 study also led to U.S. asset renewal plans to improve  the system’s lock infrastructure condition—at the time, the first  coordinated effort to assess and improve the system’s infrastructure in its  50 year existence. Now over a decade after the 2007 report and almost 60 years since the opening of the system, the Great Lakes-Seaway’s  potential as America’s “fourth coast” remains, as it provides direct access  to a region that is home to 107 million people, including major cities such  as Chicago, Detroit, Cleveland, and Toronto.

The Great Lakes-Seaway has been managed jointly between the U.S.  and Canada throughout its history. A series of 17 locks enables  commercial vessels to navigate a change in elevation of over 600 feet  between the Atlantic Ocean and Lake Superior. The primary purpose of  a lock is to raise and lower vessels to bypass river rapids or overcome  changes in water levels (see fig. 2 for how a lock operates). The 17 locks  are divided between U.S. and Canadian management, with 4 locks  managed by two U.S. federal agencies. Specifically, the Saint Lawrence  Seaway Development Corporation (U.S. Seaway Corporation) manages 2  locks in Massena, New York, that are located among the 13 locks that are  managed by Canada’s St. Lawrence Seaway Management Corporation  (Canadian Seaway Corporation). Meanwhile the U.S. Army Corps of  Engineers (Army Corps) manages the Soo locks—two parallel locks in  Sault Ste. Marie, Michigan, that connect Lake Superior with the rest of the  Great Lakes. In addition to its binational management, another critical  feature of the Great Lakes-Seaway is that the system is closed to  navigation for 2 to 3 months in the winter due to weather conditions and in  order to complete maintenance on the locks.

You asked us to review efforts to modernize the Great-Lakes Seaway.  This report examines (1) how Great Lakes-Seaway shipping trends have  changed since 1980 and what factors have shaped recent trends, (2)  selected stakeholders’ perspectives on challenges to using the Great  Lakes-Seaway, and (3) to what extent Army Corps and the U.S. Seaway  Corporation have made progress on lock infrastructure renewal efforts  and how the agencies measure performance of these efforts.

To understand shipping trends, we analyzed cargo traffic by tonnage from  1980 to 2016 for the St. Lawrence Seaway (published by the Canadian  and U.S. Seaway Corporations) and for domestic cargo traffic on the  Great Lakes (from the Army Corps’ Waterborne Commerce Statistics  Center). Although the Seaway data represent all cargo traffic that travels  on the St. Lawrence Seaway, the Army Corps data we analyzed  exclusively represent traffic between U.S. ports on the Great Lakes  system. As a result, some cargos that travel on the Great Lakes—such as  between Canadian ports or U.S. and Canadian ports—are not included in  this report. We selected the 1980 to 2016 timeframe to describe long-term  trends using data that both sources collected consistently, and since 2016  was the most recent year available from both data sources. We also  analyzed recent cargo traffic trends for the top five commodities that  comprised domestic Great Lakes and St. Lawrence Seaway cargo traffic  by tonnage from 2001 to 2016. These years were selected to represent  the past approximately 15 years of traffic. We assessed the data’s  reliability by reviewing documentation and interviewing Army Corps and  U.S. and Canadian Seaway Corporation officials and determined the data  were sufficiently reliable for our purpose of describing trends.

To obtain selected stakeholders’ perspectives on factors shaping recent  trends and challenges, we interviewed 24 stakeholders, including industry  associations, carriers (companies that transport goods), shippers  (companies that own the transported goods), ports, maritime  transportation experts, and regional and maritime stakeholder groups.  Stakeholders were selected to represent a range of types of traffic (such  as U.S. vessels travelling within the Great Lakes and foreign ocean-going  vessels) and a range in use of the system (shipping of traditional bulk  goods as well as emerging uses such as containers and cruises). We  grouped the challenges identified by stakeholders based on whether they  affect traditional use of the system or emerging use of the system.  Although the results are non-generalizable, stakeholders were selected to  represent a range of known perspectives.

To understand the U.S. Seaway Corporation’s and Army Corps’ progress  on asset renewal efforts and how they measure performance of these  efforts, we analyzed available information on asset renewal projects, their  status, and estimated cost from both agencies. We also reviewed U.S.  Seaway Corporation’s and Army Corps’ relevant reports, asset renewal  plans, and documentation related to program goals and performance  measures, such as annual financial and performance reports, from 2007  through 2018 and interviewed officials from both agencies. We compared  agencies’ efforts to GAO’s Standards for Internal Control in the Federal  Government and Leading Practices in Capital Decision-Making. We did  not evaluate the Canadian agencies responsible for overseeing  Canadian-managed Seaway locks. For more information on our scope  and methodology, see appendix I.

We conducted this performance audit from June 2017 to September 2018  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The Great Lakes-Seaway system’s commercial shipping has traditionally  been dominated by vessels carrying bulk commodities such as grain,  coal, and iron ore, although there are differences between the shipping on  the Great Lakes versus the St. Lawrence Seaway portions of the system.  On the Great Lakes side, U.S.-flag (meaning registered in the United  States) vessels are primarily “lakers”—meaning they stay on the Great  Lakes and generally do not enter the St. Lawrence Seaway. This  domestic Great Lakes traffic primarily consists of iron ore, limestone, and  coal that are transported to serve the U.S. steelmaking industry. For  example, U.S. lakers transport iron ore, mined in northern Minnesota,  from Duluth to steel manufacturers at ports such as Burns Harbor,  Indiana, and Toledo, Ohio, in the lower Great Lakes. U.S. law requires  that maritime transport of cargo between U.S. ports be carried by U.S.- flag vessels.

In contrast to the Great Lakes, the St. Lawrence Seaway is used primarily  by Canadian- or foreign-flag vessels that carry cargo between and among  U.S., Canadian, and overseas ports. For example, in 2015, 40 percent of  St. Lawrence Seaway traffic, as measured by tonnage moved, consisted  of cargos shipped between Canadian ports. Another 34 percent of 2015  Seaway traffic consisted of cross-border trade between U.S. and  Canadian ports. Only 10 percent of Seaway traffic in 2015 was between  overseas and U.S. ports. This trade is generally characterized as “steel  in/ grain out”—with imported iron and steel products entering the system  destined for U.S. ports and U.S. grain leaving the system destined for  overseas ports. For example, foreign vessels transport fabricated steel  through the Seaway to manufacturing facilities in the Great Lakes region  and then carry grain from the region back through the Seaway to  overseas destinations such as Europe.

The Great Lakes and St. Lawrence Seaway portions of the system also  differ in how they are managed. On the St. Lawrence Seaway, which  opened in 1959, the U.S. Seaway Corporation manages the Snell and  Eisenhower locks, which are located in Massena, New York. Like all locks  on the St. Lawrence Seaway, the Snell and Eisenhower are single locks  without parallel locks for redundancy and are the same dimensions— about 766 feet long and 80 feet wide. On the Great Lakes, the Army  Corps manages the Soo locks, which consist of two parallel locks: the  larger Poe lock, completed in 1968 (1,200 feet long and 110 feet wide)  and the smaller MacArthur lock, completed in 1943 (800 feet long and 80  feet wide). Many U.S.-flag laker vessels are restricted to using the Poe  lock, as they are too large to fit in the MacArthur lock.

The construction of a second Poe-sized lock at the Soo locks is currently  under consideration. In 1986, Congress authorized the construction of a  second Poe-sized lock, but funds sufficient to begin construction were  never appropriated. In 2005, the Army Corps calculated a benefit-cost ratio of 0.73 associated with the construction of a second Poe-sized lock,  which was not high enough to request funding. In January 2016, the  Army Corps initiated an economic reevaluation of the project’s benefit- cost ratio to update assumptions of the 2005 study. In July 2018, the  Army Corps released its reevaluation study, which estimated the cost of  constructing a new Poe-sized lock to be approximately $922 million with  an updated benefit-cost ratio of 2.42. According to the Army Corps, the  project will compete with other construction projects throughout the  country through the agency’s budgeting process. The decision to fund the  new lock also involves review by the Office of Management and Budget  for inclusion in the President’s budget, and Congress will need to  appropriate funds.

The U.S. Seaway Corporation and Army Corps also differ in their size and  role, for example:

The U.S. Seaway Corporation. In addition to managing the two U.S.- operated locks on the St. Lawrence Seaway, the U.S. Seaway  Corporation has a role in enhancing utilization of the entire Great  Lakes- Seaway system. Its stated mission is to improve the operation  and maintenance of a safe, reliable, and efficient waterway and to  perform economic and trade development activities with the aim of  enhancing utilization. In doing so, the Corporation works closely with  its Canadian counterpart (the Canadian Seaway Corporation) to  manage the binational St. Lawrence Seaway and provide information  on the system to potential users. The U.S. Seaway Corporation is  located within the U.S. Department of Transportation and has  approximately 140 employees.

The Army Corps. The Army Corps, located within the Department of  Defense, maintains a wide range of water resources projects across  the country—including the Soo locks—under its Civil Works Program.  These projects include over 200 inland waterway locks, such as those  along the Mississippi river and its tributaries. The Army Corps’ Civil  Works Program is supported by approximately 22,000 civilian  employees and is organized into three tiers: a national headquarters  in Washington, D.C., eight regional divisions, and 38 local district  offices. The Detroit District, which is responsible for the day-to-day  maintenance and operation of the Soo locks, falls under the Great  Lakes and Ohio River Division.

Following the 2007 joint U.S.-Canadian study, the Army Corps and the  U.S. Seaway Corporation developed asset renewal plans, which were  originally intended to cover approximately 10 years and which focused on  replacing or rehabilitating existing lock components to avoid unexpected  lock closures. Both agencies complete routine maintenance and capital  improvements on the locks during the 2–3 winter months the locks are  closed to navigation every year due to weather conditions.

Congress appropriates funding for both Army Corps’ and U.S. Seaway  Corporation’s lock operations and maintenance from the Harbor  Maintenance Trust Fund (trust fund). The trust fund is supported  through collections of the Harbor Maintenance Tax (also sometimes  called a fee), which is charged to vessels carrying U.S. domestic or  imported cargo or passengers, primarily at coastal and Great Lakes  ports. Congress also appropriates funds from the trust fund for other  Great Lakes-Seaway purposes, including dredging (underwater debris  removal) to maintain the depth of ports and channels for navigation. In the  U.S. portions of the Great Lakes-Seaway, including ports and channels,  dredging is primarily conducted by the Army Corps and to a lesser extent  the U.S. Seaway Corporation. As of July 2013, the trust fund built up a  balance of $8.5 billion. In 2014, Congress authorized targets to annually  increase appropriations from the fund to reduce the balance, and required  the Army Corps to allocate annually a minimum amount of funds for the  Great Lakes-Seaway system.

Two federal agencies within the Department of Homeland Security also  have roles in the Great Lakes-Seaway. The U.S. Coast Guard ensures  safety in various ways, including by ensuring a sufficient supply of  certified U.S. pilots who board foreign vessels to ensure safe navigation.  Specifically, the Coast Guard is responsible for annually setting the rates  U.S. pilots on the Great Lakes-Seaway charge carriers (referred to as  pilotage rates for the remainder of this report). In addition, the Coast  Guard is also required by law to maintain heavy icebreaking capability on  the Great Lakes to assist in keeping channels and ports open to  navigation. Meanwhile U.S. Customs and Border Protection is  responsible for screening cargo and passengers entering the United  States at ports of entry, including Great Lakes ports.

Great Lakes-Seaway Cargo Levels Have Decreased since 1980 due to Various Economic Factors but Selected Stakeholders Report Recent Increased Diversity of Uses

Stakeholders Identified a Variety of Economic Factors Associated with Decreased Cargo Levels on the Great Lakes- Seaway since 1980

The amount of cargo transported annually on the Great Lakes-Seaway— specifically for U.S. Great Lakes domestic and Seaway cargo—has  generally declined since 1980 (see fig. 3). The Great Lakes U.S. domestic  “laker” cargo traffic declined from about 115 million tons in 1980 to about  78 million tons in 2016—a decline of 32 percent—according to data from  the Army Corps’ Waterborne Commerce Statistics Center. As noted in  figure 3, the trend includes many noticeable year-to-year changes over  this time period, which may be in response to broader economic factors,  as discussed below. Meanwhile, cargo traffic on the St. Lawrence  Seaway, which as described earlier is primarily transported by Canadian  and foreign vessels, declined by 48 percent over the same time period,  from about 74 million tons in 1980 to about 39 million tons in 2016,  according to Seaway Traffic Data.

Between 2001 and 2016, domestic Great Lakes cargo traffic levels were  driven primarily by iron ore, limestone, and coal—three commodities that  are closely tied to the steel industry (see fig. 4). Specifically, these three  commodities accounted for 90 percent of the total of about 78 million tons  in domestic Great Lakes traffic in 2016—iron ore alone comprised 50  percent. Great Lakes domestic tonnage declined by about 22 million tons  overall from 2001 to 2016, with declines in iron ore, limestone, and coal  totaling about 21 million tons. Army Corps officials noted that other  commodities such as wheat also have a presence on the Great Lakes,  with over 5 million tons of wheat traveling on the Great Lakes in 2017  according to these officials.

In contrast to the domestic Great Lakes cargo traffic, the top five  commodities on the St. Lawrence Seaway, which comprised 70 percent  of total cargo traffic in 2016, show a more varied picture of the types of  commodities and trends from 2001 to 2016 (see fig. 5). Grain, the top  commodity transported on the St. Lawrence Seaway, comprised nearly a  third of total Seaway traffic in 2016. Like the domestic Great Lakes traffic,  iron ore and coal have a significant presence on the St. Lawrence  Seaway, together comprising 24 percent of cargo traffic in 2016. In  contrast to domestic Great Lakes traffic, iron and steel constitute key  commodities on the St. Lawrence Seaway, declining from about 3.2  million tons in 2001 to about 2.4 million tons in 2016. Nearly all such iron  and steel transports are imports destined for U.S. or Canadian ports. For  example, some specialty steel used to package food in cans is  manufactured in Europe and imported for use in the United States.  Several stakeholders we interviewed told us that a balance between  inbound iron and steel shipments and outbound grain exports are  important in providing shipping capacity in both directions.

Stakeholders identified various economic factors that have affected Great  Lakes-Seaway cargo traffic levels since the 1980s:

Global economic factors. Many stakeholders noted that year-to-year  trends in global prices for commodities such as grain, iron ore, and  steel affect Great Lakes-Seaway cargo traffic levels. For example, two  stakeholders told us that U.S. iron ore is exported through the St.  Lawrence Seaway when global iron ore prices are high, allowing  producers to cover the costs of shipping while also being price  competitive internationally. Further, some stakeholders reported that  the increase in globalization since 1980 has resulted in greater foreign  competition to U.S. and Canadian commodities exported via the Great  Lakes-Seaway. For example, one stakeholder noted that countries  that were grain importers in the 1980s, such as Russia, have since  become grain exporters, competing with U.S. and Canadian grain  internationally. Grain traffic on the St. Lawrence Seaway fell by over  60 percent from about 32 million tons in 1980 to about 12 million tons  in 2016, with nearly the entire decline occurring prior to 2001.

Domestic economic factors. Several stakeholders told us that Great  Lakes-Seaway cargo traffic rises and falls in conjunction with general  economic conditions and trends, such as a sharp decline during the  recession in 2009 (see fig. 3 above). For example, one stakeholder  reported that a trend in the U.S. economy toward a more service- based rather than manufacturing-based economy has affected Great  Lakes-Seaway traffic, reducing demand for manufacturing inputs such  as iron ore. As we reported in 2013, manufacturing has accounted for  a decreasing share of U.S. employment and economic output over the  last several decades.

Industry-specific changes. Changes in industries that have relied on  the Great Lakes-Seaway for the transportation of input materials have  affected cargo trends, according to several stakeholders. For  example, demand for iron ore has been affected by the U.S. steel  industry’s move towards smaller manufacturing plants, which are  located away from the Great Lakes and which use recycled metal and  do not require iron ore. Between 2001 and 2016, domestic Great  Lakes tonnage of iron ore declined by 14 percent, from about 45  million to about 39 million tons (see fig. 4 above). Several  stakeholders also told us that changes in the power generation  industry have reduced shipments of coal. For example, environmental  concerns and competitive natural gas prices have led some utilities in  Canada and the United States to close coal-fired facilities. St.  Lawrence Seaway coal tonnage from 2001 to 2016 declined by 53  percent, from about 5.3 million to about 2.5 million tons (see fig. 5  above).

Greater competition among modes. Several stakeholders said that  certain other transportation modes have become more competitive  with the Great Lakes-Seaway. For example, several told us that the  use of shipping containers—which enable easy intermodal transfer  between waterways, highway, and rail—has grown dramatically  worldwide in the past several decades with implications for modal  competition and the Great Lakes-Seaway. As we previously reported,  the largest container vessels in 2016 could carry nearly 18,000  standard 20-foot shipping containers, roughly twice as many as in  2005. However, most modern containerships are too large to use  the Great Lakes-Seaway locks and container service on the system is  limited. Three stakeholders that sometimes use the Great Lakes- Seaway to import cargo reported that they can also import cargo to  the Midwest via coastal ports, where containers can be transferred  from container ship to truck or rail for inland delivery. While traffic on  the Great Lakes-Seaway has generally declined since 1980,  according to data published by the U.S. Bureau of Transportation  Statistics, U.S. railroad freight nearly doubled from 1980 to 2015, from  932,000 to 1.7 million ton-miles.

Stakeholders Report Recent Increased Diversity in Uses of the Great Lakes-Seaway

Stakeholders reported a recent increase in the diversity in the use of the  Great Lakes-Seaway, although bulk commodities continue to constitute  the majority of the 78 million and 39 million tons of domestic Great Lakes  and St. Lawrence Seaway cargo traffic in 2016, respectively. The  reported increase in the diversity of uses includes:

Project cargo. Some stakeholders told us shipments of project  cargo—specialty items that may be difficult to move by rail or truck  due to width or weight limits, such as windmill blades, beer  fermentation tanks, and mining equipment—have increased in recent  years. The tonnage of St. Lawrence Seaway traffic comprised of  machinery and other manufactured products, which encompass  project cargo, grew from about 657,000 tons in 2001 to about 1.1  million tons in 2016. Project cargos are typically chartered on an as- needed basis. One stakeholder said that carriers would need to offer  more ships capable of carrying project cargo as a prerequisite for any  large future increases in project cargo.

Containers. Although containers continue to represent a small fraction  of total cargos on the St. Lawrence Seaway, container traffic on the  Seaway more than tripled from 18,156 tons in 2001 to 64,984 tons in  2016. The only regular container service on the system began in  2014 and operates between ports in Cleveland and Antwerp, Belgium.  The service is offered through a partnership between the Port of  Cleveland, where officials told us they view the service as a way to  attract traffic, and a Dutch carrier, whose representatives view it as a  way to educate U.S. manufacturers on the advantages of maritime  transportation. Representatives from the carrier said that the service  offers 44 sailings annually.

Cruises. Several stakeholders said that there is recent growth of small  passenger cruises on the Great Lakes-Seaway with the potential for  further growth. Some of those stakeholders said that the region  affords advantages including a variety of scenic destinations. A typical  cruise may begin and end in Chicago and Toronto, both of which have  air connections for arriving and departing passengers. An official from  the U.S. Seaway Corporation said that the number of cruise ships  operating on the system grew from 5 to 8 and the number of voyages  offered grew from 54 to 92 between 2014 and 2018. The official said  that additional ships and voyages are expected in the future.

Selected Stakeholders Identified Various Challenges to Using the Great Lakes- Seaway, but the U.S. Seaway Corporation Has Not Fully Assessed Risks

Traditional and Emerging Great-Lakes Seaway Uses Face a Range of Challenges, according to Stakeholders

Stakeholders we met with identified a range of challenges to using the  Great Lakes-Seaway and noted that these challenges pose risks to the  future use of the system. Although many of the challenges that  stakeholders identified—such as the annual winter closure—affect all  users of the system, some challenges may impact the system’s various  users differently. Specifically, some challenges directly affect the  “traditional use” of the system—including the transport of bulk cargos  such as iron ore, grain, and steel—while other challenges primarily affect  “emerging use” of the system, such as the cruise industry and container  market, as discussed below. The cumulative effect of all the challenges  represents costs and system reliability risks to shippers that can erode  the advantages that the system has traditionally offered over other  transportation modes. For example, a representative from one shipping  company told us the company frequently compares the cost of using the  Great Lakes-Seaway to other modes and noted that the margin favoring  the Great Lakes-Seaway is becoming narrower due to the system’s  various challenges.

Stakeholders identified several challenges that affect traditional uses of  the Great Lakes-Seaway, including transport of dry bulk commodities and  imported steel.

Recent Increase of Pilotage Rates: The majority of stakeholders we  interviewed reported that recent rate increases in the costs of  securing pilots, who are intended to ensure safe navigation, have  significantly increased costs for foreign ocean going vessels operating  in the Great Lakes-Seaway. Federal law requires that certified pilots  board foreign vessels while in the Great Lakes-Seaway. A pilot may  be on board for multiple days on a single voyage, given the size of the  system. As part of its responsibility to set rates that pilots charge  carriers for the Great Lakes-Seaway, the U.S. Coast Guard revised  the methodology used to calculate the rates in 2016. Coast Guard  officials told us the methodology had not changed since the mid- 1990s and changes were needed to bring rates up to a sufficient level  to attract and retain pilots. Specifically, according to the Coast Guard  the number of pilots in the region decreased from 44 in 2007 to 36 in  2014, resulting in pilot shortages and traffic delays. In response, the  Coast Guard raised rates. For example, in the St. Lawrence River  portion of the system, pilotage rates increased 23 percent between  2014 and 2016. According to one carrier association we interviewed,  pilotage is one of the single largest cost items for foreign vessels  entering the system. Similarly, representatives from a carrier  association told us pilotage rates are a primary challenge affecting the  cost competitiveness of the system compared to truck and rail. The  methodology used to calculate rates was revised further in 2017 and  2018 and Coast Guard officials report that the recent updates have  accounted for factors, such as eliminating a weighting factor based on  the size of the vessel. According to Coast Guard officials, these  changes corrected factors that were not properly accounted for in  previous years and effectively lowered rates compared with 2016. The  Coast Guard also authorized an increase in the number of registered  pilots, from 36 in 2014 to 45 in 2017.

Condition of the Poe-lock Infrastructure: Several stakeholders that  operate on the Great Lakes told us that they are concerned about the  condition of the Poe lock (see fig. 6). One Great Lakes shipper  representative told us that they believe the Poe lock is at critical risk of  lock failure that could result in an unplanned outage and disrupt the  U.S. steel industry, which has limited alternatives (rail or truck) to  move large amounts of iron ore from Minnesota and Michigan’s Upper  Peninsula to steel manufacturing plants in the lower Great Lakes. As  mentioned previously, many U.S. laker vessels can only fit in the  larger Poe lock at the Soo locks due to vessel size. For example, the  Army Corps estimated that 85 percent of the tons of cargo travelling  through the Soo locks in 2017 were restricted to using the Poe lock. A  representative from a Great Lakes carrier told us that a closure of the  Poe lock for repairs during the shipping season could pose further  challenges to using the system, since there is currently no redundant  Poe-sized lock to which traffic could be diverted. As discussed  below, Army Corps officials note they currently lack the means to  replace the Poe lock’s upper miter gate—which was identified as  critical in 2007—without disrupting navigation. The Army Corps’ asset  renewal efforts to improve lock condition, including the Poe lock, are  discussed in greater detail below.

Regulatory Complexity Related to Ballast Water: Several agencies are  involved in regulating ballast water in the Great Lakes-Seaway, and  several stakeholders reported that the complexity of the regulatory  environment poses a challenge to using the system. Ballast water is  taken up or discharged in a vessel’s tanks to improve stability during  voyages and when cargo is loaded or unloaded. Ballast water  regulations are aimed at preventing the introduction of invasive  species collected in foreign waters from transoceanic vessels and  discharging them into the Great Lakes. These regulations involve  joint U.S.-Canadian Seaway regulations as well as requirements from  the U.S. Coast Guard, U.S. Environmental Protection Agency (EPA),  and some states. Specifically, under the current framework, all  oceanic vessels bound for the Great Lakes-Seaway are tested to  meet the ballast water discharge standards established by the U.S.  Coast Guard and the EPA. Most lakers, which are confined to the  Great Lakes and unlikely to introduce new aquatic invasive species  from outside the Lakes, are not subject to the Coast Guard and EPA  requirements. In addition, states are authorized to establish their  own vessel discharge control measures, and according to an industry  association, several Great Lakes states have their own ballast water  requirements. One carrier association representative told us that the  various ballast water regulations can cause confusion over how the  regulations apply across the system.

U.S. Seaway Corporation officials said they are aware of these issues  and since 2007, the U.S. and Canadian Seaway Corporations have  been operating under harmonized, joint ballast water regulations  intended to eliminate confusion among users of the system. In  addition, both Corporations participate in the Great Lakes Seaway  Ballast Water Working Group, which is comprised of representatives  from the U.S. Coast Guard and others. The group’s mission is to  coordinate regulatory, compliance, and research efforts to reduce the  introduction of aquatic invasive species via ballast water. The working  group reported in 2018 that such coordination will help minimize the  creation of a patchwork of inconsistent regulations.

Effect of insufficient dredging: Several stakeholders we met with said  that insufficient dredging—removal of sediment and debris from the  bottom of ports to maintain water levels for maximum vessel load— can pose a challenge to using the Great Lakes-Seaway. In particular,  a stakeholder noted the Army Corps, which is responsible for  dredging the major U.S. ports on the Great Lakes, has limited  capacity to keep up with all ports’ dredging needs, and that this  situation can lead to vessels having to engage in “light loading”—  filling to a lower capacity to reduce vessel weight—to access affected  ports. The Army Corps reported in 2018 that its dredging backlog  has decreased to 13.5 million cubic yards from a high of 18 million in  2013. One stakeholder that uses the Great-Lakes Seaway to ship iron  ore told us that light loading causes steel mills to operate at lower  capacity when they do not receive the required amount of iron ore.  Army Corps officials told us that high water levels in recent years have  allowed vessels to carry more tons of cargo. However, because water  levels fluctuate over time, those conditions could change and affect  load efficiency.

Stakeholders also identified challenges that particularly affect emerging  uses of the Great Lakes-Seaway, such as the cruise industry and  container market.

Winter closure: The majority of stakeholders we interviewed told us  the annual winter closure hurts the system’s competitiveness because  shippers must either stockpile their cargo or find alternative modes of  transport during the winter months. While winter closure has been a  long-standing feature of the system, it poses a particular challenge for  the emerging container market since, as a stakeholder from a carrier  association noted, containerized cargo is often time-sensitive and  cannot be stockpiled. Securing an alternative transportation mode  during the winter closure may be challenging because railroads, for  example, prefer to sign year-round contracts for shipping rather than  shorter-term winter arrangements. Additionally, some stakeholders  told us lack of icebreaking during the start and end of the season,  particularly during severe winters, has caused vessel delays. The  U.S. Coast Guard’s icebreaking fleet consists of nine vessels on the  Great Lakes. In 2016, a U.S. Coast Guard report identified some ice  breaking issues that led to 3- and 6-week delays in 2010. The report  detailed actions the U.S. Coast Guard took to mitigate future delays,  including moving an icebreaking vessel’s home port to a Great Lakes  port, but also noted that procuring an additional heavy icebreaker is  not cost-effective. An example of potential delays caused by ice was  demonstrated in January 2018 when a vessel became frozen in the  U.S. Seaway Corporation’s Snell lock during extreme weather  conditions, delaying five vessels and necessitating the system’s  closure for 11 days. Efforts to free the vessel included ice melting  equipment and tug boats.

Limited U.S. Customs and Border Protection resources for clearing  passengers and container cargo: Several stakeholders we interviewed  told us that the limited capacity of U.S. Customs and Border  Protection’s processing of container cargo and passengers poses a  challenge for emerging system uses. U.S. Customs and Border  Protection is responsible for inspecting travelers and imported cargo  that enters the U.S., including at the ports of entry in the Great Lakes  regions. U.S. Customs and Border Protection officials told us that their  procedures for processing containers and passengers are more  involved than traditional bulk cargos and that processes differ by port.  For example at the Port of Detroit, cruise passengers are transported  by bus to facilities a few miles away for processing. According to a  representative from a cruise industry association, this processing  creates delays and poses a challenge to the developing cruise  industry. Officials from U.S. Customs Border and Protection offices in  the Great Lakes region told us that their resources for processing  passengers and cargos are located at main ports of entry (such as  airports) and that at the Great Lakes ports are lacking appropriate  facilities, tools, technology, equipment, and personnel. These same  officials said that if the Great Lakes ports were to handle increasing  numbers of passengers and containers, U.S. Customs and Border  Protection would need sufficient time and budget to add inspection  equipment, but that port operators would need to bear the costs of  upgrading their facilities.

Inadequate portside infrastructure: Some stakeholders told us that  many of the ports along the Great Lakes-Seaway were developed to  support bulk commodities—such as iron ore, coal, and grain—and are  not equipped to easily handle containers. Bulk commodities do not  require portside equipment at destination ports since they are  transported by self-unloading vessels and are often delivered straight  to private docks, such as iron ore delivered to a steel manufacturing  facility. As such, Great Lakes ports generally lack multimodal  connections that enable transfer of containers from vessel to truck  and rail routes. A representative from a company that ships containers  on the Great Lakes-Seaway told us that the port nearest its location  does not have cranes to handle containers. Instead, the company  uses a different port that is further away because it has the  infrastructure necessary to ship containers. Port representatives told  us that financing options exist to make upgrades to port infrastructure  but consistent and sustainable traffic levels are needed in order to  justify investments. For example, an official from the Port of Cleveland  told us they have access to their own financing and have added  infrastructure to create their container business, including cranes,  storage warehouses, and right-of-way for rail connections using  revenue bonds issued by the board that oversees the port. An official  from the Port of Indiana told us that the port lacks infrastructure to  handle containers, but it would find the financing to make investments  in container equipment if there were a consistent stream of business.

The U.S. Seaway Corporation Has Not Fully Assessed the Risks That Challenges Pose to System Utilization

Although U.S Seaway Corporation officials told us they are aware of  system challenges cited by stakeholders, the Corporation has not fully  assessed the extent to which the challenges pose risks to the use of the  Great Lakes-Seaway. As previously noted, the U.S. Seaway  Corporation’s stated mission is to improve the operation and maintenance  of a safe, reliable, and efficient waterway and to improve regional  economic and trade development by enhancing utilization of the entire  Great Lakes Seaway system. To achieve this mission, the U.S. Seaway  Corporation’s strategic plan includes several goals, such as increasing  the volume and value of commercial trade through the Great Lakes  Seaway System, while promoting cost-effective competition for all users.  To achieve these goals, the plan lists several actions, including  developing initiatives to improve capacity of the system, and working with  carriers, ports, pilots, and other stakeholders to contain costs and foster  increased trade in the region. For example, the U.S. Seaway  Corporation has taken steps to improve the condition of lock  infrastructure—as discussed in greater detail below—and in 2015, hired a  full-time employee, stationed in Cleveland, Ohio, who is responsible for  advancing the Corporation’s trade and economic development activities in  the Great Lakes region. However, the Corporation has not taken steps to  identify, analyze and monitor challenges that affect use of the system,  such as those identified by the stakeholders we interviewed.

The Standards for Internal Control in the Federal Government states that  assessing risks and monitoring changes are key to achieving objectives.  Specifically, management should analyze identified risks to estimate their  significance, which provides a basis for responding to the risks, and  design responses to the analyzed risks so that risks are within the defined  risk tolerance for the defined objective. The standards also note that  monitoring is key to ensuring that the process used by management to  help achieve its objectives remains aligned with changing environments,  laws, and resources. The importance of understanding risks to system  use in the Great Lakes Seaway was also emphasized by the Conference  of Great Lakes and St. Lawrence Governors and Premiers. This  conference, made up of Governors and Premiers of the eight states and  two Canadian provinces along the Great Lakes-Seaway, developed a  2016 strategy that delineated system challenges and called for an  analysis of the total costs of moving cargo through the system and how  this compares to other modes. U.S. Seaway Corporation officials told us  they are supportive of the Conference’s strategy but are not working to  implement this analysis or other elements of the strategy.

Although some actions have been taken to address challenges, officials  from the U.S. Seaway Corporation told us that the Corporation has not  fully assessed risks to Great Lakes-Seaway use, in part because the  Corporation does not have a formal or standing process to monitor risks  over time. The U.S. Seaway Corporation has worked closely with other  federal agencies over the years, including the Army Corps and Coast  Guard, to address challenges. For example, in 2007, it played a role in  the joint U.S.-Canadian study that focused attention on the system’s  infrastructure, and the Corporation has worked with the Coast Guard  and others in the Great Lakes Seaway Ballast Water Working Group. In  addition, although U.S. Seaway Corporation officials told us that they  have a limited role in addressing challenges involving other agencies, the  U.S. Seaway Corporation has some experience assessing system risks  that could be useful in better understanding and addressing challenges  facing system users. For example, in 2012, the U.S. Seaway Corporation  was involved in a study led by the Canadian Seaway Corporation that  examined the cost-competitiveness of the Great Lakes-Seaway and  included a discussion of risks. These efforts could be useful in developing  a process to track risks and monitor how they evolve over time and in  relation to current shipping trends so that further actions could be taken to  address challenges faced by traditional and emerging users of the  system.

Establishing a process to assess and monitor system risks would provide  the U.S. Seaway Corporation with greater assurance that the actions  taken by the Corporation, including those listed in its strategic plan, and  by other stakeholders are working to improve future utilization and ensure  efficient use of the system. Without a formal assessment of risks, the U.S.  Seaway Corporation lacks information on the cumulative effect of the  challenges faced by users of the system, limiting its ability to inform its  future actions to help address those challenges.

The U.S. Seaway Corporation and the Army Corps Have Made Progress on Lock Asset Renewal Efforts, but the Army Corps Lacks Associated Goals and Measures

Both Agencies Have Made Progress on Lock Asset Renewal Efforts, but the Army Corps Has Yet to Start Work on a Project Identified as Critical in 2007

The Army Corps and the U.S. Seaway Corporation developed asset  renewal plans, in fiscal year 2007 and 2009 respectively, which were  originally intended to cover approximately 10 years and focused on  modernizing, rehabilitating, or replacing existing lock components to avoid  unexpected lock closures. Within a lock there are a number of  structural, mechanical, and electrical components that must work together  (see fig. 7). Key lock components included in the agencies’ asset renewal  plans include:

Approach walls—Help guide the vessel as it approaches the lock  chamber and provides a place for the vessel to tie up to wait to enter  the lock chamber.

Lock chamber—Concrete structure with rock or concrete floors that  contain the vessel while water flows to empty or fill the chamber. The  lock structure houses the culvert valves, which fill and empty the lock.

Miter gates—Steel structures that first function as a dam to prevent  free flow of water through a lock, then open and close to allow vessels  to transit through the lock. The end of the gates are mitered (angled)  and use the difference in water levels to provide the force necessary  to achieve a nearly water-tight seal.

Embedded anchorages—The connection point between the miter  gates and lock walls, which transfers the load from the gate to the lock  wall during the opening and closing of the gates.

Over the past decade since beginning these efforts, the Army Corps and  U.S. Seaway Corporation have made progress on asset renewal efforts.  The Army Corps’ asset renewal efforts have a total estimated cost of  about $310 million for work through 2035. Meanwhile the U.S. Seaway  Corporation’s asset renewal efforts have a total estimated cost of $189  million for work through 2023 (see fig. 8). (See appendix II for a  complete list of both agencies’ asset renewal projects.) According to the  Army Corps’ most recent asset renewal plan from 2016 and updates  provided by Army Corps officials in May 2018, to date, the Army Corps  has spent about $53 million on 18 completed projects out of the about  $86 million it has received since 2008 (see below for more information on  funding received per year for both agencies). The U.S. Seaway  Corporation estimates it has spent $45 million on 16 completed projects  of the about $137 million it has received since 2009. According to the  Army Corps’ estimates, it has about $257 million in remaining and  ongoing work through 2035. Meanwhile, the U.S. Seaway Corporation  estimates it has almost $144 million in remaining and ongoing work  through 2023. Officials from both agencies stated that asset renewal  plans will transition to ongoing capital investment programs that will  continue into the foreseeable future. Army Corps Detroit District Officials  also emphasized that the list of asset renewal projects frequently changes  to account for new information such as results of facility inspections.  These officials also noted that a project’s inclusion in the asset renewal  plan does not obligate future funds on behalf of the Army Corps, since all  projects must compete for funding as part of the annual budget process.  Furthermore, these Army Corps officials noted that the total cost estimate  could decrease if a second Poe-sized lock is constructed, since traffic  could be diverted to the new lock, allowing the current lock to be taken  out of service for repairs.

Both agencies have also made progress addressing critical projects  identified in the 2007 study, but the Army Corps faces obstacles in  finishing key projects without disrupting traffic through the Poe Lock. In  the 2007 study, the U.S. Seaway Corporation and the Army Corps  identified several critical projects to improve the condition of their  respective locks (see table 1). The U.S. Seaway Corporation has  completed its rehabilitation of the downstream miter gates on both locks  and started work on a long-term project to rehabilitate concrete on the  Eisenhower lock. Of the three key Army Corps projects identified in the  2007 study, one is complete, one is ongoing, and the other is remaining.  Specifically, the Army Corps has not started work to replace the Poe  lock’s upper miter gate because Army Corps officials say they lack the  means to replace the gate without disrupting navigation. In the short term,  Army Corps officials say they now plan to repair the gate and have requested $2 million in appropriated funds in fiscal year 2019 for the first  phase of this work. Army Corps officials also noted they have ongoing  work to reinforce the West Center Pier, which has eroded over time and  which forms the approach channel for both the Poe and MacArthur locks.  However, these officials reported that the cost to complete the work  differs greatly ($82.6 million versus $7.5 million) depending on whether a  second Poe-sized lock is constructed, since more expensive construction  methods are currently needed to avoid disrupting traffic.

In addition to addressing key projects from the 2007 report, over the past  decade the Army Corps and U.S. Seaway Corporation have undertaken  projects to address emergent issues and make operational improvements  to lock infrastructure. For example, in late July 2015, the Army Corps  identified the MacArthur lock’s embedded gate anchorages as a critical  issue requiring immediate attention. It closed the MacArthur lock for 19  days during the navigation season in August 2015 in order to address the  issue at a project cost of $5.8 million. Meanwhile, the U.S. Seaway  Corporation is working to install “hands-free mooring” at both of its locks,  which is intended to improve the efficiency of lock operations. Hands-free  mooring was developed by the Canadian Seaway Corporation, is being  deployed on all Seaway locks, and eliminates the need for conventional  lines to secure a vessel during the lockage process—instead, arms along  the side of the locks extend and secure the vessel using vacuum pads.  Once fully implemented, the system is expected to produce benefits such  as improved workplace safety and reducing the time to transit a Seaway  lock by approximately 7–10 minutes each direction. The U.S. Seaway  Corporation expects to have the system completed by the end of the  2019 shipping season, at a total cost of about $18 million, about $7  million of which had been spent through 2016.

The Army Corps and the U.S. Seaway Corporation differ in the level of  funding they have received for asset renewal efforts in the past decade,  which may have influenced the agencies’ pace of asset renewal efforts.  Through fiscal year 2017, the Army Corps received about $86 million  (starting in fiscal year 2008) and the U.S. Seaway Corporation received  about $137 million (starting in fiscal year 2009) (see fig. 9). Army Corps  officials noted they received an increase in funds in 2009 due to the  American Recovery and Reinvestment Act of 2009 as well as more  stable recent funding due to the Water Resources and Development Act  of 2014 which, as mentioned earlier, required the Army Corps to  allocate annually a minimum amount of funds for the Great Lakes- Seaway. However, individual Soo Lock asset renewal projects must  compete for funding with other Army Corps projects across the country at  the district, division, and headquarters level, based in part on a project’s  risk rating. In contrast, the U.S. Seaway Corporation is a much smaller  organization and directly allocates its funding to projects based on its own  condition assessments.

The U.S. Seaway Corporation Has Established Goals and Measures for Asset Renewal Efforts but the Army Corps Lacks Goals and Measures for the Soo Locks

The U.S. Seaway Corporation has a lock performance goal and measure  that officials use to monitor its asset renewal efforts, in accordance with  government internal control standards, but the Army Corps does not have  such a goal specific to the Soo locks. Standards for Internal Control in the  Federal Government states that agencies should define objectives  clearly and in measurable terms so that performance toward achieving  those objectives can be assessed. Similarly, Leading Practices in Capital  Decision-Making states that organizational goals should be integrated  into the capital decision-making process and that agencies should use  performance measures to evaluate results of capital projects to determine  if goals have been met. As part of the Department of Transportation’s  annual performance reports, the U.S. Seaway Corporation reports its  annual progress toward its goal of maintaining 99 percent system  availability of the U.S. portion of the Seaway during the navigation  season. This measure includes times the system is unavailable for three  key reasons: vessel incidents, weather, and lock outages. Of these  reasons, the U.S. Seaway Corporation has the most direct control over  lock outages. U.S. Seaway Corporation officials told us they use this  information, particularly on lock outages, to assess the effect of its asset  renewal efforts on lock performance, as part of its agency goal to reduce  the risk of delays due to lock equipment failure.

The Army Corps has not established specific operational goals or metrics  for the Soo locks that can be used to evaluate the outcomes of its asset  renewal efforts. In its annual financial report, the Army Corps Civil Works  program has a nationwide strategic goal to facilitate the transportation of  commerce goods on the nation’s coastal channels and inland waterways  and a corresponding goal and measure for the number of instances  where mechanically-driven failure at locks resulted in delays of more than  a day or week. This national measure aggregates Army Corps locks  across the country, including over 200 in the inland waterways such as  the Mississippi River. However, this national goal and measure does not  provide information on the operational performance of individual locks,  including the Soo locks.

Detroit District Army Corps officials told us that they have not established  operational goals or measures specific to the Soo Locks because the  Army Corps’ project approval process involves prioritization based on risk  rather than operational performance. Specifically, these officials noted  that asset renewal efforts are measured by improved risk scores, which  indicate higher reliability and less likelihood of unscheduled outages.  While this process allows the Army Corps to prioritize individual  investment decisions according to risk, it does not define a specific  measurable goal for the operational performance of the Soo Locks. As a  result, the Army Corps lacks a key tool to assess whether the investments  made in the locks have resulted in improved lock performance, such as  reductions in outages and delays to its users. Furthermore, the Detroit  District has access to information that could be used to develop measure  performances for the Soo Locks—specifically the Lock Performance  Monitoring System, which contains lock operations data such as  scheduled and unscheduled outages. According to Detroit District  officials, these data are used for the Army Corps’ nationwide lock  performance measure.

The Army Corps has previously noted the need for local lock performance  goals and measures to improve asset management. In December 2006,  the Great Lakes and Ohio River Division, which has the Soo locks in its  jurisdiction, recommended in a 5-year plan the development of specific  goals for the Great Lakes navigation system for use in prioritizing  investments, but the plan has not been updated since then.  Furthermore, a 2013 Army Corps commissioned report on best practices  in asset management recommended the development of key  performance indicator target values to monitor the effectiveness of asset  management. Likewise a senior official in the Army Corps’ Asset  Management Program Office—which shares leading asset management  practices across the Corps— stated that local and regional offices have  the ability to develop local lock performance goals and measures to  assess the local results. This official also noted the goals and measures  to evaluate the progress of asset renewal efforts and lock performance  would allow for greater transparency to stakeholders. Without goals and  associated measures for the Soo locks, the Army Corps cannot link its  asset renewal efforts to improved lock performance and cannot  demonstrate the effect of these efforts to stakeholders.

The Great Lakes-Seaway serves as an essential transportation route  linking U.S. manufacturing, agricultural, and other industries in the  nation’s interior to the global economy. Yet, this system faces various  challenges that, according to stakeholders, pose risks to traditional and  emerging uses that could limit the system’s ability to enhance the region’s  economy. The U.S. Seaway Corporation’s mission to improve the  system’s utilization and reliability provides it with a unique vantage point  for assessing the cumulative risks that these challenges pose on the  system’s current and future utilization. Establishing a process for  identifying, analyzing, and monitoring the system’s risks would better  enable the U.S. Seaway Corporation to design future actions that it, and  other stakeholders, could take to address those risks. Similarly, the Army  Corps’ efforts to rehabilitate the Soo locks are critical to U.S.  manufacturing and trade in the Great Lakes region. Regardless of the  outcome of the decision on whether to build another Soo lock, the  importance of the Poe lock remains, as indicated by the concerns raised  by stakeholders regarding its condition. Given the criticality of the Poe  lock and the more stable funding for asset renewal since 2014, it is  important that the Army Corps assess these funds’ potential effect on the  Soo locks’ performance. Without establishing goals and measures for the  Soo locks, the Army Corps is not able to demonstrate whether the  substantial investments made so far and planned in the future will  improve the Soo locks’ performance and by extension, the reliability of the  Great Lakes navigation infrastructure.

We are making the following two recommendations:  The Administrator of the U.S. Seaway Corporation should establish a  process to identify, analyze, and monitor risks to the system’s use to  inform future actions to address those risks. (Recommendation 1)

The Army Corps Director of Civil Works should, in coordination with the  Commanders of the Great Lakes and Ohio River Division and the Detroit  District, develop and adopt goals and measures to assess the  performance of the Soo Locks and assess outcomes of asset renewal  efforts. (Recommendation 2)

We provided a draft of this product to the Departments of Defense,  Transportation, and Homeland Security for comment. In comments,  reproduced in appendixes III and IV, the Departments of Transportation  and Defense concurred with our recommendations. All three departments  also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Transportation, the Secretary of Defense,  the Secretary of Homeland Security, and other interested parties. In  addition, this report is available at no charge on our website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or flemings@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) how Great Lakes-St. Lawrence Seaway (Great  Lakes-Seaway) shipping trends have changed since 1980 and what  factors have shaped recent trends, (2) selected stakeholders’  perspectives on challenges to using the Great Lakes-Seaway, and (3) to  what extent the U.S. Army Corps of Engineers (Army Corps) and the  Saint Lawrence Seaway Development Corporation (U.S. Seaway  Corporation) have made progress on lock infrastructure renewal efforts  and how the agencies measure performance of these efforts.

To understand shipping trends, we analyzed cargo traffic by tonnage for  both the St. Lawrence Seaway (published jointly by Canada’s St.  Lawrence Seaway Management Corporation and the U.S. Seaway  Corporation) and for domestic Great Lakes cargo traffic (from the Army  Corps’ Waterborne Commerce Statistics Center) from 1980 to 2016.  Although the Seaway data represents all cargo traffic that travels on the  St. Lawrence Seaway, we analyzed the Army Corps’ domestic data,  which accounts exclusively for traffic between U.S. ports on the Great  Lakes system. As a result, some cargos that travel on the Great Lakes— such as between U.S. and Canadian ports or between Canadian ports— are not included, although such movements would be captured in the  Seaway data to the extent they enter the Seaway. Although the Army  Corps’ data include information on Canadian and foreign cargo, we did  not analyze or report this information because (1) of the limitation, which  we confirmed with Army Corps officials, that the data exclude Great  Lakes cargo movements between Canadian ports and (2) including this  information would potentially double-count trips that also entered the St.  Lawrence Seaway. We selected the 1980 to 2016 timeframe because it  provides a sufficient timeframe to describe long-term trends using  consistently collected data from both sources and 2016 is the most recent  year for which both sources have published data. We also analyzed cargo  trends for the top five commodities by tonnage from 2001 to 2016 for  domestic Great Lakes and St. Lawrence Seaway traffic. We selected the  years 2001 to 2016 to capture trends over the past approximately 15  years. The selected commodities represent the majority of cargo traffic for  both sources. Specifically, the top five domestic Great Lakes commodities  made up 96 percent of total cargo tonnage from 2001 to 2016, while the  five commodities for the St. Lawrence Seaway represented 71 percent of  total St. Lawrence Seaway cargo tonnage for the same time period. We  assessed the reliability of the data by reviewing documentation and  interviewing Army Corps and U.S. and Canadian Seaway Corporation  officials and determined these data were sufficiently reliable for our  purpose of describing trends. To describe factors that have shaped recent  trends, we reviewed available government and industry reports, such as  the 2007 Great Lakes-Seaway study, the 2013 U.S. Department of  Transportation Maritime Administration’s Status of the U.S.-Flag Great  Lakes Water Transportation Industry, and the 2016 Conference of Great  Lakes and St. Lawrence Governors and Premiers’ Strategy for the Great  Lakes-St. Lawrence River Maritime Transportation System.

To understand factors affecting recent trends and challenges to using the  system, we interviewed 24 stakeholders representing a range of  traditional and emerging system users and experts. We interviewed  representatives from three carriers that transport goods on the system  and three associations that represent current U.S., Canadian, and foreign  vessel traffic: Interlake Steamship Company, FedNav, Spliethoff, Lake  Carriers Association, Chamber of Marine Commerce, and the Shipping  Federation of Canada. We interviewed four Great Lake ports  stakeholders, including three ports that represent a range of cargo levels  and mix of cargos—Port of Duluth, Port of Cleveland, and Port of Indiana,  Burns Harbor—and their association, the American Great Lake Ports  Association. We interviewed six stakeholders that represent traditional or  emerging shipping uses (e.g., cruises and containers) on the system:  Cleveland-Cliffs Inc.; Tata Steel; CHS Inc.; General Motors; American  Iron and Steel Institute; and the Great Lakes Cruising Coalition. We  interviewed two maritime experts and a freight forwarder which helps  arrange shipping logistics: Dr. Walter Kemmsies, Martin Associates, and  Midwest Transatlantic Lines. Lastly, we interviewed representatives from  five Great-Lakes Seaway region and maritime stakeholder groups:  Conference of Great Lakes and St. Lawrence Governors and Premiers,  Great Lakes Commission, Council of the Great Lakes Region, Committee  on the Marine Transportation System, and the American Pilots’  Association. We grouped the challenges identified by stakeholders based  on whether challenges affect traditional use of the system or emerging  use of the system. Although the results are non-generalizable,  stakeholders were selected to represent a range of known perspectives.  To better understand the context of these challenges, we interviewed  officials from the Army Corps, U.S. Seaway Corporation, U.S. Coast  Guard, and Customs and Border Protection.

To understand the agencies’ progress on asset renewal efforts and how  they measure performance of these efforts, we analyzed available  information on projects, status, and estimated cost from both agencies.  To assess the agencies’ asset renewal progress we reviewed the Army  Corps’ most recent asset renewal plan from 2016 with updates provided  by the Army Corps in May 2018. Likewise, we analyzed information  provided by U.S. Seaway Corporation officials in March 2018 on project- by-project expenditures from 2009 to 2016 and cost estimates from 2017  to 2023. Although we describe the agencies’ cost estimates for their asset  renewal efforts, it was beyond the scope of this engagement to check  these cost estimates for accuracy and completeness. Likewise, although  we describe the agencies’ processes for selecting projects for funding, we  did not verify these processes by, for example, selecting projects and  ensuring the selection met the agencies’ established procedures for  selection. We reviewed U.S. Seaway Corporation and Army Corps  relevant reports, available asset renewal plans, and documentation  related to program goals and performance measures, such as annual  financial and performance reports, from 2007 through 2018. We also  visited the Soo locks at Sault Ste. Marie, Michigan, and the Seaway locks  at Massena, New York, in summer 2017 and interviewed officials from  both agencies. For example, within the Army Corps we interviewed  officials from the Detroit District, headquarters’ navigation and Asset  Management Program offices, the Inland Navigation Design Center, and  the Institute for Water Resources. We compared agencies’ efforts to  GAO’s Standards for Internal Control in the Federal Government and to  Leading Practices in Capital Decision-Making. Although the Great Lakes- Seaway system is binational, we are not evaluating the Canadian  agencies, although we did interview officials from the Canadian St.  Lawrence Seaway Management Corporation to understand their process  for asset renewal.

Appendix II: List of Asset Renewal Projects

The Army Corps information below is based on the most recent asset  renewal plan report from 2016 for the Soo locks, with updates provided by  the Army Corps in May 2018. The U.S. Seaway Corporation information  includes project-by-project expenditures for fiscal years 2009 through  2016 and cost estimates for work from fiscal years 2017 through 2023  provided by U.S. Seaway Corporation officials in March 2018. To align  projects between the two agencies, we removed from the U.S. Seaway  Corporation list: a dredging project (since the Army Corps information  does not include dredging), one Seaway International Bridge project that  lacked an associated cost estimate, and discontinued projects. It was  beyond the scope of this review to check these cost estimates for  accuracy and completeness.

Replace lock utility lines and steam system, used for de-icing   Fabrication of second set of stoplogs to allow for full dewatering of the lock  Poe   Replacement of quoin and miter blocks that help transfer load from the gate  to the lock wall  Replace gate latches to protect the miter gates  Replace bevel gears that help move the miter gates  Replace protective relays for power plant  Replace switchgear assembly B, to assist with de-watering  Replace sluice gate valves for Poe and Davis pump well which are used to  dewater the locks  Repair west center pier, which forms the north wall of the approach channel  (outer portion of the wall)

Modernize steamplant, which supports de-icing   Repair west center pier, which forms the north wall of the approach channel  (inner portion of wall closest to lock chamber)

Rehabilitation of Davis pump well which is used to dewater locks for winter  maintenance  Rehabilitate ship arrestor booms that are designed to protect miter gates  from vessel impact  Gate 1 coating/ weld repairs (upstream end of lock)

New miter gate replacement (spare) for upstream end  Rehabilitation of Poe pump well used to dewater Poe lock for winter  maintenance  Fabrication of replacement stoplogs (replacement for originals from initial  Poe Lock construction)

Rehabilitate ship arrestor booms that are designed to protect miter gates   Rehabilitate lock fill/ empty valve machinery  Rehabilitate gate skin plate and replace gate coating  Repair southwest pier, which serves as south upstream approach wall  Reinforce piers mooring bollards along approach wall (Southwest Pier)

Appendix III: Comments from the Department of Transportation

Appendix IV: Comments from the Department of Defense

Appendix V: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Matt Barranca (Assistant  Director), Emily Larson (Analyst in Charge), Amy Abramowitz, Melissa  Bodeau, Michelle Everett, Aaron Gluck, David Hooper, Alyssa Hundrup,  SaraAnn Moessbauer, Joshua Ormond, and Shane Spencer made key  contributions to this report.

The Great Lakes-St. Lawrence Seaway has connected U.S. and Canadian ports to the world since 1959—but traffic has declined since 1980.

Stakeholders identified many challenges to using the seaway. For example, the cost of hiring pilots to navigate the system increased in 2016; older lock infrastructure is at risk of failure; and ports aren't set up to clear passengers and container cargo for travel.

We reviewed modernization efforts and found that U.S. agencies have completed almost $100 million in projects to improve locks over the past decade. We recommended better monitoring of the challenges and assessment of improvement efforts.