to Montreal was estimated to be five to seven days, compared to four to five days by rail and
two days by truck. For intermediate origin-destination pairs, such as Chicago to Cleveland,
the transit time was estimated to be three days, which compared favorably with railroad
service; however, the truck transit time was one day. The rate for the container service was
estimated to be 40 percent of the current truck rate and 75 percent of the current rail rate,
but the RFID program may allow higher rates because it would be a premium service and
differentiate GLC from the rail and motor carriers.
The meetings with the port directors confirmed that the volume of grain and iron ore
being handled by Great Lakes carriers was on the decline and the predictions for the next five
years were for a continued decline. The lack of adequate containership service on the Great
Lakes was also confirmed and the port directors were enthusiastic about the possibility of
GLC initiating such service. They were also interested in the advantages of the RFID tech-
nology even though it would require some additional investment for them.
Ben and Kate decided to delay the decision to invest in the new equipment and technol-
ogy because of the economic forecasts for the Great Lakes region and related potential cash
flow problems. Also, the development of new oil fields more recently with the development
of fracking technology in New York, Ohio, and Pennsylvania were changing the economic
landscape of the Great Lakes region. Now they were reconsidering their alternatives before
moving ahead, with their plans for investment in new technology and equipment.
CASE QUESTIONS
1. What is the overall impact of the new sources of energy in the Great Lakes area? What
is the likely impact on commodity flows in that area? What will be the likely impact
on GLC?
2. What are some of the logistics supply chain issues that GLC should consider?
3. What recommendation would you make to the GLC board of directors regarding a
containership operation and the possibility of new bulk shipments of oil and possibly
chemicals?/nBen and Kate discussed the type of vessel that would be needed to move containers
and concluded that current GLC vessels could not be retrofitted for container operations.
Furthermore, the new ship would have a maximum carrying capacity of about 1,000 con-
tainers because of the size limitations imposed by the locks on the Saint Lawrence Seaway.
The typical oceangoing containership has a minimum carrying capacity of 2,500 containers.
The proposed operation would consist of weekly sailing schedules beginning in Duluth
and stopping at Chicago, Detroit, Toledo, Cleveland, Buffalo, and Montreal. Containers
would be picked up and delivered at each port along the route. The transit time from Duluth
to Montreal was estimated to be five to seven days, compared to four to five days by rail and
two days by truck. For intermediate origin-destination pairs, such as Chicago to Cleveland,
the transit time was estimated to be three days, which compared favorably with railroad
service; however, the truck transit time was one day. The rate for the container service was
estimated to be 40 percent of the current truck rate and 75 percent of the current rail rate,
but the RFID program may allow higher rates because it would be a premium service and
differentiate GLC from the rail and motor carriers.
The meetings with the port directors confirmed that the volume of grain and iron ore
being handled by Great Lakes carriers was on the decline and the predictions for the next five
years were for a continued decline. The lack of adequate containership service on the Great
Lakes was also confirmed and the port directors were enthusiastic about the possibility of
GLC initiating such service. They were also interested in the advantages of the RFID tech-
nology even though it would require some additional investment for them.
Ben and Kate decided to delay the decision to invest in the new equipment and technol-
ogy because of the economic forecasts for the Great Lakes region and related potential cash
flow problems. Also, the development of new oil fields more recently with the development
of fracking technology in New York, Ohio, and Pennsylvania were changing the economic
landscape of the Great Lakes region. Now they were reconsidering their alternatives before
moving ahead, with their plans for investment in new technology and equipment./nGreat Lakes Carriers: A Sequel
During the summer of 2014, Ben Heuer, president and chief operating officer of Great Lakes
Carriers (GLC), and E. Kate Weber, vice president of business development, revisited the
port directors of every major port on the Great Lakes. Their objective was to seek additional
business for GLC's bulk cargo division with a related objective of exploring potential demand
for increased containership operations on the Great Lakes.
GLC was founded in 1940 by Ben's grandfather with one ship hauling coal and iron ore
from the mines along the Great Lakes to the steel mills in Indiana, Ohio, and surrounding
areas. Today the company has a fleet of 12 bulk vessels that move grain from the upper Great
Lakes area to Chicago, Buffalo, and Erie. There is also some continued demand for bulk coal
and iron ore movements. The demand for the movement of such commodities has decreased
in the 21st century because of increased foreign steel production, and the railroads have
increased their share of the grain movement with new, larger, hopper cars, which provide
more dependable movement.
GLC has developed some containership service on the Great Lakes, but the volume has
been disappointing. Container traffic between the United States and the European Union
can move via railroad to the port of Montreal, where it is transloaded to an oceangoing
containership. Substantial NAFTA container traffic (USA-Canada) moves via either railroad
or truck to major cities adjacent to the Great Lakes. Lastly, the area surrounding the Great
Lakes is a major manufacturing region with large volumes of traffic moving among the major
port cities and to inland locations. Radio Frequency Identification (RFID) technology is
providing GLC with some competitive advantage for higher-value container traffic where
visibility could help improve supply chain efficiency and effectiveness. Kate also believed
that they could charge higher rates with RFID tags and explore the possibility of diversifying
even further into logistics-related services.
