Treasury: Soo Locks project could provide $1.7B boost

Jonathan Oosting
Detroit News Lansing Bureau

Spending nearly $600 million to construct a new passageway at the Soo Locks in Sault Ste. Marie could provide an economic benefit of up to more than $1.7 billion, according to a new report commissioned by the U.S. Treasury.

The federal report identified the long-discussed Soo Locks modernization plan as one of 40 transportation and water infrastructure projects “of major economic significance” to the nation.

Michigan Gov. Rick Snyder has urged the Obama administration to fully fund a new Soo shipping lock to avert a “cascading collapse of the U.S. economy,” and said last month he hopes to also pitch the project to Republican President-elect Donald Trump.

Michigan’s congressional delegation has spent several years seeking federal funding to build a new 1,200-foot-long lock to mirror the 48-year-old Poe Lock, which handles large freighters carrying iron ore.

Most Canadian and U.S. ships are reportedly restricted by size to using the Poe Lock.

It would cost between $582 million and $626 million to construct the new lock, according to the report prepared for Treasury by a team of independent infrastructure experts. They project an economic benefit of between $582 and $1.74 billion.

The Soo Locks are on the St. Mary’s River between Michigan’s Upper Peninsula and the Canadian province of Ontario. They create a key corridor for ships from Lake Superior to the St. Lawrence Seaway and lower Great Lakes.

More than 60 percent of current U.S. and Canadian ships are restricted by size to using the Poe Lock, according to the report. Closures of the aging lock are expected to increase in coming years, jeopardizing transportation of more than 40 million tons of iron ore and coal to manufacturers along the Great Lakes.

“Fewer outages and less delay would allow shippers to move more tonnage during the shipping season with greater efficiency and fewer emissions,” the experts said.

The report suggested that the increased reliability of the locks would also lower the risk for commercial ship operators, making lenders more inclined to finance new investments.

A 1986 law authorized construction of a new lock similar in size to Poe, according to the Lake Carriers’ Association, a trade association for U.S.-flag vessel operators on the Great Lakes, which said an inaccurate analysis of the benefit-cost ratio has stalled the project to date.

The Treasury report pegs the cost-benefit ratio at two to four times the investment.

“This new study is further proof that a second Poe-sized lock will be a wise investment, said Lake Carriers’ Association president James H.I. Weakley. “The project is shovel ready. We just need an accurate b/c ratio.”

Michigan U.S. Sens. Debbie Stabenow and Gary Peters in May sent the Army Corps of Engineers a letter urging a separate cost-benefit analysis of replacing the Davis and Sabin Soo Locks be completed “as quickly as possible.”

The Treasury report indicates the primary challenge facing the Soo Lock modernization project is a lack of available funding at both the federal and local level. Any shortfall would extend the project completion date and increase the total cost, it said.