The Great Lakes Global Freight Gateway Project: Detroit to Halifax

The Great Lakes Global Freight Gateway Project:  Detroit to Halifax

Jesse D. Sutton

22 February 2012

 WSU – ECO 5800-001

 

Introduction

The industrial Midwest has been on a decline for the past four decades. Many companies have left Southeastern Michigan to produce goods elsewhere. When these companies moved their operations to other cities, much of the population in the region moved also. These people left to seek job opportunities in other urban areas. When industries and people leave an area, the infrastructure is often left behind. Buildings, land, and infrastructure remain vacant in Detroit because of this exodus from the region. The framework of the region largely resembles the period before Detroit was incorporated as a city, aside from the infrastructure that has been left behind. The availability of existing industrial centers coupled with the new capabilities of the Halifax Port in Nova Scotia, Canada, offers Detroit the opportunity to use this infrastructure to transform the region into an international shipping hub. The Great Lakes Global Freight Gateway Project is a program that will use these vacant assets to create an inland port in Detroit, and to promote global trade from the Midwest (GLFG3, 3:33/8:46). This essay is going to show how the Great Lakes Global Freight Gateway Project can restore economic vitality to the region and provide growth opportunities for all stakeholders.

 

Development

The United States economy has shifted from being predominately manufacturing based to being largely service based. In contrast, Detroit’s economy is still based on manufacturing. Manufacturing jobs have been on a steady decline for more than 40 years. Repositioning Detroit from a manufacturing only industry to a manufacturing and transcontinental shipping industry can open new revenue possibilities for stakeholders in the region.

Detroit’s population peaked in the 1950s with more than two million residences in the region (Mc, Pg. 12). This period of growth contributed to the clustering of various economic activities around manufacturing (Mc, Pg. 66). These clusters of economic activities still exist today, however the population has declined to pre-1920s levels, and the economic growth of the region is stagnant. When manufacturing jobs left the region, large amounts of the population followed. The population that remains are largely from the manufacturing sector and have the necessary skill set to be employed in the shipping industry (Mc, Pg. 44). The Great Lakes Global Freight Gateway Project can promote growth in the region by utilizing the same regional assets that were used for urban growth in the mid 1900s.

Nearly half of the nation was formed between 1790 and 1860. Innovations in the productions of goods and services coupled with the transportation revolution led to rapid urbanization (MC, Pg. 56). In Southeastern Michigan, this urbanization took form in the 50 villages that developed during the pre-civil war years (EV1, 1:00/12:10). These villages were connected through a network of roads (EV2, 1:12/2:30). These roads were the basis for establishing rail lines and industrial centers. By 1926, these villages and towns had been incorporated into the City of Detroit, and the population was nearly one million residences (DGA, 1:00/1:10). The manufacturing industry continued to expand, and contributed to the population doubling in less than 25 years. The rapid growth of the manufacturing industry translates into rapid population growth. This rapid growth can also destroy sectors of the economy.

Creative destruction is the minor pains that one industry suffers because of the greater gains of a replacement industry. The nation has felt the pains of creative destruction, as manufacturing has been displaced by the service industry. Detroit specifically has felt the pains of creative destruction, but with no benefit of an emerging industry. Creative destruction can also be described as the pains that an area feels because of globalization (UEA7, Pg. 33). Detroit feels the pains of creative destruction from globalization as well. Manufacturing job have been outsourced to other countries and the unemployment rate has risen to nearly 10%. There are no industries in Detroit to support the talent pool of workers that are available. In other words, globalization and the service industry have wreaked havoc on the manufacturing based economy of Detroit and the surrounding areas. The benefits of creative destruction have not been realized. The Great Lakes Global Freight Gateway Project will provide the benefits of creative destruction to the region though repurposing of assets and repositioning of the major industry in the region. This repositioning will combine manufacturing and transcontinental shipping from the industrial Midwest, through Detroit and on to The Port of Halifax. From there, goods will be shipped to and from emerging markets in Europe, Africa, India and China.

Detroit is better situated than any other city for repositioning its main economic engine to transcontinental shipping. The location on an international border and the system of rail lines and roadways in the region, are the assets that make this opportunity possible. Industrial centers and rail lines were built along these routes as the transportation revolution provided faster ways to trade goods (DRF1, 1:07/4:47). These roads also became the basis for the interstate highway system in the region (DRF1, 4:24/4:47). The trucking industry uses these highways to move goods to and from manufactures all over the Midwest and Canada. Canada is an integral part of this international effort to bring economic prosperity to the region. Canada’s rail assets offers mail line service through Montreal to The Port of Halifax. Using Detroit to access the Port of Halifax gets goods to and from an international port quicker and cheaper than the Chicago to Norfolk route. The Detroit region is the median location for Midwestern manufacturing inputs and outputs that are bound for worldwide markets (Mc, Pg. 43). At the median location, transportation costs are the lowest for shipping to any point in the supply chain. Rent cost are also reduced by shipping from the median location (Mc, Pg. 86). This reduction in rent cost is because manufacturers do not need to be located in the central business district (Mc, Pg. 92).  The Great Lakes Global Freight Gateway will provide manufacturers from the Midwest the opportunity to move products to and from the global marketplace quicker and cheaper. This system of industrial facilities, road and rail access on both sides of the border make the Southeastern Michigan/Southwestern Ontario region a prime location for becoming the transcontinental shipping hub of the Midwest (Mc, Pg. 46).

The region has strong input-output relations that form an agglomeration economy (Mc, Pg. 74). The downtown business district, airports, industrial centers and supporting service industries are centers of economic activity for growth around the repositioning of the city (Mc, Pg. 79). The clustering of these economic activities makes Detroit well suited for a transformation into a global city (Mc, Pg. 71). However, this transformation can only happen by using the infrastructure in its intended role. The role of infrastructure has always been to move freight from place to place (Mc, Pg. 83). To facilitate that role, new bridges and tunnels need to be built to accommodate the increased capacity of rail travel along the route (HD, 3:15/5:36.) The investment is minimum compared to the revenue possibilities of shipping through Detroit to Halifax, as opposed to using the Chicago to Norfolk route. This transformation from manufacturing only to manufacturing and transcontinental shipping can create growth and rival Chicago as one of the largest urban areas in the Midwest (Mc, Pg. 61).

The Port of Halifax is the only port in North America that is now capable of handling the new Maersk Triple E container ships. These ships are built for economies of scale and can transport up to 18,000 shipping containers. Businesses that want to expand into the emerging markets of Europe, Africa, India and Asia have new opportunities by using the Detroit to Halifax shipping route. The Triple E ships allows for parts and finished products to be moved across the world in greater quantity than what is now available.

 

Summary / Conclusion

The Great Lakes Global Freight Gateway can take advantage of the available underutilized assets in the Detroit region to the benefit of all stakeholders. The growth potential of this project will create economic activity in the region that has not been seen in a half century. The underutilized infrastructure and unemployed industrial workforce presents an opportunity to get this project moving very rapidly. The industrial Midwest has the ability to move more products to and from global markets all while reducing expenses and increasing revenue. Revenue increases stimulates growth in the industry that stimulates population growth in the region. The Port of Halifax has provided an opportunity for the industrial Midwest to capitalize on underused assets. These factors are what make urban area grow. The Great Lakes Global Freight Project is the engine to make this growth possible and will be a boon for all stakeholders.

References

McDonald, J. F., & McMillen, D. P. (2011). Urban Economics and Real Estate: Theory and Policy. (2nd ed., p. 12,66,44,56,43,86,92,46,74,79,71,83,61). Danvers, MA: John Wiley & Sons.

Sase, J. F. (2009). Urban economic anatomy: Upheaval & Change in Detroit. (p. 33). Lathrup Village, MI: SASE Associates.

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Sase, J. F. (Producer). (2011). Early Villages That Became Detroit – Part 2. [Web Video]. Retrieved from http://www.youtube.com/user/urbanecondetroit

Sase, J. F. (Producer). (2011). Detroit Growth by Annexation (Study Version). [Web Video]. Retrieved from http://www.youtube.com/user/urbanecondetroit

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Sase, J. F. (Producer). (2011). Great Lakes Global Freight Gateway. [Web Video]. Retrieved from http://www.youtube.com/user/urbanecondetroit