Maine companies eye the ocean to move their goods as new Portland ship service opens

Posted May 27, 2011, at 12:44 p.m.
Last modified May 27, 2011, at 5:03 p.m.
Eric Zelz | BDN
The American Feeder Lines' New England container ship remains moored at the state's International Marine Terminal in Portland May 24, 2011, as crew members prepare it to begin making cargo runs in June between Portland, Halifax, N.S., and Boston.
The American Feeder Lines' New England container ship remains moored at the state's International Marine Terminal in Portland May 24, 2011, as crew members prepare it to begin making cargo runs in June between Portland, Halifax, N.S., and Boston.

Every day, the workers at FMC BioPolymer in Rockland take seaweed from around the world and process it into carrageenan, an ingredient in everything from ice cream to marinades.

The seaweed comes across the oceans, packed into containers aboard giant, seafaring container ships. The ships dock at Halifax, New York and Boston, and the containers full of seaweed get put on trucks that trundle into Maine, along the state’s roads to Rockland.

Despite Maine’s vast coastline and suitable port facilities, there’s no container ship service into and out of the state, except for livestock being shipped out of Eastport.

But that’s set to change.

Early next month, American Feeder Lines plans to launch a container ship service linking Portland, Boston and Halifax, Nova Scotia, in a triangular route. Its feeder cargo ship — the AFL New England — is small by comparison to the behemoths that ply the global trade routes; it can only hold 700 20-foot containers, or their equivalent.

But that feeder will hook up with its big sisters in Halifax, where dozens of shipping lines operate, sending cargo to Europe, Asia, South America and other key destinations. The cargo from Portland and Boston will be loaded onto those ships and sent globally. Imported goods destined for Maine businesses will make the same trip, only in reverse.

It’s analogous to an air traveler leaving Bangor on a small, regional jet to LaGuardia in New York, to board a jumbo jet for a further destination.

That opportunity to cut time, road travel, extra steps and hopefully cost out of both exports and imports has a number of companies around the state at least interested, and in some cases, excited. The development shows the interconnectedness of Maine’s businesses and transportation infrastructure, as well as the growing importance of foreign trade and services that facilitate it.

For a company like FMC, that could mean getting their imports much closer to Rockland, and cutting down on the amount of time the containers are on the road.

“FMC BioPolymer has always had a very good relationship with the port of Portland and if economically feasible we try to support the port and the state of Maine,” said Jim Fitzwater, spokesperson for FMC Corp., which employs 130 people in Rockland “We will absolutely evaluate all our options taking into consideration frequency of service, transit times, vessel capacity, free time allowed at the port and other offerings including costs.”

Rudy Mack, chief operating officer at American Feeder, said the company planned to have agreements signed with two major shippers by the middle of next week, and with many more within two weeks. And the Portland-Boston-Halifax route is just the first step in an ambitious plan that’s been in development for 10 years that would bring domestic container shipping to the East Coast, from Portland down to Houston.

Filling the shipping void

Container service to Portland has been spotty for a number of years. The last container ships stopped calling on Portland in 2008, said John Henshaw, executive director of the Maine Port Authority. An intermittent — and slow — barge service hauling containers from Portland and New York ended its run last August.

“I do believe the reasons never had to do with the potential business that they could gather here in the state,” said Henshaw. “That’s why we have always been optimistic about resuming service, we thought there was interest among our shippers.

“Businesses are driven by cost and speed to market. If you can’t offer those things they’re not going to use the service.”

Mack said his line plans weekly stops in each of the three ports. The company is currently in talks to have 10 feeder ships built in the United States so it can comply with federal shipping laws and start the coastal route. How it runs the New England-Halifax route will directly impact its ability to attract investment and interest in the coastal plan, said Mack.

“The next step, the much larger step, is the coastal feeder service,” said Mack. “We have to build up the credibility in the north.”

American Feeder Lines was founded by three partners who have invested privately to start the service. Mack has more than 40 years in global container shipping, and worked with Hapag-Lloyd for 35 years as a regional president for Asia and the Americas. Tobias König is the CEO of the line; he is the founder and managing director of König & Cie, a Hamburg, Germany-based investment house that specializes in shipping. And Percy Pyne IV is chairman of American Feeder. Pyne is founder of The Pyne Cos. Ltd., a real estate management and investment firm based in Manhattan.

The AFL New England is docked at the International Marine Terminal in Portland, from where it will operate. The state leases the port from the city, and will receive a set tariff for goods shipped from it.

The state has been trying to get a shipper to bring service to Portland for several years, Henshaw said. The service planned should be attractive to Maine businesses, he added.

“What we bring to the table is consistency, reliability and hopefully cost,” said Henshaw. “That will make it a successful operation.”

Jim Theriault, vice president of marketing and materials handling for Sprague Energy Corp., said his company warehouses and ships a lot of bulk pulp from Maine mills out of its Merrill’s Marine Terminal in Portland.

Having container service out of Portland will allow mills to “containerize” pulp into smaller shipments, giving them other export options. If they want to do that now, they have to truck product down to Boston or New York, warehouse it there and then ship it, adding cost, time and complication.

Previous container service didn’t work well in Portland, said Theriault, because it was operated by a shipping company, and its competing companies were reluctant to ship on the vessel. American Feeder Lines is a third party, not a competitor to any of the major shippers, he noted.

Alison Leavitt is director of business development for Albatrans Inc. in Portland, a freight forwarding company. Her company handles logistics for companies seeking to move cargo in and out of the U.S. – sort of a travel agent for product.

Having a successful feeder line operating out of Portland will help maintain the working waterfront, and provide jobs in Maine, she said. Keeping the port viable economically means companies will be better able to get goods — from wind turbines to computer components — in and out of Maine.

“Anyone shipping anything in or out of Maine, Boston, New England will have the option to use port of Portland to get goods to and from anywhere,” said Leavitt.

And it will take trucks off the road, relieving both pollution and traffic congestion, she said.

Leavitt said she expected cost savings for Maine businesses who now have to ship out of Boston or New York. In some cases, companies importing from Asia have cargo dock in Vancouver, British Columbia, and transport the goods by rail across Canada, down to Lewiston, and then by truck to their final destinations.

The savings will vary by customer; they may save a few hundred dollars, or $800, or $75, she said. In some cases, it may be a wash. But getting companies signed on to use the service in volume is important, she said.

“If they don’t support it, it’s not going to work. It’s a new thing, maybe they won’t save as much as they thought,” said Leavitt. “But if we can get it going, keep it going, the costs will go down as the volume goes up — that’s how it works.”

Spirits, tissue and bottled water

“It has great potential. It’s always a matter of cost, but operationally, it definitely offers us an advantage,” said Harold Jones, traffic manager at White Rock Distilleries in Lewiston. “If we’re able to save costs, that’s certainly a great advantage. We’re anxious to get the rating in place and see what the cost structure is.”

White Rock currently imports 30-plus containers a month, mainly French grain alcohol used as a base for its vodka, but also finished scotch, cognac and other spirits. The company shipped in and out of Portland when there was service, said Jones. Now they ship into Boston, and truck the goods to Lewiston.

“It did amount to significant cost increases to bring the goods into Lewiston” when the Portland service stopped, Jones said.

Jones said he’s also very interested in the developing short-sea shipping route American Feeder is pursuing. Much of their finished product goes down the East Coast and into the central part of the country. If he could link up with a barge service up the Mississippi, that could save significant transportation costs, said Jones.

Ken Rogers, regional logistics manager for Nestle Waters North America, similarly saw potential for Poland Spring water.

Poland Spring averages 400 tractor trailer loads out of Maine a day, with more than 70 percent going to metro New York and northern New Jersey. If he could put the water on a container ship to New York, then on a truck to local markets, “that really does pique our interest,” said Rogers.

“We’ll keep an open mind to it and reevaluate how we’re shipping to market.”

L.L. Bean is interested in exploring the service for the goods it imports, said a spokesperson. Sappi Fine Paper North America is also evaluating the service for exports from its Westbrook and Somerset mills, but hasn’t yet made any decisions, said Mike Segal, director of logistics.

“Sappi recognizes that economic development investment in Maine depends on sound transportation policies and options,” he said.  “We are always exploring new and innovative ways to efficiently serve our regional and global customers.  The American Feeder Line may be one such option, and we are currently evaluating the efficiencies and economics of this project. ”

Keith Van Scotter, president of Lincoln Paper and Tissue, said if the numbers add up, the feeder service might open up an entirely new market for his mill’s products, which typically ship domestically.

“If we can find a way to move our product cost effectively to Europe – there’s market there,” said Van Scotter. “This might be an opportunity, we don’t know yet. It’s all about the cost.”

Most companies said they were waiting to see rate cards to figure out exact savings from shipping out of Portland. Mack, of American Feeder Lines, said those cards would be available soon, pending the agreements with the shipping lines out of Halifax.

Just the start

Mack said the hub-and-spoke feeder ship model is well-established in Europe and Asia. The Panama Canal is undergoing expansion, which is expected to be complete in 2014. That will mean bigger container ships from Asia coming to U.S. ports, which will drive the need for feeder ships to take cargo to and from them.

As the short-sea shipping plan takes off, there’s potential for other ports in Maine to be serviced by American Feeder Lines, Mack said.

“We will look at each and every port once we have stared the service — shall we extend our service, put more ships into the feeder service? It comes with the flow,” said Mack. “We will look at the whole trade in New England, and what’s necessary. We look at is there cargo, does it make money, can we offer the service – then we make a fast decision.”

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