Port of Boston looks to get a bigger slice of the pie

Massport’s Conley Terminal in the Port of Boston is its largest container facility. But the port is boxed in by much larger players, such as the ports of Montreal and Halifax and the real driver on the East Coast, the Port of New York/New Jersey. But in this new era of bigger ships and bigger alliances can a medium sized port get a bigger slice of the pie?

The Port of Boston has always had a prominent role in the transportation system of the Northeast. But the current challenge for the Massachusetts Port Authority (Massport) is how to keep the Port relevant in an era that increasingly emphasizes the importance of mega containerships and hub port calls. The problem is partly one of geography, as New England and the Northeast in general, aren’t as large nor growing as fast as other regions such as the Southeast. Further, the greater New York metropolitan area is the largest market on the US East Coast, and naturally, for ship deployment purposes most planning starts there and works outward accordingly. Unboxing the Box The Port of Boston, New England’s largest port is “boxed” in. There is no denying the impact of geography: there is the Canadian Port of Halifax (442,000 Teus) to the northeast, the Port of Montreal (1.4 million Teus) to the northwest, and the mega-Port of New York/New Jersey (5.47 million Teus) to the southeast. To a lesser degree the ports of Norfolk, Virginia; Baltimore, Maryland; and Philadelphia, Pennsylvania can be added to the list as the competition for slots on containerships is closely tied to vessel rotations. In comparison, Massport’s Conley Terminal handled just under 200,000 Teus, a good number for the Port but relatively small compared to regional rivals. The real question is how big is the New England/Northeast market, and secondarily, how much of a slice do the other three ports take? The Port of Halifax and Nova Scotia have a relatively small population, and most of the containers are destined inland to Canadian metropolitan regions (nearly all of which lie within 100-miles of the US border) or the US Midwest. Although Halifax has always had close business ties with New England (Eimskip America has service connecting Portland, Maine and Halifax), the main markets are inland. The Port of Montreal, a thousand miles inland, is the closest major seaport to the Midwest and might shift more containers to and from Northern Europe than any North American port. Finally, the mega-Port of New York/New Jersey is not only a major gateway for traffic moving to inland destinations, but a major consuming area unto itself. It is arguably the largest “New England” port as it draws well over 200,000 TEUs out of the region, as the congestion on Route-95 would amply suggest. But the real question of how many boxes actually move in and out of a region that has a GDP similar to the Netherlands, with around thirteen major urban centers and a relatively high per capita income is hard to answer. Is the New England/Northeast market a million TEU region? Possibly with a number of caveats, but from the Port of Boston’s perspective there are more TEUs to be gained than the current 200,000 TEUs throughput. Maritime Port Director Deborah Hadden, who last September had the “interim” tag removed from the title, explained a little bit of the thinking inside the Bay State’s bonded agency. She told the AJOT that the “existing footprint is capable of handling 500,000 TEUs” more than double the current throughput. In both an Army Corp of Engineers study (necessary to justify permitting for dredging) and a private study, it was concluded that there was, as Hadden put it, a “bigger slice of the pie” to be had for the Port of Boston. Essentially, the question is how to get another 200,000 TEUs in calls at the Port. There are more than a few moving pieces for the Port to increase their market share from the surrounding ports, particularly the Port of New York/New Jersey. In an era of mega-ships and mega-ports, Massport is embarking on addressing the question of where “medium sized” ports will fit in the rotation equation. How you keep the larger vessels calling is a challenge not only for Massport, but for smaller ports nationwide that fear being eclipsed by the drive for larger ships with reduced port calls at hub ports. There are some very straightforward selling points for a ship call in a market like New England. There is considerably less landside traffic congestion that enables the trucks to make 30 minute turn times. Equally, the berths also enable quick turns and little waiting. However, as with all smaller ports, picking a few containers in and out is inefficient and productivity compared to larger ports handling larger ships is low. Also moving equipment back to places of greater need can be an issue. It is a complex problem to address, but there are some fundamentals. The first is channel depth and that means dredging. Secondly, the berth and cranes must be able to service the ship. Finally, the infrastructure from the yard outward must be able to handle the traffic. Massport after fourteen years of trying has an “approved dredging plan” that will bring the outside Channel (Broad Sound North Entrance Channel) to 51-feet and President Roads to 47-feet. The berths are also dredged two-feet beyond their 45-foot approval to match the 47-feet at President Roads. The dredging plus a 10-foot tide, while not ideal, should give the port adequate depth for the next generation of containerships that fully laden draw around fifty feet. The dredging plan has made it into the bill before Congress, which is a victory of sorts by itself. Another major bullet point is the $30-million “dedicated truck haul road” is now out for bid. The dedicated truck route will wind through the adjacent property [Coastal Oil property purchased in 2008) and two other sites that Massport has acquired for terminal expansion. The road will take the trucks off of the neighborhood lined East First Street in South Boston and smooth out truck flow by linking it directly to Summer St. Hadden thinks the dedicated truck haul road project will be completed in two years. Originally, when the “Coastal Oil” property was purchased, it was being thought of as a space for additional container storage but as Hadden explained, “we are now thinking of adding or extending the berths to get them [the berths] as far off the flight path as possible.” One of the unique features of Conley Terminal is it sits on the opposite side of the harbor from Logan International Airport (also part of Massport), and the air draft on the cranes is an issue with the flight paths to the airport. Low profile cranes are now deployed, but moving the berths back could be an advantage. According to Hadden, the Port Authority is also looking at getting possibly two more post-Panamax cranes with a longer reach to accommodate the larger ships that will be calling. Getting in the Rotation The strategy of dredging the channels and improving the facilities at Conley Terminal would mean little if the ships bypass the Port. With the advent of containership operator alliances, it’s critical to retain port calls as finding a replacement alliance is considerably more difficult than finding a replacement for a single steamship line. For smaller ports, finding an alliance that fits isn’t necessarily a given. In the case of the Port of Boston, the recently FMC approved P-3 alliance composed of MSC [Mediterranean Shipping Company], CGM-CMA and Maersk has said that there will be a service at Conley Terminal. MSC has long been a “good customer” of the Port and under the revamped P-3 schedule, a Mediterranean service schedule will keep MSC calling and add the partners CMA-CGM and Maersk to the mix. Maersk, which previously had a strong presence in the New England market, certainly makes for a good fit. Additionally, CMA-CGM has at times had services in the Port and opens up some potential in North-South services. Service is expected to begin in May or June with interim ships of over 6,000 teus before the 7,500 teus are deployed. These ships will be a considerable boost over the 4,500-TEU ships now in service. The size of the vessels adds incentive into both the dredging plan and getting container cranes with a longer reach. Additionally the new CKYHE alliance (formerly CKYH) consisting of Cosco, K-Line, Yang Ming and now Evergreen (although the service is designated for Asia, North Europe and Mediterranean, not North America) is revamping their participation on the all water service with Evergreen and Hanjin each adding a vessel. This all-water service from Asia uses the Panama Canal and is viewed as an alternative to the West Coast ports. Another point that came out of the studies for the dredging is that because of the smaller vessels calling in the port, there were fewer slots available. Hadden believes that one advantage of the larger ships is the availability of more slots for the local market that will help boost the Port’s market share. On the issue of productivity the Port and the ILA (International Longshoremen’s Association) have succeeded in hammering out some key ideas that are as Hadden describes it a “win win” for both sides. Labor has the advantage of working a ship and leaving for the day while flexible start times are key for management. The formula has reportedly added three-gross crane moves per hour and with bigger vessels with a larger volume of container moves productivity should climb. To help control emissions the port spearheaded a truck replacement program for older vehicles. Twenty old trucks, used mostly by independent owners in container drayage, were replaced with new trucks. Through an EPA grant the truckers got $25,000 towards the new truck. As Hadden points out, although twenty doesn’t sound large, these trucks were regular callers at the port, so the impact of replacing them with newer vehicles with less emissions was a big step in the right direction. The next few years could be telling not just for Massport and the Port of Boston, but many ports similarly situated. The New England market’s port geography holds some disadvantages for the Port of Boston but none which are unto themselves an end game. With the larger vessels in the rotation, perhaps for the first time in decades, improving market share is an obtainable goal.