New England is one of the nation’s most affluent regions. A strong consumer driven economy keeps ships calling Boston’s 617 area code. The port is the region’s hub and annually handles over 200,000 TEUs. It has become a model for mid-sized ports nationally – a most remarkable improvement from two decades ago. But as is the case of many U.S. niche ports, dredging is the single most important challenge and will Washington, DC answer the call?
In a few days (of this writing March 28) the Port of Boston will host an 8500 TEU COSCO (China Ocean Shipping Company) vessel at the port’s Conley Terminal. Although the Port has handled 8,000 TEU vessels before, this ship will be the largest ever to call. This is a test for the Port and a glimpse at two potentially very different futures for not only the Port of Boston, but all mid-sized U.S. ports facing the challenge of remaining competitive in the mega-ship era.
There are a lot of moving parts to a containership call. Because of channel depths the 8,500 TEU ship will have to come in on a high tide to the dredged berth at Conley Terminal. While there is nothing new in the procedure, it ties the port call to a window of opportunity. Once at the berth the real challenge begins. The terminal’s gantry cranes will not be able to reach every container, thus vessel stowage is an issue. Historically, the port’s container throughput was heavy on the inbound side, at times over 80% (loaded TEUs). Over the last decade the imbalance has narrowed and 62%-66% inbound to outbound is not an uncommon monthly split (see chart on page 16).
Unlike other Northeast ports, the presence of Logan Airport directly across the harbor creates an issue of providing adequate height between the airport’s flight paths and the height of the gantry cranes. The port has low profile cranes to address this problem, albeit at a cost of outbound reach (maximum 138-feet cranes 3,4,5 & 6). The port has been working on adding higher capacity cranes which will work within the FAA (Federal Aviation Authority) air draft guidelines.
It’s just another moving part in the puzzle that must be assembled to keep ships calling.
Why Call 617?
In 2015 Conley Terminal set a new record, posting an 11% increase in container volume 2014, while handling more than 237,000 TEUs. Export volumes increased a surprising 5.4% while import volumes climbed 8.1% over 2014. These are exceptional numbers for a mid-sized niche port serving the New England region.
The port’s productivity has been very good. In 2015 the adjusted gross productivity per crane was 30.86 lifts per hour. This doesn’t factor in the severe winter storm period in February (27.62). For most months in 2015 productivity was over 31.20. In addition to reasonable productivity, the port has little truck traffic congestion, a problem which plagues many of the nation’s mega-ports.
For containership operators like Mediterranean Shipping Company (MSC), COSCO, “K” Line, Yang Ming, Hanjin, Evergreen, Maersk Line and Hapag-Lloyd, the greater New England area, and especially the 617 area code of Boston, is an attractive market and getting more so. In January General Electric Company, Inc. (GE) announced it would relocate its corporate headquarters to Boston. GE Chairman and CEO Jeff Immelt explained the rationale behind the relocation to the Hub when he said, “GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry…Greater Boston is home to 55 colleges and universities. Massachusetts spends more on R&D than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world.”
All of these factors point to an affluent region that is growing. New England has a GDP of nearly US$1 trillion – a larger GDP than that of the Netherlands. Put into the context of the “Northeast” as a whole, it represents about one-third of the region’s estimated US$3 trillion GDP (which itself would make the Northeast the 5th largest economy in the world). It’s one of the world’s largest consumer markets, a magnet for containership imports. The big question for containership operators is how to service the region cost effectively.
The Bottom of the Bottom Line
New England is hemmed in by Canada to the north and northeast, the Atlantic to the east and south and New York to the southwest. For containership operators there are options to serving the New England market. The Port of Montreal is around 300 miles north, Port of Halifax just over 479 miles northeast (almost 100 more by land) and Port of New York/New Jersey, a little over 200 miles to the southwest. Add in the factor that ports throughout the entire Northeast corridor are competing for freight, and the importance of being competitive is clear. And that begins with channels at a minimum depth (45-50 feet) able to handle (without playing the tides) for at least mid-range 7000-9000 TEU ships. This new mega-ship reality demands dredging.
While there is nothing new for containerships riding the tide into berth, it restricts the time available to handle the vessel; or as one veteran port director outside the region explained to the AJOT, “it’s like an airport runway only being open a few hours a day.”
Last week, (March 24) Massport’s board inked approval of a Project Partnering Agreement with the U.S. Army Corps of Engineers (ACOE) and MassDOT to start the ‘Boston Harbor Dredging Project’. The agreement allows the ACOE to bid contracts for construction on a Confined Aquatic Disposal cell (CAD cell), which is necessary for the maintenance dredging of the Inner Harbor Main Ship Channel. The maintenance dredging will reestablish the inner harbor depth to 40 feet and is the first phase of the larger dredging project. This section of the harbor was last dredged by the ACOE in 1986. Massport and MassDOT will pay $5 million, while the ACOE will spend $12 million from its FY’16 Work Plan for the design and construction. CAD cells have been constructed in Boston Harbor for past dredging projects.
However, as the 8,500 TEU ship call so amply demonstrates, restoration of a 40 foot deep channel isn’t enough for the future. Back in June 2014, President Obama signed the Water Resources Reform and Development Act (WRRDA) into law and the Port of Boston became part of his remarks on water infrastructure and harbor deepening projects across the country. The $310 million Boston Harbor Dredging Project is designed to deepen the main channel from the existing 40 feet up to 51 feet, which obviate the need of the larger boxships to play the tides – defacto leveling the playing field with other regional ports.
Without adequate channel depth it will be hard to keep the containership services calling at niche ports, no matter how great a ‘golden apple’ New England’s economic activity appears. Further without the Federal guarantees, it’s difficult to move forward with other infrastructure measures that have been long in the planning.
This is the challenge not just for the Port of Boston but nearly every mid-range port in the US.