Sailing from Boston
Central Mass. manufacturers find a growing link to the world only 45 miles away
BOSTON — Millions of pounds of steel rolling mill equipment made in Worcester and bound for the Far East helped push container cargo shipments to a record last year at the Port of Boston, the nation’s oldest continuously active port.
Morgan, a Siemens VAI Business that designs and manufactures steel rolling mill equipment, much of it for China and Korea, shipped 8 million pounds of cargo last year through the port. Driven by rising business with Asia and a $28 million upgrade to the port’s Conley Terminal, container cargo rose 10 percent in 2007 to a record 220,339 TEUs, an industry measure.
Completed last June, the upgrade took about two years. It added new equipment, including eight massive rubber-tire gantry cranes that loom over giant stacks of shipping containers, and doubled container storage and processing capacity from 155,000 TEUs, or Twenty-foot Equivalent Units, to 310,000 TEUs, all without changing the terminal’s 100-acre footprint. A TEU equals a 20-foot-long container.
The upgrade has also improved efficiency, reducing the time it takes trucks to deliver and receive containers from 56 minutes to about 36 minutes.
“The project was certainly well worth it,” said Port Director Michael A. Leone. “We have seen roughly a 10 percent growth annually in volume over the past four years, and expect to see between 5 percent and 8 percent growth through 2025, with overall container volume doubling to 500,000 containers per year. That will increase the economic impact of our business from 32,000 jobs to 77,000 by 2025, and the total economic impact on the region to grow from $2.4 billion.”
With an aggressive campaign by the port to promote its growing Asian import-export traffic, Central Massachusetts companies such as Morgan find the port cheaper and quicker because of its proximity — 45 miles versus 200 miles to New York/New Jersey — and prefer to use it when possible. Headquartered in Worcester, Morgan has used the port for the past 10 years to export steel mill equipment to Europe and the Far East.
“Using the Port of Boston saves Morgan about 35 percent on the inland transportation to bring the empty container to Morgan for loading and then truck the full container back to the Port of Boston,” said Stephen A. MacConnell, international logistics manager for Morgan.
“China is by far our largest market and Korea is second-largest. So sailing to those areas out of Boston — that is what we are using the port for,” he said. Direct sailings into the port of Shanghai make Boston attractive, he said. “Also, the Port of Boston is less congested than New York, so there is a time savings as well.”
Direct service to Asia began in 2002. The China Ocean Shipping Co., or COSCO, and its affiliates from Japan, Taiwan and Korea call on Boston three times per week. The port also offers two European carriers, including ships twice weekly from Mediterranean Shipping Co., one serving Northern Europe and one the Mediterranean, and a ship from CMA-CGM every other week serving Northern Europe.
Nonetheless, Morgan still turns to New York/New Jersey, citing a lack of direct and sufficiently frequent service to Europe as factors limiting the use of Boston to about one-quarter of what the company ships.
“The bulk of what we ship via ocean goes through Port Elizabeth because of availability,” said Mr. MacConnell. “Sailing schedules are very limited out of Boston.”
It’s a chicken-or-the-egg dilemma, he said. If more companies use the port, Massport has told him, more steamship lines will call there. But Morgan can’t use the port as often as Mr. MacConnell would like, “because the frequency of sailing is not there.”
Another Worcester company has chosen New York/New Jersey for the same reason, and also because it is less expensive.
“It comes down to an economic decision,” said James M. Brennan, transportation manager for Saint-Gobain Abrasives Inc. in Worcester, which ships its grinding wheels and sand paper to Europe. “The Port of New York and New Jersey generally has more offerings in terms of boats and better rates. Boston just has higher overall total costs for us,” he said.
While higher diesel prices add to the cost of shipment through New York/New Jersey, Mr. Brennan acknowledged, “inland transportation is only part of that total cost. It is not insignificant, but it is not the biggest part of the cost; it is the ocean rate that is the driver.”
The Port of New York/New Jersey ranked third-largest in the country in container traffic last year, after Los Angeles and Long Beach, Calif., with more than 5 million TEUs, according to the American Association of Port Authorities. Boston ranked 30th, with 220,339 TEUs.
The formula for the cost of shipping goods overseas and for choosing a port depends on a variety of factors that include their distances from distribution centers, number of boats, cargo processing time, docking rates and boat routes.
Docking rates are set by terminal operators such as the Massachusetts Port Authority, which operates the Port of Boston, and vary based on the length of the vessel. The rates are regulated by the Federal Maritime Commission. Rates at the Port of Boston are higher than at the ports of New York or New Jersey.
At the Port of Boston, which serves New England, the rates are $800 for ships less than 500 feet, plus $7.35 to $9.50 per foot above that length for those above 500 feet, with the per-foot rate increasing with each 100-foot increase in boat length. The ports of New York and New Jersey set their length rates at $5.62 to $8.30 per foot above 500 feet, allowing carriers more savings while docking.
The Port of New York/New Jersey is far bigger than Boston, Mr. Leone noted, with five terminals on hundreds of acres dedicated to container operations serving a population base that is one of the largest in the world. And size attracts services. “We will never be New York/New Jersey, but we can be a tremendous alternative for New England-bound freight even though we don’t have the same amount of carrier services that call,” he said.
Currency shifts pose a challenge to attracting more service now, said Mr. Leone. A strong euro has made business between Asia and Europe more profitable, influencing where carriers direct ships, while a weak dollar has dampened U.S. demand for imports while helping push exports higher.
“As the U.S. economy bounces back, the Port of Boston will be well positioned to attract additional services,” said Mr. Leone, citing the potential impact on the port of the widening of the Panama Canal to accommodate larger ships that now call only on West Coast ports, and greater use of the Suez Canal by steamship lines from Asia, connecting Boston to Southeast Asia, India and the Middle East.
Manufactured goods exported from the Port of Boston rose 23 percent last year to almost $1.6 billion, said Paula L. Murphy, director of the Massachusetts Export Center in Boston. Along with import growth of 10 percent, total trade through the port was $10 billion, up from $9.23 billion in 2006, she said.
“It does show the expansion has resulted in significantly more cargo going through the port,” said Ms. Murphy.
Any expansion of the port’s capability and capacity “is going to encourage more international routes, and publicizing that to exporters is important,” she said. “So, giving more direct access to export markets from the port is going to be important, both in destinations and frequency. That is a challenge they have had in the past.”
More expansion may be ahead. Massport is negotiating with an adjacent landowner to acquire property that would give the port 30 more acres of container-handling capacity and the ability to develop a third deepwater berth for vessels, said Mr. Leone. Additional capital investments are also necessary to increase traffic, such as more cranes and yard equipment to service ships and a larger terminal layout. Maintenance and deepening of the harbor are also critical, the port says.