PORTLAND – The Maine Port Authority has started a yearlong, $5 million reconstruction project at the International Marine Terminal that’s expected to increase its efficiency and quadruple its capacity for cargo shipping.

The work, funded by an economic recovery grant from the U.S. Department of Transportation, began Sept. 1 and will be completed by August 2012, said John Henshaw, executive director of the port authority.

Reed & Reed of Woolwich is the general contractor on the project, which includes demolishing a former ferry terminal and U.S. Customs building, expanding the pier and cargo-container storage area and constructing a new port operations building on Commercial Street.

“We’re increasing by twofold the cargo handling area,” Henshaw said. “It will allow us to load and unload containers more efficiently.”

The improvements will make it possible for a container shipping service, which resumed operation at the terminal in July, to increase its cargo handling capacity from about 50 containers per week now to about 200 in the future, Henshaw said.

A large part of the project consists of filling, grading and reinforcing a four-acre parking lot at the terminal — the former home of the Scotia Prince ferry — which will become additional storage area for cargo containers. The new port operations building will replace a trailer that has been used by cargo operators for years.

The authority received a total of $14 million in federal grant money to upgrade three Maine ports. In Eastport, the authority is building a $2 million bulk cargo storage pad to complement a $4.5 million conveyor system that was funded by a 2009 state transportation bond, Henshaw said.

The authority also plans to purchase a $7 million mobile harbor crane for Searsport, to improve its capacity to lift bulk cargo, including wind turbine components.

The authority started leasing the International Marine Terminal from the city of Portland in June 2009. The 33-year agreement calls for the state to make major infrastructure improvements in the first few years and share profits with the city in the future.

Portland was served by container ships until 2007, and by a barge that carried containers to New York until 2009.

A container service launched last summer by New York-based American Feeder Lines re-established cargo transportation between Boston, Portland and Halifax, Nova Scotia. The service may expand to other East Coast and Gulf Coast ports in the near future, said Jack Humeniuk, representative of the local longshoremen’s union.

For now, the service is mostly export-oriented, shipping Maine forest products and goods for companies such as L.L Bean in Freeport and White Rock Distilleries in Lewiston.

The new container service employs three full-time workers and 15 part-time workers from the longshoremen’s union, Humeniuk said. That number will grow if the container service expands.

Staff Writer Kelley Bouchard can be contacted at 791-6328 or at: [email protected]