PORTLAND – A strategic partnership between Iceland’s largest steamship line and New England’s largest railroad is poised to transform the quiet port of Portland into a hub for freight crossing the North Atlantic.

Starting later this month, container ships from Icelandic Steamship Co., also called Eimskip, will be connecting Portland directly with cities as far north as Murmansk, Russia, 125 miles above the Arctic Circle, and as far south as Rotterdam, Netherlands, Europe’s largest port.

Portland will be Eimskip’s only U.S. port of call, and officials say the company probably will eventually move its North American corporate offices here from Virginia Beach, Va.

Eimskip will be offering Maine its first direct container service to Europe in 33 years.

Portland has been without a container service in any form for nearly a year, since the New York-based American Feeder Lines suspended operations and closed in April.

The new twice-a-month service will create a more stable supply chain for Maine manufacturers than the coastal barges and container ships that have offered sporadic “feeder” service between Portland and Halifax, Nova Scotia, over the past two decades, said John Henshaw, director of the Maine Port Authority, which played a critical role in upgrading the city-owned International Marine Terminal and recruiting Eimskip.

Pan Am Railways this spring plans to extend its railroad tracks on the Portland waterfront about 1,500 feet to reach the International Marine Terminal, where the Eimskip vessels will dock. When the rail extension is finished, containers will be transported from ships to trains at the same terminal for the first time in the port’s history.

Because Eimskip is already serving existing customers, it doesn’t need to attract new customers to make the service viable, according to Gylfi Sigfusson, the president and chief executive officer of Eimskip.

When Eimskip starts service in Portland, it will continue serving its current customer base, he said, with 5,000 containers flowing through Portland annually.

NEW INTEREST FROM RAILROAD

In the past, Pan Am Railways, which owns tracks along the western waterfront, has shown little interest in supporting the port’s on-again, off-again container business.

But this time, the railroad is aggressively using the new Eimskip service to market itself.

The difference now is that Eimskip has a steady customer base and will be bringing containers that are filled with freight, unlike previous feeder carriers, said Michael Bostwick, senior vice president of marketing and sales at Pan Am Railways.

He said the railroad will be able to find customers to fill containers for the return trip to Europe.

Keeping containers filled on both legs of the trip — rather than hauling empty containers — is what keeps costs down and prices competitive, he said.

“They’re bringing loads in, and we’re helping bring loads out,” he said. “We have a broad range of markets that are opening up because of this.”

Pan Am serves most of Maine’s paper manufacturers, who ship pulp and paper around the world. For products bound for Europe, manufacturers may benefit from using the port of Portland rather than New York or Boston because it will cost less to get their products to Portland, said John Willions, president of the Maine Pulp & Paper Association.

Eimskip specializes in moving freight in the high latitudes of the North Atlantic. With a fleet of 17 vessels, Eimskip delivers frozen fish as well as other products, including Icelandic water, lamb and aluminum to markets in North America. It also takes provisions to Iceland, Greenland and Newfoundland.

CANADIAN PLANS DOVETAIL

Newfoundland is key to the company’s business plan in Portland.

Exxon Mobil Corp. in January gave the green light to a $14 billion project to pump oil from a massive oil field off the coast of Newfoundland. Eimskip is the only international carrier serving the island.

In addition, the Newfoundland government over the next few years will spend more than $7 billion building two huge hydro projects in Labrador. Work on one of the projects has just started.

Construction materials for the projects could be supplied through Portland by rail from as far away as Houston, Texas, said Larus Isfeld, a senior Eimskip manager who heads the Portland office.

Maine companies in the fabrication, construction and heavy equipment business could play a role, Sigfusson said.

“There is a huge opportunity for Maine businesses to capitalize on the billions being spent in the projects in Newfoundland,” he said.

Eimskip will need a large cold-storage warehouse on the waterfront to store its seafood, mostly haddock and cod, and company officials are hoping that its shipping business will spur a Maine company to build the warehouse.

For Maine farmers and food producers, the service to Europe could open up new markets, particularly for its seed potatoes and frozen blueberries, said Walter Whitcomb, commissioner of the Maine Department of Agriculture.

“It harkens back to the day when the Portland terminal was the hub for the Grand Trunk Railway,” he said of the railroad that, from the mid-1800s to the 1920s, positioned Portland as a critical ice-free seaport for Canada and spurred Portland’s growth for decades.

Indeed, Eimskip’s move to Portland is the best news for the city’s waterfront since 1845, when Portland entrepreneur John Poor convinced the Montreal Board of Trade to build the railroad to Portland rather than Boston, said Jack Humeniuk, representative for the International Longshoremen’s Association and chief of operations for Ports America at the Portland container terminal.

“This to me is a lot like that,” he said. “It’s not as big, but maybe second to that. There is a huge economic benefit.”

Eimskip has signed a five-year lease with the Maine Port Authority for a 6,000-square-foot warehouse at the Portland terminal.

The company decided to move to Portland to reduce the amount of time its ships will be at sea, allowing for a bimonthly shipping schedule rather than its current monthly schedule. The move also allows the company to add new routes and ports of call in Greenland, Iceland and Europe, Sigfusson said.

Eimskip’s first ship, the 416-foot-long Reykjafoss, will arrive on Thursday to deliver empty containers and truck chassis from Norfolk, Va. Its first ship carrying cargo from Europe is scheduled to arrive on March 24.

Until Pam Am extends the tracks to the International Marine Terminal, the containers will be placed on chassis and trucked to the Merrill Marine Terminal, where they will put on trains.

Eimskip also plans to use the Merrill Marine Terminal’s warehouse operations to store and consolidate cargo that won’t be loaded into containers, such as aluminum.

BRIDGE TO BE REMOVED

To help the port and the railroad, the state this year plans to remove a small bridge on Cassidy Point Drive, which crosses the rails near the Merrill terminal, said Maine Department of Transportation Commissioner David Bernhard. Removal of the bridge, which is redundant, will allow trains for the first time to carry double stacks of containers.

The bridge is the last obstacle preventing trains from hauling double-stacked containers from Portland across Canada all the way to the Pacific Ocean, although a more realistic destination for Portland trains would be the U.S. Midwest via rail connections in Chicago, according to Mario Brault. He is president of the St. Lawrence & Atlantic Railroad, which connects the Pan Am railways with the Canadian Pacific Railway.

The efficiency provided by double-stacked trains is critical for a busy national railroad like the Canadian Pacific, he said.

Pan Am connects with the St. Lawrence & Atlantic at Danville Junction in Auburn and also with three other large freight railroads in New York state at interchanges near Albany. To the south, Pan Am reaches into southern Connecticut.

In Plainville, Conn., freight from the port of Portland will be taken off trains and put on trucks for delivery in Connecticut, New York and New Jersey, said Chris Meyer, president of Meyer Enterprises LLC, which owns a 300,000-square-foot warehouse and a fleet of 17 trucks.

He said he expects to be transporting cargo bound for Iceland through Portland as well.

“It’s Iceland. All they have is fish and water because it’s melting,” he said. “They don’t have anything. Their needs are massive.”

On Saturday, 18 managers from Eimskip operations around the world toured the port’s facilities.

Olafur Hand, the company’s marketing director, looked out over the harbor and remarked that Viking explorers who had settled Iceland had also landed in what is now Maine.

“We found this place one thousand years ago,” he said. “And now we’re back.”

Tom Bell can be contacted at 791-6369 or at

tbell@pressherald.com


Correction: This story was revised at 10:40 a.m., March 13, 2013, to state that Chris Meyer is president of Meyer Enterprises LLC in Plainville, Conn.