May 2, 2012

Shippers lose Portland-based container line

American Feeder Lines closes its Port of Portland service, citing a lack of volume and a loss of investment.

By Tux Turkel
Staff Writer

PORTLAND — The Port of Portland has lost scheduled container shipping again, nine months after the start of weekly service connecting Boston, Portland and Halifax, Nova Scotia.

click image to enlarge

Containers at the International Marine Terminal in Portland.

Shawn Patrick Ouellette/Staff Photographer

New York-based American Feeder Lines, which handled everything from L.L. Bean products to grain alcohol headed for a Maine distillery, announced late last week that it had suspended operations because of a lack of volume and a loss of private investment, then said it had closed.

"We're very disappointed," said Rudy Mack, the company's chief operating officer. "We thought the timing was right."

The end of the service is a blow to Portland, which is rebuilding the International Marine Terminal and expanding cargo handling capacity from 50 containers a week to about 200 a week. The $5 million, federally funded project will be completed this summer.

Exact figures on how many containers were moving through the terminal recently were not immediately available. In 2007, city officials said the facility handled 4,077 containers.

American Feeder Lines' demise represents a financial loss for the Maine Port Authority. In early March, the authority approved a $200,000 loan to the company to help pay for its operations. The money came from lease and dockage revenue, not tax dollars. Boston and Halifax made similar loans.

That investment now appears to be gone.

Another operator could resume the service from Halifax, an important market connection to New England. The Port of Portland is being used by several Maine shippers. White Rock Distilleries in Lewiston, L.L. Bean in Freeport, Schnitzer Steel Industries in Auburn and a half-dozen paper mills, including Sappi's Westbrook and Somerset mills, have been importing or exporting goods through Portland and Halifax.

"There's a lot of interest," said John Henshaw, executive director of the Maine Port Authority. "This is a lost opportunity, but it's not the last opportunity."

The Port of Portland has long had a strong commercial link with Halifax, which is home to several major shipping lines. Portland lost weekly container service to Halifax in 2008, when another company pulled out. A barge that took wood pulp to New York stopped calling in 2009.

The arrival of American Feeder Lines was a hopeful sign that Portland could again have stable and reliable freight service. It also supported as many as 20 longshoremen's positions, for unloading cargo and operating the marine terminal.

Boston, Portland and Halifax formed the first leg of a new venture meant to link a string of Atlantic ports from Miami to Portland.

American Feeder Lines had a hub-and-spoke network, in which imported cargo from large container vessels was shuttled to smaller ports, such as Portland, on a fleet of feeder ships. For exports, the smaller ships fed the big vessels.

The so-called short-sea container service is a common way to move freight in other countries, but not in the United States, where it faces strong competition from trucking and railroads.

American Feeder Lines hoped it could buck that trend. It ultimately wanted to build a fleet of environmentally friendly container ships that would take freight traffic off crowded East Coast highways.

The company began operating last summer with a chartered vessel, the AFL New England. Mack said Tuesday that he and his partners put about $3 million into the venture, and received $2 million from investors. The service wasn't generating enough cash flow to continue, he said. It also was hurt when diesel fuel prices soared this year to record levels.

Henshaw noted that the service was starting from scratch in Portland and it took time to sign up shippers.

"To my mind, it took longer than investors thought it would, but it was moving in the right direction," he said.

(Continued on page 2)

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