Harbor hopefuls | Changes at three Maine ports could be a boon for cargo and business

It's a dynamic time for Maine's major cargo ports. While a resurgence of pulp shipments has led to the return of container service at Portland's International Marine Terminal, the idling of another pulp mill has forced its Down East counterpart, the Port of Eastport, to diversify. And despite economic conditions and environmental backlash, the state is moving forward with plans to develop a new cargo port on Sears Island, which could be a boon for the state's paper industry.

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Instability in the state’s pulp and paper industry, a main driver of shipping activity in Maine, has forced the ports to seek new sources of activity and new ways to operate in order to ride out the market’s pitching and rolling. All three major cargo ports — Portland, Eastport and Searsport — have handled or are gearing up to handle shipments of wind turbine components destined for wind farms in northern New England and Canada. This growing industry has helped sustain the cargo ports during slow times and could supplement port activity for years to come, says John Henshaw, executive director of the Maine Port Authority. “If the state develops an expertise in handling this cargo, then it’ll be in a competitive position when offshore wind is developed,” he says.

Here’s a summary of activity in each port:

Portland

Changes are in store at Portland’s International Marine Terminal as container cargo service resumes and new operators prepare to take over.

After an eight-month hiatus, container cargo service has resumed at the port, operated by New Jersey-based Columbia Coastal Transport. The company halted container service last June when Red Shield Environmental, a primary customer and former owner of the Old Town mill, shut down. But the mill is under new ownership and is now running as Old Town Fuel and Fiber.

Henshaw says a number of parties worked to restore that service, including the new owners of the mill, the mill’s pulp broker Central National-Gottesman Inc., the port authority and the city. The pulp is sent by train to Portland’s Merrill Marine Terminal, which is privately operated by Sprague Energy, put into containers and brought a quarter-mile over to the International Marine Terminal. There, employees of Ports America, the port’s stevedore and terminal operator, and members of the International Longshoremen’s Association Local 861 load the containers onto a barge headed for New York.

The return of container service will help Maine companies compete, says Henshaw. “It’s important insofar as it provides additional transportation options for Maine shippers — a cost-effective option,” he says. “The more options, the better off they’ll be with respect to getting goods to market.”

So far, the service moves 160 containers a week — last year, it moved 400 once every two weeks, says Henshaw. About 2,000 to 2,500 tons of pulp are shipped a week, according to Jack Humeniuk, operations chief for Ports America and a representative of ILA Local 861. The return of the container service creates work for about 18 longshoresmen at the terminal, and could help generate jobs throughout the state, he says.

It’s the most recent chapter in the tumultuous history of container service in Portland. A container ship that used to make weekly trips between Halifax, N.S., and Portland was seized by Canadian authorities in July 2006 due to a financial dispute between the ship’s owner and a subcontractor. The feeder service resumed in the summer of 2007, but was discontinued in December of that year due to rising costs to use the service. Columbia Coastal began operating a biweekly container service from Portland to New York in August 2007, but halted that service in June 2008 when Red Shield shut down.

Having the option to ship cargo via water, as opposed to trucking or railing it to major ports in the Northeast and Canada, is vital for Maine’s economy, say port officials. Portland is the only ocean port in Maine that offers container services (the Port of Auburn ships containers as well, via rail). But in order for the service to thrive this time around, it has to be dependable and cost-effective. “Its success is determined by its sustainability, its reliability and its cost versus alternative methods,” Henshaw says.

Over the past 18 years, about two dozen companies have utilized Portland’s container service, says Humeniuk, including L.L.Bean and White Rock Distillery. Though Old Town Fuel and Fiber is the only company using the service now, port officials are actively working to attract new customers. Other companies, mostly pulp and paper mills, are already interested, according to Henshaw, but the port’s draw has somewhat diminished now that shipping via truck is not as expensive as it was last year. “With fuel prices lower now, that’s more of a challenge,” he says.

The Maine Port Authority will soon be taking a more active role in the International Marine Terminal. The authority is in the final phases of negotiating a lease with the city of Portland that would allow the authority to operate the city-owned marine terminal. The city council is expected to discuss the lease at its meeting April 27.

The port authority plans to spend $3.5 million to $5 million over the next three years in improvements to the port, which include updating lighting, taking down the ferry terminal building to improve access to the pier and revamping the former ferry parking area to make it suitable for handling cargo containers to expand that service. The port authority is hoping Gov. John Baldacci’s $306 million transportation bond proposal, which includes $3.5 million for the International Marine Terminal, will pass this year, and it also plans to use about $200,000 of its own funds left over from a previous bond.

Eastport

After a record year in 2008 for the Port of Eastport, 2009 began on a grim note. In March, Domtar Corp. said it would idle its Baileyville pulp mill indefinitely beginning in May, putting 330 employees out of work. The announcement also meant that the port’s primary customer would stop shipping its thousands of tons of pulp, threatening the jobs of another 70 to 90 workers involved in getting that pulp from the mill to the barge, says Chris Gardner, executive director of the Eastport Port Authority, which operates the port. The port handled nearly 377,000 tons of cargo last year. “It certainly affects us greatly,” he says. “It’s a tremendous hit to port traffic.”

But Gardner says he doesn’t “want to dwell on that.” Instead, he’s looking forward to the opportunities the slowdown could bring. With the mill’s future uncertain, the port authority has begun exploring new business, and has already landed work bringing in wind turbine blades from South America that will be used by Massachusetts-based First Wind, which operates two wind farms in Maine and has proposed others. The first shipment is scheduled for the end of April, and the next is in June. The interim shipments will help sustain the longshoresmen at the Federal Marine Terminal, the stevedoring company that handles the cargo, and independent truckers who bring the pulp to the port.

The Eastport Port Authority is also exploring other shipping options, including wood pellets and chips, and expanding the port’s importing business. “Domtar has helped illustrate that diversification is key,” he says. “It’s very tricky to rely on one industry to support a port.”

Gardner is working with state officials to find funding for a $3 million-to-$5 million upgrade of the port’s infrastructure to allow it to better handle different types of cargo. The money would pay for a conveyor system and other equipment to handle bulk shipments — loose, unpackaged cargo like gravel and salt.

Gardner is also exploring ways to connect the Eastport port to rail lines. The port has never had a rail connection and has managed to thrive because of its close proximity to industries. But with the impending Domtar shutdown, the lack of a rail connection is the port’s biggest obstacle to attracting new business, Gardner says. He’s also approached state officials about getting funding, perhaps from the federal stimulus package, to build about 25 miles of new track that could connect the port to existing rail lines in Calais, and he hopes to get an investment commitment this year, he says. “If we want to grow parts of rural Maine, we have to use the assets that are in place,” he says. “You don’t have to reinvent the wheel — you just have to build on what’s already working.”

Sears Island

While the Portland and Eastport terminals navigate various stages of renaissance, another cargo port is about to be born. In January, the Legislature’s Transportation Committee moved ahead with a recommendation from the Sears Island Joint Use Planning Committee to turn a portion of the 931-acre island off the coast of Searsport into a cargo port. The Maine Department of Transportation plans to spend $100,000 on a plan to market Sears Island to potential developers, and the Maine Port Authority has issued a request for proposals to find a consultant with port development experience that could help the DOT and the port authority find and work with a developer, according to Henshaw. The DOT is reviewing the five responses it got to the RFP and plans to select three finalists by the end of the month, according to VillageSoup.

The mainland of Searsport already has a cargo port called Mack Point, owned and operated by Sprague Energy. The deep-water port on Sears Island would be able to accommodate larger vessels and offer container services, which Mack Point does not. Containers would be transported from the new port to Searsport, where they could be trucked out or loaded onto rail in a doubling stacking process — a not entirely unique process but rare for other ports, says Henshaw. Other services at the Sears Island port will be dictated by market demands and complement the Mack Point facility, Henshaw says. “A larger container facility in Searsport would bring a different scale of activity. It would benefit companies in the state and attract business to the state,” he says.

A container service on Sears Island would be a welcome addition for Maine’s pulp and paper industry, says John Williams, president of the Maine Pulp and Paper Association. Its proximity to several large mills in the state would mean those mills could send their materials to Searsport for shipping, rather than trucking or railing them to other ports like Boston or St. John, N.B., and Mack Point’s rail connections to Canada and the Midwest would provide easy access to those markets, Williams says. “They’d be using ports in Maine more,” he says. “It would help our industry and help Maine businesses in general.”

But not everyone is welcoming the new port. The DOT plans to use one-third of the island for the cargo port, while preserving the rest as conservation land. So far, three lawsuits have been filed against the DOT, claiming the conservation easement between the DOT and the Maine Coast Heritage Trust violates state law and Maine’s Sensible Transportation Planning Act. Henshaw isn’t worried that lawsuits will keep the port from moving forward, since representatives from area towns and environmental groups participated in developing the Sears Island use plan. “Given the long public process, it’s in a relatively good position,” he says. “There’s always opposition to these kinds of projects, but we’re moving the process forward.”

Mindy Favreau, Mainebiz staff reporter, can be reached at mfavreau@mainebiz.biz.