Short-haul ships with a long view

Hub-Halifax route expected to save money, increase security

By Jay Fitzgerald
Globe Correspondent / July 5, 2011

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The Massachusetts Port Authority is hoping a new, short-haul cargo service between Boston and Halifax, Nova Scotia, will help open a “marine highway’’ of small ships hauling scrap, raw materials, and manufactured goods to ports up and down the Eastern Seaboard.

Later this week, American Feeder Lines Holding LLP - a New York shipping company that plans to have a small armada of so-called feeder cargo ships steaming along the East and Gulf coasts - will launch its “New England-Halifax Shuttle.’’ The weekly service will connect Boston, Portland, Maine, and Halifax via a small container ship that will unload imports from China and other countries in each of the three ports and deliver US goods for export to foreign markets.

The Boston-Halifax shuttle is considered a pilot for US government efforts to a create feeder system of small cargo ships, hopping from one port to another along what would essentially become marine highways off the nation’s coasts. When huge container ships arrive from Asia or Europe, the cargo would be off-loaded onto these smaller vessels instead of trucks or trains.

The goals: reducing reliance on heavy trucks on overburdened roadways; cutting energy consumption and transportation costs; and improving security by having more US-flagged ships hauling products in and out of US ports.

“It’s something that’s already being done in Europe,’’ said Percy Pyne IV, chairman of American Feeder Lines. “This is a tremendous opportunity. It’s something I’ve wanted to see happen for a long time.’’

If all goes as planned, the cargo ship AFL New England will steam from Halifax on Friday, loaded with imported goods. It will stop at Portland before arriving at Massport’s Conley Terminal next Tuesday to deliver containers full of steel for an Everett recycling yard owned by Schnitzer Steel Industries Inc., one of the nation’s largest recyclers of scrap metal.

The AFL New England, a 16-year-old German-made diesel ship, is small compared with other cargo ships, capable of holding only 400 shipping containers. Larger cargo ships can hold as many as 14,400 containers, Pyne said.

But the smaller ship works economically because it is designed as a shorter-haul carrier to compete with fleets of trucks and rail cars, not massive container ships. By using less fuel than land-based competitors, a regional feeder ship can cut transportation costs by up to 60 percent, Pyne said.

The launch of the New England-Halifax shuttle comes as Massport’s Conley Terminal shows signs of rebounding from the recent recession. Container cargo in and out of Boston plunged to 1.3 million tons last year, down from the pre-recession peak of about 1.7 million tons in 2007, according to Massport.

But shipping tonnage jumped 21 percent over the first five months this year at Conley, compared with the same period in 2010, suggesting the economic recovery is advancing.

Activity at Conley is expected to increase further following the launch in May of a Southeast Asia shipping service through Egypt’s Suez Canal. The service will add direct ocean-cargo connections between Boston and ports in Hong Kong, Singapore, Taiwan, and Vietnam.

With the addition of American Feeder Lines, five shipping carriers will operate out of Boston.

Massport has tried feeder services before, but two previous attempts failed. Most recently, the shipping company Eimskip shut down service in late 2007 when the Icelandic corporation ran into financial troubles unrelated to its regional cargo service, said Michael Leone, port director for Massport.

Leone expressed confidence that American Feeder Lines will succeed where others failed, largely because of the experience of its executives and deep pockets of its investors. Pyne wouldn’t say how much is invested in American Feeder Lines.

Pyne, chairman and cofounder, also owns Pyne Cos. Ltd., a New York real estate management and investment firm. Tobias König, also a founder and partner, is head of König & Cie, a German shipping and investment company. Rudy Mack, chief operating officer at the company, is a longtime shipping executive and founder of Rudy Mack Associates Inc., a New York management consulting firm.

“It has a very, very experienced and strong team,’’ Leone said of American Feeder Lines. “I’m very optimistic. We think it’s going to be a successful venture.’’