“All this baloney is for public consumption”

This is a reprint of Vol. XXVIII, Arts. 3 and 4, reviewing the Boston Globe’s story about Massport’s vision (hallucination?) of a new ‘marine highway’ for hauling scrap, raw materials and manufactured goods to ports up and down the Eastern Seaboard. We predicted that it wouldn’t work with today’s conventionally-structured vessels. (The scheme fell on its face last week.) Here’s what we wrote:
“Later this week,” the report went on, “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 U.S. goods for export to foreign markets.

“The Boston – Halifax shuttle is considered a pilot for US government efforts to create a 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.’…

“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 …

“Massport has tried feeder services before, but two previous attempts failed … Michael Leone, port director for Massport … 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.” –

All this baloney is for public consumption. It’s also supposed to impress the folks that are being asked to put up the money for ten 1,300-TEU container ships that those “experienced executives” have asked Aker Philadelphia Shipyard and Bay Shipbuilding to build for them – at $ 70 million-a-pop. But it ain’t gonna happen. Investors are the real “experienced” ones, and they recall that just a little more than a year ago, Columbia Coastal had to throw in the towel mainly because cumbersome, time-consuming and primitive methods of loading and offloading conventional container ships couldn’t compete with low-cost trucking operations.

Not a dime has been raised, and that’s why Mr. Pyne won’t “say how much is invested”.

In Art. 4, we cited the differing estimates of the vessel’s capacity and we pointed out the heavy costs of transshipment – what the folks overseas call “feedering”. And even though authorities readily admit that double-handling adds significantly to shipping costs, AFL and Massport weren’t deterred.

“Well, which is it? Last week it was announced that the AFL New England has a 400-TEU capacity. That translates into 400 20-foot containers, or 200 40-foot containers.

“Today’s announcement states that the vessel has 700 20-foot-equivalent units, and that would be the equivalent of 350 40-foot containers.

“Today’s announcement also stated that the first sailing was scheduled for mid-June but was pushed back until this week. That isn’t exactly true, either. Canadian newspapers reported that the first sailing was scheduled for May 20th, but there wasn’t enough cargo available for transport so the ship remained anchored.

“It will be interesting to see if this operation ever gets off the ground.

“Officials of the company say that the ship’s cargo will consist primarily of feeder cargo from international ships but will also carry some cargo between Canadian and U.S. ports. But isn’t the concept of U.S. short sea shipping supposed to be based upon hauling materials and manufactured goods between U.S. ports on U.S. inland waterways?

“And doesn’t the Jones Act state that vessels must be built in U.S. yards, must be owned by U.S. interests and must be crewed by U.S. personnel? Isn’t that what U.S. short sea shipping is all about?

“And this business of feeder cargo from international ships, what does that have to do with short sea shipping? In one of our earliest commentaries – “A Fitting Solution” (in Volume 1, dated November 2nd, 2004) – Paragraph 7 quoted Neil Davidson of Drewry Shipping Consultants when he reminded his audience at Navis World 2004 in San Francisco, that, “The bigger the ship, the more transshipment and feedering (sic) you need, and that costs money.”

“So if American Feeder Lines intends to handle “primarily” feeder cargo from international ships, “and that costs money”, how will that beat the low cost of over-the-road trucking?

“It won’t, of course, so why the duplicity? It isn’t short sea shipping; it isn’t Jones Act; and it certainly isn’t cheaper – so why the heck would someone want $ 700 million from investors to …

“Oh, now it’s becoming clearer. It’s the $ 700 million that’s the key. These guys already know that Massport has seen every effort fail in attempts to move small numbers of containers in small conventionally-structured container ships between U.S. ports. Primitive storage and retrieval methods of loading and offloading are too costly when dealing with small numbers of containers.
“Kevin Mack, Columbia Coastal’s VP, made it clear after terminating operations last year that any venture should be built around a business model that does not depend on government support. In other words, using conventional vessels, this stone won’t float without an influx of OPM.” –