Massachusetts state officials said they will have to consider the effect of the harbor maintenance tax on plans to upgrade a rail line for double-stack service between Boston and Vancouver because of fears that the new service could divert more cargoes to Canada.
The concern is that shippers will re-route more Boston cargoes to Canadian ports, avoiding the U.S. tax, if they are given the added incentive of cheaper and faster rail service through Montreal.Ports and shippers already have complained that the 0.125 percent tax on the value of waterborne cargo hurts business at northern U.S. ports because some shippers are moving freight by truck or rail through Canadian docks to save tax costs of as much as $300 to $500 a container on high-value goods.
Transport rates between New England and Montreal already are competitive for cargo that would otherwise move through Boston, once the tax is figured in, said Rod Schonland, trade and regulations manager for Cambridge, Mass.- based Polaroid Corp. and a member of the New England Shippers Advisory Council. The only big difference is one or two days in added transit time on the Canadian route, he said.
Ironically, the balance could tip further toward a diversion decision as a result of efforts to upgrade Boston's service with dockside double-stacks
because the same service could also lower rates and transit times to Montreal.
The plan, involving Guilford Transportation Industries Inc. and the Canadian Pacific Ltd. lines of CP Rail, would cost an estimated $95 million for bridge and tunnel clearances in Massachusetts. The cost would be shared by the carriers and the state, which is hoping the project will boost Boston's business.
While the harbor tax has been a hot topic for ports and shippers, it has been relatively unknown among landside transport interests. Paul N. Anderson, Massachusetts deputy transportation secretary for land use and rail, said the ''negative impact" of the tax is something that will "have to be considered" before the state makes a decision on the investment.
Diversion also could prove attractive to New England importers from the Far East who now use the U.S. mini-landbridge from West Coast ports. A switch to Vancouver and a CP double-stack line could yield major tax savings.
Colin Pease, executive vice president of Guilford in North Billerica, Mass., stressed that the company's Canadian partners are not motivated by diversion possibilities. They hope to win business through competitive service and the subject of the tax has never come up, he said.
Mr. Pease said he is "confident" that the carriers will be able to provide a "38-hour route to Chicago" from Boston, a timetable that suggests an interline agreement for a route south of the Great Lakes as well as the Canadian connection.
Mr. Pease argued that despite potential for diversion, the best chance for the Port of Boston will be to upgrade its infrastructure. The alternative, he said, would be a continuing loss of cargoes through inability to compete with other ports.
"If you don't increase your clearances and get a first-class transportation system, then the only thing you're going to be faced with is the dribs and drabs," Mr. Pease said, adding that every effort would be made to find innovative market opportunities for the port's new stack service.
To date, there have been no firm statistics on diversion, although a recent statement by Rep. Gerry E. Studds, D-Mass., cited estimates that the Port of Boston has lost 10,000 to 15,000 containers since the harbor tax tripled last year from the 1990 rate of 0.04 percent. Rep. Studds and Rep. Joe Moakley, also a Massachusetts Democrat, have sponsored legislation to roll the tax back to the earlier rate.
Container traffic at terminals operated by the Massachusetts Port Authority fell 11.2 percent last year to 71,644 boxes compared with 1990 volumes.