Geoffrey Giovanetti has a favorite East Coast port gateway for seaborne imports of wine and spirits destined for the Midwest, but he generally leaves the choice of ports and the intermodal facilities up to the container lines that bring the shipments in.
“For much of the intermodal carriage we’re involved in, we rely on the carriers to get it to the destination,” said Giovanetti, managing director of the Wine and Spirits Shippers Association.
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Port fees don’t matter to the wine and liquor store importers that belong to the WSSA, because ocean carriers charge them the same freight rate regardless of the gateway they use. That’s why the gateway ports from Halifax and Montreal south to New York-New Jersey, Baltimore and Virginia generally woo carriers to their ports by pitching the allures on the basis of capacity, productivity efficiency and, perhaps most important, their intermodal connections to the Midwest.
Right now, the ocean carriers are getting a break on intermodal rail costs. “As long as there is a container imbalance in the Middle West, import cargo gets a pretty fair shake on the inland transportation rates,” Giovanetti said.
What matters to wine and spirits shippers is the transit time. For that reason, Giovanetti prefers Norfolk for members’ cargo headed inland. “It works better because it’s more set up for rail access, but the New York terminals are really trying hard to work out all the inefficiencies that have been there historically.”
Although port and terminal fees in New York tend to be higher than those in Norfolk, that doesn’t matter to importers. “To the shipper, it’s not more expensive because the Shipping Act says in so many words, ‘Thou shalt not discriminate among U.S. ports,’ which means that all the terminal-handling charges, security charges and all these things that carriers claim are pass-throughs are identical, whether you’re coming into New York or ports all the way around to Houston,” he said. “It’s the same cost whether you’re coming in through Boston and New York, which tend to be the more expensive ones, or through Charleston and Savannah, which tend to be a lot more reasonable.”
Gateway ports from Canada to Virginia are working on programs to enhance their intermodal rail service. The Port Authority of New York and New Jersey has invested $450 million to build ExpressRail on-dock rail terminals at four of its biggest container terminals in New Jersey and Staten Island and has authorized another $100 million in capital spending on it.
The port authority this year started building a flyover to ExpressRail Port Newark that will enable trucks to pass over Corbin Street to the Port Newark Container Terminal, where the ExpressRail terminal is being expanded. The authority is completing design work on the Greenville Yards Intermodal Facility, which will handle intermodal shipments from Global Terminal and the new container terminal on land the port authority acquired next to it.
The authority hopes to raise intermodal rail’s share of port traffic from the current 15 percent to 20 to 25 percent. New York-New Jersey is having a good year, with total container volumes in the first five months rising 9.7 percent year-over-year. ExpressRail volume through May was up 15.9 percent year-over-year.
Other East Coast gateway ports are taking dead aim at New York-New Jersey’s estimated 20 percent in “discretionary” cargo, shipments that move more than 200 miles from the port, mostly by rail. The Virginia Port Authority is pinning its hopes for increasing its share of discretionary cargo on Norfolk Southern’s new Heartland Corridor, which cuts 200 miles off the previous route for double-stack cargo to the Midwest.
Intermodal volume surged 164 percent between last September, when the corridor opened, and May, according to Don Seale, NS executive vice president and chief marketing officer. “A good portion of that is business that we have shifted from the other old routes, and about 13 percent growth on it since we launched it has been organic, brand new growth with new business coming through the port,” he said at an investors’ conference in June.
NS is still raising the clearance on a length of the route this year that will make it 100 percent clear for double-stack trains, compared with 97 percent currently.
Despite the growing intermodal volume, the VPA is struggling for reasons unrelated to its new developments (Story, page 44).
Baltimore doesn’t have full double-stack rail service at the Seagirt Marine Terminal, its main container terminal, which has hampered intermodal growth. Still, Baltimore container volume increased 8.8 percent year-over-year in the first six months of 2011, according to Jim White, executive director of the Maryland Port Administration.
The Seagirt terminal has an adjacent on-dock CSX rail terminal that can technically handle stacktrains, though not two high-cube containers because of height limitations at the Howard Street Tunnel under Baltimore. CSX is considering four locations near the entrance to the tunnel for a new intermodal container transfer facility that would use automated stacking cranes to transfer containers from the short line to Seagirt and onto CSX’s National Gateway Project, which can handle stacktrains from Baltimore to Ohio.
“CSX is working with community groups on its site selection and will probably make a choice by the end of the year,” White said. When CSX builds its new rail ramp, it will run on-dock trains through the Howard Tunnel and then load them together with domestic freight to the Midwest. Once CSX has chosen the site, construction will take two years, so it likely will be completed at about the time the new Panama Canal locks are completed at the end of 2014.
Along the East Coast’s northern tier, the gateway ports of Halifax and Montreal have taken giant steps to upgrade rail services linking them to the Canadian and U.S. Midwest. “Montreal provides an incredible head start to the Middle West, and the inland (rail) rates reflect that,” Giovanetti said. “But this year there have been problems at Montreal because it’s been so chock-a-block full of cargo. If you have to wait for two or three vessels before you can get your cargo off, it takes away that advantage.”
The Montreal Port Authority is taking steps to ease congestion. It signed agreements this year with Canadian Pacific and Canadian National railroads designed to improve service to the port. The agreements include specific metrics for container dwell times at terminals, railcar availability, on-time performance and vessel performance.
The port authority is building a single common truck gate for its terminals that eventually will be equipped with optical character recognition and video along with 27 platforms that trucks will have to stop at before heading to their destination. Montreal has built a new electrical substation at the port that increases the power available to terminals by about 30 percent for their new cranes and refrigeration equipment.
The Termont Terminal, for example, just completed expansion work that includes 300 reefer plugs, port spokesmen Yves Gilson said. In the first six months of 2011, container shipments moving through the port increased 2 percent on a tonnage basis year-over-year.
Halifax has a single CN Rail service to the Midwest. The Halifax Port Authority signed a level-of-service agreement with CN last year that sets metrics for cargo-handling performance. “That’s been helpful toward focusing on where service improvements can occur,” said George Malec, the port authority’s vice president of business development and operations. “CN has been proactive in working directly with the terminal operators.”
Halifax won a new service in July when American Feeder Lines launched its single-vessel weekly service linking it with Portland, Maine, and Boston, the first stage of a marine highway network AFL hopes to build along the Atlantic and Gulf coasts.
The port’s containerized cargo volume increased 3.5 percent in tonnage terms in the first six months year-over-year. “We’re cautiously optimistic that we’ll enjoy this kind of growth for the rest of the year,” Malec said.