OOCL OWNERS INVEST IN NY BOX TERMINAL EXPANSION POTENTIAL COULD HELP PORT DRAW OTHER LINES

OOCL OWNERS INVEST IN NY BOX TERMINAL EXPANSION POTENTIAL COULD HELP PORT DRAW OTHER LINES

Hong Kong's Tung family, owners of Orient Overseas Container Line, has purchased a share in the Howland Hook marine terminal here, a move that could accelerate an expected massive reshuffling of ship line calls in New York and up and down the East Coast.

The reshuffling is being driven by the continuing desire of steamship lines to cut costs by achieving economies of scale through partnerships and consolidation.No one is sure exactly how the reshuffling will shape up on the East Coast, but some expect a greater concentration of cargo at two or three large ports - if those large ports can accommodate the growing needs of the lines.

At 187 acres, the long-shuttered Staten Island terminal will represent a significant addition to New York region's total container-handling capacity when it comes on line this fall.

But, with an abandoned former Procter & Gamble site next door, Howland could be more than doubled in size. With the Tungs' financial muscle and experience running massive Hong Kong container terminals, that expansion potential is creating the possibility that Howland could become the first of the "mega-terminals" some expect to be needed to service the new large steamship line consortia and partnerships.

"We've always seen it (Howland Hook) as that," said Lillian Borrone, port director for the Port Authority of New York & New Jersey. "That's why we were willing to invest port authority money in it."

The port authority and the city of New York are spending more than $17 million to do vital dredging at the terminal and send the contaminated dredged material to a Utah dump site.

Over the last decade, container lines have gradually reduced their port calls and concentrated on larger ports such as New York and Hampton Roads, Va., at the expense of smaller ones such as Boston and Philadelphia.

"When you reduce port calls, you reduce the cost to the consumer," said Jimmy Chen, president of Global Terminal & Container Services Inc., an OOCL unit that runs a Jersey City, N.J., terminal.

But some expect steamship lines to accelerate their reduction of port calls, both because of their consolidation of ship operations and because the potential ending of the federal requirement for public rate filing may favor large ports.

Former Maryland Congresswoman Helen Bentley, a longtime maritime industry and Port of Baltimore booster, has warned that the end of rate filing could leave the East Coast with only two ports.

The steamship lines' drive to consolidate port operations to mirror the partnerships they are creating aboard their vessels is already taking shape in New York, a development in which Howland Hook will likely play a significant role.

No official announcements have been made yet, but Howland is being eyed by the members of the Tricon group, which recently added Hanjin Shipping Co. to its members.

Its current members, Cho Yang Shipping Co. and DSR Senator Lines, call at the Jersey City Global terminal. But the Global terminal is not believed capable of handling Hanjin, also, whereas Howland could accommodate all of the group's members.

Global without the Tricon group might be large enough, however, to accommodate the four members of the so-called Global Alliance - American President Lines, Mitsui O.S.K. Lines, OOCL and Nedlloyd Lines. Alternatively, the Global Alliance could itself take up residence at Howland Hook.

Things are more difficult in New York for the efforts of Sea-Land Service Inc. and Maersk Line to mirror their on-sea consolidation in one New York area terminal.

Both companies own large New Jersey terminals, but they are not adjacent to each other. Maher Terminals Inc., the port's largest stevedore and its last large active one not owned by a steamship line, separates the two.

Sea-Land's terminal might be large enough to accommodate the two lines but only if some of its current tenants move out.

Port executives said that Sea-Land and Maersk have yet to figure out how they will consolidate their New York port operations, but some kind of land swap with Maher might be part of the change.

As much as everyone is talking consolidation and partnership these days, not everyone is convinced that smaller ports will end up the losers.

"Years ago, there was a theory of load centering," said Thomas Dowd, a port expert and professor at the University of Washington in Seattle. "The assumption was that all the lines would somehow pick a port and load center in that port," he said. "That hasn't happened."

Mr. Dowd said that even if a line chooses to use only one port on the East Coast and transship its cargo to other ports by land or feeder vessel, not all lines will choose to load center in that same port.

"It isn't like anyone's going to die because every line's going to be using one port," he said. "I don't think we're going to see an announcement that the Port of Charleston is going to give up (on container business) and become a fishing boat headquarters."