NAVIERAS DROPS 3 PORT CALLS ON MAINLAND E. COAST CITIES BRACE FOR MORE CONSOLIDATIONS

NAVIERAS DROPS 3 PORT CALLS ON MAINLAND E. COAST CITIES BRACE FOR MORE CONSOLIDATIONS

In the lastest indication of the wave of consolidation that is sweeping the maritime industry, the former national shipping line of Puerto Rico Friday said it would consolidate all its mainland business at only two ports.

Navieras/NRP Inc., which was privatized in March, will drop calls at Baltimore, Charleston, S.C., and New Orleans in favor of New York and Jacksonville, Fla. Some 80 workers throughout the nation will lose their jobs, primarily in marine-related functions.Executives in the losing ports expressed disappointment, but even they recognized that Navieras had to make the move in order to reduce its costs and improve service.

"I think they (Navieras) had a good plan," said L. Duane Grantham, Charleston marketing and sales director. "They just picked the wrong (South Atlantic) port to drop."

Ports along the East Coast are expected to face further reductions in port calls as lines seek to reduce their costs and switch to trucks, rail and barges for serving the ports they drop.

"It's inevitable that the carriers will balance port calls with intermodalism," said Leo Donovan of consulting firm Booz, Allen & Hamilton.

Navieras executives said that the move to depend more on intermodalism will

allow them to actually improve service to their customers while reducing the line's operating expenses.

Today, for example, a customer in Memphis only has the option of one Navieras sailing a week out of New Orleans with a four-day sailing time, said Ed O'Donnell, executive vice president and commercial director. Now, "you're going to have two sailings out of Jacksonville" the customer can use, he said.

While land transit to Jacksonville from Memphis may take longer than going to New Orleans, the shorter water transit time more than makes up for that, Mr. O'Donnell said. It takes about four days for ships to reach Puerto Rico

from New Orleans, compared with about two and a half from Jacksonville.

The restructuring will also make Navieras' service more reliable, Mr. O'Donnell said. Currently, the line needs all five of its ships to serve its port rotation, which means some port calls need to be canceled when a vessel goes into dry dock. Navieras will only need four ships to maintain the new port rotation.

"Now, our salespeople can go out with confidence and tell the customer we can handle the freight all year long," said Mr. O'Donnell.

It is just this potential to offer improved service at lower costs that has other lines eying reducing port calls, sharing vessel space and making greater use of land transportation for the final leg.

The resulting expected port call consolidations are setting off an intensifying battle among the East Coast's largest ports, each of which is determined to become one of the surviving "load centers."

New York, which will go to two Navieras port calls a week from the current one under the Friday announcement, sees itself as a winner in the consolidation game because its massive local consumer market guarantees that lines will continue calling there.

"This is where the population center is," said Bob Ambrite, port marketing and sales general manager for the Port Authority of New York & New Jersey. "This is where the goods are consigned."

But other ports tout lower costs and higher productivity as allowing them to beat out New York for the so-called discretionary cargo bound for destinations outside of local port areas.

Charleston is "the most productive port in the U.S." with fast vessel turnaround times, said Mr. Grantham. "That means a lot of money for carriers."

New York still handles about twice the container traffic that Charleston does, but figures from The Journal of Commerce's Port Import/Export Reporting Service show Charleston is growing faster. This year through May, Charleston's traffic was up 23 percent over a year earlier, while Ne York traffic was only up 14 percent.

Jacksonville already has two weekly Navieras sailings, while New York and the three other current Navieras ports now have weekly service.

Not everybody thinks that the Navieras move is a sign of a larger trend. ''We're disappointed" to lose the line, said Jim Gring, Baltimore spokesman. "I think we're viewing this as an isolated incident at this point."

Charleston and Baltimore will be dropped effective Aug. 22, but Navieras

plans to serve New Orleans through the end of the year. Ships will depart from New York and Jacksonville on Tuesdays and Fridays, sailing directly to Puerto Rico.