Maine Sees Iceland as Entryway to New Markets in North Atlantic
By Tom Bell
PORTLAND -Maine craft beer makers seeking new markets usually look south and west, to cities like Boston, New York and Chicago.
Some Maine brewers, though, are looking east to Europe after discovering that shipping a container across the Atlantic Ocean costs about the same as trucking it to Delaware.
This change in perspective, which is happening in other Maine industries, such as agriculture and seafood, was prompted by an Icelandic shipping company’s decision three years ago to make Portland its North American logistics hub.
The company, Eimskip, is moving cargo between Portland and Europe with stops in Iceland. The island nation serves as an entryway to a market of 330 million people in Scandinavia and the rest of northern Europe, said Sean Sullivan, executive director of the Maine Brewers’ Guild, who traveled to Iceland this fall with representatives from three beer companies to make industry contacts.
“Iceland is on the footsteps of Europe,” Sullivan said. “And with the Eimskip connection here, there is an opportunity.”
Port Investments Lure Eimskip to Maine
In 2009, Portland’s 13-acre container terminal was so quiet that the city’s public works department used it to store snow removed from city streets. The terminal needed $8 million in repairs, and its largest building was uninhabitable due to toxic mold.
Maine’s largest port had been in decline for nearly a century. From the mid-1800s through the end of the first World War,
Portland served as the winter seaport for much of Canada and was among the largest ports on the East Coast, a rival to Philadelphia and Baltimore.
But Portland lost that business after the war when Canada developed its own ports in Halifax, Nova Scotia, and Saint John, New Brunswick. Another blow came in the 1960s with the widespread adoption of containerized cargo. Shipping traffic was funneled to major ports that had giant cranes and vast yards for stacking containers. Small ports like Portland couldn’t compete.
The Maine Port Authority, which in 2009 took over management of Portland’s container terminal, created a business plan based on the concept that the terminal should focus on offering containerized freight service to Maine companies and customers moving special-project cargo, such as wind turbine components.
Patrick Arnold, whose company Soli DG Inc. manages port operations and business development for the Port Authority, said he and the agency’s executive director, John Henshaw, traveled throughout Maine in the summer of 2009 and spoke with business leaders to determine how the Port Authority could help support the state’s economy. The companies included L.L. Bean, Hannaford, Poland Spring and White Rock Distillery.
“All you have to do is focus on customers and their needs and address those needs,” Arnold said. “Those needs have nothing to do with what’s going on in the world, with the Panama Canal, the Suez Canal or even the Arctic ice cap melting and all of that. We started addressing those needs, and lo and behold, we start moving freight through the terminal.”
Arnold said talks with Eimskip initially began as part of an effort to find an investor for a struggling feeder route between Portland and Halifax operated by American Feeder Lines, which in April 2012 suspended the route after only nine months, citing a lack of volume and a loss of private investment.
That deal fell through, but talks eventually moved to the idea that Eimskip could relocate to Portland.
Eimskip had operated for decades from its North American headquarters in Virginia. From the Port of Norfolk, the company had been supplying a U.S. navy base in Iceland, but the U.S. closed the base in 2006. The company. (remove extra .) was looking to move to New England and shorten sailing times between the U.S. and Europe.
Arnold said state investments in the International Marine Terminal in Portland were critical to convincing Eimskip to move to Maine.
The state had spent $5 million in federal TIGER funds and $3 million in state bond money to rebuild and modernize the facility. The Port Authority demolished the mold-infested building to create more area on the pier’s edge for a 100-ton mobile crane to operate. It also rebuilt a former parking lot so it can support heavy cargo, transformed a warehouse into a transloading facility, and added 150 refrigeration plugs.
The state would later expand the container terminal and connect it with rail, bringing its total investment to $30 million.
Before moving to Portland, EImskip’s ships were calling on Everett, Ma. and Norfolk. The steamship line now calls only on Portland, and much of the seafood is trucked to cold storage warehouses in Massachusetts.
Since Eimskip’s arrival, container moves in Portland have steadily increased, from 3,381 containers in 2013 to about 6,955 in 2015. In 2016, the company is on pace to move 9,000 containers, a 30 percent increase.
The terminal expansion added about 12 acres on the west side of the Casco Bay Bridge, plus a five-acre strip to serve as a rail corridor. The expansion allows containers to be moved between ships and trains, and also between trucks and trains. (remove extra spaces)The railroad, Pan Am Railways, connects with Class 1 railroads in Massachusetts and New York state.
About 3,750 containers will be moved by rail in 2016, according to Port Authority estimates. There were no rail moves in 2015.
A new “wheel yard” provides a place for trucks to drop off and pick up containers. The terminal serves as a port of entry for cargo delivered by ship to other ports. Cargo from Asia, for example, can be delivered to New York and trucked to Portland for clearance, which saves time. Maine companies can then send trucks to Portland to pick up the containers. Trucks have 24-hour access to the yard.
In 2015, 3,466 containers were moved in and out of the terminal by truck.
Eimskip ships are now calling on Portland on a bi-weekly schedule, with an additional five vessel calls a year, or a total of 31 calls annually.
The company’s ships travel between Portland and Rotterdam with stops in Newfoundland, Iceland and England, plus an additional stop in Halifax on the return trip to Portland. At Eimskip’s terminal in Reykjavík, containers can be transloaded to other ships in the Eimskip network, which extends as far north as Murmansk, Russia and as far east as Germany and Poland.
Eimskip is a niche steamship line that specializes in moving refrigerated cargo, primarily seafood. Containers in-bound to Portland largely contain frozen seafood from the North Atlantic, lamb, paper, bottled water, snow groomers, wood stoves and ferrosilicon, a byproduct of aluminum manufacturing in Iceland. Maine exports include paper, blueberries, frozen lobster, chocolate, and cranberries. Also, food and consumer goods from other U.S. states are shipped to Iceland and Europe out of Portland.
Larus Isfeld, managing director at Eimskip USA Inc., says the company’s move to Portland has been successful, but he believes the full potential of the service won’t be reached until Eimskip ships are calling on the port every week, a goal he hopes to achieve by 2020.
“We have done 15 percent of the job,” he said. ” I think we have a long way to go.”
The global warehouse giant Americold next year will begin building a 120,000 square-foot cold-storage warehouse on state land adjacent to the terminal. Henshaw said the warehouse will support the city’s traditional fish processors and help establish a secondary food processing industry in the region.
One of Eimskip’s biggest Maine customers is Bristol Seafoods, which imports line-caught haddock from Norway and processes the haddock in Portland on equipment designed and built in Iceland.
Bristol Seafoods CEO Peter Handy said the construction the cold storage warehouse will allow his company, which is on pace this year to have record sales, to operate more efficiently and import other fish species from North Atlantic waters.
The cold waters of the Gulf of Maine support that same fish species found across the North Atlantic, including haddock caught in Norwegian waters above the Arctic Circle (awkward). Handy said people in New England, Iceland and Norway share the same fish consumption habits, and they also share the same values about sustainability.
Improving Maine’s Supply Chain
Chris Howard, a Portland attorney who specializes in trade issues, said Eimskip’s presence in Portland can give companies more confidence in the supply chain because they can ship from a local port operated by people they know. Eimskip is a relatively small steamship line that depends on small companies for most of its business.
In contrast, shipping out of New York means dealing with global shipping conglomerates for whom small shippers are a low priority. Howard said. Also, shipping out of Portland means Maine companies don’t have to spend money to truck cargo to New York, he said.
Eimskip, which has 51 offices in 18 countries, can also help Maine companies build trading relationships, Howard said.
“Eimskip can serve as a glue,” he said. “It’s about the connectivity to much larger markets and a much more diverse set of markets.”
Martin Grimness, a leader in Maine’s composites industry who has used Eimskip to ship composite products to Europe, said the service makes Maine more competitive because it reduces trucking costs and transit time.
Shipping products out congested major ports, such as Philadelphia or New York, requires trucking cargo a week ahead of sailing, he said. Also, Portland is closer to Europe, so cargo spends less time on a ship sea.
Grimness said Eimskip provides Maine with better access to international markets.
“They are bringing the world to our doorstep that otherwise would have gone to Boston or New York or wherever,” said Grimness, who founded Harbor Technologies in Brunswick. “They are a conduit, not only for shipments but for access. They know people, They deal with people.”
Building on the Eimskip Network
Eimskip is expanding aggressively throughout the North Atlantic. The company in May signed a capacity-sharing agreement with Greenland’s Royal Arctic Line to invest in and operate ships designed for harsh weather conditions in the North Atlantic and the Arctic.
The new vessels, to be delivered within two to three years, will connect Iceland and Greenland with Scandinavia, Europe, and North America.
Greenland, a self-governing country that is part of the Danish Realm, gets almost everything from Denmark. But Maine is 700 miles closer, and the Eimskip connection in Portland may create some trade opportunities through the Port of Portland, said Hans Peder Kirkegaard, who worked this summer in Portland as an intern at the Maine North Atlantic Development Office.
People in Greenland view doing business with the United States with apprehension because of the massive size of the U.S. economy and the negative portrayal of its corporate culture in Hollywood films, said Kirkegaard, who is managing a trade office in Nuuk, Greenland for Kisserup International Trade Roots, a Halifax-based consulting company.
He said many Greenlanders view Americans as brash and manipulative. In contrast, Maine’s low-key and down-to-earth business culture is similar to that of Greenland’s. He said those shared cultural values present an opportunity for Maine.
“In Greenland, it’s very much about knowing the right person,” he said
Establishing those personal relationships require an investment of time and travel, Arnold said.
“You have to talk with each other and break bread, and start building a relationship based on trust and mutual respect.”
The infrastructure investments on the Portland waterfront are almost complete. The task now is to build trade relationships throughout Eimskip network, Henshaw said.
He said Maine’s level of engagement today is greatest with Iceland. He noted that the University of Southern Maine and Reykjavik University in Iceland have begun exchange programs and plan to expand them.
“That broad engagement in relationship-building between Maineand Iceland is an example of how you can build lasting relationships that benefit both parties over time,” he said.