HDC positions the port to be a distribution hub

A cargo ship arriving from Morocco last week might seem like just another working vessel in New Bedford’s busy commercial waterfront, but to city officials, the little orange fruit it carried symbolizes a potentially bright future.
The 400-foot-vessel, hauling Mediterranean clementines bound for Canada, is part of the city’s existing break-bulk cargo trade, an industry term referring to packaged cargo that is shipped on smaller pallets than the standard steel shipping containers.
The ship’s fruit, which arrives each winter, is New Bedford’s foot in the door in international food trade circles, which local officials would like to see blown wide open.
The city built its reputation on its harbor, first as whalers in an industry that peaked in the mid-19th Century, later as distributors for a booming textile trade and today with seafood, maintaining the highest catch value of any port in the United States for more than a decade.
The port currently supports about 200 marine-related businesses and a fleet of about 500 fishing vessels. Recent efforts to re-establish ferry services to Martha’s Vineyard and Cuttyhunk and to develop a local cruise ship destination have added to a thriving marine business environment.
Now city and port officials want to take the next step, positioning New Bedford as a leading intermodal facility with particular specialties in moving perishable food and a plan to lure emerging clean energy technologies here.
It’s a long-term and somewhat risky strategy, one that includes factors outside city control. But if it works, it could be New Bedford’s ticket into global shipping arenas.
“In my view, New Bedford’s port is also New Bedford’s future,” said Mayor Jon Mitchell. “Our goal is to continue our preeminence in the commercial fishing industry but also expand in other sectors, and we’ve been working hard to grow our import-export capacity.”
Two projects in particular are taking center stage. One involves building a maritime facility to support offshore wind development. The other, the import goal to which Mitchell referring, is perhaps less sexy, but nonetheless exciting, because it builds on existing seafood infrastructure without the need for large infusions of capital.
A New Route
Meximar, the brainchild of local freight company Maritime International, is a planned international shipping route set to haul produce from Mexico to New Bedford and return there carrying local goods. If successful, it will expand current international traffic to New Bedford, like the Mediterranean clementine, by establishing similar trade routes with Mexico, hauling Mexican grown products like tomatoes, avocados, and limes.
The route will cost less, be more environmentally friendly and grow business for the freight company, said David Wechsler, company president, who called the move a reflection of a national shift away from trucking toward shipping.
“It makes economic sense,” he said. “All traditional food chain links will eventually move from trucking to the sea.”
“The goal is to make New Bedford a hub for international fresh produce for New England and Eastern Canada,” said Edward Anthes-Washburn, deputy port director. “The key sort of thing we’re trying to do here is to have the opportunities be as diverse as possible so if something like the home industry tanks, there are other sectors that we can rely on.”  Mitchell agreed.
“Our efforts are based on the recognition that our port represents our economic advantage,” the mayor said. “New Bedford can compete well in any industry that relies on the use of water. Other cities that lack port assets like ours will struggle to compete in the future. So, in order to maintain and enhance our economic viability, we’re putting all our efforts into making the most of these assets.”
New Bedford’s strengths for potential importers include its location. For shippers, the port is easily reached and is closer to prime global ports than several of its Eastern seaboard counterparts such as Philadelphia, said Wechsler. Proximity counts, he said, because each day at sea for a cargo ship can cost in the range of $20,000 to $25,000.
For buyers and sellers, it’s the city’s proximity to Canadian markets that is attractive. Based on the existing seafood industry, New Bedford already has the infrastructure in place, from cold storage warehouses to connections to rail and trucks and a skilled work force.
And it can get easily-spoiled produce to Canada quickly.
Once a cargo ship hits dock, longshoremen from Maritime International can unload it in 12 hours, making it possible for fruit to reach port in early afternoon and be sold in Canada the next morning, according to Wechsler. The efficient operation gives buyers confidence that their product will be received in quality condition and is one of the reasons port officials believe they can increase harbor business.
The end result of a trade increase is jobs, local officials said. An influx of international cargo to New Bedford could lead to new production and distribution facilities in the region.
“The idea would be to get some of those jobs in and around the port once we become a terminal for fresh produce,” said Anthes-Washburn. “At this point in the status of New England, there are not very many manufacturing jobs left and not very many blue-collar jobs. The union labor is a very skilled and well-paid work force, but those jobs are fewer and far between.”
“As we establish ourselves as a distribution hub, all of a sudden distribution centers for warehousing and things like that will begin to locate in and around the port,” Anthes-Washburn added. “These facilities don’t necessarily have to be (located) next to the water. They can be in the business park and other areas.”
Will it succeed?
The idea for Meximar was conceived more than 14 years ago. At the time, Maritime International saw possibilities in capitalizing on its existing seafood facilities by shifting produce moved by truck to cargo ships. The company’s port operation was already equipped to handle fruits and vegetables with cold storage warehouses and the staff and distribution capacity to handle an increase in cargo flow.
What it needed was a connection with a well-situated Mexican port that could support a direct trade route, and Tuxpan fit the bill.
An active, growing port city on Mexico’s east coast, Tuxpan is located about 200 miles from Mexico City. It has added facilities in recent years, building piers designed for large freighters and adding a new refrigerated warehouse. As of this spring, a new highway is expected to open, creating an easier connection to Mexico City.
It was an ideal partnership, Wechsler said, but the plan did not take off initially.
Despite interest, American buyers didn’t want to take a risk on a product they could not inspect first, he said, and farmers did not want to ship to the United States without knowing they had buyers lined up.
But Wechsler didn’t lose faith. He believed there were enough benefits from the route that he continued to push for it over the next decade, sending key staff members to Tuxpan to build relationships and continuing to research the market. To date, Maritime International has invested about $250,000 in the venture, he said.
Recent developments brought the route to the forefront again, including a shift in Mexican federal policies toward offering more support for growers. Expected financial savings from shipping versus trucking in the wake of rising oil prices also helped, Wechsler said, and a trend in the food industry toward the consolidation of grocery chains gave the few remaining chains more buying power. That meant a ship could potentially launch using only one or two grocery buyers and still have a large enough purchasing commitment to make the venture financially viable.
“Any one of three to four chains could fill up one of these ships,” said Wechsler.
Also making the timing right was a stepped up commitment of support from city officials. In July, New Bedford threw its weight behind the venture, signing a sister port trade agreement with Tuxpan that acknowledged mutual trade interests. That was followed in early October by a daylong trade development summit at the Whaling Museum that put Mexican producers and U.S. buyers in the same room with export, customs, and other government officials.
Wechsler acknowledged the support has been meaningful.
“In successive city administrations, Scott Lang and Kristen Decas and Jon Mitchell’s administration and Edward Anthes-Washburn, we’ve seen an increased focus on actually helping generate both import and export trade,” he said.
The summit, led by the Harbor Development Commission as a follow-up to a 2011 event, focused “on buyers and sellers talking to each other, getting everybody in a room together so any questions they have, we can get them answered at the summit,” said Anthes-Washburn. “It was a great success in terms of that.”
Even so, the event didn’t lead to large scale commitments from buyers or sellers and over the last few months Maritime International has continued to work to bring participants on board in order to get the ship launched. About 2,000 pallets of produce each week would make the trip viable, Wechsler said. As of mid-October, port officials said about 600 pallets had been committed, a little more than a quarter of the amount needed to fill a ship on a weekly basis.
Asked when he thought Meximar would get going, Maritime International freight-forwarding manager, Pierre Bernier, gave it a 50-50 shot in 2013. “It’s all about risk,” he said. “Someone is taking the risk.”
The process takes time, Bernier added, pointing to the complexity of negotiations that involve many individual Mexican growers, ship owners from Europe, and U.S. growers and companies.
Driven by economics
But Wechsler believes economics will ultimately tip the scale for Meximar.
Meximar can cut distribution costs over trucking routes by as much as $1,600 per tractor trailer load, he said. The ship being considered can carry 2,000 pallets of produce, compared to a trailer truck capacity of only 20 pallets per load. That means about 100 trucks would be needed to equal a single ship’s load, Wechsler said, translating to a potential $160,000 savings.
And, while fuel and labor costs are the primary economic benefits, Wechsler said additional savings include necessary regulatory filings, potentially a $7,000 expense for 100 trucks crossing the border, versus about $70 for a single outbound ship.
Ultimately the success or failure of the shipping route comes down to achieving critical mass, said newly appointed New Bedford Port Director Jeff Stieb. And that falls on the shoulders of the business involved.
Wechsler didn’t disagree. Critical mass is 2,000 pallets, he said, but the ship could start with less.
“The line might start with as little has half that amount,” he said.
One local business interested in participating is New Bedford-based food specialty company Sid Wainer & Sons.
“If the boat were coming in next week, we’d place an order with some of the farms and try it,” said Henry Wainer, owner and CEO. “We’re prepared to try it and see where it goes.”
While Wainer said he is still seeking answers to unknowns such as Mexican growing practices, the quality of merchandise and necessary travel time from port to destination, he said he sees the route as a plus for the region and his business.
“I think anything we can do to make our port more vibrant is a great thing,” he said.
But even if he does participate, Wainer said his interest in mangoes, bananas, and limes and other foods will never be in the kind of volume the shipping route needs.
“Our initial oversight of the proposal was that we needed to be a massive retailer and be able to use massive pounds of bananas,” he said. “They’re looking for a big player like Costco or BJ’s. That’s what they need for it to work.”
Getting on board
While many concerns center on getting purchasing commitments from local buyers, others wonder about the ship’s return haul. The route offers local food industries, like seafood and cranberry companies, a direct shipping path to Mexico. But does it hold enough value to entice them to change existing export routes?
“It’s an opportunity we’ll consider,” said Dan McCarthy, a Northern Wind account executive. Seafood processor Northern Wind is interested in the Mexican consumer market, McCarthy said, and will be researching it more closely.
“We need to learn more about the market,” he said. “There’s a growing middle class in Mexico and we want to get into it, as a market, a lot.”
Northern Wind got its start as a direct off-loader and processor of scallops in 1987, but later expanded its product line and now delivers a full range of fresh and frozen scallops and other fresh local seafood. It already exports to Mexico, selling domestic sea scallops, lobster and other products there, according to McCarthy. Currently product is moved by refrigerated truck from New Bedford to Florida, and then by ship to Mexico, he said.
For any shipping route to be attractive, McCarthy said, it must offer faster times to destination, quality care along the route, and better freight cost.
Cranberries are another local product with potential distribution benefits from Meximar. The fruit has seen increasing exports over the past decade or so, including increased sales to Mexico, according to Cranberry Marketing Committee director Scott Soares.
Soares said cranberry exports represented about 30 percent of total cranberry production in 2011, up from 15 percent in 2000. And Mexico is no exception to the trend.
Exports to Mexico are up 218 percent over the last five years with 100,000 barrels of cranberries, about 10 million pounds, exported last year, Soares said.
Several factors contributed to the growth, including recent economic improvement in Mexico, the removal of a retaliatory tariff in 2011 that had raised costs and a heightened interest among Mexican consumers in healthier eating, he said.
“It strikes me, based on the amenities provided, proximity to market, and proximity to producers, that there would be an inherent cost savings associated with (Meximar), but I don’t know enough of the specifics,” said Soares.
Ocean Spray, the Middleboro-based agricultural cooperative of about 700 growers, refused to discuss Meximar, citing the cooperative’s existing distribution channels.
“Our products are shipped by ground transportation to Mexico from our facilities that are located in the South and Southwestern parts of the United States,” a spokesman said by email. “Therefore, I don’t think we can provide any point of view on what Scott (Soares) presented.”
Beyond Meximar
Weschler said Maritime International will fare well with or without Meximar. “We could stop the whole thing and the company would be fine,” he said. “But from a long-term perspective, I think it’s a good thing.”
Heavily involved in the seafood industry, Wechsler sees that business continuing, even given regulatory changes that have been impacting commercial fishing catch amounts.
“We’ll continue to service the seafood industry,” he said. “I think there will be a shift in species with some diminishing and some increasing. And we’ll roll with that.”
Making meximar happen
What: Proposed weekly trade route between Tuxpan, Mexico and New Bedford with possible stops in Florida.
When: The route will start once founder Maritime International secures enough commitments from growers in Mexico and buyers and sellers in New England.
Imports/Exports: Mexican produce could include bananas, avocados, tomatoes, limes, and more. New England products could include seafood, cranberries, apples, or potatoes.
Benefits
• Substantially lowered costs over existing truck distribution routes.
• The opportunity for growers to sell direct to buyers, potentially increasing profits.
• Increased jobs for the city. It can take about 50 men to unload one cargo ship and a weekly commitment means sustained work for longshoremen.
• The possibility of new distribution centers locating in the area.
Obstacles
• The need for companies to rework existing distribution routes.
• Several unknowns including product quality from growers and buyers who have not worked together before.
• Complex negotiations among buyers, growers, shippers from multiple countries who each need to commit to the venture to make it successful.
By BETH PERDUE
bperdue@s-t.com
December 16, 2012 12:00 AM
Source URL: http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20121216/NEWS/212160316/1001/NEWSLETTER100