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Part 2 Boston: One Harbor, Two Stories - Public Welfare in the Balance

When Matt Camberlain of Boston Towing & Transportation fired off his now infamous E-mail to an obscure maritime chat site, he painted a picture of a dying Boston harbor and the harbor pilot greed which had, in part, been one of the prime movers of that trend. Citing the loss of car carrier traffic to a nearby Rhode Island port, he also questioned the competence and legal ability (READ: certification) of the Boston pilots to perform docking maneuvers. Beyond this, he alleged that the pilots were seeking excessive fee hikes which would increase port costs to a point at which Boston would be too expensive for ocean carriers. Finally, he says that pilot actions “would eliminate several docking pilot jobs.”

Boston will never be a top-tier port in the United States, in terms of tonnage, traffic, maximum draft, or any other yardstick usually employed to measure such things. It is, however, an important niche port in the northeast, and a critical part of the Massachusetts transportation infrastructure and the local economy. A real decline in traffic and / or tonnage would be a major blow to Massport, which is the governing public authority of both the Boston port and airport systems. As the second quarter of 2006 comes to a close, there is no real evidence to support the allegation that the port is in any sort of trouble; both in terms of long and short term trends.

MAREX has obtained the ship numbers--that is to say the total numbers of port movements by ocean-going, deep draft vessels--for Boston Harbor, for the period 1984 through 2005. During this 22 year span, the average yearly traffic for Boston harbor has been about 1,995 ship movements, with the nadir coming in 1991. Last year was the best on record with a healthy 2,520 movements, and the numbers are trending upward every year since 2002. Hardly the portrait of a dying port, but ship numbers only tell half the real story.

Massport, itself, has trumpeted significant growth in both 2004 and 2005 in both cargo tonnage and TEU (twenty-foot equivalent units) volume. Much of this is a function of a healthy economy, but record cargo levels amounting to 16% and 8% increases for the past two years can be construed as nothing but good news. The general trend for 2006 appears to be consistent with these numbers. The unspoken statistic, which escapes the passing glance of most observers, is the increased efficiency with which the job of moving cargo through the port of Boston is getting done. Because deep draft cargo ships are progressively becoming larger, it takes less traffic to move more cargo. In this respect, the economy of scale at Boston has never been better.

Unofficially, most observers will now concede that the Boston pilots are very close to securing their first rate increase since 2001. Their initial rate request has reportedly been pared down in committee to just 11-1/4%; presumably a much more palatable number for all concerned, especially those - Boston Towing & Transportation, for example - who initially opposed the rate hike anyway. How this pending hike in port fees will affect the commercial viability of the port of Boston is another matter.

The cost of a port call for any deep draft vessel in Boston - with few exceptions - is increased by the addition of docking master service, no matter who performs the work. The real numbers may surprise you, especially given the push by local docking pilots to gain the exclusive rights to perform such work via establishment of a State Commission through the Commonwealth’s legislature. Dave Clark of Boston Towing & Transportation says that their docking master fees provide good value for marine end-use consumer. Putting these assumptions to the test, MAREX polled various agents and consumers in Boston harbor to determine real costs and provide comparisons between the invoices issued by the Boston pilots and the docking masters employed by Boston Towing & Transportation. The numbers are telling and do not necessarily mean good news for ocean shippers, especially if SB 1330 becomes law in its current form.

By following the accompanying spreadsheet Boston Pilot Cost,the 2520 marine movements recorded by the Boston harbor pilots are broken down into specific categories of marine vessels. The Boston pilots are allowed, by law, to charge a flat fee of $350 per movement for docking or undocking. Period. Fees assessed by the docking masters range from as little as $275 all the way to as much as $1,200, depending on the movement, according to the shipping agents who process these invoices. There’s more: Extra charges can be assessed for night movements, backing out of particular berths, and for other miscellaneous circumstances.

As much as $1.4 million in docking / undocking fees could be represented by the 2,520 ship movements occurring annually in Boston Harbor. Using a best case scenario in an apples-to-apples comparison, docking master fees will exceed the harbor pilot’s rates by approximately $400,000 in a given year. In reality, the harbor pilots only perform docking master duties with respect to, perhaps, 15% of the total movements. The actual differences could be far more. Beyond this, the unspecified numbers of “enrolled” or domestic tug and barge traffic that passes through Boston harbor also would appear to be the exclusive domain of the docking masters.

Harbor pilotage in Boston harbor accounts for 20% of the average combined bill of $20,000+ for a typical tank vessel which arrives at Boston, discharges its cargo, and then departs. This is because the average deep draft vessel incurs, in addition to pilot fees ($4,300), docking master invoices (~ $1,200), charge for line handlers ($1,900), ship agents ($3,000), tug boats ($7,000), and the combined hickey of U.S. Customs & Boarder Patrol, Tonnage Tax, User Fees and other miscellaneous add-ons ($2,900). The cost to bring an LNG ship or cruise liner into Boston reportedly can hit $30,000, or more. And, still, they come. Someone is clearly making money.

The current harbor pilot rate proposal which is set to be voted on by the Mass. State Senate will increase the cost of a port call to Boston by only 2%, or somewhere between $400 and $500. Moreover, a 2004 comparison of pilot fees in Boston with those of eight other northeast ports shows Boston to be the best bargain, in some cases by literally thousands of dollars on a particular movement. Some of these ports have been granted rate increases since then; Boston has not.

The cost of pilotage represents, as it should, a significant portion of the cost doing business in Boston Harbor. The proposed pay raise, especially one which is occurring for the first time in five years, does not. It is difficult to put a price on safety, when it comes to the competent guidance of marine traffic in and out of the harbor. On the other hand, the good people of the state of Alaska could probably weigh in on that matter if asked to quantify the cost of the “EXXON VALDEZ” grounding. Similarly, cost alone should not be the determining factor in deciding who should provide docking and undocking supervision for large marine vessels. If it were, it is likely that the only people who would be performing docking master work in Boston harbor would be the marine professionals who are now commissioned by the Commonwealth to do so. Hence, the hard sell for SB 1330 is not surprising. The greed alleged by Matt Chamberlain might well be present. So far, there’s no sign of it on the pilot’s side of the ledger.

Senate Bill 1330 is not dead - far from it. According to Chris Gregory, SB 1330 was recently amended to a supplementary budget proposal; it has passed from the Senate to the House, where it awaits action in committee. Only time will tell if the House has any stomach for it. In the meantime, its supporters are intent on ramming it through before the current legislative session ends in July.

When Marine Log’s Tugs & Barges Conference & Expo kicks off on May 16th in Stamford, CT, George Lee of Boston Towing & Transportation is scheduled to take a lead role in a session on the subject of “Harbor Transit Security: The Developing Role of State Governments.” The moderator for this session, scheduled for May 17th, is listed as Harlan M. Doliner, Esq., Keegan Werlin LLP. Since Boston Towing is listed on Keegan Werlin’s WEB site as one its clients, it is unclear as to whom or what he will actually be moderating. Lee will likely keep the text of his comments to himself until the 17th, however, lest he risk disappointing those who have paid the $775 admission price for the conference. It’s a safe bet that the discussion will not center on reminding the Captain to keep the wheelhouse door locked. No, May 17th will be all about escort tug services.

Harlan Doliner also serves on the Board of the Environmental Business Council of New England. According to the EBC WEB site, “the EBC was conceived in 1990 by environmental and energy company executives who began meeting on a regular basis to exchange ideas and share experiences.” Coincidentally, the Vice Chair of Government Affairs at EBC is listed on their WEB site as none other than Robert Durand, who, as you may remember, also moonlights as Boston Towing & Transportation’s paid lobbyist. Once again, it would appear that Durand is well positioned to advise Lee and his moderator on the best way to foster “the developing role of state governments” in harbor transit security. Lee is an excellent choice to lead this discussion, but the focus of his remarks may well have to center on “lessons learned,” since the six-figure efforts to sway legislators in the Bay State have so far produced no joy. May 17th is a long way off, though. Anything could happen between now and then; this is Massachusetts, after all.

The face of Boston harbor’s marine landscape has evolved slowly over the years. The encroachment of condominiums and other pleasure outlets still threatens to crowd out the core business of the port. Now, other changes are coming as well. These changes are at the very crux of the local political and commercial struggles which will come to a head in the coming months. As MAREX goes to press for this edition of our on-line newsletter, Constellation Tug Corporation - Boston Towing & Transportation’s primary competition in Boston Harbor - has quietly announced that it is in the final stages of the “due diligence phase” of being acquired by Foss Maritime, a west coast firm which is a wholly owned subsidiary of the Marine Resources Group. Foss is a dominant player in the U.S. West coast tug and escort business. As it dips its toes into the cold waters of the Atlantic Ocean, the implications are simply huge and the possibilities endless.

Matt Chamberlain may have it right after all: “escorting” could very well become a reality in Boston harbor. In any event, the most powerful, modern, and versatile “escort” marine equipment in the world is probably on the way to Massachusetts as you read this article. The jury is still out on who will get to drive and guide this equipment. The approaching summer always means excitement, baseball, and drama at Fenway Park, but the best hard ball being played in New England right now is on the Boston waterfront. And the playing field just got a lot bigger.

Send Comments to Joseph A. Keefe - Senior Editor jkeefe@maritime-executive.com