Horizon, Trailer Bridge outline ambitions
Two Jones Act carriers indicated that they have ambitious expansion plans at an investors' conference held Tuesday in New York by Jefferies & Co.
Chuck Raymond, Horizon Lines' chief executive officer, said his company has plans to offer weekly Jones Act container service on the East or Gulf coasts, using two or three ships next year.
Meanwhile, John D. McCown, CEO of Puerto Rico barge carrier Trailer Bridge, whose company just started a service to the Dominican Republic last month, said the carrier might enter the Alaska or Hawaii trades. He also expressed interest in starting a service to Cuba if trade relations are normalized with that country.
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McCown |
Raymond explained that the addition of five foreign-built ships to Horizon’s fleet for use in the Guam trade, and redeployment of ships elsewhere in its services, has left the company “with three extra vessels that are on standby ready to enter the domestic trades along the coast when we are prepared to do that next year.”
Initially he said the service would be aimed at shuttling containers between East and Gulf coasts ports for international carriers. But he said he expected the company would eventually market the service to domestic trucking and intermodal companies.
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Raymond |
Raymond said he felt the time was right for short sea shipping because of growing congestion on Interstate highways running along the nation’s coasts. He also noted the growing size of containerships meant fewer ports could accommodate the largest ships. That, he said, opened the possibility for carriers with smaller vessels to shuttle boxes from deepwater harbors to shallow-draft ports.
He did not specify what ports Horizon might serve, but did indicate that deeper draft ships calling Hampton Roads, Va., and New York might need relay services to serve shallower draft ports.
He pointed to two pieces of legislation as being important for coastal services viable.
One was an elimination of Harbor Maintenance Tax for imported cargo being relayed from one port to another. Raymond said this amounted to double taxation on containers being shuttled from one port to another by ship or barge rather than truck or rail.
“That’s wrong and Congress has recognized that,” he said. Legislators are weighing a bill to eliminate the tax and he expected it to pass.
Raymond noted the ships his company wants to use for the coastal service are quite old, built in 1968 and 1969. There will be a need to replace those vessels and he called for revival of the Title XI ship loan guarantee program. He said a House bill would supply $100 million to the program, making possible construction loans of $2 billion.
Raymond would not say whether the company would start the services without the legislation being passed.
If Horizon does enter the coastal trade it will be competing head to head with Columbia Coastal Transport, a New Jersey-based company that offers scheduled barge services between ports from Portland, Maine, to Miami, as well as service to Freeport, Bahamas, and Cuba.
Raymond also said Horizon plans to dramatically grow its involvement in the logistics business.
“We see a huge opportunity there,” he said. “We are not looking to go out and buy a $1 billion logistics company. We are going to build that, and we are going to build it by seeding a small company or small companies that know how to do that with the customer relations we have at Horizon. It is a process of seeding a logistics business as opposed to sodding it.”
Last month Horizon acquired San Francisco-based third-party logistics company Aero Logistics, and Raymond said he would like to grow that company dramatically.
This year Horizon expects to have revenue of about $1.2 billion. Raymond said he would like to see both the liner side and the logistics side of the business each with revenues of about $1.5 billion by 2010. And he would like Horizon to have total revenues of $4.25 billion by 2012.
McCown noted Trailer Bridge has just recently started calling the Dominican Republic with one of the barges it uses in its Puerto Rico service, and the company has recently signed an alliance with intermodal company Pacer to better serve shippers moving cargo between Puerto Rico and the U.S. West Coast.
While Trailer Bridge is the smallest player in the Puerto Rico trade, McCown believes the fact that his company uses 53-foot domestic containers with 61 percent more cubic capacity than a standard 40-foot marine container gives it an edge over other competitors in the trade.
And he said the fact that it tugs moving barges burn distillate fuel that produces less pollution, particularly particulate matter, is attractive to environmentally conscious shippers.