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The Future of Conley Terminal and the Port of Boston

While it once served as one of the country’s largest and most important seaports, due to a variety of factors, Boston is no longer truly considered one of the county’s major ports.

Despite back-to-back years of double-digit growth and a new cargo volume record in 2015, Boston’s Conley Terminal ranked as the 25th busiest port in North America in terms of combined import and export volumes.

At the same time, both industrial capacity and rents have remained relatively stagnant for years.

So it begs the question – What does the future look like for the port of Boston?

Keeping up with current demands

Artboard 1The Conley Terminal is the only full-service container terminal in New England, representing an important hub in the shipping of many products across the region.

Each year, the port handles more than 1.5 million metric tons of cargo, which Massport says generates $4.6 billion of economic activity in New England and 50,000 total jobs. In 2015, the port set a new record, handling 237,166 TEU worth of cargo – an 11-percent jump from 2014.

Some of the increases have been attributed to congestion at other U.S. ports, with shippers choosing to unload at Boston rather than the busy New York-New Jersey port area.

Despite its record cargo volume in 2015, the port still has room to grow before becoming overwhelmed. A previous Massport study found that the terminal had a capacity of 344,000 TEU, without taking into account expansion into the Coastal Oil property.

Demand and rents in the area have been relatively flat for the past several years, said Scott Gredler, a Director at Cushman and Wakefield, with most of the activity in smaller blocks.

“There has been a lot of consolidation in the area, but the sector hasn’t really bounced back,” Gredler said. “Because there aren’t larger spaces available, many of those users have chosen to stay outside the city.”

While it would require a 45 percent increase in cargo volumes to reach that estimated maximum capacity, if the current pace of growth continues, that threshold could be reached as soon as 2030.

The impact of larger and larger ships

The reason Boston is seen as a secondary port is due to its inability to handle the largest ships in use today.

Shipbuilders and shipping lines continue to design newer, larger ship models built to the maximum capacity of the Panama Canal (hence the term Panamax).

The original Panamax ships had capacities of roughly 5,000 TEUs, and required harbors roughly 40 feet deep, which Conley Terminal could accommodate. However, continued expansions of the canal have created multiple lines of larger and larger Post-Panamax designs, with Boston Harbor unable to keep up.

Artboard 1 (4)

Last year, Conley Terminal handled its two largest Post-Panamax ships ever – each with capacities of more than 8,000 TEU in 2015. However, even with a $310 million two-year dredging project set to start next year, the harbor won’t be deep enough to accommodate the newest ship designs with capacities of 13,000+ TEU.

The ability to unload larger ships in Boston is also hindered by the terminal’s proximity to Logan Airport. Because it is directly under flight paths in and out of the airport, the cranes used to unload those ships need to be custom-designed to comply with height restrictions from the FAA.

As time goes on, the push for lower shipping costs means more and more of the world’s maritime cargo is being moved with these larger ships, which will continue to limit the cargoes which can be unloaded in Boston.

What the future looks like

The port of Boston is a key supply chain hub for the New England region, and will likely remain so as time goes on.

However, the current planned dredging project will allow Conley Terminal to service more of the larger containerships currently in use, and represents an opportunity to continue to grow in the future.

The push toward the use of larger and larger ships may only exacerbate the congestion in ports which can handle them.

While the restrictions it faces may keep Boston becoming a top-level port city, if Boston can continue to serve as a strong secondary option, it may carve out a larger role in servicing the rest of East Coast shipping traffic, and see steady growth in the coming years.

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