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April 7, 2014

After dropping anchor in Portland, Iceland's Eimskip looks to hunker down, expand

PHOTo / Tim Greenway Larus Isfeld, Eimskip USA's managing director, stands at the International Marine Terminal in Portland. Isfeld hopes to double the Icelandic shipping company's business in Portland within five years.

In the year since Eimskip, the 100-year-old, Reykjavik-based shipping company, moved its U.S. port of call for its own vessels to Portland from Norfolk, Va., the company already is handling 5,000 containers, has signed 20 export/import business customers and is growing roots in the community through charity and other events. Larus Isfeld, managing director of Eimskip USA, says he hopes container traffic will double going forward if a planned rail connection into the port comes to pass.

Born in Reykjavík, Isfeld, 42, graduated from Methodist University, Fayetteville, N.C., with a degree in international studies. After college he worked for a large grocery store in Iceland, and then in 1999 founded his own company at JFK Airport called Icexpress, an air freight forwarding company that merged with Eimskip in 2009, when he became managing director of Eimskip USA in Virginia, where he still resides.

About half of the company's $597 million operating revenue comes from operations outside Iceland. Here in Maine, exports to Iceland grew 807% from 2012-2013, from $215,205 to $1.95 million, and Maine is on track to export $517,447 to Iceland for January year-to-date in 2014, according to Dana Eidsness, director of the Maine North Atlantic Development Office. Maine imports from Iceland rose 1,881% from 2012-2013, from $217,825 to $4.32 million, according to the World Institute for Strategic Economic Research website data from the U.S. Census Bureau's Foreign Trade Division.

“Because Eimskip offers direct transatlantic services between the United States, Canada and Europe as well as services between Iceland and other major ports in Europe, it's important to remember that shipping to Iceland can provide [an opening] into other North Atlantic markets,” Eidsness wrote in an email to Mainebiz. “EU markets alone currently represent approximately $340 million in exports for Maine.”

While Isfeld declined to give specific dollar figures for his company's exports and imports, he recently took time to reflect with Mainebiz on his company's first year of business in Portland, and what the future holds for the shipper. An edited transcript follows.

Mainebiz: What is the status of the company's relocation to Portland? Do you still maintain a presence in Norfolk, Va., and Everett, Mass.?

Larus Isfeld: Our Portland office is the only port where we call with our own vessels in the United States. That's what makes it significant. We are still running a freight-forwarding division out of Norfolk. We do a lot of international freight forwarding, tracking, purchasing and distribution. We have no intention of closing that down, because a significant part of our revenue comes from that location. We don't have our own vessels there, but we service a lot of customers from the steamship lines who go through Asia, South America and Europe. A large part of the cargo that comes into Portland goes to Everett for cold storage by truck.

MB: Has locating your port of call to Portland played out the way you envisioned?

LI: This year has been focused on operational challenges, because it's not easy to drop the market that we've established for 27 years, like the one in Norfolk, and the one in Everett where we've worked for more than 50 years. So the first year [in Portland] has been focused on keeping the current business we've had on the vessels. In Portland, we're helping [customers] change their shipping routes. I would say overall it's gone really well, we've been really happy with the reception in Maine and we've been getting help from everybody involved, our vendors, the community and the authorities also. This year our focus is shifting from setting up the operation to sales and marketing and making sure everyone knows we are there. We had a feeling that a lot of the local customers in the beginning had doubts we'd be staying. I feel those customers finally believe we're here to stay. We started to see some bookings from them in the last few months and we feel that's only going to increase. We have two 700 TEU [twenty-foot equivalent unit] vessels in Portland and may increase the size to 900 TEU with more business, in which case the frequency of shipping may be increased to every week.

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MB: Are you hiring salespeople right now?

LI: We expect to hire one. It's not like we're marketing to the public. We're trying to get ahold of the 200-300 export and import companies in Maine that are focused on Northern Europe business. So our marketing would be very direct to just get in contact with those people.

MB: How many of them are clients so far?

LI: Maybe 20. They're anybody with products manufactured or distributed from the state of Maine.

MB: You mentioned you have cold storage in Everett. Do you plan to have that in Maine, too?

LI: The cold store in Everett is run by another company. There have been some talks about building a new cold store in Portland, as the current cold store facility there is very old. A new facility could give better service to customers. We're just waiting to see what happens with that. We probably have to prove ourselves first and prove to the community we're here to stay.

MB: Plans are being discussed for a $5 million expansion to the International Marine Terminal in Portland along west Commercial Street and to extend rail lines, which could double your current container business to 10,000 annually. But the funding still isn't fixed. What will you do if it isn't funded?

LI: To build our business and continue to grow volumes through the port, we have told the authorities that they need a rail connection to make the port more competitive to accommodate the trade flows. If that does not happen, we would not have the volume, because we won't have the infrastructure to [handle it]. We don't think that would cause us to leave with the current volume that we have, but the region has high hopes of at some point servicing Europe and adding trade routes. The more containers that come out of here, the more competitive the region will be.

MB: Have you found Maine to be a business-friendly state?

LI: We are very happy with the state in terms of doing business. We believe the slogan 'Open for Business' is very accurate.

MB: What is your current traffic through Maine?

LI: We have about 5,000 containers moving on the trade we brought to the area in the first year, and we're hoping to see those numbers in the next coming few years double. That would be local export and import business that we're hoping to pick up to start using our services. We're importing more than we're exporting, about 60-40 imports to exports. We'd like to have it at 50-50. We're always trying to balance our trade flows because that means [otherwise] we have to move empty containers. We're hoping for more export business to even those flows to Portland. But it's not something that we control; it's something the market controls.

MB: What have you been importing and exporting?

LI: We're importing Icelandic Glacial Water and fish from Norway, the Faroe Islands, Iceland and Greenland. We're importing machinery for the retail market from Scandinavia and chocolates from Northern Europe. Exports in general are from all over. We're exporting a lot of paper and pulp out of Maine. And we're exporting local beer.

MB: Are there other things that might provide more business going forward, like wood pellets, maple syrup or fish?

LI: I think Maine might be able to export building materials like wood and wood pellets if they're consumer-packaged wood pellets into the European market. Maine could also export the Poland Spring water.

MB: Has Poland Spring contacted you or do you have a contract yet?

LI: No, but there might be a possibility to reduce shipping costs locally. Newfoundland is an island with 500,000 people reached by our vessels.

MB: Are you doing anything to reach out to Maine companies to get more of their business to export to Europe?

LI: We're working with the Maine International Trade Center and the North Atlantic Development Office on the trade mission in June to Iceland and the U.K. We hope to increase trade between those two [areas] and Maine. We hope to sign some contracts at that time.

MB: Your prospectus to go public on the Iceland's NASDAQ in October 2012 noted that liner services account for approximately 70% of overall company sales, and forwarding services, 30%. Do you expect similar percentages for Maine?

LI: Very similar.

MB: What did you learn from your visit to the recent Seafood Expo North America show in Boston?

LI: We've had a booth at the expo for over 20 years. A large part of our customers that come there every year are from Norway, the Faroe Islands, Sweden, Denmark, Holland, Germany, Iceland and Greenland. Our CEO and the Icelandic Minister of Trade and Commerce had a meeting with Gov. Paul LePage at the show. They were meeting to talk about the trade mission and future opportunities to capitalize on the Eimskip service. I wasn't at the meeting.

MB: What are Maine companies doing to take advantage of Eimskip's presence in Maine? How is Eimskip helping Maine businesses capitalize on its connections throughout Europe?

LI: There is a big interest in the Maine logo in Northern Europe. We've been establishing business with some customers in Maine that allows them to ship pallets instead of containers, so they've been able to ship one or two pallets to customers throughout Northern Europe with all kinds of Maine food items. In the past, they've had trouble reaching those markets because if they didn't fill the full 20-foot containers, they couldn't get a competitive rate. But now we've been able to ship one, two or three pallets if they need to service a customer. It's been more frozen prepared foods, and I think a lot of it has been lobster-based.

MB: Do you act as a matchmaker to get businesses together in Europe and Maine?

LI: That's a big part of our business, to make people aware of opportunities in our markets. Like our CEO said in one of his recent speeches, 'We're like AT&T. We connect people.'

MB: Where do you see Eimskip's Portland operation in five years?

LI: I'm hoping we can expand weekly vessel calls into port, but to do that we have to double the business, so we need to see at least 10,000-15,000 containers flow through the port every year. To handle that, I think we'd need an office of 15 people.

MB: Are there commonalities between people from Maine and Iceland?

LI: The reason we came to Maine to start with is we thought the community is like our culture in our other North Atlantic offices, especially in Scandinavia. I would say it feels good to do business in Maine because of that. I think we're very compatible with the people of Maine. We all come from harsh winters with long dark periods and we've always had to fight for our existence. So I think I would say fighting to survive through the past few 100 years has gotten us some common denominators so we understand each other better. A lot of the values Mainers have, you find the same values in Scandinavia. If you don't do something, no one will do it for you. And it's too cold to sit out in the street and do nothing.

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