PORTLAND (AP) – Merrill Marine Terminal Services Inc. says it needs to open a second shipping warehouse.

The state-funded 56,000-square-foot warehouse opened last November. It was made possible by a $1.7 million investment by the state through a 20-year, interest-free loan.

Now the warehouse is handling so much cargo that a second, larger warehouse is needed, said company president Paul Merrill.

“It does seem that this is something that’s really paying off,” Merrill said. “The real impact is the fact that we’re able to lower the cost of shipping for Maine manufacturers.”

Merrill said he has been talking with state officials about similar financing for a second $3 million warehouse.

The state investment for the first warehouse leveled the playing field for Merrill Inc., which runs the only private wharf of its kind on the Eastern seaboard.

Similar facilities in Boston, Providence, White Plains, N.Y., and in Searsport and Eastport, are owned by states and licensed to private companies, which pay only for cargo that passes through.

The first warehouse allowed Merrill Inc. to keep its anchor tenant, Kruger Inc., a Canadian newsprint company that ships rolls of paper through Portland. Without Kruger, Merrill would have had to drastically scale back operations.

The amount of Maine and New Hampshire wood pulp exported out of Merrill’s facilities has doubled, and is expected to double again in 2004, Merrill said.

The pulp, produced by paper mills around the state and in Berlin, N.H., goes to mills in Northern Europe, the Far East and the Mediterranean, Merrill said.

Additionally, the amount of cargo coming into the port to be shipped along the East Coast has also grown.