NY/NJ port’s future view
Marine terminals sees congestion as precursor to challenges from Panama Canal.
Container volumes are up this year at the Port of New York and New Jersey, and while that’s good news for the region’s economy, the cargo growth also creates challenges for the largest port on the U.S. East Coast, which experienced severe congestion in the summer of 2013 and following winter.
Shippers are watching how the port performs this year as container carriers ramp up the size of their ships and additional cargo is routed to the East Coast following months of problems at West Coast ports during and after contract negotiations with members of the International Longshore and Warehouse Union.
Interest is keen on how the bi-state port will cope this year since even greater numbers of large ships are expected to call the East Coast when the Panama Canal expansion project is finished next year.
Terminals in New York and New Jersey handled 908,287 TEUs of loaded and empty containers in the first two months of 2015, 11.2 percent more than in the same 2014 period.
In 2014, port container volumes were 5.77 million TEUs, 5.6 percent more than in 2013. New York’s volumes have grown steadily since 2009 when they dipped during the recession to 4.6 million TEUs.
According to statistics from the American Association of Port Authorities, New York/New Jersey’s market share peaked in 2010 and 2011, when volumes were about 34 percent of U.S. East Coast container traffic and 62 percent of the U.S. ports north of Cape Hatteras, which in addition to New York/New Jersey include Boston; Philadelphia; Wilmington, Del.; Baltimore; and Hampton Roads, Va. That share dipped slightly to 31 percent of the East Coast and 58 percent of the ports north of Hatteras in 2014.
Richard Larrabee, director of the Port Commerce Department at the Port Authority of New York and New Jersey, said some cargo in recent months has been redeployed from the West Coast to New York and other East Coast ports, both on fully loaded ships on regular East Coast routes and about a dozen supplemental “sweeper ships” or “extra loaders.”
Beth Rooney, assistant director for the port, added the department estimates that 70,000 containers that normally would have gone through the ports of Los Angeles or Long Beach in the fourth quarter were instead loaded onto ships in Asia and bound for New York/New Jersey.
“We’re all waiting to see if this most recent spike in the last few months is really an anomaly that will go away or something that will etch itself into the Port of New York and is here to stay,” said John Atkins, chief executive officer of GCT USA, which operates terminals at Bayonne and Staten Island.
Meanwhile, Larrabee said the port has been dealing with the extra volume and “depending on who you talk with you would hear that we have been successful or marginally successful, depending on the day. We get sporadic days of congestion and it moves around. A lot of it has to do with extra cargo and ships being off schedule that gets the snowball rolling.”
Schedule reliability has been a worldwide problem for carriers—Morten Berg Thomsen, of the consulting firm SeaIntel, said on-time performance by carriers during 2014 was considerably lower than in 2012 and 2013.
The Port of New York and New Jersey has also seen a substantial increase in containerized exports, cargo that can tie up space at terminals for days if ships are delayed in their arrival.
“Once you get behind it is hard to catch up,” said Larrabee, who added terminal operators have extended gate hours and included Saturday hours as ways to reduce congestion.
“All of this is a precursor to what happens after the Bayonne Bridge is raised and we get a steadier stream of much larger vessels,” Larrabee said.
The road deck of the bridge is currently 151 feet above the Kill Van Kull, the waterway that separates, Staten Island, N.Y., from Bayonne, N.J. The port authority is spending more than $1 billion to raise the bridge’s roadbed to 215 feet so that larger ships can pass beneath it and call the container terminals in Newark and Elizabeth, N.J., and on Staten Island. The agency expects the roadbed’s raising to be finished by the third quarter of 2016.
Terminal Backups. Shippers “have experienced days when congestion was a significant issue” during the past winter, Larrabee said, and congestion has continued as an issue into the spring.
For example, in early April, there were reports of truckers lined up for miles waiting to go into the GCT Bayonne terminal because of extra cargo the terminal was handling.
A port authority notice said trucks were “arriving earlier and earlier to begin queuing… before the terminal gates open” and blocking traffic on highways leading to the facility.
The agency said the traffic results in the container yard being “flooded with the same trucks previously on line and the delivery process is negatively impacted” and “it would be beneficial to all parties if the trucks arrived more regularly throughout the available gate hours, which run form 6 a.m. to 6 p.m.”
But Leslie Hare, ocean import coordinator at Farmingdale, N.Y.-based Shea Trucking, noted if truckers don’t line up early, it is likely they may not be able to move more than one container per day.
The port authority has threatened to ticket trucks that queue prior to 5:30 a.m. each day.
Hare said her drivers have even been waved out of line during regular business hours and not allowed to return an empty container to a terminal, thereby forcing her company to incur per-diem charges and pay storage costs.
When her firm protests, she said the terminals “don’t give an inch” and “are all powerful and, unfortunately, nobody in the port will say anything is wrong.”
The congestion the port is seeing is “strictly caused by volume,” said Jeff Bader, CEO of Golden Carriers and president of the Association of Bi-State Motor Carriers. “When terminal operators tell us not to send trucks to the pier, what are we supposed to do? It doesn’t make any sense.”
Bader said he does not have an answer to the congestion that hit GCT Bayonne, but suggested the terminal might extend its hours or perhaps have ships worked there discharge cargo at a sister terminal on Howland Hook which is less congested. GCT Bayonne did announce plans to remain open on Saturday in early April.
The port authority said it expects “sporadic delays” would last several more weeks before activity in the port normalizes.
Seeking Remedies. After the port was snarled by congestion during the summer of 2013 and winter of 2013-14, the port authority created a group of stakeholders from an array of businesses in the port to address ways to improve productivity in the terminal complex.
After six months of meetings last year, the group came up with a list of 23 recommendations, and a second group, called the Council on Port Performance, was set up to work on implementing them.
Rooney said just as she was asked in the aftermath of the Sept. 11, 2001, terrorist attacks to focus on port security, she has now been asked to make the council’s work her primary focus.
“This is essentially a crisis of its own,” she said.
The top priority of the group is the formation of a gray chassis pool, which the port hopes to introduce by July 1.
There are about 38,000 chassis in the port and TRAC, Direct Chassis Link, and Flexi-Van—the three major chassis providers—are all planning to participate in the pool, and additional owners of chassis—trucking companies, for example—could chose to join the pool, as could liner companies, such as Mediterranean Shipping Co., which still have their own chassis fleets in the region.
In addition to making chassis “interoperable” so truckers will be able to use them to handle containers from multiple shipping lines in multiple terminals, Rooney said, the hope is the port will be able to create a dedicated workforce to maintain and repair chassis and not have chassis repair workers taken off jobs to work on other equipment such as straddle carriers or reach stackers at the terminals where they are employed.
Another priority is to work with ocean carriers to encourage block stowage of containers, especially those moving out of the port by intermodal rail.
Rooney noted while only about 12-15 percent of the imports entering the port are intermodal boxes to be loaded on trains, block stowage helps place rail cargo on trains more quickly and gets it off the dock.
The port has intermodal “ExpressRail” terminals for APM Terminal and Maher Terminal in Elizabeth, PNCT Terminal in Newark, and GCT New York’s terminal on Staten Island.
Construction on ExpressRail infrastructure for the GCT Bayonne terminal is expected to begin later this year and be completed in about 18 months.
Another project the council is working on is a truckers’ guide to the port’s container terminals (in addition to the five mentioned above, there is also Red Hook Terminals in Brooklyn, N.Y.). The manual is now being reviewed by both experienced and rookie drivers and the plan is to publish it in a number of forms, including a cell phone version and make it available in several languages.
There are about 16,000 drayage drivers serving the port, and Rooney said the vast majority make at least one move a day. A goal is to reduce congestion by reducing the number of truck transactions—about 6 percent today—that end up at a trouble window inside the terminals, she said.
Port Community System. The No. 2 priority of the council is the creation of a port community system that will give truckers, shippers, and others increased visibility into the status of their cargo at the port, Rooney said.
The idea is not a new one—the port introduced a community system called “FIRST” that went live Sept. 10, 2001. She said the effects of the terrorist attacks the next day and concern about port security caused it to be shut down.
The port hopes to start up a new port community system, to be known as the Terminal Information Portal System or TIPs, later this year.
It will allow truckers to check a container’s status at any of the port’s six terminals instead of having to look at each terminal’s unique website or create a watch list that will let them know when a box is available. The user will also be able to find the booking status for exports so that he or she knows when to deliver an empty container to a shipper.
Larrabee said the project had advanced by March to the point where “we’re going to be bringing BCOs (beneficial cargo owners) and truckers in to look at screen shots that have been developed. We’re working with a software provider, and my sense is that we’re getting closer to having a system that’s going to work for us.”
The system is “the precursor for any sort of truck management system and ultimately any sort of an appointment system,” he added.
“There’s mixed feelings about the effectiveness of an appointment system in a port like ours, when everybody still sort of has their own situation to deal with. I think there are some who are more enthusiastic about it than others,” he admitted.
Rooney said it is unclear exactly how the appointment system will work—if, for example, there are two lines—one for truckers with appointments and another for truckers who arrive without a pre-arranged time.
Bader was wary, stating “every appointment system I’ve seen has not worked in other ports. When one terminal is working well and another terminal is working badly, how can you count on appointment times? When you’ve got one bad terminal that’s holding everything up for the rest of the terminals. It’s a domino effect.”
However, he praised some of the port’s initiatives, such as its winter weather plan and system the port set up for keeping truckers informed when terminals are closed.
John Nardi, president of the New York Shipping Association, said the port was closed fewer days in 2014-2015 because there was less snow, though the bitter cold did affect diesel machinery.
Hiring New Workers. NYSA represents employers in the port during local negotiations with the International Longshoremen’s Association, and the contract with employers that was ratified in 2013 by ILA members included incentives for about 300 New York-area longshoremen to retire early.
NYSA then sought to add 682 workers—532 longshoremen and 150 checkers, both to replace the retiring workers and support higher cargo volumes.
Nardi said “for all practical purposes, we’ve hired the longshoremen and now the focus is on training, because you take these people in, but nobody has ever driven a straddle carrier before,” he said.
The clerks are taking a little longer to hire, and he complained that it’s taking too long for the Waterfront Commission to approve potential workers.
(The commission is essentially a specialized police force that was set up in the 1950s to screen workers and fight crime on the waterfront. It also regulates the number of workers on the docks, a system that is a holdover from the days when workers showed up for a daily “shape up” to get work and often had to pay kickbacks to get selected.)
Both the ILA and employers have chaffed at the Waterfront Commission’s oversight, feeling that crime has largely disappeared from the docks, but they are still subject to cumbersome regulations on the size of their workforce.
The commission operates under a bi-state compact that was created by both the states of New York and New Jersey. It has become so politically unpopular, that both chambers of the New Jersey legislature voted unanimously this year to withdraw from it.
As this issue of American Shipper went to press, N.J. Gov. Chris Christie had not acted on the legislation, which the Waterfront Commission said the state cannot unilaterally withdraw.
Dock Automation. The ships calling the Port of New York and New Jersey are getting larger—GCT Bayonne handled the Zim Tianjin, which as a capacity of 10,000 TEUs.
Terminals such as the Ports America’s Port Newark Container Terminal and the GCT Bayonne terminal have expanded, and GCT Bayonne converted half of its facility to a high-tech, rail-mounted gantry crane operation.
Whether other terminals in the port will automate is unclear. One source said owners have already spent so much money on improving their current systems which use straddle carriers or rubber-tire gantry cranes, that they may not be willing to sink hundreds of millions of dollars more to further automation.
Deutsche Bank, owner of the largest terminal in the port, Maher in Elizabeth, has said the facility is a non-core legacy asset and last month announced the sale of Maher’s terminal in Prince Rupert, Canada. Experts gave conflicting reports of how aggressively Deutsche Bank is seeking to sell the Elizabeth terminal.
A major change in the latest contract with the ILA will allow terminals in the Port of New York and New Jersey to set up a relief gang system.
“The purpose is to improve productivity. In many cases today, for a machine you hire two people for one job and they relieve each other,” Nardi said.
But the ships that are calling the port are so large that they may be staying at terminals for several days.
As a result, Nardi said, while productivity typically starts off well it begins to decline as time goes on.
“The relief gang system will ensure fresh labor every 12 hours, if needed,” he said. “Really, we’re just trying to replicate what they have in every other port on the East Coast. If you’re going to work more than 12 hours then you bring in fresh labor to continue the work.”
In early April, Nardi said employers had not yet determined how many workers they need to hire, but hoped to add workers by late this year or early 2016.
During the summer of 2013, the port struggled with productivity because so many workers were on vacation and the problems that Maher Terminal had with integrating its computer system.
Last year, many dockworkers that had chosen to retire early stayed on the job for several additional months, which helped the port function more smoothly.
Nardi expects this summer to be equally challenging, but said NYSA should be able to manage the situation since many of the new workers will only have a week of vacation compared to senior workers who have since retired and could take off as much as six weeks a year for vacation.
The Port of New York and New Jersey is “growing, but we’re not growing as fast as ports south of us, and I don’t think that’s a healthy situation to be in long term,” Nardi said. “That’s why we’re putting all these measure in place—to make the port more competitive so that we make it more attractive and maintain our market share.”
Political Turmoil. A contentious issue that has divided the Port Authority of New York and New Jersey and some container carriers is a $4.95-per-TEU cargo facility charge that the port implemented in 2011 to help fund infrastructure projects such as roads and intermodal rail yards.
The New Jersey legislature passed a bill and Gov. Christie signed to revoke the fee and similar legislation has been approved by a New York Senate committee. An attempt by ”K” Line to challenge the fee in the U.S. Federal Maritime Commission was dismissed last November, and the carrier is now seeking a review of that decision at the U.S. Circuit Court of Appeals for the District of Columbia. “K” Line stated the fee not only violates the 1984 Shipping Act but is unconstitutional.
In the past year, Christie’s administration has had to contend with various allegations that individuals at the agency who abused their power in some way or worked to benefit the state at the port authority’s expense.
These allegations include the contention that Christie’s aides inflicted retribution against the mayor of Fort Lee, N.J., for not endorsing the governor’s reelection by causing artificial traffic jams on the George Washington Bridge, and David Samson, former agency chairman, had somehow convinced United Airlines to offer a flight between Newark and Columbia, S.C., near his weekend home.
Others are that the clients of Samson’s law firm somehow benefited from port authority decisions such the agency taking over the Atlantic City airport, that New Jersey benefitted the state by committing $1 billion to repair the 85-year-old Pulaski Skyway which is not one of the agency’s properties, and it bailed out the City of Bayonne by spending $235 million for 131-acres along the Hudson River.
While these allegation have cast a cloud over the once-proud agency, the port department that oversees the marine terminals appears to have survived with its reputation intact.