Who wants yesterday’s papers?
Well, hold onto yesterday’s Star-Ledger because there’s an insightful article on the shipping slowdown at Port Newark:
In 2006, Maher Terminal in Elizabeth created an overnight shift, assigning longshoremen to rearrange stacks of cargo containers that had been delivered during the day to make room for new shipments.
Now, in a sign of the downturn on the docks, Maher this month eliminated the overnight shift. The terminal just isn't that crowded with cargo anymore.
"The economy isn't doing real well," said Sam Crane, spokesman for Maher Terminal in Elizabeth, the largest terminal in the port. "We're not exempt from the economic cycles."
After several years of robust growth, shipping terminals in the Port of New York and New Jersey -- which in 2006 handled almost 3 million containers -- have run into an economic wall, along with other seaports around the country.
Port officials and business executives say the volume of cargo shipped to the docks in Newark, Elizabeth and other terminals in New York Harbor has been declining for several months.
"This is an industry that's gotten used to 5 and 10 percent growth," said Edward Kelly, executive director of the Maritime Association of the Port of New York.
The Port Authority of New York and New Jersey is still tabulating its trade statistics for 2007. Richard M. Larrabee, the agency's port commerce director, said initial indications are that the volume of containers increased by about 4 percent compared with 2006. But that growth mainly came from a surge in business in the middle of the year, he said.
"It was slow at the end of the year," Larrabee said.
Since Jan. 1, the volume of cargo has been down about 1 percent compared with 2007, Kelly said.
Those numbers could be worse were it not for changes in several trade routes that used to go through ports on the Pacific Coast and then used trucks that drove cross-country to deliver goods on the East Coast, he said.
At least four of those routes now come through the Panama or Suez canals to terminals in New York and New Jersey, largely because of increases in fuel costs, Kelly said.
Economic analysts are predicting the port slump should continue for several months.
"The ports are a very good mirror of what's happening with the economy," said J. Craig Shearman, a spokesman for the National Retail Federation, a trade group that helps produce a monthly report on the seaport industry. "The cargo that comes through the ports is a hard and fast representation of what retailers expect to sell."
An article by William Finnegan in the New Yorker described the present state of the New Jersey ports:
Global, at a hundred acres, is a relatively small terminal, but it's busy. Byan took me on a tour of the pier in his pickup truck, navigating between walls of containers and dodging big, fast-moving equipment-forklifts, bladed stackers, top loaders, and huge rubber-tired gantries, six stories high.
"Empty field!" Byan yelled, pointing at some tall piles of multicolored containers, each one eight feet wide by eight feet high and forty feet long, with "CHINA SHIPPING" and "HANJIN" and "P & O NEDLLOYD" painted on the sides. Empty containers are the Port of New York and New Jersey's biggest export, followed by wastepaper and scrap metal. The wastepaper mainly goes to China, and comes back later as paper goods. No empty containers arrive. ...
The largest American importer by far is Wal-Mart. Last year, it brought seven hundred thousand container units through the green lane into the country. The rise of the big-box retailers, with their global network of suppliers, has caused a shift in power in the international shipping business away from the steamship lines and terminal operators, and toward the importers. What is more, companies like Wal-Mart have been actively working against stronger port- and containersecurity laws since shortly after the September 11th terror attacks. The Retail Industry Leaders Association, a Washington lobby dominated by Wal-Mart, actually boasted, in a 2005 report to its members, about its "continued industry leadership in opposition to ill-advised and onerous port security measures (i.e. cargo fees, increased physical inspections)."
The container-ship revolution has effectively abolished distance as a pricing factor. For a pair of shoes made in China and sold in this country for fifty dollars, only about seventy-five cents of the retail cost derives from transportation. And the main costs in international shipping come from friction in the pipeline, particularly at the points of ship loading and unloading. The costs exacted by fraud and other crimes-the "Mob tax"-are small compared with the costs of ordinary, honest labor. It is, therefore, the latter costs-unionized labor, essentially-that concern global shipping interests, rather than the costs associated with reducing crime or with the industry's potential contribution to terrorism. ...
The American public was clearly disturbed to learn, earlier this year, that our ports are run largely by foreign corporations. But terminal operators tend to be owned by companies with steamship lines-the shipping business is highly vertically integrated-and the last major American line, American President, was sold to a Singapore conglomerate in 1997. American-flagged service in the North Atlantic actually ended in 1969. When the Administration of George H. W. Bush went looking for American firms to handle some of its stevedoring and shipping in the first Gulf War, it found virtually none with the needed capacity. Today, a Singapore company handles a large amount of U.S. government work in the Middle East. The largest American terminal operator is S.S.A. Marine, in Seattle, a family-owned company; with no ships or containers, or even a logistics business, it is hardly in the global big leagues. It's fair to say that, if foreign-owned terminal operators were barred from American ports, many terminals would cease functioning.
The main reason for America's absence from the field is that international shipping is a high-risk, capital-intensive business that periodically requires extensive state assistance, and neither Wall Street nor Washington has traditionally had much interest in it. (Military shipping is another matter: the United States Navy is by far the world's largest.) Other governments and other national financial establishments have made different calculations.
Orient Overseas, the Chinese company that owns Global and the terminal at Howland Hook, has a fleet of sixty-nine ships which includes some of the largest vessels afloat. They operate in a partnership known as the Grand Alliance, which includes Hapag-Lloyd, of Germany (a hundred and thirty-six ships), and N.Y.K., of Japan (a hundred and nineteen ships). Both Hapag-Lloyd and N.Y.K. also operate terminals. Maersk is the world's largest steamship line, with five hundred and seventy ships. When calling in New York, they use the company's own terminal, in Port Newark. [Emphasis mine.]
Oil prices are hovering around $100 a barrel this morning. I thought I would add that near-pertinent fact.
—Douglas Carlucci
