Summertime Blues at NY-NJ Port

As cargo delays at the Port of New York and New Jersey enter their third month, customers are wondering: When will this end?

Terminal operators say they expect things to settle down soon after Labor Day. Vacationing longshoremen will be back on the job, diverted ships presumably will return to their normal berths, and Maher Terminals says it will be ready to handle its share of the traffic.

That’s small comfort to port users dreading another month of expensive delays. And the terminals’ hopeful forecasts are tinged with caution — September usually heralds the peak season for holiday imports, which could put new strains on the port’s capacity. Retailers already are antsy.

The last two months have been frustrating and costly to cargo interests, drayage companies, owner-operator drivers, container terminals, and everyone else connected with the East Coast’s largest port. Almost every day since June, at least one or two container terminals have been clogged with truck lines that sometimes have stretched two miles or more.

Blame for this summer’s chaos has focused on Maher’s troubled integration of a new Navis N4 operating platform. Computer glitches ignited the port’s summer meltdown, but the problem goes deeper than that.

The fiasco at Maher set off a chain reaction that exposed the port’s vulnerabilities in labor, facilities, and operating practices.

Long-term changes have been put into motion to address some of these issues, but as John Maynard Keynes once said, “In the long run, we’re all dead.”

It was remarkable how quickly the diversion of ships from Maher produced gridlock at other terminals. Delays have been aggravated by a tight supply of labor, major construction at Global Terminal, and port authority bridge tolls that have discouraged use of New York Container Terminal on Staten Island.

Once a busy container terminal falls behind, it’s difficult to catch up. Think of it this way: If congestion allows a terminal to handle only 25 percent of its workload on Monday, it must do 175 percent on Tuesday. The longer the sub-par productivity continues, the more daunting the arithmetic.

Port truckers already are doing the math on their losses, which are substantial. Drayage companies have had to dip into their pockets to pay drivers waiting in hours-long lines, but the compensation doesn’t approach would owner-operators could earn under normal conditions.

Some port drayage companies, already struggling, may be forced out of business. We’re hearing more talk of owner-operator drivers who are fed up with delays at the piers and are taking other jobs. These are ominous developments for a port that relies on trucks for 85 percent of its business.

Delays appear to have eased at most terminal gates during the last few days, but it’s still a day-to-day situation. Meanwhile, a four-way battle is intensifying over who will pay for this summer’s fiasco. Truckers, terminals, ocean carriers and drayage companies are trying to minimize their losses.

Drayage companies are adding congestion surcharges to customers’ bills, billing terminals for detention time, and trying to pass along demurrage charges for containers whose free time has expired. With disputes already emerging, lawyers can look forward to a spike in business.

Shippers are starting to vote with their feet by switching shipments to Baltimore, Norfolk and other ports. Hapag-Lloyd raised eyebrows last month when it advised customers to reroute shipments until the New York-New Jersey congestion clears. Diversions may accelerate as the peak season gets under way.

Representatives from terminals, the port authority, truckers and the New York Shipping Association met Monday afternoon to discuss ways to get things back on track. Ideas reportedly discussed included extended gate hours at terminals. The NYSA is preparing to seek approval to hire additional dockworkers in the coming months.

For the port, this follows an extended run of mostly good news — a remarkably quick rebound from Hurricane Sandy, approval and funding of a higher Bayonne Bridge, a six-year longshore labor contract that offers a path to improved productivity, and several billion dollars of infrastructure improvements, and plans to hire additional longshoremen.

These and other developments offer long-term dividends, but the payoff will be reduced unless terminals, truckers, labor, the port authority and others can make the port resilient enough to keep a computer glitch at one terminal from exploding into a summer-long crisis.

Contact Joseph Bonney at jbonney@joc.com and follow him at twitter.com/JosephBonney.

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