When it’s working right, the Port of New York and New Jersey is an effective gateway for one-third of the containerized cargo moving through U.S. East Coast ports. But when things go wrong they can really go wrong.
That was demonstrated this summer, when computer problems at Maher Terminals set off a chain reaction of slowed cargo deliveries that frustrated shippers for more than two months. On the worst days in June and July, drayage drivers waited for hours outside terminals. Sometimes they couldn’t pick up loads before gates closed.
Delays were so severe that container line Hapag-Lloyd urged customers to reroute cargo to other ports, and the National Retail Federation implored New York-New Jersey port leaders to straighten out the mess before the pre-holiday peak season.
Congestion receded in early August, but costs are still being tallied and some bills disputed. Meanwhile, terminals, truckers, the port authority and the New York Shipping Association are searching for ways to keep it from happening again.
Making the port more resilient is a tough challenge. This summer’s fiasco reinforced New York-New Jersey’s reputation as a place where even a tiny glitch can send things haywire — and where it’s difficult to get operations back on track quickly.
“I’ve heard from my customers that when things go wrong on the West Coast, they seem to regroup faster than they do here,” said Mike Baicher, CEO of drayage company West End Transport. “That’s something everyone needs to work together to change.”
Though the ports of Los Angeles and Long Beach handle higher volume, New York-New Jersey is arguably more complex. Some 80,000 beneficial cargo owners use the port, double that of the Southern California ports, where large shippers dominate. Some 86 percent of New York-New Jersey’s cargo moves by truck.
The port is third-largest in the U.S. and 25th in the world, with 2012 cargo volume of more than 5.5 million 20-foot-equivalent units. It is in a congested urban area with little room to expand. Traffic is dominated by time-sensitive consumer goods. The longshore work force is highly unionized, with entrenched routines and a strained relationship with truckers. The drayage community is fragmented and diverse, ranging from large motor carriers to numerous small firms run by strong-willed entrepreneurs. The bi-state port authority is a landlord agency, with limited influence over terminal operations.
It adds up to a volatile combination, ripe for conflict and susceptible to operational glitches. Terminal, trucking and port officials often describe the port as “fragile.” In recent weeks, that adjective has proved apt.
When problems with a new operating system disrupted Maher Terminals in early June, congestion spread quickly to other terminals. Productivity sagged as longshoremen, their ranks thinned by summer vacations, couldn’t keep pace. Delays were aggravated by construction at other terminals and shortages of chassis that weren’t in position for ships diverted from Maher.
Jeff Bader, president of the Association of Bi-State Motor Carriers and of Hillside, N.J.-based Golden Carriers, said the delays were “a nightmare,” the worst he’d seen in 30-plus years in the industry.
Motor carriers were hit first and hardest. Drayage companies sustained heavy costs for per-diem charges on containers they couldn’t deliver to piers on time, and for demurrage, chassis rental and storage, and drivers’ lost productivity.
Though terminals cut motor carriers some slack on demurrage and on detention bills for drivers’ waiting time, it wasn’t enough to offset truckers’ losses. An estimated 70 percent of port drivers are owner-operators paid by the load. Many drayage companies paid them for idle time, but it didn’t match what most drivers normally would have earned.
Much of the discussion on making the port more efficient and resilient focuses on relations between truckers and terminals. There’s natural tension between the two groups. Both are intermediaries, with limited control over inevitable volume surges that cause delays. Terminals’ primary customers are ocean carriers, which are mainly interested in getting their ships worked quickly. Truckers generally work at the direction of importers and exporters.
Motor carriers have long complained about terminals’ service and unpredictable turn times. Drivers who haul containers in and out of the port are even more caustic in describing their daily treatment at terminals.
Several owner-operators awaiting Port Newark Container Terminal’s 6 a.m. gate opening on a recent Wednesday morning complained bitterly about long waits for usable chassis, frequent diversions to the “trouble window” for problems such as mistyped bill-of-lading numbers, and surly treatment by International Longshoremen’s Association personnel.
“Those guys make $100,000 a year, and we’re up at 4 a.m. trying to feed our families,” fumed one driver who said he’s hauled containers in and out of the port for 17 years. “You want to know why the piers are so messed up? It’s because the union has the companies by the cojones.”
In separate interviews, several drivers said they believe ILA workers informally agree to move only a certain number of containers per hour. The drivers refused to speak for attribution, saying they feared retaliation.
ILA members say those allegations are nonsense, but the port’s productivity has been an issue for years. Work and pay practices in New York-New Jersey were the central issue in the recent negotiations for a coastwide ILA contract.
The new six-year local contract between the ILA and the New York Shipping Association features several provisions to boost efficiency. These include the phase-in of relief gangs to replace existing open-ended work shifts, establishment of per-crane productivity standards that will rise annually and be monitored by union-employer committees, and increased cross-training of workers.
Some 300 dockworkers have applied for early retirement with enhanced pensions under the new contract. They will stay on until replacements are recruited, hired and trained, a process NYSA President John Nardi said employers would complete by next April.
The NYSA this month plans to ask the Waterfront Commission of New York Harbor for authority to hire additional workers during the next several months. Fifty-one percent of the new hires will be military veterans.
The new hires and phased-in productivity improvements will help avoid a repeat of this summer’s “meltdown,” Nardi said. “I’m pretty confident we’re not going to have this problem ever again,” he said.
Jim Devine, CEO at GCT USA, which operates Global Terminal and New York Container Terminal, said the hiring, training and productivity improvements will make the port more competitive.
ILA President Harold Daggett and other union officials are cooperating fully with the new contract, including the productivity committees, Devine said. “Harold is engaged in making this happen. I have every confidence that he and the ILA will deliver,” he said.
Rick Larrabee, director of the Port Authority of New York and New Jersey’s seaport division, said customers view this summer as a short-term problem and will continue to rely on the port. The crisis, he said, has spurred the port’s diverse interests into the kind of cooperation that produced a quick recovery from Hurricane Sandy last fall.
“We operate as a system,” he said. “In many ways, this port is fragile, but when you look at the volume of cargo we handle here and the capacity we can bring to bear, I think we’re pretty resilient. I think Sandy demonstrated that.”
Terminal operators have been using their Federal Maritime Commission-approved discussion agreement to address immediate and long-term issues. Representatives of truckers, the port authority and the NYSA have sat in on the meetings.
Possible steps under discussion include lengthening terminals’ gate hours to help truckers make multiple trips in a day, standardizing gate procedures so drivers don’t face a different system at each terminal, and developing universal performance indicators for things such as truck turns.
Terminals measure turn times from the time a truck enters a gate until the time it exits. Truckers complain that this doesn’t include waiting time outside gates. A new program for radio-frequency identification technology at gates and on trucks is being touted as a way to measure turn times accurately while smoothing traffic flow.
Though the port authority doesn’t operate terminals, it has pursued an array of infrastructure improvements aimed at removing bottlenecks and adding capacity for larger ships expected from the 2015 opening of wider locks at the Panama Canal.
Work is nearing completion on dredging channels to 50 feet and major improvements to road access. Raising of the Bayonne Bridge for larger ships is targeted for completion in 2015. Work is under way on the last in a series of projects to provide each of the port’s five main terminals with on-dock rail.
But infrastructure and facilities are only part of the puzzle. Larrabee said those investments won’t make New York-New Jersey more competitive for inland intermodal cargo unless the port can improve its productivity.
“This is a ‘we’ problem,” Larrabee said. “If there’s any silver lining we’ve seen this summer, it’s a recognition that we in the port have to work more closely together … I think we have a tremendous capacity to learn from some of the things we’ve dealt with this summer and to fix them, and fix them in a way that will make us stronger.”