Copyright 2003, Traffic World, Inc.
After their attempt during the last decade to become a "mega-container-opolis," the Philadelphia-area ports on the Delaware River are returning to their niche roots, while looking for some new offshoots.
The piers provide the logistics hub and spokes to be a class A, meat-and-potatoes - or, in this case, meat-and-fruit - cargo gateway. Port leaders are leveraging that network for other specialized imports and exports as well.
"There''s a very strong structure here for handling niche cargoes," said Robert Palaima, the president of Philadelphia-based Delaware River Stevedores, which handles imports and exports at major public piers on the river in Pennsylvania, New Jersey and Delaware.
The Philadelphia-area port network has a large number of refrigerated warehouses for South American fruit, Australian meat and dairy products and other temperature-sensitive cargoes. More than three-quarters of the Chilean fruit that comes into the United States is imported through the Philadelphia region. The piers'' proximity to federal highways like Interstate 95 and major rail terminals means the imports can be shipped to major U.S. population centers in a matter of hours or days.
It took decades for the Delaware River ports to notch those niches. Port companies from Philadelphia and South Jersey sought the cargo, fought to bring it through U.S. borders through their piers and battled to keep it there. It was no easy task. American farmers didn''t appreciate the fruit imports, even if the grapes and other Chilean produce entered the U.S. markets when North American fruit was out of season.
The area ports developed a logistics network that benefited the country, Philadelphia-area port leaders contend. "Most people think nothing of it now when they eat grapes during the winter," Palaima said. "That''s thanks largely to the fruit that''s come through here."
Delaware River ports chased the South American imports as a means of survival. When shippers started using more containers to move their goods, Philadelphia failed to invest as much as other ports in box-handling equipment. Port leaders at that time thought containers would have limited success and labor saw the boxes as a threat, fearing they would reduce the amount of people or hours needed to move cargo.
As containers and the ports that moved them efficiently became more popular, Philadelphia - which into the middle of the last century moved more cargo than other Atlantic-coast ports - saw prestigious shipping lines pull anchor and take the cargo to other cities.
Part of the problem is geography. The piers along the waterfronts in Philadelphia, South Jersey and Wilmington, Del., all lie about a full day''s voyage upriver from the sea for cargo ships. One of the main benefits of container shipping is to cut down on time and chugging up the Delaware would translate to wasted bucks for shippers and lines.
So, the port looked for breakbulk cargoes - like fruit and frozen meat - and developed the infrastructure to handle the goods. Grapes and other fruit bruise easily if handled roughly. Philadelphia longshoremen became adept at moving the produce carefully and quickly on the docks.
Across the river, along the waterfront in Camden, N.J., the longshoremen started to move steel and scrap metal. "It''s helped to keep us in business," said Joe Balzano, the executive director of the South Jersey Port Corp.
The ports developed a reputation for being jacks of all trades and master of a few. That was fine with Palaima and other port company leaders who recognized the limitations of the river piers and developed trade lines that would flourish within those restrictions.
But in the latter half of the 1980s, as shippers started packing more cargo into containers and more lines left the Delaware River, port leaders started searching for ways to retain cargo and lure more customers, especially those dealing in containers.
Port politicos from Philadelphia and South Jersey reckoned that, geography aside, one of the biggest problems along the Delaware River was unification - or the lack of it. The public piers on the river are governed by three states, half a dozen cities and a host of different and often competing government authorities or other agencies. That roster doesn''t include the numerous stevedore companies, port operators and other private businesses that also compete for cargo.
Delaware decided to go solo while Philadelphia and South Jersey opted to unify their resources. That way, they figured, they would stop fighting each other for customers - a war they called churning - and start to battle more effectively against other ports.
The effort really hit stride in the mid-1990s, as the ports and governments shelled out big bucks for national port administration talent (in the past, the port usually had relied on locally bred officials) and created yet another new port agency to take control. The Port of Philadelphia and Camden tried to win bids for a terminal that would serve jet-engine-powered freighters as well as the right to operate the North Atlantic''s largest American complex for Maersk-Sealand.
After about a decade of lawsuits, bankruptcies and other failed port propositions, port leaders have pretty much tolled the bell on "unification." "Unification, at least as it was meant before, has run its course," said Bill McLaughlin, a spokesman for the Philadelphia Regional Port Authority, which is responsible for that city''s public piers.
That''s to say it''s highly unlikely there will be a rationalization plan for different kinds of cargoes at specific piers with little or no chance of mixing. It''s worked out for some of the piers anyway; on the Philadelphia side, the Packer Avenue Marine Terminal handles most of the containers and the Tioga Street piers handle a great deal of the Chilean fruit. South Jersey Camden''s claim to fame is scrap steel and other special cargo. But there''s no set plan to keep one cargo at one port or another.
But, at a very basic level, there''s already been unification. Delaware River Stevedores, for example, moves cargo through terminals in all three states. Having survived bankruptcy, the company has a simple philosophy. "We use whatever terminal is best for the cargo," Palaima said.
One thing that the port has learned is not to bet too much on container traffic. "There are just not too many containerships that are going to take the long trip up the river," one port official said.
But other ships will gladly make the trip if the right kind of infrastructure is in place for the cargo.
Philly officials figure they''ve got a lock on fruit and frozen meat. During the winter, the region becomes grand central for refrigerated trucks filled with South American cargo, only minutes from major highways. "From here, we send the trucks all over the country," McLaughlin said.
That kind of access to trucking and cold warehousing is why the NZMP, which represents New Zealand dairy ingredients importers, uses the port for about 60 percent of its imports, said Patti Smith, the organization''s vice president. "We have a large customer base on the East Coast," she said. "In Philadelphia, we have warehousing right at the port and we can move our goods to the trucks in a very short period of time."
Thanks to long delays in nearby New York, area officials hope there will be even more trucks picking up Delaware River cargo. While it can take hours at the larger port, Philly officials say that with technology updates, trucks will able to turn a load around in about 30 minutes.
Philadelphia area piers, however, are not just counting on the inefficiency of competitors to lure more customers. For one thing, the port is looking to add even more berth space for breakbulk cargo, refurbishing abandoned piers in the northern Philadelphia waterfront. About a year ago, the port spent about $1.1 million to build a movable warehouse to attract new cocoa bean business to the port.
At the time, Harvey W. Weiner, president of Dependable Distribution Services, the cocoa bean terminal operator at the port, said, "I know the requirements of the cocoa industry and the port helps me to implement those requirements."
Using relationships they had developed with Chilean fruit exporters, port officials tracked a new cargo niche from the South American country - hardwood and pulp - that fit perfectly with the temperature-controlled covered warehousing and storage space the port had built for its other cargo, said Ed Henderson, the director of strategic planning and development for the Philadelphia Regional Port Authority.
Trucks are just one mode to move the cargo in and out of the port. Philadelphia boasts of its service by three major railroads, including two-day service on Canadian Pacific to Canada. The port is counting on a new intermodal rail terminal to be operated by Norfolk Southern in the city''s old Navy Yard, which has seen a recent spurt of relatively new developments, including a private shipyard.
Another big player the port is banking on is shipping line P&O Nedlloyd. The carrier is looking to dump New York, Henderson said, for its around-the-world service via the Panama Canal. The line would make Philly its last North American port of call before heading across the Atlantic to Europe, Henderson said.
There''s a hitch with that plan. In order to make it work the way P&O Nedlloyd wants, the port is going to need a deeper draft on the Delaware River. For Philly, the good news is that the Corps of Engineers already has a plan to do just that. The bad news is that New Jersey and Pennsylvania will have to work together to make it happen. "There have been some political problems," Philadelphia Regional Port Authority spokesman Bill McLaughlin said. "They have to do with the disposition of the dredged soils."
Such problems have become a bit of a clich? with U.S. ports. They need deeper drafts to accommodate the ever-increasing size of cargo ships. But the dredged material is politically volatile stuff; environmentalists warn that it can contain heavy metals and other hazardous materials. It''s not exactly the kind of stuff people want in their sandboxes or backyards.
Still, port officials say the material is safe. "This is the same kind of material that we used to build Tioga and Packer Avenue terminals in the 1970s," McLaughlin said. In the case of the Delaware River, the Corps would have to find a home for about 6 million cubic yards of dredged material, half in New Jersey and half in Pennsylvania.
The issue has been where to put it in Pennsylvania, McLaughlin said. State officials are considering a plan to haul the dredged soil to the western part of the state for landfills or to replenish strip-mining areas, he added. "One of the problems with that, the transportation cost could almost double the overall cost," he said.
Total costs, the Corps of Engineers estimates, will run about $300 million. Of that, about a third has to come from the local sponsors, in this case Pennsylvania and New Jersey, a bi-state authority or some other representatives.
Officials from both states overcame some early hiccups to work together and come up with the local share. Which just goes to show, McLaughlin said, that "unification" may be a thing of the past, but that doesn''t mean the ports can''t work together on projects important to them all. "It doesn''t rule out collaboration," McLaughlin said.
With the deeper drafts, who knows what ships the port can lure. For, despite the continued success for niche cargoes, there are still some who hold out hope for more container traffic. Like it or not, the U.S. port scene is a boxed society, where the number of TEUs (or the measurement of cargo volume by 20-foot-containers) is often the measure of a port''s worth.
The latest plan to percolate those dreams is the scheme to barge containers out of New York to relieve the truck congestion there. There''s been little more than a promise that this will bring boxes to Philly. But some still think there could be something there.
In the meantime, Delaware River Stevedores, the Philadelphia Regional Port Authority and the South Jersey Port Corp. will continue to knock around the niches, using the region''s networks of warehouses, trucking network and rails to grab as much cargo as possible.
Fruits of Philly''s Efforts
Fruits of Philly''s Efforts
Copyright 2003, Traffic World, Inc.
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