UNIONS TO VOTE ON FEE CUT \ MOVE WOULD REDUCE NEW YORK PORT CHARGES

UNIONS TO VOTE ON FEE CUT \ MOVE WOULD REDUCE NEW YORK PORT CHARGES

The longshore union at the Port of New York and New Jersey is expected to meet next week to approve a decision by port operators to slash handling fees on local cargo, The Journal of Commerce has learned.

The International Longshoremen's Association and the New York Shipping Association will meet early next week to jointly vote on a proposal to cut the charge by $1.50 a ton. That plan was approved by the NYSA's board last week, carrier officials confirmed Tuesday.Official approval by the ILA-NYSA contract board would make New York, the East Coast's largest port, more attractive to carriers because it would slash rates for handling containers at the traditionally expensive port by an average of $24 a container.

''It's a significant drop, and we expect the ILA to approve the proposal because it's clearly in their interests,'' said Phil Connors, executive vice president at Maersk Inc. ''I would say that New York is still on the high side in terms of carrier operating costs but this is just another sign of the significant progress they've made in the last 18 months to address that.''

The unions declined comment.approval by the ILA-NYSA contract board would follow similar cuts on local cargo and inland freight made last Jan. 1 for fees that directly fund the pension, health, vacation, holiday and guaranteed annual income packages for the ILA in New York.

The drop in cargo-handling fees would be the eighth time in 11 years that the port has slashed rates on either local freight or cargo moving into the interior.

''New York has gone from being a very expensive port in the mid-1980s to a fairly expensive port, and this would clearly be another positive step in attracting cargo,'' said John Reeve, vice president of A.T. Kearney, a Cambridge, Mass., transportation consultant. ''You always have to trade off New York's costs, however, with its links to an enormous consumer market for all its inbound cargo.'' New York is expected to finally begin long-stalled efforts to deepen its critical Kill Van Kull channel this fall to help stem the diversion of up to 10 percent of its container cargo over the past four years.

Container carriers rechanneled large volumes of freight primarily to the Port of Halifax to lighten loads on inbound calls so ships could safely navigate New York's relatively clogged channels.

''The port seems to be making progress on settling its dredging problems, and the split-up of Conrail should also create more rail competition and give shippers greater alternatives to move their cargo,'' Mr. Reeve said.

Conrail Inc. last week won federal approval to sell its network to Norfolk Southern Corp. and CSX Corp. That deal is widely expected to increase competition in the Northeast and give many customers more choice in services.

Mr. Reeve also said New York has gotten better control of its operating costs by ''getting a large number of longshoremen off their books.''

The cargo assessment fee at New York was initially very high because the port had a large number of ILA workers doing limited work after containerization dramatically reduced the number of workers needed to handle cargo. The Guaranteed Annual Income program was created to fund benefits for East Coast workers. Maersk's Mr. Connors said he believes New York will finally begin to deepen its major channel this fall. That, he said, ''would go a very long way towards meeting our major operating concern at the port.''

Maersk and its global partner Sea-Land Service Inc. recently asked for proposals to build a giant intermodal container terminal from New York and six of its competitor ports on the East Coast.

The ports of Halifax; Hampton Roads, Va.; Baltimore; Quonset Hut, R.I.; Philadelphia; and New York have responded to the Maersk-Sea-Land request with bids to build the proposed intermodal terminal, Mr. Connors said.

Boston didn't file a bid, however, because New England's major container port said it didn't have sufficient infrastructure to handle the expected large volumes of rail cargo moving into the Midwest and Canada, he added.

The NYSA, which represents 75 carrier and terminal operators at the port, and the ILA are expected to vote for a cut on the cargo-handling fee from $2.50 a ton to $1 on containerized cargo moving within 260 miles of the port. The port will continue a $65-a-container charge on that cargo.

ILA approval would translate into a cut in costs of at least $24 per container because the average weight of loaded containers is about 16 tons.

The inland assessment for cargo moving 260 miles outside the port was cut this year to 91 percent of its initial $5.85-a-ton assessment; the local fee was cut as of Jan. 1 to 57 percent of its original assessment of $5.85 a ton plus $65 a container.

The cuts on inland cargo have been pivotal in the continuing expansion of the port into so-called discretionary cargo that is not geographically tied to any port.

The port said inbound intermodal cargo moving by rail to the U.S. Midwest or central Canada has grown this year at more than twice the pace of the port's total container traffic.

''It's tied to the fact that cargo has been up for the past five quarters,'' after total volumes jumped 12.4 percent last year and 15 percent in first quarter, one carrier official said. ''The New York Shipping Association obviously feels they have the revenue to fund all the ILA's benefit packages with the reduced assessment and there doesn't seem to be any valid reason why the ILA would reject that.''