But the future is bullish with investments ongoing to massively increase capacity
In July, the Port of New York and New Jersey was the busiest in the nation. In August, volumes dropped off, reverting to the pattern of post-pandemic trade activity, characterized by the drawdown of existing stateside inventories.
During the COVID-19 pandemic, one of the big trade stories was that the Port of New York and New Jersey (PANYNJ), perennially the number three port in the country behind Los Angeles and Long Beach, had surpassed Long Beach to become number two. Since then, the port’s monthly performance has fluctuated between the two top positions.
July was the biggest month for the port since October 2022, but year-to-date numbers show that August was more typical. In the first eight months of 2023, imports decreased by 21.7%, close to August’s slide of 21.4%. July, by contrast, saw a decrease in imports of 7.7%.
“Gateway of Choice”
For Mike Bozza, deputy port director at the Port Authority of New York and New Jersey, the declining numbers are indicative of the continuing efforts by U.S. retailers to reduce the overstocks they accumulated during the previous two years. Bozza assumes that the port will retain its number one or number two positions going forward, but more important than the container contest among U.S. ports, Bozza said, is that “we want to be number one in reliability. We want to be the gateway of choice.”
The Port of New York and New Jersey saw dramatic increases in volumes during the pandemic, in part, because cargo owners diverted shipments away from West Coast ports to the East, to avoid congestion and to mitigate the risk of disruptions due to possible labor actions. “Some of the volumes have gone back to Southern California ports,” said Bozza, “but we have actually retained more than we expected.”
What accounts for that? Reliability is the top reason Bozza attributes to this phenomenon but there are others as well. “Shippers have gotten wise and started to diversify their supply chains,” he said. “They don’t want to put all their eggs in one basket.”
Importers are also diversifying their sources of supply away from China, although China remains the port’s largest trading partner by far. “Our market share from China continues to slowly decline,” said Bozza, “and the biggest pickup is from India, Vietnam, Italy, and Germany.” Imports from Italy include beverages, appliances, cereals, furniture, and prefabricated buildings. Germany supplies appliances, plastics, vehicles, and electronics.
Future Growth: Key is Increased Capacity
The recent declines in port volumes have not dampened the bullish sentiment among port stakeholders and the Port Authority itself about future growth, as reflected in ongoing and planned infrastructure investments designed to increase port capacity.
Additional terminal capacity should come online at the port as a result of the operational takeover by CMA CGM of the GCT Bayonne and GCT New York container terminals, completed on August 31, and, as of October 12, renamed Port Liberty Bayonne and Port Liberty New York. CMA CGM is targeting an increase in the terminals’ capacities of 80% during the next 10 years with $600 million in investments, including the continued development of Bayonne’s Berth 3, which will have the capacity to handle 18,000-TEU vessels. The company will also expand yard and berth capacity to improve operational fluidity at Bayonne and New York.
Those acquisitions increase CMA CGM’s terminals in the U.S. to seven. The carrier acquired the Fenix Marine Services container terminal in the Port of Los Angeles in 2021.
“We are excited about the partnership with CMA CGM,” said Bozza. “It is the third largest carrier in the world, and they are making significant investments in those two facilities, which will result in driving additional cargo through this gateway. We’re also hopeful that it will also drive additional intermodal cargo through this gateway.” Both terminals are served by the Port Authority’ ExpressRail network, Bozza noted, which provides intermodal rail service up and down the East Coast, and to eastern Canada and the Midwest.
The GCT leases that were transferred to CMA CGM, with Port Authority approval as owner of the facilities, were set to expire in 2030, but have now been extended to 2047. “We did that to help facilitate the additional investments that CMA CGM is planning to make,” said Bozza. As part of the amended agreements, CMA CGM will pay increased rent based on container throughput, subject to a minimum annual guarantee, and will share revenue from excess container storage.
In Bayonne the construction of a new wharf is already underway and is expected to be completed at the end of 2024. Upgrades to equipment, including the acquisition of rail mounted gantry cranes, and expansion of facilities, and modernizing the gate complex are also in the planning stages.
CMA CGM is also committed to the Port Authority’s goal of achieving net-zero greenhouse gas emissions by 2050 (see accompanying article), and to that end will be acquiring zero-emissions material handling equipment and promoting renewable energy.
Other Port Projects
Elsewhere in the port, July saw the kickoff of the Port Authority’s Corbin Street project. The $220 million project, supported by a $44 million federal infrastructure grant, is “a capacity and safety enhancing project,” said Bozza. “It’s going to replace the Corbin Street ramp at the northern entrance to the port, which is functionally obsolete, with a two-lane structure.” Bozza expects it will take five years to complete.
Currently in its final design phase is the $6.6 million Southbound Connector intermodal project, which will add an additional track to the port’s ExpressRail Elizabeth terminal. The connection will increase the terminal’s capacity from 800,000 to over 1.4 million containers per year and will reduce congestion by allowing trains to arrive and depart simultaneously both north and south.
“The southbound connector will allow trains out of ExpressRail Elizabeth to avoid the choke points around areas where trains are being built,” said Bozza. “That is going to provide additional redundancy and resiliency.” The ExpressRail Elizabeth terminal serves the Maher and APM terminals.
The Port Authority received a $6 million grant from the State of New Jersey under its Rail Freight Assistance Program for the planning and design of the project. Construction is scheduled to begin in the fourth quarter of 2024 and be completed in 2025.