Staten Island Live – October 19, 2009: “Recession hits seaport industry hard”

“STATEN ISLAND, N.Y. – At the entrance to the New York Container Terminal, the gates close earlier now, the lines of trucks waiting to pick up goods are shorter and longshoremen are working fewer hours lifting fewer containers on and off the world’s cargo ships.

“It’s a very different picture from last year, when gates were extended, lines of trucks backed up onto local streets and highways waiting to pick up and drop off goods, and booming business spurred the successful start up of freight rail service.

“Last year was a record breaker, with $ 190 billion in cargo handled across the Port of New York and New Jersey. [Ed. This figure puts into perspective the size and extent of the $ 787 billion Wall Street bailout!]

“In contrast, the global recession has driven volume down nearly 20 percent in the second quarter of this year, compared with the same period last year, according to Jim Devine, president and CEO of the Mariners Harbor seaport.

“The effects of the economic downturn are felt across the entire Port of New York and New Jersey, where 15 straight years of growth fell flat at the end of last year …

“SUPPLY AND DEMAND …

“Imports are down because cash-strapped customers are spending less, and focusing primarily on the necessities, which means there is a lower demand for DVD players, flat panel televisions and designer clothing that cargo ships bring in.

“Exports, like wastepaper, are down because the lower demand for goods means less need for cardboard boxes.

“‘Clearly that reduces our revenue, our earnings, salaries,’ Devine said. ‘It’s just something that we’re working through.’ NYCT is one of the borough’s largest employers, with about 76 management jobs and approximately 450 longshoremen. Hours for longshoremen are down about 16 percent, year over year, Devine said. The entire Port of New York and New Jersey provides 232,000 jobs, both directly and indirectly, according to the Port Authority.

“Shipping companies are hurting, too. The Port of New York and New Jersey is among the country’s largest entry ports for new cars, but with demand so low, vessels loaded with new cars are sitting idle in ports around the world, since there isn’t enough room to park them on land. Car carriers account for the single largest drop-off in vessel traffic in the Kill Van Kull, said Capt. Andrew McGovern, president of the New Jersey Sandy Hook Pilots.

“SUBSTANTIAL JOB LOSSES …

“Last October, there were about 30 to 40 longshoremen out of work, according to Michael Brandon, secretary/treasurer for the International Longshoremen’s Association, Local 333 …

“This year, there are more than 150, Brandon said, including laid off harbor veterans, all victims of belt-tightening among local companies and competition from outside firms …

“‘A lot of the bigger companies will probably weather this storm,’ Brandon said of the Island-based firms. ‘They may lay up some equipment, but eventually, I’m sure it will come back.’

“‘A lot of the smaller companies that are family-owned and have one or two boats are having a hard time,’ he said. One small Mariners harbor company has already been shuttered, Brandon said.

“And for the longshoremen who still have jobs, crew headcounts have been trimmed and workers are given more responsibilities, which leads to concerns about safety, according to Local 333 President William Harrigan.

“And fewer tons of goods coming into local ports means less work and less wages for men and women who handle the cargo. Longshoremen need to work at least eight days a month in order to get health benefits, Brandon said. ‘It affects everybody.’

“In the industry since 1973, Devine says he understands the cyclical nature of his business, which, he pointed out, caused Howland Hook to close in the mid-1980s. The previous operator was a victim of reduced volume, reduced rates and increasing debts, he said.

“‘That ghost exists, but it’s not going to happen this time,’ he said. Instead, Devine is moving ahead with plans to expand the container terminal, with a goal to adding a fourth berth. Doing so is a strategic initiative, he said, so NYCT will be ready when the economy regains its steam.”

So, if Mr. Devine understands the cyclical nature of his business, and if he’s so sure that NYCT will be ready when the economy regains its steam, would it be asking too much of him to let us in on how and when this tailspinning economy of ours will regain its steam?

And does he really believe that he could go ahead with his plans to expand his container terminal – in spite of drastically reduced volumes, reduced rates and the increasing debt (that will inevitably be incurred by the proposed expansion) – and still avoid the misfortune that befell Howland Hook?

We travel the New Jersey Turnpike more than a dozen times each year. In the past, one could look to the East and surmise the approximate locations of the Newark and Port Elizabeth container terminals. Last week, however, no guesswork was involved. The exact location of both terminals were very much in evidence because the arms of dozens of idled container cranes reached skyward. No ships were being serviced, and “clearly that reduces our revenues, our earnings, salaries …”

But why worry? “It’s not going to happen this time.” Business is cyclical … and ignorance is bliss.