Similar to last year, 1996 is expected to register strong growth in global trade. According to DRI/McGraw-Hill, the volume of world trade is projected to rise 7.6% this year, and continue increasing into 1997.

Waterborne trade, measured in tons of general cargo, is expected to jump 4% in 1996, and almost 5.2 % next year. This is good news for the Port of New York and New Jersey, which will handle much of the ocean borne freight traveling on the North Atlantic, Asian and Latin American trade lanes -- which, according to DRI/McGraw-Hill, are expected to become busier this and next year.

In an effort to improve its infrastructure, level of efficiency and competitiveness, the Port of New York and New Jersey has begun and is continuing to implement a number of strategies and renovations designed to achieve these goals. These include a new multi-million dollar on-dock rail system, an all-water service from the Far East, and a reduction in cargo assessments.

Express Rail: Providing Efficient and Competitive Service Inland

In a continuous effort to improve the New York/New Jersey Port's competitive position for inland cargo, a new $19 million common-user rail facility, called Express Rail, will be completed at the Elizabeth-Port Authority Marine Terminal in early 1996. The new on-dock express rail system will provide for the off and on-loading of containers directly from ocean vessels to trains. This system is expected to accommodate 100,000 containers per year, and will be able to expand to handle up to 150,000 to 200,000.

Express Rail is designed to achieve a number of objectives. These include the enhancement of the Port's inland reach to high-growth consumer and production markets in the Midwest and Canada; to increase efficiency and reduce costs in transferring cargo from ship to rail by eliminating the need to truck the cargo from one point to the other; and to prepare the Port for future opportunities.

"Express Rail will help us capture a bigger piece of the inland market", says Don Lots, Manager of Intermodal Development at the New York/New Jersey Port. "This is an integral part of our strategy to become the primary North Atlantic load center. We feel those ports with a combination of a large local market and superior intermodal connections are the ports that will dominate in the future." The new facility is expected to virtually double the Port's existing rail terminal capacity.

In testing the validity of the on-dock system, a pilot project was initiated in late 1991. Overall, the facility averaged 25% growth per year, had been expanded twice to accommodate growing demand, and has been a key factor in the Port's success in securing greater market share for inland freight compared to other East Coast ports.

Andy Abbott, Executive Vice President of Atlantic Container Line (ACL), a wholly owned Swedish company located in South Plainfield, New Jersey, and a participant in the pilot project, is happy with the results. Stated by Abbott, the on-dock system has eliminated extra steps leading to lower costs and greater efficiency.

ACL currently has six calls each week at the New York/New Jersey Port, the most of any line to Europe, says Abbott. The liner calls on a total of twenty ports in Europe and on the Atlantic and Gulf Coasts of North America.

Abbott anticipates a marginal increase in U.S.-European trade this year, resulting mostly from higher U.S. exports. According to DRI/McGraw-Hill, Ocean freight, measured in tons of general cargo, bound to and from Northern Europe is predicted to grow 4.6% this year and 5.2% in 1997. The increase flow of goods in the North Atlantic trade lane will likely result in more business for ACL and the New York/New Jersey Port.

In the interest of improving its level of service, Navieras NPR, Inc., located in Edison, New Jersey, has consolidated operations and eliminated three of its five U.S. port calls. In doing so, it added an additional call to the New York/New Jersey Port last August. These changes have allowed Navieras to double its level of service, says Carl Fox, Vice President of Business Planning and Development.

The liner services U.S.-Caribbean trade with the majority of business going to Puerto Rico, and secondly, the Dominican Republic. "Having a presence in the Northeast United States is critical, and the New York/New Jersey Port has great accessibility into the Northeast, Midwest and Canadian marketplace", says Fox.

For many of Navieras' customers, shipping speed is of the essence. According to Fox, the liner, which maintains the fastest ships in the business, carries refrigerated goods, perishables and other time sensitive cargo. Consequently, "Rail connections are critical to us", Fox says. The new on-dock Express Rail system will be a valued benefit for both Navieras and its customers.

NYK Line (North America) Inc., which primarily services the Far East, calls on the New York/New Jersey Port four times each week. The company has considered the benefits of the on-dock rail system. Stated by Richard Peacock, Regional Manager for NYK, "I'm looking forward to the (on-dock rail) expansion." Express Rail is a very important part of the future growth of the New York/New Jersey Port, he said.

Attracting New Business Through an All-Water Service

The Asian trade lanes are seeing more traffic these days. Last year the Global Alliance, comprising Mitsui O.S.K Lines, American President Lines, Nedlloyd Lines B.V., and Orient Overseas Container Line, began a shared all-water service between Asia and the U.S. East Coast through the Panama canal. Ellen Nesheiwat, Senior Marketing Analyst at the Port of New York and New Jersey, says this service is attracting new business to the New York/New Jersey Port. It replaces the practice of ocean vessels unloading merchandise on the West Coast where it is then shipped on land to the Northeast United States.

In February, 1995, Mitsui O.S.K. Lines (MOL) celebrated its 75th year of continuous service to the Far East/U.S. East Coast trade. The liner's extensive intra-Asia network provides New York and New Jersey customers an efficient transportation chain to many key Far Eastern markets, including Hong Kong, Kaohsiung, Kobe/Osaka, and Nagoya. As trade in the Far East rises, available space on board shipping liners like MOL will likely decline.

DRI/McGraw-Hill has estimated that ocean borne freight, measured in tons of general cargo, headed to and from the Far East will grow by 5% this year and 5.8% next year. This will undoubtedly benefit the Global Alliance and the New York/New Jersey Port.

U.S.-East Asian trade continues to increase at a substantial pace. "Due to the new service, we're getting a greater share of traffic from that area of the world", says Nesheiwat. Carriers are choosing to offer this service for various reasons. Two of these include cost savings and the fact that the merchandise is handled to a lesser degree resulting in fewer accidents and damaged goods, Nesheiwat says.

Dimitri Rallis, strategic planner at the NY/NJ Port, foresees an increase in manufacturing in Southeast Asian, and more specifically, South China. As a result of this activity, he predicts the volume of U.S. imports from Southeast Asian to increase, boosting traffic through the Asian trade lanes and business at the New York/New Jersey Port. DRI/McGraw-Hill complements this news with predictions indicating that U.S. exports to the Asia Pacific region will also increase.

Rallis anticipates the all-water service from Southeast Asia, through the Suez Canal, to the New York/New Jersey Port will rise. More economical bigger ships will likely handle the larger volumes of cargo, and the Suez Canal, unlike the Panama Canal, can accommodate the larger ships, he says. In order to satisfy growing demand, NYK Line indicated that it will be upgrading the size of its vessels traveling the Asian Trade Lanes through the Suez Canal.

Cargo Assessments Cut Further Improving Port Competitiveness

As part of an ongoing effort to improve the New York/New Jersey Port's competitive position, major reductions in cargo assessments have been achieved. The assessments are charges levied on cargo to fund dock worker fringe benefits.

Last August, these assessments were reduced 22% on local cargo (destinations within 260 miles of the Port) and 46% on inland cargo beyond 260 miles. Greg Storey, Vice President of Corporate Relations for the New York Shipping Association, says "This is one more step in labor and management's effort to lower labor costs. I'm confident this will help the Port's competitiveness."

The reductions in assessments have positively impacted carriers. Stated by Peacock, of NYK Line, "The reductions in cargo assessments have reduced our costs. This is wonderful." He also indicated that he'd like to see further cost reductions in doing business at the Port.

Traffic Along Major Trade Lanes Is Increasing -- Latin American Lanes Are No Exception

Stated above, activity in the European and Asian trade lanes is projected to increase this year. Like many other shipping executives, Roy Winograd, Vice President of Marketing for Hoegh-Ugland Auto Liners, predicts an improvement in U.S.-European trade this year over last, and an increase in activity in the North Atlantic trade lane. "To satisfy the growing U.S.-European demand, we'll be adding a third ship from the New York/New Jersey Port to Europe", he says.

Hoegh-Ugland Auto Liners transports mostly automobiles, boats and some equipment from the Northeast United States to Northern Europe. Additionally, the liner also delivers new cars to the Middle East.

The Latin American trade lanes are also expected to become busier. Patricio Grez, President of Chilean Line, is very optimistic about U.S.-Latin American trade. Chilean Line is the agent for Compania Sudamericana de Vapores (CSAV).

According to Grez, the Latin American trade lanes will see more traffic as trade in the Western Hemisphere flourishes. CSAV, a Chilean privately owned maritime general cargo company and one of the largest in Latin America, expects to benefit from the additional trade. CSAV currently operates across five continents and in addition to general cargo, it owns vessels specially designed for frozen cargo, cars, bulk cargo, and forest products.

"I believe U.S.-Latin American trade will continue to grow as Latin American countries develop", says Grez. He's not alone, stated by U.S. Trade Representative Mickey Kantor, by the year 2010 the United States will export more goods to Latin America than to Japan and Europe combined. DRI/McGraw-Hill predicts that ocean borne freight, measured in tons of general cargo, headed to and from Latin America will grow by 2.5%% this year and jump 4.3% in 1997.

This article appeared in VIA Magazine, a division of The New York Times, January-February 1996.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, competitive strategies and the latest economic trends. He also is CEO of World Trade Center BN, chair of the Upstate New York District Export Council, and founder of The Manzella Report and Manzella Trade Communications Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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