Intermodal Rail: “Extremely Important” for NJ
JERSEY CITY, NJ — “Special Interview: The Evolution and Impact of the Tri-State Logistics Economy” was a highlight of CAPREs I-REV Summit on early December, featuring the perspective and expertise of Michael Bozza, General Manager of the N.J. Marine Terminals, The Port Authority of New York & New Jersey. The moderator, Marcus Reimann, Senior Vice-President of Seafreight North America, Kuehne + Nagel, one of the world’s leading logistics companies, kicked off the session by picking up where the previous session left off – the global trade war. Reimann asked Bozza to expound on the effects he is seeing in the day to day of his job from that escalating skirmish.
“It’s been interesting for us. I think those last presenters really hit the nail on the head there, we’re starting to see some shifts in production away from China. China still is our number one source of goods and services, and over 30% of all the cargo that comes in form the Port of New York and New Jersey. But it is starting to shift away,” replied Bozza. “And as that cargo shifts to places like Vietnam, Bangladesh, and India, the Suez Canal and other water routes to the East Coast become stronger, more effective options.” According to Bozza, however despite the trade war and the tariffs, he has still seen strong growth in containerized fruit.
Reimann then asked about the importance of significance of the recent decision to raise the Bayonne Bridge, seeking some first-hand input from Bozza. “The Panama Canal being raised allowed Post-Panamax and Super Post-Panamax vessels up to 14,000 TEU to come through that waterway. And our raising of the Bayonne Bridge was a critical next step for container terminals west of that structure to continue operating viably. It was an air draft concern problem. Since lifting that, if you look at the number of vessels prior to 2017, 50% of our cargo came in through vessels that were 4,000-6,000 TEU in size.”
However, Bozza continued, since raising the Bayonne Bridge in June of 2017, the average vessel size is greater than 8,000. “We’re seeing a huge uptick in 12,000 and 13,000 TEU vessels. The impact that has is that larger ships coming in may drop anywhere from 30%-60% of their boxes in New York. It takes longer to offload,” he added. “And terminals have to get it out the door before the next one comes in.”
Next up was rail – Reimann asked Bozza to provide some detail into rail investment as well as future plans for growth. “For our containerized volume, last year we did about 7.2 million TEU. It’s the first time we eclipsed 7 million. Earlier this year we actually overtook the Port of Long Beach as the second largest pot by containerized volume. 85% of that cargo stays local, and can be served relatively easily by truck. The remaining 15% of the cargo goes out the door by rail. Intermodal rail is an extremely important part of the Port’s vision to grow overall into the future,” explained Bozza.
“We’ve invested over $600 Million USD over the last 20 years or so to have on or near dock facilities for all of our container terminals. The last one we opened in Bayonne earlier this year, and we now have a capacity of over 1.5 million lifts in our rail infrastructure, and last year we did about 650,000 lifts. So we obviously have lots of capacity, and we truly see rail as our opportunity to grow.” he continued. “We can see it going anywhere from 12-17 million TEU over the next 30 years. That delta is contingent upon our ability to capture more rail market share.” Bozza then pivoted a bit to talk about the state of Barges, utilizing, for example, passages like the Hudson River.
“We’re constantly looking at different solutions and ideas. The challenges that barges have posed, at least so far, is that we can put plenty of boxes on a barge and send it up the Hudson to inland destinations. But if there’s not a return trip, it becomes very costly to do that,” he asserted. “So what we’re constantly looking at and looking for is how to incentive cargo to get on that barge coming back, so that it makes sense. Because every time you touch a box, there’s a cost. So it needs to pencil out.”
“Are you looking for investors to support and develop your brown field developments?” asked Reimann.
“We don’t have a lot of development space on our port,” Bozza replied. “When the port was originally developed back in the 30s and 40s, cargo was unloaded very differently than it is today. As containerization has evolved, you didn’t really need the warehouse space directly on port. The private sector is much better suited than the government can, but really out highest and best use of our land is to really drive throughput. Whether it’s containers, autos, bulk, use that land to get the goods from the vessels to its final destination. To the extent, that we have property, we’re looking for ways to leverage it to move cargo.”
To conclude the session, Reimann asked Bozza to talk about efficiency. What upgrades is the port weighing or planning to ratchet up their game? “We’re a landlord port, so our primary object is to invest in the infrastructure that makes all of this work and all of it go,” replied Bozza. “In the immediate future we have a $150 Million USD project on the books to redevelop Port Street, for example. This was developed in the ‘40s and ‘50s and there was some tough turns, some narrow roads. So we’re investing a significant amount of money to rework that entire corridor. We’re also looking at a berth rehabilitation and reconstruction study. We have some berths that are 30 years old and we want to upgrade all of that infrastructure so that we remain viable. Our whole driver really is the movement of cargo.”
Bozza then revealed that the port’s current estimate to upgrade all of those aforementioned berths is over $11 Billion USD. “So it will take a significant amount of investment over a long period of time to make that happen,” he intimated. “On the terminal side, our terminals are also spending a significant amount of money to upgrade their facilities. There was a remark before about traffic, which is a constant concern. It’s something the Port Authority is in tune with and we work with it on a daily basis. Terminal operators have made investments in new software systems to work with trucks more quickly. They have expanded gates to process and hold more trucks.”