D.
Hamm Presentation
Port Industry Day
10/12/05
Comments on “A Call to
Action”
Members of the panel, friends and colleagues, ladies
and gentlemen it is a pleasure to present to you today on the topic of the
report prepared by the Waterfront Coalition on the National Marine Container
Transportation System, titled “A Call To Action”.
I
am Don Hamm, President of Port Newark Container Terminal, currently the third
largest terminal in New York Harbor handling 550,000 units on an annualized
basis. For those of you who count in
TEU’s that is approximately 935,000 TEU’s.
P&O Ports and Maersk Sea Land own PNCT equally. But more about our terminal later, right now
let’s move on to the report titled “A Call To Action”.
All
of us employed by this industry realize that the business has changed
dynamically over the last 15 years and, here on the East Coast, especially over
the last 5 years. We on the East Coast
too are experiencing double digit growth rates in volume as the business either
diverts from the West Coast or organically grows, spurned on by the decrease in
manufacturing capacity in the U.S. This
growth is a phenomenon, which will not change but will require significant
modifications and upgrades in the terminal infrastructure and intermodal
operating capacities available to handle this increase in volume. The subject report addresses many of these
issues and, while I do not subscribe to all positions in the report, I applaud
the efforts expended in organizing the issues in a format which will stimulate
debate and emphasize the areas which need long-term consideration, planning and
ultimately change.
First
premise “We must improve the productivity, efficiency and throughput of all
American blue-water ports”. In the
report under this area, there are 6 topics which are headlined and each is
tremendously pertinent and I will address them later but I think it omits one
of the most important issues facing the maritime industry as it grows, creating
thousands of high paying, tax paying, regional enhancing enterprises and that
is “we don’t do a good job in insuring that the waterfront and adjacent
property is used for waterborne cargo”.
A good example is Port Newark where 25% of the 930 acres available is
utilized for industries which have no direct dependency on the waterfront to
support their businesses. Through this
practice, the landlord is directly contributing to the constraint of the
waterborne cargo handling capacity of the port, reducing efficiencies and
actually turning away business which would provide high paying blue collar jobs
for our longshoremen and the highly efficient delivery of goods to the
surrounding population. I am not a
proponent of putting these ancillary businesses out of business, just relocate
them to the off-port areas which are currently available for development. The rule of thumb should be, if you have a
piece of property or building in the port and the goods handled there have been
moved from or to a marine terminal or elsewhere, that business doesn’t need to
be in the port and is taking up space which can be utilized to handle cargo to
be loaded aboard or discharged from a vessel. This is additional capacity,
which we are not using today but will be needed in the future to keep pace with
the forecasted growth. Some experts
would say just densify the existing terminal footprints – and this too is an
option which the recent terminal investment in the Port is achieving but it
will not be sufficient to satisfy the forecasted demand. The terminal operators have already invested
in off-dock CY’s to handle empties and in some cases chassis but we can’t work
the vessels on the Passaic River.
Unfortunately, vessels can only be worked at deep water berths and need
marshalling areas for their cargo.
The
second opportunity in the waterfront capacity area is the single stacking of
autos in the port. Currently, there is
probably 300 acres utilized for car parking between Port Elizabeth and Port
Newark maybe more depending on the time of year. Isn’t it time we start seriously considering investing in
multi-storied parking garages which will meet the demand of the car manufacturers
for the processing of the imports which arrive in New York. Doesn’t it make sense that we gain back
valuable property for other types of waterborne industries at the same time
providing the auto processors with additional property on which to handle the
growth in their industry? Isn’t this
like killing two birds with one stone?
This is not a novel idea as they are already doing this in Europe.
The
issues covered in the terminal efficiency part of the report on which I will
comment are as follows:
There
are owner operators giving up their trucks every day, some say as many as
80,000 last year alone. This is a
trend, which must be stopped if we are to handle the growth predicted over the
next 5 – 10 years. It is all about
earning power and it is true that the slow service of trucks at marine
terminals contributes to the ability or lack thereof of the owner operator to
make a fair return on his truck. It is
something we at PNCT discuss and make decisions to assist many times every
day. There are however certain issues
which arise for which the terminal doesn’t possess the solutions. Currently between 20-30% of the trucks
arriving at our facility must go to a trouble window to resolve a problem over
which we have no control. These
problems range from incorrect booking numbers, no insurance clearance, holds on
cargo by line, bringing the containers to the wrong terminal, unpaid demurrage,
unpaid VACIS, no chassis, incomplete hazardous material information, containers
not on file, etc. These problems are
also for the most part out of the control of the owner operator but are very
much in the control of the dispatcher who sent them to our terminal. In essence, in many cases, the very company
for whom the owner-operator works is slamming the owner-operator by not
preplanning his trip. At PNCT we are
developing a Website, which will allow the truckers to get these questions
answered before he is dispatched to the terminal. If used, this will speed up the servicing of up to 20% of the
trucks calling at the facility.
PNCT
has, with the advice and consent of the Bi-State Trucking Association, started
offering extended hours on Tuesdays and Thursdays, keeping our gates open to
2000 hours. So far the response has
been less than expected averaging about 150 units serviced against a capacity
of 5-700. This is an expensive
operation for PNCT which if fully utilized is worthwhile and a definite boon to
increased capacity. If however it is
not utilized, we will have 2 choices: stop offering the extended hours which
will jam more cargo through our daytime gates slowing the truck turn-time or
conversely, follow the lead of our West Coast colleagues and put in some
modification of the PierPASS system which has shown so much promise by
encouraging as much as 35% of the cargo to be moved off hours. As they say “necessity is the mother of
invention”!
Operating
terminals during extended hours is definitely the way of the future, the only
question remains is how will we accomplish it without breaking the bank.
Currently
PNCT has 16 of 180 acres devoted to chassis storage for the servicing of the
containers moving over our facility. At
the same time both state and federal government are coming up with laws
governing the liability connected with dispatching these chassis on the
road. I do not believe that marine
terminals belong in this equation which is a commercial tool developed by the
lines to service their cargoes. If they
want to provide chassis to their freight they should go off terminal and set up
chassis pools to do so, or alternatively join common pools established by the
leasing companies to service the trade.
If the chassis are forced off terminals the lines by necessity will have
to join common pools as truckers cannot be cost effective if they have to, for
example: deliver a Hapag box on a Hapag
chassis and then leave the terminal to get a NYK chassis to make their next
move. Again “necessity is the mother of invention”! Chassis are a cost item to a terminal; we make our money loading
and discharging vessels and receiving and delivering containers to/from trucks
and rail. Every truck arriving at our facility should have a chassis. There should be no bobtails. When we talk about quick dispatch at marine
terminals just imagine the time saved if the trucker already had his chassis
when he arrived and this same chassis could be used for any subsequent
moves. The improvement in truck
turn-time would be significant.
Rethinking
“free time” and managing it more efficiently:
Currently
PNCT’s dwell time on imports is 5.2 days and approximately the same on
exports. This is despite service
contracts agreed to by the lines which could be as long as 30 days for certain
commodities although PNCT only allows a max of 15 days. I consider this, the lines buying the cargo
with the terminal operators money because while the extended free time box is
sitting on terminal, the terminal operator is deprived of utilizing that space
for another paying box. This is a
practice which will have to be curtailed in the future. Whatever happened to “Just in Time”
inventories? Maybe it is only just in
time unless we can store our goods on your nickel! The NY/NJ terminal operators are making inroads with free time
and you can expect more in the near future.
We want to encourage greater cargo velocity by moving the boxes off the
marine terminal more promptly. If we
can accomplish this, the result will be significantly increased terminal capacity,
which is one of the premises this study is directed at.
Spreading
out vessel schedules:
As
an eastern port depending on the North Atlantic weather for schedule integrity,
it is like gambling at Atlantic City – sometimes you win but most times you lose. We are not in a good position. Ships arriving 4 days or more late is not
uncommon especially during winter months and this creates havoc with terminal
capacity, production and the bottom line.
To understand the impact on a terminal for example, when a
weekly-scheduled vessel is a week late, we have to manufacture space for an
extra vessel’s export freight while awaiting the delayed ship, and manufacture
capacity for an extra vessel’s discharged containers after the late ship
finally leaves. The cost of this
operation is extreme when you calculate the extra moves and gate hours expended
during the receiving and delivery process to handle the late cargo. Today there are terminals in the world where
if a vessel is late and misses its assigned berthing window, they must pay a
surcharge to the terminal operator to cover the extra expense caused by the
late vessel. I predict that this will
become a practice in the U.S. as terminal space continues to tighten.
Others
Items of interest in paper:
Short
Sea Shipping
– This paper predicts that Short Sea Shipping is not expected to result in any
significant benefit. I feel that there
will be a place for this mode of transportation in the future but only after
the roads are so congested that alternatives must be found and mandated. The problem with this mode is the inherent
cost in handling the boxes on and off the barge. This mode has been successfully deployed for years in Europe on
the various rivers and between proximate countries, and I feel we will use it
as well here in the U.S.
Shuttle
Trains –
The report predicts and I agree that shuttle trains are not likely until we
come to grips with upgrading the current long haul rail system to handle the
projected volume increases. I believe
that nighttime truck shuttles to inland terminals are more likely in the
immediate future utilizing the off-peak traffic hours to strategically position
boxes closer to destination and out of the clutter of port traffic.
The
report while defining issues, which need to be addressed, is essentially
attempting to solve problems, which are being caused by a very positive
occurrence, that being the growth of the maritime industry over the next
decade. What other industry has the
same healthy forecasts for which they must plan. In my opinion this is potential knocking at our door and
if we put our parochial interests aside for a short time and work together I am
convinced we will come up with plans in all areas to handle the demand.
This
concludes my comments. Thanks for you
attention today.