Global recession wave slams NY ports

April 27, 2009 at 3:49 pm Leave a comment

Plunge in demand harms maritime, allied businesses; officials see long-term growth

A year ago, Angelo Mack was averaging 45 hours a week working on the docks in Bayonne, N.J., and on Staten Island. But as global demand for goods has plummeted, so has his workload.

“Two weeks ago, I worked 24.5 hours,” the 43-year-old longshoreman says. “Last week, it was eight hours. This week, it’s zero.”

The deepening worldwide recession is wreaking havoc at the Port of New York and New Jersey. Cargo traffic sank by 17.4% in the first quarter versus the same period in 2008. In response, major container companies are laying off administrative workers for the first time ever, and more and more longshoremen like Mr. Mack are sitting idle.

The impact on the maritime industry—which directly and indirectly supports 230,000 area jobs and contributes $20 billion a year to the region’s economy—has rippled out far beyond the docks to truckers, tugboat operators, warehouse owners and others.

“I’ve been in the business 40 years, and I’ve never seen anything like this,” says Don Hamm, president of Port Newark Container Terminal. “It’s troublesome, and I don’t know anybody who has predicted when it’s going to be over.”

Cargo volumes at the Port of New York and New Jersey began falling in November, ending the year down 0.6% and snapping a 15-year growth streak. Because it typically takes two to four months before orders are delivered, the impact of last fall’s financial implosion is only now being felt in New York’s harbor. The declines are steepening sharply each month, with volumes down 19.5% in March from year-earlier totals.

Every missing container takes a toll.

“Think of all the different people associated with producing, packaging, documenting, handling and transporting it,” says Larry Howard, chair of the global business and transportation department at SUNY Maritime College. “The shipment of one container affects hundreds of people.”

One small consolation for port officials is that business is holding up far better here than it is at West Coast ports. Long Beach and Los Angeles saw drop-offs of near 40% through February. Closer to home, traffic at the Port of Virginia fell more than 20%.

Safer harbor

So far, the New York area’s large population is helping to shield its ports from the worst of the global storm. More than 80% of the goods that arrive here are consumable products, such as food and beer, that are destined for delivery within 250 miles of the port. Other ports, which deal more heavily in discretionary goods like electronics and appliances, are faring worse.

Such comparisons offer little solace to local executives and workers whose fortunes rise and fall with the port’s. Jim Devine, chief executive of Global Container Terminals USA, is projecting a 15% decline in volume this year at his Bayonne and Staten Island docks. Mr. Hamm, of Port Newark, says his business was down 20% in March. He has already cut back on workers’ hours and, for the first time, has laid off managers as well, cutting 10 out of 100.

“It has a cascading effect on everybody,” says Mr. Hamm.

On Staten Island last week, for example, 20 tugboat hands were laid off. That brought the total number of out-of-work members of United Marine Division Local 333 to 150, according to Michael Brandon, its secretary-treasurer. He reports that several small tugboat companies have gone out of business in the past few weeks, adding to an already overloaded union hiring hall.

“It’s pretty stocked right now, where typically, we couldn’t keep anyone in there,” he says. “As recently as October, everybody was out working.”

Halved hours

For veteran longshoreman Johnnie Taylor, the slowdown has meant a nearly 50% reduction in his work hours. The 37-year-old father of four is scrambling to adjust.

“I’m cutting back on spending across the board,” he says.

The president of his union, Anthony Falcicchio, worries that unless business picks up soon, the least senior workers will lose their health insurance.

“If you don’t make your hours, you’ll have the problem of not having medical coverage for your family,” says the leader of ILA Local 1588.

Complicating matters, a contract covering 12,000 dockworkers from Maine to Texas is set to expire next year. Union officials charge that the shipping industry is using the slowdown to push for concessions on overtime and wages, overlooking the industry’s bright long-term prospects.

In a statement, the Port Authority of New York and New Jersey said that it continues to project future cargo growth, and that it is investing in rail and other infrastructure to support an increase. The city’s Economic Development Corp. is also working to boost the local maritime industry’s prospects by supporting several big infrastructure projects.

Such growth can’t come fast enough for Mr. Mack. As his work hours have dwindled to a precious few, he’s spending most of his time in the gym.

“Longshoremen are probably in better shape than anyone these days,” he says.

SHIFTING CARGO
Year-over-year change in number of container units passing through NY area ports.

January -15.3%

February -17.2%

March -19.5%

Source: Port Authority of New York and New Jersey

By Daniel Massey

Crain’s New York

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Entry filed under: Brooklyn, Dive In, Maritime, Region, Staten Island, Working Waterfront.

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