NYNJ In Decline

Our 2013 throughput forecast for the port of New York New Jersey (NYNJ) continues to signal that the year-end figure will mark a decline on the previous year, in terms of boxes at least. For gross tonnage volumes we remain cautiously bullish, forecasting growth, albeit at a sedate rate, although it should be noted that monthly throughput data for the total tonnage volumes is unavailable.

The downwards revision is predicated on the monthly throughput figures for the port, and on problems the facility has faced with congestion.

The first-half results are now in, and show that box throughput at the facility endured a decline of 3.7% over the six-month period. In H113 NYNJ handled 2.62mn twenty-foot equivalent units (TEUs), compared to 2.72mn TEUs handled in the same period in 2012. This is despite the fact that the outlook for uninterrupted operations has been much more promising than was the case in H212. With the dispute with the International Longshoremen's Association (ILA) having come to a close, the performance over the January to June period has disappointed.

Poor First Half
Port Of NYNJ January To June Throughput (TEUs), 2011-2013

Our 2013 throughput forecast for the port of New York New Jersey (NYNJ) continues to signal that the year-end figure will mark a decline on the previous year, in terms of boxes at least. For gross tonnage volumes we remain cautiously bullish, forecasting growth, albeit at a sedate rate, although it should be noted that monthly throughput data for the total tonnage volumes is unavailable.

The downwards revision is predicated on the monthly throughput figures for the port, and on problems the facility has faced with congestion.

The first-half results are now in, and show that box throughput at the facility endured a decline of 3.7% over the six-month period. In H113 NYNJ handled 2.62mn twenty-foot equivalent units (TEUs), compared to 2.72mn TEUs handled in the same period in 2012. This is despite the fact that the outlook for uninterrupted operations has been much more promising than was the case in H212. With the dispute with the International Longshoremen's Association (ILA) having come to a close, the performance over the January to June period has disappointed.

Despite the recovering US economy, with fiscal retrenchment set to be the theme in US economics in 2013 we see little scope for this box throughput outlook to improve to any significant degree over the remainder of the year, and so are forecasting a decline in box volumes over the twelve months. We note that the month with the strongest year-on-year decline was June, when container throughput volumes were down 7.9% y-o-y.

Poor First Half
Port Of NYNJ January To June Throughput (TEUs), 2011-2013

The problem has been exacerbated by a new operating system. From early June, the Maher Terminals facility at NYNJ, which handles around a third of all boxes that pass through the terminals' complex, has had problems with its new Navis terminal operating system. Although the terminal claimed to have 'turned the corner' in August, the port still had a backlog of containers to clear. Over the two months that there has been an issue truckers have complained that they have been forced to wait in queues, and that tasks that should have taken an hour have been taking four or five. According to a joint statement from Maher Terminals and Navis, part of Cargotec Corp, 'Real-time interactions between the various system components deployed in the container yard were not operating as designed.'

The result of the delays has been that shipping companies were forced to call at alternative terminals at NYNJ, with delays resulting at these facilities also. German container shipping firm Hapag-Lloyd went one step further, advising its customers to ship through other northeast ports such as Montreal, Halifax, Norfolk and Baltimore. Baltimore in particular has been a key beneficiary.

Remaining Positive
NYNJ Throughput, ('000 Tonnes), 2008-2017

The congestion at NY/NJ, which Hapag-Lloyd predicted in August would not be entirely rectified until September, presents downside risk to our throughput forecasts for the port in 2013. At present we forecast that NY/NJ will handle 5.30mn twenty-foot equivalent units (TEUs), which would mark a decline of 4.1%. Over the first six months of the year the port handled 2.62mn TEUs, a 3.7% decline on the 2.72mn TEUs handled in the January to June period in 2012. Our forecast decline is stronger than the first half would suggest as a result of the current problems at the port; the effect of these is visible in the June results for NY/NJ, which show that box handling dropped by 7.9% year-on-year. With July and August likely to show similar drops, our forecast comes with risk weighted heavily to the downside.

Work is underway to extend Global Terminal's dock by 900ft to 2,500ft by 2015. Dredging is also planned at the port, with the US$41.4mn contract awarded to the Great Lakes Dredge & Dock Corporation (GLDD) in February. The port's draught will be dredged to 15m, enabling the facility to cater for post-Panamax vessels.

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Sector: Freight Transport, Shipping
Geography: United States
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