History in the Making:The Port of New York and New Jersey's Past
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History in the Making: The Port of New York and New Jersey’s Past, Present and Future By Ryan Ramos The Port of New York and New Jersey has six container terminals covering 1,340 acres, two airport freight operations and a rail and inland distribution network reaching the largest consumer base in the United States. It is one of the busiest in the world and is constantly adapting to new circumstances. While many take the scale of activity for granted, the numbers are staggering; each day, $557 million of goods move through the port, and 8,800 containers – by and large carrying imported goods from top trading partners such as China, India, Germany and Italy – are unloaded.1 In many ways, the port is the physical manifestation of the U.S. trade deficit – totaling $36.44 billion in 2016 – and its shift to a $13 trillion consumer economy that has only accelerated since World War II, barring the Great Recession in the late 2000s.2 We have long had many clients who use the port to import and export various physical commodities, and in many ways, the port and Brown Brothers Harriman have a shared history with common roots in the early stages of this country’s international trade. 1 Brown Brothers Harriman | COMMODITY MARKETS UPDATE Before delving into the past and prologue of the Port of New forward-looking approach have remained consistent. To under- York and New Jersey, we begin with the story of a bridge con- stand the port’s continued success and growth, it’s helpful necting Staten Island, New York, and Bayonne, New Jersey. The to look back at its history and how it overcame various chal- Bayonne Bridge, currently the fourth-longest steel arch bridge lenges over the years. worldwide, was the largest of its kind for 45 years after construc- tion finished in 1931. Built for the tallest ships at the time, the The Port’s History bridge’s clearance of 151 feet above water was fully functional At the turn of the 19th century, the Port of New York had the for the Port of New York and New Jersey’s maritime activity same trading volume as the other main ports, such as New over the course of 80 years. Today, the most pressing initiative Orleans, Baltimore, Philadelphia and Boston. Boston was the facing the port is “Raise the Roadway,” a project dedicated to United States’ busiest port due to its established marine history, bringing the clearance to 215 feet in order to accommodate while New York was still adjusting to trading goods originating neo-Panamax vessels. These vessels are at the forefront of from the colonies after being the only major city controlled by modern shipping after the Panama Canal expansion completed the British throughout the Revolutionary War. In 1820, Boston this past June, allowing ships 366 meters long and 49 meters and New York each exported around $12 million of goods, but wide that carry 13,000 twenty-foot equivalent units (TEUs) to by 1840, the Port of New York handled more passengers and pass through, compared with ships of 294 meters long and 32 cargo than all other ports in the country combined.4 The reason meters wide that carried 5,000 TEUs previously.3 This project for New York’s arrival was the “cotton triangle,” a newly formed is the last upgrade needed to allow these larger ships to call trade between the Southern states, New York and Europe that on the Port of New York and New Jersey and add to the cargo made New York’s port the consolidation and distribution center volume of the East Coast’s largest port and North America’s for the entire country. Cotton and tobacco from Southern farmers third-busiest container port, after the Port of Los Angeles and were shipped by the Ports of Baltimore or New Orleans to New the Port of Long Beach. More than $200 billion of total cargo York, and ships returned to the Southeast carrying manufactured moved through the port in 2015, and container volumes have goods from Northern states. U.S.-grown commodities traveled been on the rise since 2009, according to the Port Authority of across the ocean from New York to Europe, and imported goods New York and New Jersey. returned to the port for ultimate delivery throughout the country. Port of New York and New Jersey's There were two interrelated reasons why New York became Oceanborne Cargo Tonnage and Containers the hub for the cotton triangle: developments in marine technol- 100,000,000 4,000,000 ogy and the city’s geographic advantages over other ports. The 90,000,000 3,500,000 first steamship, built in 1808, allowed goods to travel quicker 80,000,000 and cheaper on Western rivers to the interior U.S. markets than 3,000,000 70,000,000 by wagons carrying goods over land. With the Erie Canal’s 1825 2,500,000 No. of Containers 60,000,000 completion, the Port of New York benefited from the new steam- 50,000,000 2,000,000 ship transportation method by giving Western farmers and traders Metric Tons 40,000,000 1,500,000 access to New York markets, which served as a consolidation 30,000,000 1,000,000 20,000,000 point for other East Coast and European markets. For example, 500,000 10,000,000 wheat grown in Indiana could travel by steamship across the 0 0 Great Lakes, through the Erie Canal and down the Hudson River 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Cargo (left-hand side) Bulk Cargo (left-hand side) No. of Containers (right-hand side) to New York, where it could be exported to England. Source: The Port Authority of New York and New Jersey. 1 Source: The Port Authority of New York and New Jersey, “2015 Trade Statistics,” January 2016. The Port of New York and New Jersey has weathered changes 2 Source: Trading Economics, “United States Balance of Trade,” November 2016. 3 For more information on the recently expanded Panama Canal, see the September 2016 Commodity in maritime trade patterns, shipping technology and con- Markets Update article, “Panama Canal Update: Too Narrow for ‘Neos’?” 4 Source: Glaeser, Edward I. “Urban Colossus: Why Is New York America’s Largest City?,” FRB New York sumer demands throughout its history, but its adaptability and - Economic Policy Review, 2005, v11(2,Dec), 7-24. Issue 3 2016 2 Following the advent of steamship transportation, the next impor- tant development of the 19th century was larger ships built with greater cargo capacity and stability for transatlantic voyages. This led to the smaller ships, previously used for these trips to Europe, pivoting toward the transport of goods along the Eastern sea- board. The industry was seeking economies of scale to be gained from having a single consolidating location where smaller vessels could load cargo onto bigger ships making the intercontinental trip, and the Port of New York’s geological advantages made it the obvious choice. While New York continued to gain steam, it was not without competitors. However, it had some clear geological advan- tages relative to its competition. For example, the Port of Philadelphia lacked direct access to the ocean, making it a more expensive option compared with New York because of addi- tional inland shipping costs. The Port of Boston connects to the Atlantic Ocean, but its harbor freezes in the winter, and the increased trade volumes throughout the century required the trading volume. By 1870, the Port of New York grew to be a fully functioning port year-round. Yet New York’s biggest the busiest in the Western Hemisphere, and this was just the geological advantage was simply its central location between beginning of its leadership in the maritime community. New England’s textile manufacturers, anthracite coal miners of Philadelphia and Southern cotton and tobacco growers.5 New Until the early 1900s, the main berths for shipping goods were York was an easy compromise for all markets when looking for mostly in Manhattan or Brooklyn, while the freight lines with a major port between two key output areas that could handle access to the rest of the country were in New Jersey. Barges made many trips every day to bring cargo between the two North American Free Trade Agreement states for switching between ship and train transport, and this Region Container Traffi c created many disagreements around the states’ jurisdictions Port Country 2015 Traffi c in TEUs Change from 2014 and boundaries. On April 30, 1921, in a compromise with far- Los Angeles (CA) United States 8,160,458 -2.2% reaching historic consequences for the U.S. maritime industry, the Port Authority of New York (renamed the Port Authority of Long Beach (CA) United States 7,192,066 5.4% New York and New Jersey in 1972) was created to set aside the New York/New Jersey United States 6,371,720 10.4% two states’ own interests and do what was best for the public. Savannah (GA) United States 3,737,402 11.7% This was the first agency to be formed under an interstate com- Seattle/Tacoma pact, and as the demands on the Port of New York and New United States 3,529,446 4.0% Alliance (WA) Jersey progressed, this unity proved to be the sine qua non of Vancouver (BC) Canada 3,054,468 4.9% the port’s modern growth. Hampton Roads (VA) United States 2,549,271 6.5% One of the biggest technological advancements in the history of Manzanillo (COL) Mexico 2,458,135 4.4% maritime trade is the transition from break bulk to containerized Oakland (CA) United States 2,277,521 -4.9% shipping.