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Issue 6 2020 - Freight Business Journal


///US EAST COAST


Freight industry battles to keep supply lines open


The US is on many counts the country worst affected by the Covid pandemic. As such, the nation’s ports and airports have had a vital role to play in delivering vital goods and keeping the economy going.


Covid economic scars may be permanent


At the risk of stating the obvious, the pandemic has dealt a massive blow to the once mighty US economy. As auditing and financial firm Deloitte said in its second quarter economic forecast for the country, the Covid virus has “dealt a severe short-term blow to the American economy” with Bureau of Labor Statistics estimates showing over 20 million lost jobs in just two months between March and April - about a seventh of the total. The worst-hit sectors such as


recreation, accommodation and food services saw activity down by around 50% and there were job losses across all industries. The only


consolation is that, as Deloitte says, “we’ve


known this would happen”. Its baseline forecast shows GDP falling by over 17% in the first two months of 2020 but the initial


consumption shock is


only the start of the trouble, it


says; investment lower consumption spending


is expected to decline, due to


and


the continuing high level of uncertainty. Residential construction is expected to slow as the housing market drops off, despite now rock-bottom mortgage rates. Deloitte adds that exports


will probably fall as economic activity slows abroad. The US Bureau of Economic Affairs says that real gross domestic product (GDP) decreased 5.0% compared with the 2.1% increase in the last


quarter of 2019. Goldman Sachs also sees


a decline in growth for 2020 of -4.6% as revived state restrictions and continued stay- at-home activity drag on the US economy more than previously expected. Deloitte says: “We believe that


hopes for a quick and strong rebound in the third quarter are optimistic.” While there may be some


economic bounce in the third quarter of 2020 as restrictions are loosened, Deloitte believes that growth will probably remain subdued for several quarters. In the longer term, growth


is also likely to be slow as consumer spending moves


away from sectors such as live entertainment, sports, restaurants and travel and towards alternatives such as durable goods and housing. Business practices are also


likely to change, with, for example, key supply chains being


re-shored as business


and government grow wary of over-reliance on overseas manufacturers in critical areas such as pharmaceuticals. Businesses may also rethink the emphasis on just-in-time inventory systems. Deloitte concludes:


“Unfortunately, even under optimistic assumptions, the… virus …will do permanent damage


to the economy.”


The Port Authority of New York and New Jersey (PANY/NJ)


–


which operates airports, part of the city’s passenger rail network and road bridges and tunnels as well as the city’s seaport - said it saw drastic declines in volume at its facilities in April 2020 as the result of the Covid crisis. However, the seaport


remained fully operational, reflecting its importance in the supply chain for food, cleaning supplies and medical equipment. Cargo volumes were down 7.5% at 559,929teu compared to 605,263teu in April 2019, the smallest percentage


decline at any of the agency’s facilities. In its half year results to 30


June, published on 30 July, it said that its revenue had fallen by $777 million. Since the full force of the


Covid-19 crisis started in March, the agency’s revenue loss averaged $240 million per month as compared to budget and the Port Authority projects a $3 billion loss in revenues for the 24-month period ending March 2022. As a regional transport operator, the port authority’s revenues include bridge and tunnel tolls and subway fares as


well as port and airport fees. Chairman Kevin O’Toole said:


“Due to the global pandemic, Port Authority revenues were down nearly $800 million just through June of this year – an unprecedented number for this agency. This region has been hard hit by the pandemic, and the Port Authority was not immune. Without federal assistance, the Port Authority and the region will be forced to feel the weight of this loss for years to come.” Executive director Rick Cotton


added that the second quarter financial performance was “the


worst downturn in recent history – perhaps in its entire history, and certainly since World War II. This decline was completely driven by revenue losses resulting from the precipitous decline in volumes at the agency’s facilities across the region. We continue to tirelessly advocate for federal aid to offset the damage that the revenue loss will inflict on the agency’s Capital Plan.” Throughout the crisis, the


Port Authority has kept all of its facilities open and operating to get food, fuel, and medical supplies into the region and to get essential workers safely to and from their jobs. Last


year, PANY/NJ


completed the ExpressRail Port Jersey facility, operated by GCT Bayonne – the final piece of the Port of New York and New Jersey’s intermodal freight rail


keeps vital supply lines open


Executive director and chief executive, Jeff Theobald, paid tribute to the men and women of the Port of Philadelphia in keeping vital supply chains for food, medical supplies, forest products, and other essential goods throughout the Coronavirus pandemic. He said: “Our longshore workers have been on the front


lines, American


unloading ships bringing needed supplies from around the world, and loading ships with American exports. We should all appreciate their


important work, which provides much-needed items for


network spanning facilities in Elizabeth, Newark and Staten Island. The intermodal rail facility consists of eight tracks for loading and unloading of cargo from GCT Bayonne that connect to two lead tracks to and from the main freight rail network. The new rail facility is coupled


with the completion of the raising of the Bayonne Bridge to accommodate ultra large container vessels and over $4 billion in other modernization initiatives over the past two decades. Before the Covid crisis the


number of containers handled topped 4.1 million a year and the port was poised to surpass Long Beach and become the nation’s second busiest cargo port for the first time in more than two decades.


our supermarkets and factories.” Philaport’s Delaware River port


complex is the leading US gateway for imports of fruit, vegetables and meat, and among the most important for dairy and other food categories. Paper pulp that arrives at Philaport goes to factories in Pennsylvania and other states to make much needed personal hygiene products including napkins, paper towels, diapers and toilet tissue. Since the start of the crisis, some of these factories have converted part of their production to make medical face masks.


The port serves not only


the US northeast but also the Midwest and Canada, with 75% of all container carrier services making it their first port of call on the East Coast. The new rail facilities were


designed to reduce the port’s historical heavy reliance on trucks to transport cargo and expands its geographic cargo reach to inland hubs. Road however still accounts for 85% of all containers moved on and off port terminals. In addition to the $1.7 billion


Bayonne Bridge project and the $600 million invested in its rail network, the port has also deepened harbour


Philadelphia


channels


to 50ſt, rebuilt wharves and berths, enhanced its internal road network and installed improved security systems and infrastructure.


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