N.Y.-N.J. offers incentives for rail cargo
The Port Authority of New York and New Jersey will pay a $25 per container incentive to ocean carriers that increase the amount of cargo they move over the port’s on-dock rail system in 2009 over 2008.
The incentive program, approved by the authority’s board of commissioners Thursday, will last one year, and could be extended for a second year if the agency’s board chooses.
It is aimed at increasing the competitiveness of the port, especially for the 20 percent of the port’s cargo that moves to or originates from points 250 miles or more from New York, said Richard Larrabee, director of port commerce.
He explained the incentive program — which became more generous as it was discussed by the port authority staff and the commissioners Thursday — is aimed at increasing the amount of cargo that is “port blind,” cargo where the shipper does not have a preference as to which port the carrier uses.
“What does matters to the shipper is that the price is right and that cargo gets to where he wants it to be on time. This discretionary cargo is very price and service sensitive,” Larrabee said.
He noted that in the face of declining cargo volumes, other ports, including Charleston, S.C., and Los Angeles, have been providing incentives to carriers to move more intermodal cargo through their ports, including containers bound to markets served by New York via rail such as Chicago, Minneapolis and Kansas City.
Other ports are offering incentives of $50 to $100 per container for new rail terminals, he said.
While use of the ExpressRail has been growing rapidly, at about 14 percent per year for the past decade, Larrabee said the near term outlook was less certain. The agency is predicting overall volumes in New York will decrease by about 2 percent to 3 percent in the coming year and possible beyond.
Originally the port staff had proposed paying the $25 incentive only on boxes once a carrier had increased its use of the intermodal rail facility by more than 7 percent over its 2008 volumes. But after discussion with the board’s committee on operations, the program was made more generous so that the $25 incentive will be paid on all boxes that exceed a carrier’s 2008 volumes.
But Larrabee said in addition to the $25 incentive payment, New York has other attractions to shippers moving cargo to and from the Midwest, including that the port is often the first port in or last port out for ships going overseas. This can give incoming cargo, for example, a two-day head start if it is discharged in New York rather than in, say, Norfolk, he explained.
He also noted the port has spent heavily on improving its ExpressRail system — $557 million on design and construction to make it one of the largest on-dock rail systems in the United States.
When fully completed, ExpressRail will have three on-dock facilities in Newark and Elizabeth, N.J., as well as Staten Island and two support facilities.
About 370,000 intermodal rail containers are handled at the port annually, in facilities with capacity of about 500,000.
But that capacity will be boosted to about 1 million containers later this year with the completion of two major ExpressRail projects.
In August, work on providing additional support track at the ExpressRail Corbin Street Intermodal Rail Support Facility will be completed, which will allow for simultaneous building of four 10,000-foot trains. That will allow for more direct trains to major inland destinations. In September, a second lead track for the ExpressRail Terminal in Elizabeth will be completed, which will allow for simultaneous arrival and departure of two 10,000-foot trains.
The $25 incentive represents about half of the intermodal lift fee that the port authority receives for any container is loaded or unloaded at ExpressRail facilities.
Port Authority Chairman Anthony R. Coscia said the region will benefit from additional use of intermodal rail both because of the additional jobs it provides and because it will reduce truck usage and reduce pollution and fuel use. ' Chris Dupin