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2023 cargo lull will help NY-NJ improve fluidity
PANYNJ Director Beth Rooney said that the 2023 cargo lull will allow them to resume projects aimed at keeping and increasing the share of freight that migrated from the West Coast last year. Those moves include longer gate hours and better truck and rail networks.
NY-NJ saw total volume for 2022 of 9.5 million TEU, an increase of 5.7% from 2021 and 27% from 2019. The port was not expecting that volume until 2030. However, Rooney said they handled it without an equivalent increase in terminal space, labor, trucks, and chassis.
PANYNJ’s 2023 budget estimates that container volumes could drop to 8.5 million TEU. Despite the softer outlook, Rooney stated, “this downturn in volume is not a time to take a break but to make up for the eight years of lost time.”
Rooney also noted that ocean carriers are betting that the shift in cargo from the West Coast to the East Coast will be ongoing. Eight independent carriers have started calling NY-NJ in the last year, major container lines have added five new services, and larger ships are calling the port.
In December, port officials said they were looking at what’s required to open terminals at 4am, and eventually switch to a 24-hour operation. Rooney said moving terminal gate operations past their current working hours will be critical to handle the expected future growth.
Rooney said now is the time to begin working on landside projects to improve cargo fluidity and match the volumes coming off the water. She said the port is close to awarding construction contracts for the $44 million Port Street Corridor Improvement. The port is also undertaking initial design work on adding new trackage from its two largest marine terminals to make it easier for intermodal trains to depart.
NY-NJ’s longshore workers are also a focus in 2023 as the ILA starts negotiations for a new master contract in 2024.
Maersk & MSC to end 2M Alliance amid divergent strategies
MSC and Maersk will terminate their 10-year 2M Alliance in January 2025. The carriers said they plan to “pursue individual strategies” and focus on integrated networks. The carriers will wind down the alliance over the next two years and they will unravel a complex partnership that stretches across all major trade lanes.
In recent years, Maersk has invested in integrated offerings and held off on expanding its fleet. MSC has done the opposite to become the largest container line by tonnage. Based on the current orderbook, MSC is set to dwarf the other major carriers in terms of tonnage.
However, MSC’s approach is nowhere near as aggressive as Maersk. Maersk used its profitability over the past three years to accelerate its integrated strategy with a series of targeted acquisitions across the globe.
The announcement raises questions about whether Maersk and MSC will seek new alliance partners. Given MSC’s existing tonnage and robust orderbook, some in the industry have questioned whether the carrier could go it alone and not tie up in any alliance.
Starting in Q3, MSC and Maersk began increasingly operating services without the other. In Q4 2022, more than one-third of Maersk’s capacity was independent of the alliance, compared to 21% in Q4 2021.
2M operates nine services on the trans-Pacific trade, three US-North Europe services, two US-Mediterranean services, and nine Asia-Europe services.
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