Corzines Port of Call

A little-noticed plan to boost economic growth hinges on improving cargo flowFrom all the talk during the recent gubernatorial campaign about who had the better plan for luring high-tech industries to the state and helping them grow, you might think that dazzling innovations were the only path to boosting the economy.

But New Jersey has a low-tech card to play as well: the ever-growing volume of freight moving through the state’s ports and across its rail lines and highways. Governor-elect Jon Corzine made spurring the growth of the ports in Elizabeth, Newark and Camden a central—if little noticed—part of the economic development program he laid out during his campaign.

Corzine also backed efforts to promote port-related sectors of the economy that he said could generate up to 60,000 new jobs. These include the assembling, repackaging and distribution of goods that arrive here by sea.

If efforts to convert industrial sites near the ports to new uses as warehouses and distribution centers take hold, many of the semi-skilled jobs that would be created could flow to residents of the nearby urban areas of Newark, Elizabeth and Camden. Those Democratic areas strongly supported Corzine in the election.

In a speech he gave at Port Elizabeth in April, Corzine vowed to make “expanding and accelerating the development of the port and related industries a top economic priority.”

But once he takes over his new first-floor suite in the statehouse in January, the former Goldman Sachs CEO will have to work some political magic to pull together a coalition that will back the bold moves—and the big dollars to pay for them—that it will take to turn his vision into reality. He will need to do that while facing an estimated $5 billion deficit in his first year and a Transportation Trust Fund that will be broke next July.

A basic problem facing the state is that efforts to bolster the aging network of roads, bridges and rail connections at the ports are lagging far behind the growth in cargo volume and its associated truck and rail traffic.

An ambitious Portways program was first proposed by Governor Christie Whitman as a series of road and bridge improvements in the area of Newark and Elizabeth. Work began in 2000 but only three of 11 planned projects have been completed so far at a cost of about $100 million, says Erin Phalon, a spokeswoman for the New Jersey Department of Transportation (DOT). That leaves $1 billion of work still to go. A second phase, called Portway Extensions, is still in the planning stages at DOT.

Corzine says he backs the continuation and expansion of the Portway project and also supports ExpressRail—a $600 million Port Authority of New York and New Jersey project to extend more rail lines to the waterfront so containers can be moved easily from trains to ships. But these projects may not be enough.

John Hummer, manager of freight initiatives for the North Jersey Transportation Planning Authority in Newark, says he thinks Corzine needs to think bigger. Hummer looks for “the kind of infrastructure that would secure our place as a global-trade gateway and make the place viable and livable in the future.”

He cites the Alameda Corridor, a $2.4 billion sunken rail line that began serving the California ports of Los Angeles and Long Beach three years ago, as an example of the kind of project that can make a big difference. The 20-mile rail corridor took a large volume of truck traffic off local roads and eliminated more than 200 at-grade rail crossings.

The pressure is building as more containers pile up on New Jersey docks. During the first six months of this year the Port Authority reported that total container volume handled at its ports in Newark, Elizabeth and Staten Island was up 10%, led by a 28% growth in imports from Asia. That followed a gain of 11.7% in container volume in 2004. According to an economic impact study commissioned by the New York Shipping Association, a trade group for shippers, total container volume moving through the ports grew 46.8% from 2000 to 2004.

The study found that the ports support 232,900 jobs in the New York metropolitan area and generated personal income for workers of $12.6 billion in 2004.

The recent growth, driven by the U.S. appetite for cheap clothing, furniture and other consumer goods from China and its neighbors, has outstripped the Port Authority’s projections from five years ago that container volume would grow by 4% a year through 2040.

Hummer says some outside studies say cargo moving through the New York ports “will double in 20 years, [while] others think it will happen much before then.”

Because 87% of that traffic moves partly by truck, one result is growing congestion and wear and tear on the state’s highways, as well as continuing air pollution problems in the port areas.

“It’s very clear that freight movement is a big industry in New Jersey,” says Jon Orcutt, executive director of the Tri-State Transportation Campaign in Manhattan, a group that generally backs mass transit. Orcutt agrees with Corzine that the state “should capitalize on it. The trick will be doing that without increasing diesel pollution.”

Orcutt wants to see more cargo containers moving by rail, and a reversal of the recent trend to locate warehouse and distribution centers at a distance from the ports themselves, such as in the clusters at interchanges 8A and 7A on the New Jersey Turnpike. Corzine wants to see fewer such facilities ending up across the Delaware River in Allentown, Bethlehem and Harrisburg, Pennsylvania, “only to have goods reshipped back into our metropolitan area.”

That system, says Orcutt, “adds a lot of truck miles for a lot of commodities.”

Orcutt has an ally in Richard Johnson, a senior vice president at Matrix Development in Cranbury who is also a trustee of New Jersey Future, a Trenton-based group that advocates smart growth policies. Johnson, whose firm is a major landlord at interchanges 8A and 7A, nevertheless backs the idea of building more warehouse and distribution centers close to the ports themselves.

Johnson says ongoing dredging at the ports in Newark and Elizabeth to deepen the channel to 50 feet will lead to bigger container ships arriving here from the Far East via the Suez Canal carrying “shipments of electronics and value-added products.” That will create “value-added assembly [work] which employs different people from [those] involved in straightforward shipping and logistics.”

Meanwhile, Corzine will need to have a clear industrial land-use policy to turn abandoned and polluted industrial sites into new warehouses and distribution centers. This may require offering developers tax breaks and other incentives, Johnson says. He adds that it should involve prodding the state’s bureaucrats to move more decisively on overseeing brownfield projects “without cutting short any process that needs to take place in terms of land remediation.”

E-mail to wquinn@njbiz.com

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