The first dedicated vehicle and ro-ro terminal in New York City will begin operations in 2012 at the site of a former container and coco terminal in Brooklyn, following a development programme that has lasted more than a decade.
The South Brooklyn Marine Terminal (SBMT), in the Sunset Park industrial area of Brooklyn, will offer processing and technical services for vehicle imports and exports. It will be the first time that carmakers and ro-ro lines will have a direct link to vehicle distribution on the east side of the Hudson river. Traditionally, most imported cars sold in the region are moved through the port of Newark, in neighbouring New Jersey, to which the city has also lost the lion’s share of container shipping traffic in the past several decades.
The SBMT, part of a facility built in 1960s and dormant since the 1980s, is in the final stages of redevelopment under the direction of the New York City Economic Development Corporation (NYCEDC), a non-profit group that works under contracts with New York City to develop public assets across the five boroughs. According to NYCEDC’s Dan Zarrilli, senior vice president of asset management, New York City has upgraded the terminal with an investment of nearly $60m in public funds through a mixture of city, state and federal funding, along with additional private investment.
“The city has added rail services to the terminal, added new bulkheads, dredged the water for deep-sea vessels, redeveloped its shed and storage space and improved security,” he said.
The redevelopment included $13m extension of a rail line from the terminal to a ‘carfloat’, in which wagons are railed from the terminal to a nearby dock from which they are shipped by barge across the harbour to Bayonne, New Jersey, where they connect to the Class 1 rail network of Norfolk Southern and CSX.
The project is part of a major public initiative to revitalise the Brooklyn waterfront, add jobs and increase intermodal freight movement in the city. According to Andrew Genn, senior vice president of Maritime at NYCEDC, a successful operation at the terminal would mean around 300 direct jobs, including the Longshoremen union for stevedoring and the Teamsters union for vehicle processing. “This would be a big win for the area,” he said.
More than a decade in the making
According to Genn, the NYCEDC has sought to develop the terminal for ro-ro freight since a study it commissioned in 1999 suggested that its geographic position in the city and east in Long Island, with direct road and rail links to one of the largest car markets in the country, could be attractive to carmakers. For shipping lines the terminal’s location is also at the closest point to open ocean from the entrance to New York Harbour.
By contrast, according to Genn, vehicles destined for the city and Long Island imported through the port of Newark must then be moved across bridges and tunnels, which include expensive tolls and heavy congestion.
Soon after the study was completed, the NYCEDC chose Axis Group–the logistics service subsidiary of Allied Systems Holding, the largest vehicle haulier in the US–to manage operations and commercial activity at the terminal. The project had been held up for years by lease negotiations and public approvals, but capital investment finally began in 2007.
According to Axis Group president, Jorgé Lopez, the processing area is now in the final stages of refurbishment and Axis is currently in discussions with potential customers and shipping lines. “Our scope is to get a ship in the first quarter of 2012. That is taking a lot of manoeuvring and contract negotiation to make it all line up,” he told Automotive Logistics.
While there are as yet no definite contracts signed with carmakers, Lopez said that the marketing initiative had only been launched last month and that all initial responses so far were “very positive”.
The terminal will face established competition with terminals on the New Jersey side that have traditionally handled the largest volume of new car traffic in the country. According to UBM Global Trade date, the combined terminals handled around 590,000 new cars in 2010, the large majority of which were imports. The NYCEDC and Axis believe docking directly in the city will be an advantage, particularly for cost and lead-time, but Genn also said that the New Jersey terminals are more focused on containers than vehicles.
“Newark has seen parts of its auto terminal closed in recent years to develop space for container handling, which has been an overall trend on the New Jersey side,” said Genn. “We always thought that automobiles therefore represented a big opportunity for New York.
“This is probably the most focused attempt by a municipality to bring an automotive terminal into with its portfolio,” he added.
Axis is also touting the terminal’s rail links as the factor that would make SBMT, positioned otherwise on one of the most densely developed areas in the country, more attractive for exports.
The carfloat may be an untraditional rail link, but according to Lopez it works very well. “It takes about two hours to Bayonne and back and is capable of running 24 hours,” he said. “It would be particularly important for potential exports from the US.”
The terminal also has rail links eastbound to Long Island.
A potential launchpad
Lopez was not ready to make a firm prediction on volume or annual capacity, although he estimated the terminal can handle one ship a day and up to 150 in a year. He suggested that the terminal could attract other ro-ro shipments, including high-and-heavy equipment and break-bulk cargo.
He even went so far as to suggest the possibility of establishing vehicle assembly in Brooklyn–not seen for at least 100 years–by using the processing area for knockdown-kit operations for a new entrant into the US market, such as a Chinese or Indian carmaker.
“Such an operation would be ideal for a light truck manufacturer, as there is a 15% duty for importing such vehicles,” he said. “We believe this would be the perfect launchpad.”
Earlier this year a Turkish manufacturer, Karsan, bid to supply New York City taxis with a proposal to assemble the vehicles in Brooklyn. It ultimately lost the bid to Nissan (http://www.automotivelogisticsmagazine.com/Newsitem.aspx?aid=1024#story).
Attracting carmakers to new terminals is not easy given that carmakers typically use the same port terminals for several years, however it is not uncommon for them to change or add ports to the network. In recent years there has also been something of a trend for carmakers to switch to smaller ports that can be customised or which allow room for expansion.
For example Glovis, which manages logistics for Hyundai-Kia, switched last year from importing vehicles at the large ports of Newark and Baltimore to opening a terminal at the port of Philadelphia, which had not been used for vehicles for more than 20 years. Last year American Honda also moved a large portion of imports from the port of San Diego to Richmond, in northern California, where it had more space for ro-ro activities. In 2008, the VW Group switched from the port of Wilmington to the port of Davisville, Rhode Island.
