The Port Authority of New York and New Jersey

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Author: Dr. Jean-Paul Rodrigue

1. Regional Setting

The role of New York as one of the world’s true global cities and the main gateway of the Eastern Seaboard of North America is widely acknowledged. This role, which emerged at the beginning of the 19th century, was mainly the consequence of the advantages of its port location. New York’s hinterland includes the resource-rich regions of America’s heartland, accessed through the Erie Canal that opened between 1821 and 1825. The canal linked New York to Albany to Buffalo and initiated a new era of growth for inland freight transportation. At that time, New York was only the fifth largest American seaport, behind Boston, Baltimore, Philadelphia and New Orleans. By 1850, New York evolved to become the most active port in the United States, as well as its primate city handling a maritime traffic greater than Boston, Baltimore and New Orleans combined. The later part of the 19th century focused on rail infrastructure developments, undermining the importance of the canal system, but confirming the function of New York as a hub of the national transport system. The growth of port activities went on par with the consolidation of foreign trade, wholesaling, financial, shipbuilding and industrial activities as well as making New York the immigration gateway of North America. Since the New York harbor and the lower Hudson river are the boundary between the states of New York and New Jersey, port development occurred under different jurisdictions.

This process led to conflicts between the two states concerning the usage and jurisdiction of harbor facilities along the Hudson River, which by the early 20th century have become increasingly difficult to manage. In 1917, as the United States entered the First World War, an interstate conflict arose over the issue of rail freight rates. Most of the rail lanes coming from the west ended on the New Jersey side of the harbor while most ocean shipping was calling from Manhattan and Brooklyn. Freight had to be transferred on barges across the Hudson, exacerbating delays and congestion in the harbor. New Jersey petitioned the Interstate Commerce Commission to lower rail freight rates on its side of the Hudson in order to attract more port calls, but was overruled on the ground that the whole region was one functioning harbor. This was the stepping stone that led to the creation of the port authority, modeled after London’s. The Port of New York Authority was founded in 1921 to settle these disputes, which makes it a unique governance case as it spans two powerful states.

Until the 1960s, port activities expanded as New York and the eastern seaboard became of one the world’s major industrial regions. This situation has however changed and New York has intensively de-industrialized since then, implying that its export function has decreased. After a period of relative stagnation, which roughly lasted from the 1970s to the late 1980s, the metropolitan area undertook an unprecedented phase of economic growth in the mid 1990s, with growing local consumption. About 80% of the new employment is service-related, underlining a dependency on external markets to supply commodities and raw materials. New York spurred a new wave of development increasingly leaning on activities global in scale, such as finance and banking, international investments, information technologies, and marketing and media activities. This situation has incited inbound cargo demands for port activities, notably containerized cargo.

The PANYNJ concerns a region of about 1,500 square miles (3,880 sq. km) centered around the New York Harbor (about 25 miles of radius). Under this jurisdiction it benefits from a very broad governance mandate where it can undertake any project concerning any transport mode as long as it would promote commerce, trade and public good. This jurisdiction can also influence infrastructure development within the periphery. For instance, the Tappan Zee Bridge is crossing the Hudson River just outside the jurisdiction of the port authority, but at an unsuitable site (the second widest segment of the Hudson River). This was done so that the New York State Thruway Authority would collect all the toll revenues. To finance its activities the PANYNJ can issue bonds, charge user fees and collect rent, which places it under the conventional landlord model. Concerning its mandate and the governance structure it has established, the PANYNJ cannot be considered solely from a port and maritime transportation perspective, as it has vested interests over of non-maritime activities, all of which account for an impressive portfolio of facilities.

2. Infrastructure Developments

To service the needs of the regional economy, the PANYNJ has undertaken since its inception the development of many infrastructure projects covering several modes, each linked with the perceived priority of the time. The most noteworthy achievements of the port authority in its early years (1920s - 1930s) were not the development of port terminals, but the construction or the take over of a succession of bridges and tunnels linking the two states, an urgent need on which both sides of the Hudson agreed. Goethals Bridge and Outerbridge Crossing were the firsts constructed (1928), followed by George Washington and Bayonne bridges (1931). These projects were completed before time and below estimated costs, which boosted the reputation of the PANYNJ as an efficient legal and administrative body. The PANYNJ also received the jurisdiction of the Holland tunnel in 1930 (completed in 1927) and opened the Lincoln tunnel in 1937, both of which were directly servicing high density Manhattan midtown and downtown areas. The issue of connectivity between New York and New Jersey was thus addressed, by road if not by rail.

The post World War II era marked tremendous technological and spatial changes for transport activities in New York, mainly with the development of air transport terminals, which jurisdiction the PANYNJ inherited. By 1948, the PANYNJ was responsible for New York’s three major airports, Newark, La Guardia and John F. Kennedy. These it began to transform into world class terminals. A major shift was also in the making for maritime transportation. Most port terminals were relocated from the general cargo wharves of Manhattan, Brooklyn, Hoboken and Jersey City to specialized and more spacious terminals at Port Elizabeth, Newark, Red Hook and Howland Hook. By the early 1980s, almost all maritime cargo transshipment in Manhattan ceased and traffic was dominantly handled in New Jersey and Staten Island, a complete reversal in the port’s geography of freight. Most, if not all, port activities were thus disconnected from the traditional urban core and relocated towards peripheral settings having higher accessibility to rail and interstate road infrastructures. The first dedicated container terminal in the world, the Elizabeth-Port Authority Marine Terminal, opened in 1962.

The 1950s and 1960s saw a commitment to public transit with the opening of the Port Authority Bus Terminal (1950), the Port Authority Trans Hudson railway (PATH, 1962) and the George Washington Bridge Bus Terminal (1963). As New York, like all American cities, was suburbanizing, a growing demand for passenger movements between both sides of the Hudson was being felt. The PANYNJ deemed it had the responsibility to help accommodate this increase in interstate interactions. This focus also reflected a shift in priority in American land transportation development with the funding of regional and national highway systems, which accelerated in the 1950s with the construction of the Interstate system. In the 1970s and 1980s, as New York’s economy was compromised by de-industrialization and the flight of head offices of major corporations, the PANYNJ became more specifically involved in regional economic development with the construction of the World Trade Center (1970), the setting of industrial and telecommunication parks and of a power plant (1990).

Containerization has been another dominant paradigm shift of maritime transportation over the last 30 years and has triggered a phase of port restructuring. On this issue, the PANYNJ has a tradition of innovation and adaptation, since the first containership called from New York in 1956 and the first specialized container terminal was constructed at Port Elizabeth, New Jersey in 1962. By the 1970s, New York was the largest container port in the world, handling just under 1 million TEUs in 1975, 1.9 million in 1980 and 2.3 million in 1985. From this peak, a period of stagnation and relative decline endured as New York was handling roughly the same amount of containerized traffic in the early 1990s (1.8 million TEUs) as it did in the early 1980s. While the decline of the port of New York during that period can be attributed to international trade changes, which are factors outside local control, local factors such as inadequate intermodal rail access and high labor costs, played significantly in its demise.

Meanwhile, Pacific Asian container ports boomed and topped New York. Similar growth and surpassing of New York occurred at the Pacific Coast ports such as Los Angeles and Long Beach. Even if containerization resulted in significant productivity gains, these gains were not uniformly achieved. Newer container handling facilities had an advantage in terms of the quality of their infrastructures as well as room for development. It is worth noting that most of these ports, especially Hong Kong and Singapore, are transshipment ports deriving the bulk of their activities from their intermediate functions. While intermediate ports are more linked to business cycles of the global economy, a port such as New York is more linked to the cycles of its regional economy. Nevertheless, from the mid 1990s containerized traffic boomed, more than doubling between 1995 and 2005.

3. Terminal Facilities of the Port Authority

The New York metropolitan area is a market gateway, implying that most of the passenger and freight traffic originate from or is bound to the vicinity. Although the domestic air market is very well serviced, the hubbing function of New York is not very pronounced. The same applies to the port terminals where the share of transshipment is negligible and the great majority of the port hinterland is within one day of drayage.

The three major airports service the metropolitan area; Newark Liberty International (EWR), John F Kennedy (JFK) and La Guardia (LAG). They form an equilateral triangle with Manhattan roughly being the center, implying that every single airport is a reasonable option for the population living in central areas. Although each airport does not handle a traffic large enough to place them among the world's top 10, their combined air passenger traffic is above 100 million, granting the port authority the status of the largest direct overseer of air traffic in the world. This confers New York as a global air transport hub ranking, alongside London, Paris and Tokyo that have respectively a considerably larger main airport terminal (Heathrow, Charles de Gaulle and Haneda). There is also a small airport facility at Teterboro (TEB) that mostly handles private jets and the Stewart International Airport (SWF) that may become on the long term New York's fourth major airport.

A substantial amount of air cargo transits through the airports, notably through JFK and EWR. The consumption market of the region and its high end services industries generate large quantities of air cargo. Both the passengers and air cargo businesses account for more than 50% of the PANYNJ revenue. Because of the significant growth in air transportation that took place since the airport terminals were designed and constructed, they have found themselves increasingly ill-fitted to service modern airport operations of a global city. For instance, the PANYNJ has addressed the problem of connectivity between its two main airports and Manhattan, which could only be reached by road transportation. AirTrain services connecting the Newark airport with regional rail transit opened in late 2001 and another service between JFK and rail accesses to Manhattan opened in 2003. JFK has also undertaken a massive upgrade of its terminals, some were torn down and rebuilt as new facilities. In 2010, one of its main runway has been enlarged to accommodate larger airplanes and to improve its durability (concrete instead of asphalt). The ongoing information technology upgrade of the American airspace, dubbed Nextgen, is particularly important for New York because of the three airports are impairing their respective approach and take-off vectors because of their proximity. Last, there is an ongoing discussion about the completely rebuild LaGuardia so that one of America's oldest commercial airports can be redesigned to meet 21st century operating standards.

The port of New York / New Jersey handles about 31% of the cargo on the American East Coast but the traffic is highly localized. Only 20% of the cargo is bound for regions outside the port's immediate hinterland (New York, New Jersey and Connecticut). Maritime terminals include seven public terminals, most of them located along the New York Harbor and Newark Bay, and are leased by the PANYNJ through long term concessions agreements. They include Port Elizabeth (Maher Terminals and Port Elizabeth Terminal; APM), Port Newark (Port Newark Container Terminal; Ports America), Howland Hook (New York Container Terminal; OOCL), Red Hook, Global Marine Terminal (containers), Auto Marine Terminal (vehicles) and South Brooklyn Marine Terminal (warehousing). The port authority thus has a typical landlord business model, leaving terminal operation to private companies. An ongoing priority is improving the efficiency of the port hinterland and regional distribution. The terminals generate a large amount of daily truck flows, often exacerbating local and regional congestion, in spite of the main terminals (Port Newark and Port Elizabeth) being located next to one of the widest highway in North America (12 lanes for the adjacent segment). Another important regional strategy is the development of a Port Inland Distribution Network where the port authority is seeking to develop inland container distribution centers, namely through barge and rail services. The port authority has invested massively in recent years in on-dock rail facilities.

A significant problem related to the future growth of the port concerns it capability to accommodate larger containerships, particularly the post-panamax class that requires at least 45 feet. In 2009, the dredging of a 50 feet channel servicing the main container terminals was completed. Yet, the clearance of about 155 feet permitted by the Bayonne Bridge (built in 1931) over the Kill Van Kull channel linking the harbor to the major container terminal facilities of Port Newark and Port Elizabeth is not sufficient. A clearance of 215 feet would be required to accommodate modern ships.

4. Land Transportation and Other Assets

The non-terminal assets of the port authority are substantial, starting with bridges and tunnels. All river crossings between the city of New York and the state of New Jersey are operated by the PANYNJ. Together they carry more than 250 million vehicular crossings each year, and the George Washington Bridge is the most heavily used in the world, with about 300,000 crossings a day. To improve the efficiency of regional vehicle circulation, the PANYNJ has implemented since 1997, in collaboration with several State and transportation authorities, an electronic toll system (E-Zpass).

The port authority also operates large public transit assets, mostly including the PATH (Port Authority Trans Hudson), the Port Authority Bus Terminal and the George Washington Bridge Bus Station. The PATH heavy rail line, which began in 1908 as the Hudson & Manhattan Railroad, links New Jersey with downtown Manhattan and carried close to 90 million passengers in 2007. The same year, the Port Authority Bus Terminal handled over 2.3 million bus movements and 70 million passengers. On a typical weekday, approximately 7,200 buses and 200,000 people use the bus terminal. Because the George Washington Bridge Bus Station is more oriented towards longer-distance commuting, its traffic figures are lower. Even so, it handled 6.2 million passengers in 2007.

Regional development initiatives include both the industrial parks (Bathgate in the Bronx and Elizabeth, New Jersey) and commercial developments offering office space (the Staten Island Teleport and the Legal Center, New Jersey). The PANYNJ is also involved in two waterfront development projects contributing to the reduction of inner-urban problems by converting centrally located maritime terminals to mixed urban land use. The power plant’s contribution to regional development is via sustainability: on average, 2,500 tons of refuse are converted into electricity every day.

Since its inception, the PANYNJ continuously expanded its assets. Doing so, it provided New York with an extensive array of terminals handling freight and passengers. New York could not have become a global city without the transshipment and distribution capabilities provided by these projects. The PANYNJ has grown along considerably and exercises a sizeable influence over the city’s transport system with 7,200 employees, an annual budget of $4.6 billion and a cumulative infrastructure investment of $35 billion.