Ebb Tide in New York

Since the days of the three-masters, merchant seamen the world over have regarded New York harbor as by far the U.S.'s premier port of call. Now the tide is changing. Chronic labor strife, rampant pilferage and the rising cost of doing business are forcing many shippers to steer around the Port of New York, which is an 833-mile labyrinth of piers stretching from northern New Jersey to western Long Island. Less than 13% of the nation's ocean-borne foreign trade passes through the port, a drop of more than 50% in the past three decades. The beneficiaries of New York's decline are other East Coast port cities--Miami, Norfolk, Baltimore, Philadelphia, Boston and Portland, Me.

Some New York dock workers are stealing themselves right out of jobs. Pilferage is so pervasive that not even the increasing use of sealed metal containers the size of 20-ft. truck trailers stops it. In the past two years, at least 26--and perhaps many more--huge containers have been stolen. Large stretches of the waterfront are poorly policed because jurisdiction is splintered among the bi-state Port Authority of New York and New Jersey, the Waterfront Commission and a host of other agencies. Much of the work falls to private police hired by the pier owners, but many owners are afraid of reprisals from dock workers if they crack down on pilferage. Importers, exporters and wholesalers often fail to report thefts for fear of being hit by steep insurance-rate increases. Says a top shipping broker: "Any stevedore caught pilfering in Philadelphia or other ports is blacklisted by his union, but in New York both labor leaders and owners look the other way."

Through repeated strikes, the International Longshoremen's Association has forced New York stevedoring companies into a contract guaranteeing longshoremen 2,080 hours of pay each year, whether or not there is work to be done. Says a New York-based ship operator: "The union contracts are negotiated between the dock workers and the stevedoring companies; but the companies that suffer the most are the shipping firms that have invested a lot in facilities in New York. Higher costs simply drive their business away."

More than a few shippers have packed up and left the troubled port. Last fall, United Fruit shifted its banana loading to Albany, 124 miles up the Hudson River. Company officials expect that distribution costs will be lower out of Albany, even though the new location adds eleven hours of travel time. Some Midwestern shippers are abandoning U.S. docks entirely in favor of ports at Saint John, New Brunswick, and Halifax, Nova Scotia. Canadian laws permit railroads and shipping companies to offer combined freight rates at substantial discounts; such discounts are prohibited in the U.S. Even such distinctively U.S. products as Playboy magazine, Kodak film, and Michigan beans (which in a later incarnation are known as Boston baked beans) now depart from Canadian ports for their worldwide destinations.

The consequences of this seepage of business from New York are painfully evident. Mile upon mile of piers lie abandoned, their timbers breaking off to float in the harbor tides, a menace to shipping. The great majority of Manhattan's 72 piers are useless, most of them so badly neglected that Army Corps of Engineers salvage vessels must retrieve them in pieces as the waves take their inevitable toll.

To reverse the trend, Port Authority officials are banking on vast containership facilities on the port's fringes in Brooklyn, Staten Island and New Jersey. Containership operations greatly reduce the time and manpower needed to load and unload vessels. The port was an early leader in construction of container terminals, and many more are being planned. But even the port's undisputed leadership in this field seems insufficient to halt the diversion of cargo to the newer and smaller Canadian and Southern containership terminals, where costs are lower. Until the overall cost of doing business in New York becomes truly competitive, the Port Authority's commitment to containerization will seem rather like building sand castles in the path of the incoming tide.

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