In this Issue...
Reefer Business Shows Strong Growth

Changing export patterns are placing demands on facilities providing refrigerated, frozen or temperature controlled services that are affiliated with the Port of New York and New Jersey.

"Butter. I hear a lot about butter," says Marc Lebovitz, President of East Coast Warehouse and Distribution, a family business headquartered at the Elizabeth-Port Authority Marine Terminal that has 800,000 square feet of temperature-controlled space inside the port, and another 150,000 outside.

No wonder Lebovitz hears about butter. Its meteoric growth as an export commodity-up 292 percent from 2006 to 2007, according to the U.S. Dairy Export Council-exemplifies the changes and challenges brought about by the dramatic increase in U.S. exports due in part to currency fluctuations.

Indeed, the Port of New York and New Jersey alone has seen a 20 percent increase in exports during the first three months of 2008. Direct all-water services via the Panama Canal and the Suez Canal is boosting the growth. North Europe, the Mediterranean and South America are the strongest markets for growth according to PIERS Global Intelligence Solutions.

APM Terminals Elizabeth more than doubled its reefer capacity as it builds for future growth.

Agricultural products such as beef, pork, poultry, milk-based commodities, and other foodstuffs have been driving the increase in exports.

In the first quarter of 2008, U.S. beef exports increased 37 percent over the first quarter of 2007, according to the U.S. Meat Export Federation. Pork exports were 39 percent more than the first quarter of last year, according to the Federation. Exports of broilers grew from 4,920,013 in 2003 to 5,771,938 in 2007, according to the U.S. Poultry & Egg Association quoting U.S. Department of Agriculture figures. In 2007, total U.S. exports of milk powder, whey, cheese, lactose and other dairy products were up 62 percent from the prior year, according to the U.S. Dairy Export Council.

Vegetables, from avocados to zucchini, are the largest category of refrigerated exports. The total for the first quarter of 2008 is 27 percent above the same quarter in 2007, according to PIERS.

These increases are not expected to change soon. The U.S. government's forecast for all agricultural exports for fiscal 2008 was raised to a record $108.5 billion at the end of May. That's up $27 billion compared with 2007 and nearly double the level of agricultural exports in 2003.

The port's reefer figures for 2007 were notable. According to PIERS, last year the port handled reefer amounting to 42,517 export TEUs. The port handled 171,417 TEUs of import reefer. The total reefer for 2007 was 214,018 TEUs.

By comparison, the Philadelphia Regional Port, known for its reefer traffic, handled a total of 82,468 TEUs, making it the second busiest reefer port among the top five North Atlantic ports including New York, Norfolk, Boston and Baltimore.

The recent expansion of the ExpressRail System has made shipping reefer products between the Midwest more feasible.

Lebovitz is installing more plugs. He is coping with increased cost of energy by using ones fueled by electricity as well as diesel. When there's the option to use electricity, he does. "It is better for the environment," he says.

At Port Newark Container Terminal, there are 350 fixed grounded reefer plugs. "We have the capability to bring in portable plug-in systems," says Robert LaMura, the Commercial Director. "We can easily handle full container loads. There are three separate reefer banks."

While PNCT has no specific plans to expand reefer service-the portables help meet fluctuations in demand-that could change with customer needs.

There are reefer options at other facilities inside and outside the port. At Maher Terminals, there are 990 plugs. At Global Marine Terminal, there are 428 reefer plugs, 212 wheeled and 216 grounded. The Red Hook Container Terminal has 72 reefer plug slots.

Gerald von Dohlan, President of Port Newark Refrigerated Warehouse says the Port Authority's investment in rail has proven beneficial. And with cargo growth, his business is benefiting by an increase in what he receives via rail. "Now we get 15 to 18 rail cars a week," von Dohlan says.

We're seeing a lot of food products. When we get agricultural freight, it comes from the Midwest so access to good quality rail is significant.

Having a siding means he can offer customers more options. If freight isn't palletized in the rail car, he can do that and repack it, often for ocean containers. Although most meat bound for the European Union is inspected and stamped at origin, he can arrange for an EU inspector at his facility. If exports arrive in cooled containers but need to be frozen for the final leg, his operation can do that too.

"We can even take the jumbo containers, and that saves on ocean freight," say von Dohlan. Rail has made receiving easier, helped cut costs and thus improved competitiveness with the West Coast particularly for cargo originating west of Kansas City. That is an advantage. "We're seeing a lot of food products. When we get agricultural freight, it comes from the Midwest so access to good quality rail is significant," he added. "Rail is a heavy fixed cost but it expands the service radius. Now, I'm building a new warehouse, and I'm putting in a rail siding."

John Galiher, President of Preferred Freezer Service, which has its headquarters in Newark, officially opened a 9.1 million cubic foot facility in Elizabeth, N.J. in May. Fully robotized, it is in the process of being LEED certified.

The company Galiher, founded in November 1989, is building another facility in Linden, N.J. Galiher says he gains from his proximity to the port. He cited projects such as channel dredging as benefiting his business by allowing larger ships to use the port. "Everything they do in the port, the more I benefit," he says.