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NEWARK-According to a 2008 Rutgers University report, New Jersey’s logistics industry accounts for nearly 11% of the total state Gross Domestic Product. To that end, port area development and logistics are critical to New Jersey’s ability to compete with other states for scarce jobs in a protracted recovery. This was the issue put forth at Naiop New Jersey’s “Port Area Infrastructure & Logistics Update,” held on Friday at the NJ Transportation Planning Authority at One Newark Center here.

The program brought together a group of port development and logistics experts to shed some light on issues such as trade growth’s impact on real estate demand; which port infrastructure projects (pending and completed) will keep us competitive, boost tenant demand and generate jobs; how the changing logistics networking is impacting the state’s market share; and what strategies third-party logistics providers and industry end-users are employing for operations, warehousing and transportation services to meet customer demand.

Kicking off the discussion was Anne Strauss-Wieder of A. Strauss Wieder Inc., who challenged attendees to look at the recession from a “glass half full” perspective. By now, we are all familiar with the daunting statistics, in particularly the fact that this recession has hit services industries—as opposed to past downturns which had a much larger impact on manufacturing jobs.

Add to this, consolidations in the pharmaceutical industry, a mainstay of the New Jersey economy, and the outlook is bleak. But, says Strauss-Wieder, “The state has always been very good at distribution and even production, and we need to play this up.” To its credit, the port of New York and New Jersey is the third largest in the US. “In 2008, the port industry supported over 100,000 jobs,” she noted.

Arguably the biggest hurdle facing the port is its current inability to handle the larger container ships that will come through once the Panama Canal expansion is completed in 2014. As it stands now, the Bayonne Bridge, which sits 151 feet over the Kill Van Kull tidal straight at its highest point, is too low to accommodate these ships. According to Strauss-Wieder, the Panama project in ahead of schedule and under, or on, budget so that date seems likely.

In addition to the capacity issue, there also exists a multitude of complex fees that importers need to navigate before coming to port. “Our incentive program is not as good as other states,” she admited. “We need to make it simple and efficient.”

Of course, it’s not only the ports that control commerce distribution, railroads also play a key role. “It’s no surprise that Warren Buffet recently bought railroad giant Burlington Northern Santa Fe for $26.3 billion in cash and stock,” said Strauss-Wieder. She went on to add that there are several new multimodal corridors currently under development in the US, including the Heartland and Crescent. She added that the state’s rail network is one of its strong suits.

Despite New Jersey’s selling points, it is also facing stiff competition from Mexico and Canada, in addition to other states, which is why, she noted, we should play up the fact that we have an enormous concentration of industrial properties in New Jersey. In a sense, the state can even use the high industrial vacancy and low rental rates to its advantage. “At Exit 8A, space is selling for $4.31 a square foot, and it’s probably even lower in many cases,” Strauss-Wieder said. “We should be marketing this like crazy. Do we want to be a hub or a spoke in the supply chain?”

On hand to answer some of these questions was Michael Francois of the Port Authority of New York and New Jersey. He noted that between 2007 and ̕08, the drop in port activity was minimal, but it jumped between ̕08 and ̕09 to 14.5%. Still, he said, “the port has achieved significant dollar volume, exceeding $190 billion and bringing in a total of 378,000 containers in 2008.”

On the investment front, Francois noted that the Port Authority is working on a number of initiatives including dredging, infrastructure, logistics, security and tenant improvements. “We have a limited amount of space so we need to be smarter logistically,” he said. “Security, for obvious reasons, takes up a large amount of our capital costs.”

As to how the Port Authority plans to tackle the Bayonne Bridge dilemma, Francois related that it has employed the help of the Army Corps of Engineers, which recently recommended another study on the bridge. He added that the cost will likely be in the $1 billion to $3 billion range, and could take up to 10 years. “We are also looking to the federal government for support,” he continued. And despite all of the speculation, “the bridge will not be a fatal flaw.”Addressing the issue of rail, Francois said that the Authority plans to have around 25% of its shipments via rail by 2012 or 2013 and is investing $650 million toward rail service improvements.

Following Francois’ remarks, John DiCola of KTR Capital Partners took the stage, moderating a panel that also included Rob Kossar of Jones Lang LaSalle, Marc Lebovitz of East Coast Warehouse & Distribution Corp. and Universal Maritime Service Corp.’s Jack Craig.

Much of the discussion centered on goods distribution and consumption. According to DiCola, many of the goods shipped to the NY/NJ port are not consumed in the metro area. “It would be great to think that 100% of the goods consumed here come through the port, but that is an unrealistic expectation,” said Francois. He added that the port does not serve only the Garden State but other nearby neighbors, such as New York and even Pennsylvania.

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