City Trying to Strengthen Brooklyn’s Claim to a Shipping Trade

It is a sunny Friday morning and a man is on his hands and knees in a Brooklyn warehouse with a lamp strapped to his head, piecing with gloved fingers through a sack of coffee in a search for pests or contraband. Nearby, a front loader is sculpting a looming mountain of gravel. A giant claw on wheels snatches massive shipping containers from a pile and sets them on a flatbed truck, as other trucks piloted by trainee drivers crawl along a defunct pier. Used cars crammed with relief materials—they are bound for Haiti—fill a lot next to a beer distributor whose territory is walled off by a ridge of gleaming aluminum kegs. Behind the enormous cranes at the water’s edge is a view of Governor’s Island, Manhattan’s skyline, and the harbor.

“That view,” says Mike Stamatis, “is our biggest problem.”

Stamatis is the president and CEO of Red Hook Container Terminal, which operates the port by the same name on the Brooklyn waterfront—a location that, because of the stunning view, has long been coveted by developers.

But scenery is not the only challenge water-based commerce faces on the Brooklyn coast, which used to teem with longshoremen and cargo when the city’s ports were in their mid-20th Century heyday. Competition from fellow Port Authority berths in New Jersey, which are better equipped to handle massive modern cargo vessels, has taken a toll: From 2008 through 2017, the share of containers delivered to the harbor that arrived on the New York side dropped from 18 percent to about 6 percent.

So, in a bid to create a more sustainable foothold for the maritime industry on the Kings County shore, the city’s Economic Development Corporation (EDC) is cutting a deal with Red Hook Container Terminal (RHCT) and industrial developer Industry City to reactivate the South Brooklyn Marine Terminal in Sunset Park. The move will create 250 jobs and take 11,000 truck trips off the city’s roadways, RHCT estimates. If the offshore wind company Deepwater Wind gets approval to build an oceanic wind farm off Long Island, the soon-to-reopen marine terminal could serve as the firm’s fabrication site, creating another 1,000 jobs there.

Stamatis says the SBMT will complement the existing Red Hook facility—accepting shipments of raw materials (like lumber and gravel) and project cargo, like the gigantic elements of the New York Wheel that are already on the site, while Red Hook continues to take containers. This will make the operation sustainable, he said.

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But when it comes to figuring how to get freight into New York City without either gobbling up suppliers’ margins or clogging up the streets with carbon-spewing trucks, being “sustainable” could require public subsidy, as the current Red Hook terminal does.

The Red Hook Container Terminal is one of six facilities that make up the Port of New York, and it’s by far the smallest: In 2017, its gross revenue on Port Authority operations was $1.8 million. By comparison, Port Elizabeth reported $152 million in revenue. The Port Authority covered about $6 million in losses by Red Hook last year, according to PA budget documents. (Stamatis contends that Red Hook makes over $30 million a year, but that includes other revenue streams, like a bus company’s lease of space at the terminal).*

While Red Hook accepts freight of various kinds, its chief focus is containerized cargo. That’s what the five giant cranes on site—ranging in height from 80 to 100 feet and capable of lifting 40 to 50 tons at a time—are designed to do: Take metal boxes off ships and barges and deposit them on the ground. They took in 60,000 last year, half of which moved in and out by barge, never touching a Brooklyn road.

“As a container port operator, we’re competing against the big boys in Jersey. And these are huge terminals that were put in Jersey by design in the 60s,” Stamatis says. “At one point, Brooklyn was the center of the universe in terms of ocean transportation and importing and exporting of cargo. There were thousands of people working on this side of the river. Now there are hundreds.”

The shrinking of the city’s working waterfront is a well-known story, reflecting changes in manufacturing, shipping and real estate. The last one might be the biggest challenge for the Red Hook terminal these days. In the briefing book that accompanied Gov. Cuomo’s state of the state address, the governor’s office said it was “calling on the Port Authority of New York and New Jersey to explore options for improving and consolidating maritime operations by relocating activities in Red Hook to South Brooklyn.”

The speech added to speculation that the Port might not renew Red Hook’s lease, which is up in September. Last week, a Port Authority spokesperson told City Limits, “We are currently working with Red Hook Container Terminal LLC on a new agreement that will continue operations of the facility past September.” New York City’s EDC says it expects Red Hook to keep operating.

Even if the lease stays in place, however, other changes could be on the tide. The Port Authority is in the midst of preparing a new master plan for the harbor. And a separate Cross Harbor Freight Program is studying whether a freight tunnel or a system that puts rail cars on barges is the better long-term solution to the harbor’s cargo needs. It’s unclear how either plan might affect existing ports, though Stamatis insists that no matter what happens in the harbor, the Brooklyn ports will only become more important as population grows.

In the meantime, Stamatis is trying to drum up more business for Red Hook, talking to ports from Wilmington, Del., to Davisville, R.I., to Portland, Me., about barging cargo to his site. He’s discussed with EDC the possibility of creating a port at the Hunts Point food market in the South Bronx to deliver produce there by water instead of truck. In these conversations, he touts Red Hook’s selling points: a Customs inspection facility right on site (that’s where the guy was combing through coffee beans) and warehouses, which most ports no longer have room to host, right on the pier.

Red Hook has to hustle for business because, even if more cargo makes its way to New York via the water, it might not be sent in ships that Stamatis’ facility can handle. “The container business is harder to attract to this side of the river just by the nature of the business today,” he says. “Larger vessels are being constructed. The idea is to have fewer vessel calls but more cargo on those vessels.” The growing size of vessels reflects a $5 billion project to widen the Panama Canal that was completed in 2016. Where the previous generation of “Panamax” ships topped out at around 965 feet long and 106 feet wide with the ability to carry 5,000 containers, the new (“neopanamax”) ships run 1,400 feet long, 160 feet wide, and boast capacity for 13,000 containers. And there are other ships – called post-Panamax – too big to fit through the new Canal.

While Red Hook is considered a deepwater port, most of those larger ships go to the New Jersey side of the harbor, where the deck of the Bayonne Bridge was actually replaced with a new one 64 feet higher precisely to accommodate larger vessels. The Port Authority did in 2016 inaugurate a program for barging containers from one side of the harbor to the other. But the fact is, there’s a limit to how much of that business Red Hook could take.

The issue isn’t space for storing containers, but warehouse space for other goods. “We’re constrained here in terms of our geographic location and the fact that we’re in a commercial/residential neighborhood and we don’t have the opportunity to expand,” says Stamatis. “But the SBMT presented that opportunity to us.”

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The SBMT, or South Brooklyn Marine Terminal, is just over a mile-and-a-half from the Red Hook Container Terminal as the crow flies but it feels much farther away. Where Red Hook bustles with machines and overflows with cargo, South Brooklyn offers a vast solitude: cavernous warehouses, stretches of tarmac broken only by tufts of grass and a puddle where a family of geese hang out. A metal recycling facility stands at one end but the only sign of activity in the main body of the port are massive parts of the New York Wheel that sit waiting for that project to be reactivated in Staten Island.

The lease between the EDC and the partnership of Industry City and Red Hook Container Terminal calls for an annual rent payment to EDC starting at $4 million. EDC says the deal, which runs through 2054, will be signed this fall. The city has spent $115 million fixing up the site and plans another $18 million project to shore up a crumbling bulkhead along one of the piers. Industry City and Red Hook are on the hook for other improvements. Stamatis says he is waiting for an engineer’s report to identify what that will entail.

For Red Hook Container Terminal, the attraction of SBMT is a doubling of its space and the ability to attract more deliveries of materials – lumber, sand, gravel – and project cargo, which is stuff like those parts for the New York Wheel, or the decking for the Verazzano Bridge, which Red Hook stored for two years during a recent repair project. “It will expand the footprint and capture business that might go elsewhere” because Red Hook is “pretty full, pretty much maxed out in terms of space,” Stamatis says.

This is not the first time the city has tried to reactivate the SBMT site, which was built in the 1960s but has been mostly dormant since 1986. In 2007, EDC inked a deal with Axis Group to start an auto-processing and general cargo operation that was supposed to create 300 jobs, but Axis filed for bankruptcy in 2012. Eight years later, an EDC bid to launch another, similar project ran into opposition from local Councilman Carlos Menchaca, who wanted a development corporation formed to oversee the project and a job-training program for locals to be part of the deal. Menchaca didn’t get the development corporation but did get a task force of community stakeholders appointed to help shape the new deal.

Uprose, the environmental justice organization that has long been a force in Sunset Park, was part of the task force. “I would say that the announcement a few weeks ago is very much in the right direction,” says Ryan Chavez, the infrastructure coordinator at Uprose. “As an environmental-justice organization, Uprose has long been an advocate for maintaining and expanding and reviving the industrial and manufacturing land uses that have long served as employment hubs for this working-class community of color, and central to that agenda is to make sure that we are really maximizing maritime dependent industry.”

EDC and the partners have committed to “new, on-site job training opportunities” at SBMT, something Stamatis says he’s personally invested in. Right now, 99 percent of Red Hook’s workers live in the city and, “That allows us to have a stable workforce.” Work rules in the harbor permit staffers to make themselves available at different sites and so, he says, “When we do hire people from New Jersey, it’s often a struggle to get them to come.”

While 250 jobs would be a significant addition to Brooklyn’s maritime workforce, the possibility of Deepwater Wind creating a wind-turbine factory within the reactivated SBMT offers a more exciting scenario. “This depends on Deepwater securing a state contract for its South Fork Wind Farm,” says Ryan Birchmeier, a spokesman for EDC. “If they win the contract, it will likely generate at least 1,000 jobs. Regardless, we think it’s likely that we’ll see at least some uses related to offshore wind at SBMT.” Deepwater didn’t reply to an email.

Chavez says an offshore wind operation “is a very real possibility.” When it comes to the potential for the reactivated SBMT to hire local residents, he is taking a wait-and-see approach.

“Port operations have something of a reputation and a legacy of exclusionary hiring practices when it comes to local community members of color, in particular,” he said. “What I would say is, the sort of new day here in Sunset Park provides the industry the opportunity to sort of correct course.”

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The plan for now is for Red Hook to be the exclusive site for containers while SBMT focuses on materials and project cargo, but Birchmeier says, “We do see opportunity to handle regional container barging at SBMT (and potential small niche container vessels)” although, “All of these uses would be additive, not competitive, with Red Hook Container Terminal.” Birchmeier also said a future role for SBMT as a deepwater port is a possibility.

The challenge to any visions for reviving a cargo operation on the Brooklyn waterfront is that moving freight by truck is still advantageous for most companies. “I think we have a tremendous highway system and trucking has been the major means of moving goods inland, and the cost has been pretty consistent over the years,” Stamatis says. “It’s still a pretty effective way of moving goods. And it’s quick.” A company can throw its product on a truck in Philadelphia and get it to New York City in 90 minutes, two hours—maybe a little longer if there’s traffic. But on a barge? It’s 36 hours, each way.

But that time differential is likely to narrow: The federal government predicts major increases in traffic congestion along the Eastern seaboard between now and 2035. That will increase trucking costs, as will new safety requirements that will reduce how many hours a trucker can drive in a single day.

Meanwhile, the environmental case for water-shipping will only get stronger. According to EDC, a barge can carry as much bulk cargo as 60 trucks or as much containerized freight as 250 rigs, with one-seventh the CO2 emissions. But those environmental costs won’t necessarily show up on company’s balance sheets, so public support for water-freight might be required. “Taking 30,000 trucks off the road,” says Stamatis, referring to the estimate for the Red Hook container facility’s current impact, “and not putting them on the local stress or bridges is a tremendous public benefit to the local community, to the city, to the state. It’s just a win for everyone.”

Red Hook projects that the SBMT project—which EDC dubs SSBMT for Sustainable South Brooklyn Marine Terminal—will handle 900,000 tons of material a year, taking 11,000 trucks off the road. However, while barging stuff to Brooklyn eliminates the need to send trucks across the Hudson, the material that arrives at SBMT will still have to get from there to its destination. There is a rail connection at SBMT to handle some cargo, and some of it could arrive and depart via water. But some will move from barge to truck and drive off into Sunset Park.

“I’m not going to sit here and tell you there are not going to be trucks. It’s going to be a marine terminal and, one way or another, there’s going to be trucks,” says Stamatis. “But our goal is to mitigate the number.”

EDC says it will be analyzing traffic as it moves toward final plans for the site. The law doesn’t require a full environmental impact process, but local Community Board 7 has called for a traffic study.

“The local truck impact is one of the conversations that’s only just beginning,” Chavez, from Uprose, says. “The project overall will lead to a net reduction of miles travelled by trucks on some regional level, but when we’re thinking locally we need to make sure we’re doing everything we can to mitigate any traffic that might be generated by a project of this nature.” That means making sure whatever trucks are used are retrofitted to emit minimal pollutants and “getting serious about rail.”

* This paragraph was updated to clarify differing estimates of the terminal’s revenue.