Weehawken, New Jersey 078087
Telephone: (201) 902-8700
Toll Free: (800) 533-3779
Fax: (201) 348-9384
Web site: http://www.nywaterway.com
Wholly Owned Subsidiary of Arcorp Properties
Sales: $73 million (2002)
NAIC: 483212 Inland Water Passenger Transportation
The largest ferry operation in North America, Port Imperial Ferry Corporation serves the New York City metropolitan area, operating under the name of NY Waterway. The company is a subsidiary of privately owned Arcorp Properties, which also operates The Port Imperial Marina in Weehawken, New Jersey, Imperatore Landscaping, and a pair of restaurants located on the New Jersey side of the Hudson River across from Manhattan. NY Waterway provides commuter service from New Jersey communities to Midtown Manhattan and the financial district of Lower Manhattan. In addition, it offers sightseeing cruises that tour the New York harbor as well as venturing upriver to visit Hudson Valley sites, including trips to Army football games at West Point. NY Waterway ships also transport baseball fans to Yankee Stadium and Shea Stadium, as well as offering dinner and theater excursions and chartered parties that use Manhattan as a backdrop. Following the September 11, 2001, terrorist attacks that leveled the World Trade Center towers and destroyed the underlying PATH train station, NY Waterway enjoyed a sudden surge in business. As business receded to pre-9/11 levels, however, the company found itself saddled with too much debt caused by overexpansion and on the verge of a collapse. NY Waterway has negotiated a rescue plan, but its future remains uncertain.
The man behind the birth of NY Waterway was Arthur Edward Imperatore. He was born in West New York, New Jersey, in 1925, one of ten children born to Italian immigrants. After serving in the United States Army from 1945 to 1947, he joined his brothers, who had launched a small trucking operation. What started out as two brothers and a single truck soon became an enterprise known as A & P Trucking (later becoming A-P-A Trucking Corp.), which included two surplus Army trucks and all five of the Imperatore brothers. Although Arthur was the youngest of the boys, he quickly emerged as the leader. He started out in sales, driving only as a substitute, but also became the company's planner and deal maker—and a workaholic who took only a single week's vacation in 20 years. Trucking in the post-World War II era was a rough and tumble, and thriving, industry. Unlike many area shippers, who concentrated on the major hauling business between Newark and Manhattan, A-P-A took on junk freight and small shipments and recognized that the outer boroughs of Brooklyn, Queens, and the Bronx offered an opportunity for growth. In 1958, A-P-A opened a second terminal in Reading, Pennsylvania, a move that transformed the company from a local trucker into a regional operation.
At this stage Arthur grew disenchanted with the business and thought about quitting. He then experienced an epiphany of sorts during a 1960 snowstorm, when he and a new driver were shoveling the Reading lot. The employee complained bitterly about shoveling not being a part of his job description, infuriating Imperatore, who suddenly realized that A-P-A was to blame for having hired the man in the first place. During the 1950s, when labor was scarce, he had trawled area bars in search of new drivers, who would later become permanent employees and because of union rules were difficult to dismiss, causing him no end of headaches. Imperatore decided that as a two-terminal operation, A-P-A had to exert greater control over its hiring. As a result he instituted a strict and thorough hiring process that included polygraphs and security checks. Imperatore renewed his commitment to the business and formalized its organization on other fronts as well. As a result, revenues grew rapidly and A-P-A expanded its geographic reach, eventually including some 30 terminals.
Imperatore reached another turning point in his life in 1975 when the company helicopter crashed, killing his brother Arnold, vice-president of operations along with the pilot. Arthur was grieving over the loss of his brother when two weeks later his mother also died. He was 51 years old. He had succeeded in building A-P-A into one of the leading trucking firms in the country, and did not relish the prospect of taking over the day-to-day managerial responsibilities of his brother. He decided to groom his 32-year-old stepson, Armand Pohan, a lawyer, as a successor. A longtime company lieutenant handled daily affairs while Armand learned the ropes and Arthur looked for new challenges.
Imperatore bought a pair of Virginia coal mines and acquired the Colorado Rockies National Hockey League franchise, which he relocated to New Jersey as the Devils. He also dabbled in real estate. Eventually he found a project that would completely capture his imagination. On a Friday evening in September 1981 he learned that an old railyard, a 2½-mile section of crumbling waterfront landfill property located in his old West New York neighborhood and Weehawken, was being put up for sale by the bankrupt Penn Central railroad. It was one of the few large tracts of undeveloped real estate located within 25 miles of Midtown Manhattan. Over the weekend he arranged a Monday meeting with Penn Central executives, then in a matter of 20 minutes was able to knock down the $14 million asking price to $7.5 million in cash, and the two sides had a deal. What Imperatore purchased for that money included a network of rusted rails, abandoned railcars and barges, hundreds of old automobiles, and assorted squatters' shacks. But Imperatore's vision for the property was grand and ambitious: he wanted to build a new, privately managed Venetian city, complete with townhouses, hotels, banks, schools, and churches, as well as an observation tower inspired by Leonardo da Vinci. He would call it Port Imperial, and it became his obsession. The estimated price tag was $5 billion.
While Imperatore met with scores of architects, planners, and consultants, and visited waterfront developments around the world, he had the property cleaned up. Over the next few years, Imperatore launched a few businesses on the site as he worked on realizing his vision for Port Imperial. He opened a marina, a golf driving range, and an upscale restaurant called Arthur's Landing. Another venture grew out of a trip he took one day in a company yacht crossing the Hudson river. He timed the trip at less than four minutes, about the same amount of time he estimated someone in a car might expect to wait at a single Manhattan intersection. Imperatore envisioned that one day residents of Port Imperial could commute by ferry to Manhattan, but on the cliffs behind his Weehawken landing, the famous Palisades, were towns already filled with potential customers. He decided that there was no reason to wait for Port Imperial and that he could start a ferry service now.
Ferries had a long history in New York City, and in fact Imperatore as a child used to ride the Weehawken ferry. To save 50 cents, A-P-A would later rely on the ferry instead of using the Lincoln tunnel. As early as 1650 the Raritan Indians ferried Dutch settlers in canoes across the Arthur Kill to Staten Island. Twenty-five years later the Dutch established a ferry to cross the Harlem and Hudson rivers. With the advent of steamboats in the early 1820s, ferries increased in popularity, so that by the end of the century there were 50 steam ferries operating in the metropolitan area. But with the opening of the Brooklyn Bridge in 1883, followed by other bridges spanning New York's waterways, or tunnels that burrowed beneath the rivers, the need for ferries began to fade. The Weehawken Ferry went out of business in 1959, and in 1967 the last operator to cross the Hudson, the Hoboken ferry, shut down, leaving only the venerable Staten Island ferry to continue the tradition in New York City. But as the bridges, tunnels, and mass transit links to the city became strained, the idea of bringing back ferry service gained credence in the early 1980s, as Imperatore was not alone in sensing an opportunity to reintroduce ferry service to New York. Around the same time that Imperatore launched NY Waterway to run a ferry between Weehawken and midtown Manhattan—to a ramshackle railroad pier acquired on West 38th Street—Tradebase International began running a ferry between Fort Lee, New Jersey, and Wall Street.
It took 27 months and $1 million for Imperatore to start his new ferry service, which some nicknamed "Arthur's Folly." Unfortunately, the idea of taking the ferry to work was not readily embraced by commuters. The Fort Lee operation went out of business after only four months, attracting less than 100 riders a week. NY Waterway began service on December 3, 1986, with just two dozen passengers, and they were riding for free. In an attempt to establish a customer base, the ferry was offered free for the first month. But Imperatore was undeterred and continued to pour money into the venture, likely drawn from the coffers of A-P-A, to the detriment of the family trucking line. What Imperatore realized, unlike other ferry operators before him, was that a ferry was not an attractive option to commuters if they were simply dumped on the river's edge in Manhattan and had to find a way to get to their office buildings. He added free shuttle buses that transported passengers to and from work and the ferry. It was the idea that made NY Waterway a viable business.
Imperatore, from his days as a trucking executive, knew the importance of political connections in the transportation industry. He began courting politicians on both sides of the Hudson—in New Jersey, in New York City, and in New York's capital of Albany. In 1988 he received a major break when the Port Authority of New York and New Jersey hired NY Waterway to run a ferry between Hoboken and the World Financial Center to help ease overcrowding on the Authority's PATH trains that linked New Jersey with Manhattan's financial district. After a few years of operating at a loss, NY Waterway finally became profitable in the early 1990s. Other ferry companies sprang up to emulate Imperatore's success, but NY Waterway was well entrenched, and so politically connected, so that it controlled about 90 percent of the city's ferry business.
NY Waterway has the largest ferry and excursion fleet in the NY Harbor, but it is still a family business with all the personal attention to service and amenities that it had when it was just Arthur's ferry.
NY Waterway also expanded beyond the commuter trade in the early 1990s, using ships during off-peak ferry hours to conduct excursions, touring the New York harbor and venturing up the Hudson River in conjunction with chartered buses to visit historic Hudson Valley towns such as Sleepy Hollow, as well as the Rockefeller family home in Pocantico Hills. By 1993 NY Waterway had cobbled together a profitable little venture, the bulk of the business coming from the four routes the company's 12 boats traveled across the Hudson, carrying 11,000 passengers a day. The same could not be said, however, for Port Imperial. Imperatore was unable to convince nearby communities to grant permission to build high-rise structures taller than the Palisades. In 1994 a bank foreclosed on a $50 million loan and Imperatore lost half of the Penn Central property, essentially leaving him with the restaurant, marina, and NY Waterway.
Imperatore and NY Waterway, however, were more successful in their efforts to curry political favor. The company hired lobbyists in New York City, Albany, Trenton, and Washington, D.C. Imperatore held fundraising dinners at his restaurant for New York's governor, George Pataki, and New York City Mayor Rudolph Giuliani. He named ferries after New Jersey Senator Frank Lautenberg and New Jersey Representative Robert A. Roe. On his yacht Imperatore also wined and dined New Jersey mayors and Port Authority executives. In 1995 New York Waterway offered a job to Donald J. Liloia, the Port Authority's supervisor of the ferry industry. Three months later, he went to work for the company, then helped to draft NY Waterway's winning bid for a Port Authority contract. Unlike other transit companies that relied on government subsidiaries, NY Waterway was privately financed. Where it did receive help was in the building of new terminals, which NY Waterway would then lease, generally based on the number of passengers it served.
In 1996 Arthur Imperatore turned over the presidency to his son, Arthur E. Imperatore, Jr. Unlike his father, the younger Imperatore did not grow up under hardscrabble conditions. After prep school in New Hampshire, he studied at both Yale and Harvard, and after giving consideration to a teaching career became an attorney specializing in real estate before succeeding his father. Although his father failed to build his dream city, he was instrumental in the ferry resuming its place, albeit small, in the New York City area transportation network. During the 1990s there was talk of launching ferry service to La Guardia and Kennedy airports, but the plans never materialized, so that by 2001 NY Waterway was still very much a Hudson River ferry operation, with 15 routes, serving 33,000 passengers each day—and only a modicum of competition. Rounding out the business were the baseball and theater excursions and sightseeing cruises.
Then on September 11, 2001, a pair of hijacked airliners were crashed by terrorists into the twin towers of the World Trade Centers, bringing down both structures and destroying the Path Station and tubes below ground. That day, NY Waterway ferries repeatedly crossed the Hudson, ultimately evacuating some 160,000 people from Lower Manhattan. With the PATH train running to lower Manhattan out of commission, and subway traffic altered as well, there was some concern that the economy of Lower Manhattan was in jeopardy. The ferries were called on to fill the void in transportation, with the Federal Emergency Management Agency providing funds through the Port Authority to subsidize four new ferry routes and increase service on another. Three of the contracts were awarded to NY Waterway without public bidding, and the company won the other two as well, much to the displeasure of its competitors. The Port Authority maintained that NY Waterway was simply the best suited company for the task, given its size and the emergency situation.
In the months following September 11, NY Waterway saw its ridership almost double, prompting the company to add several more routes, lease more boats, and hire more workers. Revenues and profits grew quickly, due in large part to the government contracts, which guaranteed a 20 percent profit. But the company came under fire, accused of running empty ferries at night simply to reap more of the available subsidy. The company maintained, however, that it was just providing the level of frequent service for which the government had contracted, in essence replicating the lost PATH service, which had always run its share of empty passenger cars late at night.
In 2002 A-P-A, once the envy of the trucking world, went out of business, due in large part to the recession, but according to a number of employees, Arthur Imperatore, Sr., had to shoulder some of the blame. Not only was the firm not as well managed after he left, it also was crippled by the money that was siphoned off to fund Port Imperial, NY Waterway, and Imperatore's other ventures. With the collapse of A-P-A, NY Waterway now found itself the subject of lawsuits involving at least six pension funds for an estimated obligation of $8.2 million.
But paying off A-P-A pension funds was just one of several problems facing NY Waterway. In November 2003 PATH service was restored to Lower Manhattan and ridership on the ferry dropped off dramatically. Moreover, Lower Manhattan had never recovered all of the jobs lost from the destruction of the Twin Towers, meaning fewer commuters to transport by train or ferry. A spike in gasoline prices also served to exacerbate the situation, as did a harsh winter that led to icy conditions on the Hudson and resulted in ferry service being shut down for two weeks in January 2004. The company also had taken on too much debt, electing to buy five boats at the cost of $10 million rather than to continue leasing them for as much as $5,000 a day. NY Waterway quickly found itself in a death spiral that even fare increases, the cutting of routes, and the sale of assets could not stop.
It was in the interest of the community to retain the ferry service, but none of the plans meant to rescue NY Waterway could find traction. Then at the eleventh hour, in late December 2004, the Port Authority, working behind the scenes, engineered a deal with Manhattan attorney William Wachtel in which Wachtel would take over half of the NY Waterway routes, while NY Waterway would retain the rest. Most of the financial consideration was Wachtel's assumption of NY Waterway debt. Ferry service continued uninterrupted while the two parties had 60 days to iron out the details, which included gaining approval from lender J.P. Morgan Chase, the federal Maritime Administration, and the Port Authority. For the time being at least, the ferries would continue to be the province of private enterprise, but whether they would remain so remained very much an open question.
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