Tacoma could regain its crown as Puget Sound’s largest container port thanks to a Thursday decision by a group of three container shipping lines to forsake the Port of Seattle in favor of the Port of Tacoma’s Washington United Terminal.
The move of the Grand Alliance shipping lines, NYK Lines, OOCL and Hapag-Lloyd, to Tacoma’s Washington United Terminal on the Blair Waterway could boost Tacoma’s critical container business by 25 percent to 30 percent.
“This is probably the biggest announcement that will be made in the rest of my working life at the port,” said Longshore Union Local 23 President Scott Mason, who was in New Zealand Thursday supporting a longshore labor dispute there. “The effect will be huge for those working on the waterfront.”
The alliance partners told the Port of Tacoma of its decision in a conference call at 10 a.m. Thursday, said Tacoma Port Commissioner Clare Petrich, but the port delayed making an official announcement until almost 4 p.m. because the alliance hadn’t issued its own news release.
“The Port of Tacoma is excited that its customer, Washington United Terminals, was selected by the NATC Group, which represents the Grand Alliance, to bring additional container lines and the associated jobs to our community,” the port said in its written statement.
“More information will be shared as Washington United Terminals and the NATC Group work through the details,” the port said.
Word leaked out quickly Thursday morning of Tacoma’s victory. Both Port of Tacoma commission President Dick Marzano and Mason acknowledged Thursday morning they’d been told the shipping alliance had picked the Tacoma container terminal.
Port of Tacoma Commissioner Petrich, vacationing in Mexico, said she learned quickly of the decision.
“I’m thrilled,” she said.
Petrich said the new business is what the port needed to kick-start its revival. The port’s business has been in a holding pattern for the last three years with occasional small bursts of new activity followed by a few down months.
The new work will mean that longshore workers now working only occasionally at the port will get regular jobs. The additional traffic also will generate jobs for truck drivers, railroad workers and others who handle container traffic.
The Port of Tacoma recently finished expanding the wharf at Washington United Terminals to better accommodate two containerships simultaneously. The WUTC terminal is on the Blair Waterway’s west side.
Washington United was one of four terminal operators, two in Tacoma and two in Seattle, who had competed for the shipping lines’ business.
While the move is good news in Tacoma, it will be a blow to the Port of Seattle. No official estimates are available for the volume of containers the three lines are expected to handle here, some estimates place that number as high as 400,000 container units a year.
The Port of Seattle said the move could seriously affect the livelihoods of workers on the Seattle waterfront.
In an official statement, the Seattle port urged Puget Sound ports to recruit new business from outside the region rather poach business from one another.
“Seattle’s seaport infrastructure represents over $1 billion in investment, and the best way to ensure that both ports work for the entire state is to recruit new cargo to our regional gateway. By trading customers, we encourage a downward competitive cycle that endangers our ability to invest in the infrastructure we need to support the import and export trade our state depends on,” the Port of Seattle said.
“We continue to call for a dialogue about how the two ports can cooperate in order to maximize return on taxpayer investment, which is a primary goal called out in our Century Agenda,” the Seattle port said.
That kind of volume that Seattle will lose would help restore Tacoma’s business to near its peak levels it hit in 2006 before the recession dampened the container trade. Tacoma’s container volumes were diminished likewise when its biggest shipping line customer, Maersk Line, moved its operations to the Port of Seattle to meld them with its ally, France’s CMA-CGM container shipping line.
The shift in cargo from Seattle to Tacoma could move Tacoma back into first place among Puget Sound ports as measured by cargo volumes. Tacoma briefly held that spot in the middle of the last decade, but lost it to Seattle when its cargo numbers fell.
Tacoma’s Marzano said the good news was an affirmation of the value of the port’s efforts to support their terminal operators’ business recruitment efforts.
“What’s good for WT is good for the port,” he said.
The Longshore Union’s Mason credited local longshore workers’ efforts to operate quickly and efficiently with helping secure the new business.
Tacoma’s victory in the war to win business is almost sure to renew the call for some sort of port consolidation, a subject of much debate over the last 40 years as the two ports competed for business.
Pierce County Executive Pat McCarthy said she’s encouraged by the economic activity the move will engender.
“The Port of Tacoma plays a major role in our regional economy, and the decision by a consortium of three shipping lines will provide quality, family-wage jobs for local residents. This goes beyond the direct benefit to those who work along the waterfront because those people live, play and shop in our community. This is a benefit to all.”
Tom Pierson, CEO of the Tacoma-Pierce County Chamber, said he’s encouraged by the local victory.
“This is an indication of the new direction the Port is taking and it’s exciting,” he said.
As for Seattle’s contention that inter-port competition is a zero-sum game and that this decision might ultimately hurt the state’s economy, Pierson had little sympathy.
“There’s winners and losers in all this. The good news is we are, for Washington state, retaining a business here,” he said. “This gives (the Port of Seattle) another opportunity to find another business to fill that spot,” resulting in a net gain for Washington.
Bruce Kendall, chief executive of the Economic Development Board for Tacoma-Pierce County, also addressed the concern about competition among local ports.
“Ports in Washington state compete for business with ports up and down the West Coast. The real danger we’ve got is losing container business to Vancouver, Los Angeles, Long Beach. So it always is smart to be as competitive as possible to win West Coast shipping business. And if Tacoma is able to be the most competitive port in the Puget Sound to do that, all of us should applaud,” he said.
While the two ports often compete for the same cargo, they’re separate political entities with separate taxing districts with no overlap. The ports use local property tax revenues to supplement their operating incomes and to build new infrastructure.
DEAL TOOK TIME
The competition was the latest chapter in a long recruitment effort that the port began a decade ago. Then the prize was NYK Line alone. NYK picked Tacoma, and the port began a huge acquisition and construction program to build the line a new terminal between the Blair and Hylebos waterways.
The port acquired businesses and began demolition and planning activities for a big new terminal that was to open this summer.
After the container import business deflated four years ago, the port and NYK called a halt to the terminal construction and negotiated an end to their deal. The deal’s collapse saved both the port and the shipping line further grief. The port had discovered that the planned terminal was costing more than it had projected and probably could not be finished on schedule.
If the terminal had been finished as planned, NYK would have been burdened with a terminal too large for its reduced traffic.
When NYK stepped back from its original plan, it said it intended to lease space at another underutilized terminal at the Port of Tacoma. That terminal is operated by APM, an affiliate of the company that owns Maersk Line.
But NYK and its alliance partners last September issued a request for proposals and APM and Washington United Terminals in Tacoma and Eagle Marine and SSA Marine in Seattle submitted proposals.
The alliance had said it would make known its decision by early this year, but the group postponed its announcement several times.
Staff writer Kathleen Cooper contributed to this report.
John Gillie: 253-597-8663 email@example.com