Tacoma and Seattle ports begin exploring enhanced cooperation

Staff writerApril 18, 2014 

Two Seattle port commissioners Friday toured Port of Tacoma facilities as guests of the Port of Tacoma Commission as the two traditionally rival ports begin efforts to attract new business to both Puget Sound ports.

The tour was the fourth meeting between Tacoma Port Commissioners Clare Petrich and Don Meyer and Seattle Port Commissioners Stephanie Bowman and Tom Albro since the two ports agreed to share information about their finances and business strategies.

Tacoma and Seattle ports successfully sought anti-trust immunity from the Federal Maritime Commission last month to begin those talks and information sharing as they moved to halt the erosion of their North American market share.

As the trans-Pacific cargo business grew by 2 to 3 percent this year, Puget Sound's two largest ports lost 4 to 5 percent of their market share to other East and West Coast American and Canadian ports, Port of Tacoma Chief Executive John Wolfe told The News Tribune editorial board Friday.

"This is not a sustainable model," said Wolfe.

The commissioners' meeting came the same week a consultant's report obtained by Seattle's King 5 News declared that the Port of Seattle's maritime container facilities were operating at just 38 percent of capacity in 2013. The report was written by Kirkland-based Mercator International for a terminal operator.

The Port of Tacoma saw its container traffic rise rapidly last year mostly as a result of a shift by a container shipping consortium, the Grand Alliance, from the Port of Seattle to the Port of Tacoma.

While that shift in Puget Sound home ports greatly improved Tacoma's statistical success, it carved a big hole in the Port of Seattle's traffic.

The two ports have hired a consultant to study the two ports' finances and operations and to make recommendations about how they could collectively become more competitive.

The two ports have been rivals for decades, stealing each other's customers from time to time, but seldom generating larger volumes by attracting new traffic from outside the region.

Wolfe told The News Tribune that the region needs to redouble its efforts to make cargo handling more efficient and timely if it is to sustain and grow its market share.

Shipping lines in recent times have been consolidating their unprofitable operations to share cargo and to eliminate duplication of efforts.  Those consolidations plus the entry of more efficient larger ships into the trans-Pacific trade has resulted in shipping lines concentrating their calls on fewer ports able to handle the larger ships.

New competition from both Vancouver and Prince Rupert, B.C. in Canada has also caused cargo diversions from Puget Sound ports.

Canadian ports enjoy a $100 per container cost advantage because an import tax levied by the U.S. government on containers moving through U.S. ports doesn't apply to cargo landed in Canada and imported into the U.S. by rail.

Both Seattle and Tacoma ports have lobbied to get that tax law changed without success in part because import goods customers don't want to see costs raised on importing goods from Asia through Canada.

The Puget Sound ports have also sought unsuccessfully to have the proceeds from the Harbor Maintenance Tax used for projects harbor projects in Puget Sound.

The rules about where the tax money can be spent now severely limit the kinds of projects that can be funded with that tax money causing most of it to be spent on projects in East and Gulf coast ports where frequent dredging is necessary.  Little dredging is needed in maintain waterway depths in the naturally deep Puget Sound ports.

John Gillie: 253-597-8663
john.gillie@thenewstribune.com

 

 

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