Business

New Northwest ports alliance expects modest growth in 2016

The newly formed cargo-handling alliance between the ports of Tacoma and Seattle is projecting modest growth and capital spending next year in most cargo categories.

That projection came in the Northwest Seaport Alliance’s first budget to be considered by the two port commissions at a meeting 8 a.m. Tuesday at Sea-Tac Airport’s conference center.

The alliance, more than a year in planning, was formally approved in early September by both port commissions. The two former rival ports formed the operating partnership to increase their competitiveness against rival ports in Canada, Southern California, Mexico and on the East Coast.

Both ports retain ownership of their cargo terminals, but the alliance will lease and operate those terminals. Port of Tacoma CEO John Wolfe heads the alliance.

The alliance in its draft budget projects that the alliance’s main cargo business, shipping container handling, will increase by 3 percent this year and by 2.2 percent in 2016. Leading that increase will be international container imports and exports, which are expected to increase by 3.3 percent next year.

Domestic container numbers — largely shipments to Alaska and Hawaii — are projected to fall by 1.8 percent in 2016. Behind much of that decline is the elimination of Horizon Lines’ shipping route from Tacoma to Hawaii. The shipping line’s new owner, Pasha Group, is consolidating its Hawaii service in Southern California.

Other business segments, the alliance projects, will grow slowly next year. Breakbulk cargoes handled at alliance facilities are expected to grow by 2.8 percent in 2016. Breakbulk cargoes are materials such as construction and farm machinery, wind turbine blades and boats too large or oddly shaped to be shipped in standard containers. That breakbulk cargo increase will be largely driven by more imports from Japan, which is benefiting from a more favorable exchange rate with the U.S. dollar.

Auto imports also are expected to increase next year. The alliance is projecting a 1 percent increase in auto numbers after a 5 percent increase in 2015.

On the down side of cargo projections, the log export market, which has fallen significantly this year, is expected to decline by more than 46 percent next year to 21 million board feet from this year’s estimated 40 million board feet. The alliance says a decline in the Chinese economy is behind those projected declines as building and construction activity falls there.

The new alliance is projecting relatively conservative expenditures — $174.5 million — over the next five years for capital improvements. Those improvement projects include such expenditures as the purchase of new straddle carriers to move containers, new container cranes, maintenance and rehabilitation work on alliance docks and planning expenses for expansion and improvements of major terminals at both ports.

The alliance now identifies Port of Seattle facilities as its North Harbor and Port of Tacoma terminals as its South Harbor.

John Gillie: 253-597-8663

john.gillie@thenewstribune.com

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