The head of a new Puget Sound port alliance says bolstering service reliability will be its paramount goal.
John Wolfe, designated the chief executive of the new Seaport Alliance, said Wednesday eliminating uneven service to import customers will be the new consortium’s first significant goal.
The ports of Seattle and Tacoma on Tuesday announced the formation of the alliance, which will oversee and operate both ports’ marine shipping businesses. The two ports named Port of Tacoma CEO John Wolfe to head the new business.
The details of the alliance’s operations will be decided over the next several months. The alliance is expected to begin operating the two ports’ shipping business by early summer next year if both commissions approve the final agreement and the Federal Maritime Commission gives its blessing to the arrangement.
The port commissions for Seattle and Tacoma will each vote on the proposed alliance Tuesday.
“We’re embarking down a road that’s not traveled before,” Port of Tacoma Commission President Clare Petrich told The News Tribune editorial board.
Stephanie Bowman, Port of Seattle Commission co-president, said the new alliance is expected to end the “corrosive competition” between the two ports that has threatened their profitability and impeded their ability to make necessary improvements.
The two ports for decades have aggressively competed against one another for shipping business. Each port has won a few rounds to the detriment of its rival port just 35 miles away.
Wolfe said such competition has driven rates charged shipping companies so low that the ports and their terminal operators in some cases haven’t been able to fund the improvements that would make cargo handling easier and more consistent.
And in recent years, rail service between the West Coast and the Midwest and Eastern markets has become so overloaded with new traffic that companies can’t count on consistent delivery schedules for their imported goods.
“It used to be that we could promise five- or six-day service to the Midwest,” said Wolfe. “Now it’s six, eight or even 10 days,” he said.
The northern tier of rail lines across the U.S. has seen unprecedented new traffic from coal, grain and oil trains headed from the Midwest and Great Plains to West Coast ports and refineries.
While much of that rail service reliability is out of the ports’ hands, the alliance plans to partner with the railroads to help solve those delivery reliability issues, Wolfe said.
The two-port alliance may yield more political clout in solving some of the governmental issues that have hectored them for years. A tax on imported containers unloaded at U.S. ports imposes a penalty on U.S. ports, the port executives said. The tax, which averages more than $100 per container, isn’t imposed on containers unloaded at Canadian ports and imported to the U.S. by rail.
Much of the money raised by that tax goes to dredge harbors and rivers in the East and South. Little is returned to the West Coast where much of the tax is levied.
While the two ports have fought against each other, their collective market share of the West Coast container business has steadily declined. In 2000, the two ports handled about 15 percent of the import business on the West Coast. That share has now declined to 10 percent.
Even so, the two ports together are the third largest container gateway in the country.
The alliance, said the commission presidents, will eliminate duplication of facilities by the two ports and foster rational decisions about the best place to build new terminals.
The two ports will share in the costs and the profits from the alliance’s operations.
The politically difficult issue to handle, however, may be job creation. Will commission members from one port vote to build a new job-creating terminal at the other port if that means new jobs will be created in the other city, not the one they represent?
Wolfe said that issue won’t be a problem if the alliance is successful.
“The idea is that we’ll grow the pot, Create more jobs for both communities,” he said.
Dean McGrath, president of Tacoma Longshore Local 23, said the alliance is a good idea if it improves the competitive standing of both ports and creates new jobs.
“We can’t just sit here idle while our business continues to shrink,” he said.