Neighbor has room to grow
The Port of Seattle’s annual container volume traffic is slowing to between 5 and 8 percent growth this year, according to port staff, after two explosive years during which container volumes jumped by 40 percent.
In a report released Thursday, the Port of Seattle said it thinks handling 4 million TEUs a year is the reasonable upper limit for future traffic, which could be reached as early as 2013. A TEU is a standard measure of container volume meaning twenty-foot equivalent units.
That falls well short of the Port of Tacoma’s expectation that it could handle nearly 6 million TEUs by 2025. And while Seattle’s port growth is expected to decelerate, Tacoma’s is revving up, projected in February to reach 16 percent in 2006.
The Port of Seattle seems to be getting used to the idea of becoming No. 2 behind that pesky upstart, the Port of Tacoma.
“It strikes me that Tacoma’s growth is a good thing,” Port of Seattle Commission President Pat Davis said at a commission meeting Thursday. Davis said it seems untoward to be “provincial” about regional success. “It attracts cargo to the Northwest, and I would rather the Pacific Northwest grow than somewhere else.”
Seattle held its edge last year with 2.09 million TEUs, as both ports hovered beneath the 2.1 million mark. But in December, a major shipping client — the New World Alliance, composed of APL, MOL and Hyundai — pulled one of its four routes through Seattle.
Meanwhile, the Port of Tacoma opened two new container terminals last year — Yang Ming Line’s Olympic Container Terminal and the Pierce County Terminal for Evergreen Marine, Hatsu Marine and Lloyd Triestino — and renovated Husky Terminal to accommodate K Line’s expansion. Accordingly, K Line and Yang Ming are sending less cargo through Seattle.
Other factors recently affecting port traffic include a Vancouver trucking strike in January 2005 that sent some cargo Seattle’s way, as well as increased efficiency at the Los Angeles/Long Beach ports. They have instituted nighttime truck movement and diverted more than 2 million trucks to off-peak hours, allowing them to accept larger vessels and absorb some of the overflow that has bolstered Seattle’s performance over the past two years.
Herald Ugles, the president of the International Longshore and Warehouse Union’s Local 19, said longshoremen have seen a slight, but noticeable, drop in work hours needed at the Port of Seattle.
So far this year, container volumes moving through the Port of Seattle are down 3.9 percent, but Charlie Sheldon, the managing director of the port’s seaport operations, said he is confident that the holiday season’s wave of goods will help the port beat last year’s performance by 5 to 8 percent.
He also noted that Mediterranean Shipping Co. S.A., the world’s second-largest container ship operator, will begin calling at Terminal 18 next year, bringing with it 221,000 TEUs and an expected 300 jobs.
Port of Seattle Commissioner John Creighton questioned whether the port could be confident in investing in a new container terminal — the conversion of Terminal 30 from a cruise-ship dock to a container terminal — given the market conditions.
The one constant of container traffic is flux, port staffers said, and Seattle has a habit of surging and coasting. But, Creighton said, the United States’ severe trade imbalances could eventually destabilize the movement of Asian goods through Seattle.
Despite those factors and the Los Angeles/Long Beach ports’ gravitational pull, Port of Seattle Chief Executive Mic Dinsmore said he has no doubts about the conversion of Terminal 30. Port staffers said Seattle should receive some of the cargo flowing from rapidly expanding mega-ports such China’s Shanghai and South Korea’s Busan.
Pointing out that the port signs 30-year tenant leases, Dinsmore said, “I have a strong belief that the U.S. economy and the flow of commerce will hold for 30 years.”
The conversion of Terminal 30, which would send the cruise ships up to Terminal 91, received initial design money in February but has yet to be approved by the Port Commission, which could reject it if costs exceed $120 million.
The port has already budgeted for a spending plan that could raise its TEU volume to 3 million within the next three years, if growth holds at 8 percent. That growth plan factors in Burlington Northern Santa Fe’s expansion of its Seattle International Gateway yard, as well as a second shift on Terminal 5’s intermodal yard. Hours at the port terminal day gates also would need to become continuous.
Port staff, indicating a need for 20 acres of off-dock container storage yards, have asked the commissioners to consider whether they could play a role in authorizing land purchases, which could then be leased back to terminal operators or shipping lines in need of space.
Just two years ago, the port sold two buildings and 16 acres of land to Charlie’s Produce for nearly $18.9 million. The produce company flipped the property last year, getting $28.5 million for it in two separate deals for a profit of 51 percent. Critics called the deal a telling reminder of the port’s ineptitude in real estate.
The 3 million TEU goal also presumes construction of state Route 519, a connector from Interstate 90 to the waterfront, or some acceptable alternative; a head-butting match between the Port of Seattle and the city of Seattle has stalled that project and there is little indication that the impasse will be broken soon. Indeed, future port construction along the waterfront may have to clear another hurdle: a newly conceived design board for the central waterfront that will subject the port, and every other waterfront developer, to a set of unknown guidelines based on the city’s presumption that a tunnel will replace the Alaskan Way Viaduct.
Already, the meeting Thursday revealed tensions brewing along the waterfront between the city and the port, which challenged the city to prove that its designs can accommodate cruise-related pedestrian and vehicle traffic, as well as oversized trucks or those carrying flammable materials.