Port of Seattle to Modernize Terminal 5 for Mega-Ships

Grace M. Lavigne, May 22, 2014, Journal of Commerce

The Port of Seattle has proposed relocating cargo activities at its second-largest terminal, the 172-acre Terminal 5, to make way for a modernization project that would make it ready for mega-ships.


While three of the port’s four terminals are already home to super-post-Panamax cranes that can service 10,000-TEU and larger vessels, the existing cranes at Terminal 5 — six Paceco cranes with 16-container-wide reaches — are not able to handle these bigger ships. Linda Styrk, managing director of the seaport division at Port of Seattle, told the JOC that the port intends to upgrade the power, dock and berth “understructure” at Terminal 5 to allow a future terminal operator to acquire and install super-post-Panamax cranes there.


“It makes more sense for global terminal operators to handle their own equipment needs that are consistent with their inventories,” Styrk said. “Our strategy is through the planning, design and permitting process to gather information about what it’s going to take to upgrade the power, dock and berth elements. In about two years, based on the information we collect, we’ll put out feelers for what the market looks like and what the level of interest is from prospective terminal operators.”


Eagle Marine Services, the current operator of Terminal 5, will shift its operations to Terminal 18, pending approval by the Port of Seattle Commission. Cargo destined to Terminal 5 would begin transitioning to Terminal 18 in mid-June. Terminal 18 has the capacity to handle Eagle Marine’s cargo in addition to the traffic from its current operator, SSA Marine, Styrk said.


“We are not expecting cargo disruption,” Styrk said. “We’ve coordinated with Eagle Marine to avoid that.”


Styrk said Eagle Marine could end up being the terminal operator that takes charge of upgrading the cranes, but not necessarily. “At this point, it could be any number of terminal operators, depending on who we entertain an agreement with,” she said.


“Terminal 5 is the last facility in our harbor that we need to bring up to the capability to install super-post-Panamax cranes,” Styrk said. “The upgrade is part of the port’s continuing long-term growth strategy to move 3.5 million TEUs annually.”


Seattle’s container throughput, including full and empty imports and exports and domestic traffic, was 1,592,753 TEUs in 2013, according to the port.


Eagle Marine lost calls from APL’s PS1 service in October, which brought an average of 25,000 TEUs per month to the terminal, Styrk said. “Since then it’s been hard to track [the terminal’s traffic] because there’s been so much flux with the alliances,” she said. Terminal 5 still receives calls from other APL services, as well as Hyundai Merchant Marine, MOL and Westwood.


The larger alliances being formed by ocean carriers to reduce operating costs result in fewer but larger vessels, and the vessel calls are occurring at fewer terminals. The Federal Maritime Commission approved expansion of the G6 Alliance — APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K. Lines, NYK Line and OOCL — in April. The alliance, which already operates in the Asia-U.S. East Coast trade, is currently being rolled out in the trans-Pacific and trans-Atlantic trades. Carrier alliances such as the P3 Network, which will not start operations before September, and CKYHE, are also rearranging their trans-Pacific services and thus changing which ports and terminals they call.


The Port of Seattle has received approval from the federal government to let the U.S. Army Corps of Engineers begin studying the potential for a project that may result in the deepening of the West Waterway channel near Terminal 5. Terminal 5 has three berths with a total length of 2,900 feet, with 2,000 feet at 50-foot depth and 900 feet at 45-foot depth.


Although Seattle’s channel and berth are naturally deep at around 51 feet, with some areas as deep as 60 feet, there are some shallower spots in the channel near Terminal 5 that must be dredged to ensure accommodation of post-Panamax ships, Styrk said.


The plan to modernize Terminal 5 is the latest step in a series of changes aiming to make the Puget Sound region more competitive against ports in western Canada and Southern California. According to port-published data collected by the JOC, Seattle and Tacoma’s market share of containers handled by North American west coast ports in the first quarter of 2014 fell 0.8 percentage point year-over-year to 11.3 percent, while ports in Southern California — Los Angeles and Long Beach — enhanced their market share to 61.4 percent in the first quarter, up from 59.6 percent in the same period last year. Canadian ports’ share narrowed to 13.8 percent in the first quarter from 14.0 percent the year before.


Tacoma also has begun the modernization process to attract more cargo by improving infrastructure at its Terminal 3 at the Husky Terminal to support post-Panamax cranes. When that project is completed, the port will take on Terminal 4, where similar improvements are needed.


The FMC recently approved a deal allowing the ports of Seattle and Tacoma to share information on their operations, facilities and rates, spurring talk of a possible consolidation. The two ports together have nine container terminals handling international cargo, translating to marine terminal utilization of less than 50 percent of total capacity, and just 38 percent at Seattle, Port of Seattle’s CEO Tay Yoshitani told local radio station WNCN in April. Some terminal operators support consolidation, seeing it as a way to end the cycle of rate-cutting to attract business from the powerful carrier alliances.


“There’s a lot of good conversation going on between the two respective commissions,” Styrk said. “Those conversations revolve around how to make us more competitive relative to other gateways, whether it’s Southern California or Canadian ports, and how to utilize excess capacity. They’re open to see what comes from those conversations, but I think the outcome will be a different kind of partnership.”


Styrk mentioned on-dock rail in particular as a “really attractive future focus for the container business” at the ports of Seattle and Tacoma. Terminal 5 has 30 acres of on-dock rail access, with six tracks and the capacity for 54 double-stack rail cars.


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