John Gillie, March 31, 2015, The News Tribune
In the bluntest language used yet in the monthslong discussion of an alliance between the ports of Seattle and Tacoma, Tacoma’s port Chief Operating Officer Don Esterbrook warned commissioners of both ports Tuesday that maintaining the status quo would continue a dangerous trend.
“It’s a recipe for disaster if we continue to do nothing,” Esterbrook told the two commissions meeting jointly Tuesday morning in Tacoma.
Esterbrook said that the two ports for years have seen their market shares sink in the face of strong competition from ports in Southern California and Canada.
The two Washington ports together now handle about 25 percent of the discretionary container cargo headed for other parts of the country, compared with 55 percent for the adjacent ports of Los Angeles and Long Beach in California. A few years ago, the two ports’ market share in that traffic was 30 percent, he said. Much of that traffic is now flowing through the Canadian ports of Prince Rupert and Vancouver, whose market share of Asian imports to the United States has risen from 15 percent to 20 percent.
As their market share has declined, he said, the utilization rate of the two ports’ terminals has fallen to just 43 percent.
Esterbrook outlined several other port business issues:
- The two ports have too many acres of land devoted to container shipping, 1,082 acres, leading to low utilization rates and efficiencies at existing terminals.
- Too many smaller terminals are unable to handle the ever-larger ships being deployed by shipping lines. Those smaller terminals lack the large cranes needed to efficiently load and unload the larger generation of ships, lack the railyard infrastructure to handle the huge surges of container traffic generated by those ship calls, and in some cases are too shallow to accommodate those megaships at dockside.
- Rail rates from the Pacific Northwest to the upper Midwest are in many cases higher than the rates from other ports.
During the recession, the world’s major shipping lines formed large alliances themselves, sharing capacity on each other’s vessels and eliminating duplicate services. That means the number of shipping line customers has declined, and the alliances have gained bargaining power because of their ability to move their business from one port to another based on costs and performance.
While shipping lines consolidated, the individual shipping lines themselves have been ordering megasize ships from Asian shipyards. Those ships, some of which can transport 19,000 container units at once, are more efficient than the smaller ships they replace, with fewer sailors per container and greater fuel efficiencies. Typical container ships now calling at Seattle and Tacoma carry 6,000 to 8,000 20-foot container units.
That change means fewer ports of call for shipping lines and greater bargaining power with ports and terminal operators, said Esterbrook.
The Tacoma port official offered a broad outline of how the two ports must change when they formalize their alliance sometime this summer.
- The two ports need at least two supersize terminals equipped to handle two megaships simultaneously. Those terminals would be able to handle ships drawing 55 feet of water at pierside, would be equipped with taller and wider container cranes to reach completely across the containers stacked on deck, and would be at least 2,800 feet long.
- The adjacent rail yards would have 28,000 feet of working tracks to allow three trains a day to load and unload at each terminal. Those terminals would be configured to handle 10,000 to 12,000 container units per acre. Truck gates would be expanded to handle an increased peak volume of containers moving through each terminal. Each container yard would be equipped to move 1.2 million container units a year, and each rail yard would have the capacity to handle 750,000 container units annually.
In building new terminals or modifying existing ones, the two ports would shrink the footprint of their total terminals to about 800 acres compared with 1,082 now.
Under the plan Esterbrook outlined, the two ports could nearly double their container volumes to 5.8 million annually from 3.4 million last year, he projected.
Commissioners say they’re committed to creating an operational and marketing alliance to revive the two ports’ competitiveness by late summer.