Port of Tacoma Eyes Bigger Ships, Bigger Business

By John Gillie, May 25, 2013, The News Tribune

When the Port of Tacoma entered the big leagues in the container shipping business in the early 1980s, the featured attractions that helped lure container shipping lines to the formerly sleepy port were the innovative terminal facilities the port built north of East 11th Street.

On that tract between the Blair and Sitcum waterways, the port created one of the world’s first on-dock railyards and a cluster of updated terminals.

Now, more than three decades later, those facilities need remodeling and renovation to keep the port’s customers happy, to repair deteriorated facilities, to keep pace with evolving shipping technology and to attract new customers.

To accomplish those goals the port has begun a low-key program of incremental updates and repairs that the port says should keep it competitive for years to come.

The planning and development work on the updates began about 18 months ago. Compared with the price of building new terminals from scratch — the port was slated to spend about $1 billion-plus for a new NYK terminal between the Blair and Hylebos Waterways before that project was canceled — the cost of bringing the Central Peninsula up to date is relatively modest, perhaps $150 million or less if new opportunities emerge. The port can pay those costs from cash flow, from a small new bond issue and by reprogramming $65 million now targeted for a debt reduction.

The schedule and the expenditures will be dependent on the port’s tenants. If the port secures more tenants or existing tenants bolster their service or increase the size of their ships, any renovation work will speed up and increase in scope. On a normal schedule, the work now scheduled should be done by sometime in late 2014.

The port, of necessity, has become more conservative since the recession, carefully targeting expenditures to squeeze the most income from existing facilities and to position itself to add more capability on relatively short notice.

Behind those renovations, said Don Esterbrook, the port’s chief commercial officer, is the evolving nature of the shipping business.

Ships are growing larger, shipping lines are joining together in alliances, and the competition from ports in Canada and on the East Coast is growing keener.

WHY PORT IMPROVEMENTS MATTER

Typical ships now serving the port’s terminals on the Central Peninsula north of East 11th Street might carry 5,000 container units. But that number is bound to move upward as shipping lines build bigger ships to take advantage of the economies of scale.

Some shipping lines, such as former Tacoma client Maersk Lines, are building ships large enough to carry 18,000 container units. Those ships are the biggest vessels on the water, extending 1,300 feet bow to stern and 190 feet side to side. The ships, fully loaded, have a draft of more than 47 feet.

Maersk and other shipping lines are putting these monster ships to port on their busiest routes from Asia to Europe. But their introduction may trigger an escalation in the size of ships used in the trans-Pacific trades as those ships are displaced from the Asia-Europe trade.

Esterbrook said he expects that ships in common use in Tacoma will gradually increase in size from 5,000 container units to 6,000, 8,500 and then 10,000. Within a few years, given a rising demand, ships with a capacity of 13,000 container units might call at the port.

The easiest place to accommodate those ships is at the terminals closest to Commencement Bay such as the container facilities on the Central Peninsula, Terminals 3 and 4 and the Olympic Container Terminal. Handling ever-larger ships in the confines of the upper reaches of the Blair Waterway will become constrained by the waterway’s dimensions, thus the emphasis on equipping the terminals closer to the bay. (The port also has plans to widen the Blair to accommodate larger ships.)

WHAT CHANGES ARE BEING MADE

The port has begun work to modify the configuration of Terminals 3 and 4 on the west side of the Blair Waterway to handle those larger ships and to prepare to install new container cranes to serve them, said Dakota Chamberlain, the port’s engineering director.

The port already has begun planning and design to reconfigure the pier at Terminals 3 and 4, collectively known as Husky Terminal, to make the pier faces parallel to the Blair Waterway.

The present configuration of the south end of the Husky Terminal is at an angle to the waterway. That angle limits the length of vessels that can call there because the angled parking causes the ships’ bows to protrude into the shipping channel if the ships are long enough.

The different angles of the pier faces at Terminals 3 and 4 make sharing container cranes impossible. Once those two terminals are brought into alignment with each other, a common set of cranes can be shuttled along rails to serve ships at either terminal.

The cranes now serving those terminals ultimately will need replacement not only because of their age, but because they have neither the reach out over the water nor the height to serve larger containerships.

When the cranes were installed decades ago, even the largest containerships were 15 or 16 containers wide. Now ships that are 24 containers or more wide are becoming more commonplace.

The newer ships likewise carry more containers stacked one atop another, necessitating a taller crane to clear the top row of containers.

Those larger cranes will require a broader wheelbase and a longer distance between the two sets of legs supporting them. The present cranes operate on rails 64 feet apart. Newer cranes require rails of 100-foot gauge. The realigned piers will be dual gauge with a set of rails 64 feet apart and another rail 100 feet from the dockside rail.

That dual gauge setup will allow the existing cranes to continue working even after larger cranes are brought in.

The redesigned dock will be large enough, said Chamberlain, to allow two 1,200-foot-long megaships to be worked simultaneously.

THE FUTURE AND MAINTAINING SUCCESS

Esterbrook said he knows of no shipping lines or shipping line alliances now actively seeking a new Puget Sound port of call, but the port wants to be prepared should opportunities arise. The Husky Terminal improvements will also ensure that the shipping lines calling there will remain satisfied with the facilities serving them, he said.

The value of preparing for the future was demonstrated last year when the Grand Alliance shipping consortium picked Tacoma over Seattle as its Puget Sound home. The port the prior year had expanded the pier at the already underused Washington United Terminal to handle more ships.

The Grand Alliance calls at that terminal.

Even so, the port had to scramble to equip the terminal and the surrounding land for the influx of cargo the alliance brought.

Meanwhile, on the other side of the Central Peninsula, the port is taking steps to ensure that a business that was the port’s bread and butter before the container revolution continues to grow.

There at Terminal 7 on the Sitcum Waterway, the port handles breakbulk cargoes. Breakbulk cargoes are items such as construction equipment, tractors, combines and machinery too large or awkward to fit inside standard shipping containers.

Before the advent of the now-ubiquitous metal shipping containers, most cargo was breakbulk, loaded piece-by-piece onto ships.

In the last two years, thanks to a boom in mining in Australia and construction and farming in China, the breakbulk shipping business has boomed. Last year, the breakbulk business in Tacoma increased by 68.3 percent to 259,000 short tons. That increase was more than double the increase the port’s strategic plan had targeted achieving in the next 10 years.

The port is taking steps to enlarge the area where breakbulk items are stored by demolishing the former port security department headquarters near Terminal 7. The security department is being moved to the Fabulich Center office building near Pacific Highway.

The increased room will allow the port to handle more breakbulk items, many of which arrive at the port days or weeks before they are exported.

The port also is inspecting and renewing the pilings and deck at Terminal 7. Some of those wooden pilings are 40 years old and are deteriorating. The port last week sent divers down to inspect pilings to determine which ones should be replaced.

The port is paving a site just south of East 11th Street to create more parking for imported autos, another growing business at Terminal 7.

A lot formerly used for car storage has been converted to a queueing area for trucks inbound to the port’s Washington United Terminal on Port of Tacoma Road. That terminal has seen a huge increase in business since the Grand Alliance shipping consortium arrived at the port from Seattle.

Esterbrook said inbound and outbound tracks at the North Intermodal Yard are being optimized for better train flow.

As the Central Peninsula shipping traffic grows, even the location of the port headquarters building at the end of the Sitcum Waterway near Terminal 7 may become an issue. Though there are no plans to relocate or demolish the headquarters building now, it occupies a strategic site between the Central Peninsula and the adjacent APM Terminal on the west side of the Sitcum Waterway, said port officials.

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