By John Gillie, October 16, 2014, The News Tribune
There’s no template, no consultant, no handy “Port Alliances for Dummies” book on Amazon to guide Port of Tacoma Chief Executive John Wolfe and Port of Seattle Deputy CEO Kurt Beckett through the task that the ports’ commissioners have given them.
That’s because the job of creating an operating alliance between two ports that have been aggressive rivals for decades has never been done before.
Wolfe and Beckett are the leaders of the newly planned Seaport Alliance. The alliance is being formed to market and operate the shipping terminals and maritime assets of the two rival ports.
The two port executives reflected on the historic job ahead Wednesday, just a day after the two port commissions officially approved a petition to the Federal Maritime Commission to win antitrust clearance to get the job rolling.
They have formed a task force of some 16 executives from both ports to first create a timeline for getting the alliance in place, to formulate the questions that must be answered before the new joint structure can be formed and to recommend solutions to what surely will be dozens, if not hundreds, of those questions.
“We haven’t fully identified all of the tasks,” Wolfe said in his office overlooking the Port of Tacoma’s APM container terminal.
“The list is long and growing,” Beckett said by conference call from his Seattle waterfront office.
The two executives said they want to be thoughtful in how they create the alliance.
“We don’t want to rush,” Beckett said. But the two port governing bodies have set a March 31 deadline for creating the framework of the alliance that will be submitted to the FMC for final approval. The two hope to gain federal approval by summertime next year.
Even as the two ports work to frame their alliance, they’re potentially losing business to new rivals in Canada and the East Coast that are aggressively pursueing the import and export business that Puget Sound has counted on for decades. Those ports are already making headway. Although the two ports together are still the nation’s third largest container import gateway, their market share has fallen by several percentage points in recent years.
The alliance’s biggest goal, Wolfe said, is not about cost-cutting, but rather improving the responsiveness and reliability of shipping through Puget Sound. The two port commissions have pledged that the alliance won’t be a vehicle for layoffs at both ports, the Port of Tacoma executive said, but rather for gaining new business that will fully and efficiently employ the existing maritime staff of both ports.
The alliance won’t be a merger of the two ports, but rather an agreement allowing the alliance to operate and market the terminals and other maritime assets of the two ports. Each port will continue to separately manage other assets such as Seattle’s cruise ship terminals and marinas and Tacoma’s industrial properties.
The two commissions have designated Wolfe as the chief executive of the alliance, but the Tacoma port governing body has yet to decide whether Wolfe will remain the Port of Tacoma chief or whether it will appoint another person to replace him.
Wolfe said his own fate is not a high priority now.
“I want to make sure that the alliance is successful,” he said. The question of his titles “will get sorted out in due time,” he said. “It’s not the most prominent issue.”
Other questions are sure to demand more attention in the months to come:
• How large will the alliance staff be? Wolfe said it’s likely that the alliance may contract the day-to-day management of the ports’ assets to each port. The same may apply to such functions as human resources and financial record-keeping. At the Port of Tacoma, Wolfe has kept a tight rein on staff growth. That’s a pattern, he said, that’s likely to guide his actions at the alliance. But the next months’ study could alter that inclination.
• Will the alliance have separate offices from the ports? Again, that’s an open question. But Wolfe said he’s not inclined to create a new empire if that’s unnecessary.
• How will the financial community and the shipping industry react to the new operating setup? The Port of Tacoma chief said the ports have made initial contacts with the investment community and with the maritime industry. The feedback has generally been positive. If the alliance can improve the financial performance of the two ports and their ability to provide reliable service to the industry, he said, they’re all for it.
• Will the ports continue to publish separate monthly cargo statistics? Those statistics have become the informal scorecards between what have been strong rivals. Wolfe said that beginning at the end of this year, the two ports will begin publishing joint cargo numbers. Whether they will continue to break out those figures by port has yet to be determined.
• With the state’s two largest ports forming a partnership, what of Washington’s smaller ports such as Olympia, Everett, Longview, Kalama and Grays Harbor? Do they fear they will drown in the two big ports’ collective wake? Beckett said he’s heard “strong words of support” from leaders at those other ports as well as some recognition from them of the size of the task that lies ahead. Wolfe said all of the state’s ports, under the guidance of the Washington Public Ports Associations, are working together to attract business to all Evergreen State ports in Puget Sound, on the coast and on the Columbia River.
• How much latitude will the alliance’s executive leadership have in making critical decisions? At what level must the two port commissions be asked for their formal approval of the alliance’s marketing and operating decisions? Again, that remains to be determined, but Wolfe said he wants to ensure that the alliance’s actions are transparent and subject to public and commission input.
• What will the alliance be called? The Seaport Alliance is the moniker of the day. The agreement between the two ports projects a rebranding effort will result in a more memorable and descriptive name that will be affixed to the venture before it begins operating in earnest.