Seattle-Tacoma alliance moves one-step forward with regulatory nod

Mark Szakonyi, December 3, 2014, JOC.com

The ports of Seattle and Tacoma are one step closer to creating an alliance to protect and even expand their container market share after getting a green light — one of two needed — from U.S. maritime regulators.

 

Members of the U.S. Federal Maritime Commission last week unanimously voted to allow a discussion agreement between the two ports, setting the stage for the two to unify their planning, marketing and management of related functions under one entity next year. The commissions of both ports will vote on a final Seaport Alliance agreement — containing details ranging from staffing to financing — on March 31, and then send the agreement to the FMC.

 

After it receives the agreement, the FMC will have 45 days to review the more detailed accord, and then determine whether to allow it to go forward or seek a federal injunction against it. The likelihood of the agency doing the latter is very low.

 

“Together we believe the two ports can be stronger in dealing with our legislators, faster in response to our customer needs and more cost-effective than we would be separately,” Tacoma Commissioner Clare Petrich said Nov. 10 at the Washington Trade Conference in Seattle.

 

The ports have a long history of competing with each other, but the loss of market share to western Canadian ports and the Los Angeles-Long Beach port complex is spurring them to take a different approach. Seattle and Tacoma had a 10.7 percent combined market share of North American west coast container volume in the first three quarters of this year, compared with 11.4 percent in the same period in 2013 and 11.9 percent in the first three quarters of 2012, according to data collected by JOC.com from the individual ports.

 

The duo’s need to work together to develop or redevelop their marine terminals is hastened by the growth of shipping alliances and the deployment of larger container vessels, testing marine terminals’ ability to handle large discharges of volume efficiently.

 

After receiving a final nod from the FMC, the port commissions plan to hire Port of Tacoma CEO John Wolfe as the head of the alliance, Courtney Gregoire, a Seattle port commissioner, told JOC.com last month.

 

The alliance also aims to have some type of game plan on how they will handle overcapacity, she said. While the alliance won’t determine whether some container terminals should be converted to handle other types of cargoes, metrics will be identified to help the ports’ make that decision. Those same metrics will help the alliance determine where to invest in infrastructure to allow the ports to accommodate post-Panamax vessels.

 

With its larger voice, the alliance could also gain more traction in getting more competitive intermodal services to the hinterland. Cheaper and sometimes more reliably  intermodal services from Port Metro Vancouver and the Port of Prince Rupert to Chicago has contributed to the Puget Sound ports’ loss of west coast market share.

 

Each port will keep its own commission, governance structure and ownership of assets. But Seattle and Tacoma will split investment costs and revenue generated from marine terminals. Both Petrich and Gregorie stressed the uniqueness of the alliance, nothing there is nothing like this model in the U.S.; the closest they found elsewhere was between the Danish ports Malmo and Copenhagen.

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