By Jon Talton, January 27, 2014, Seattle Times
The Port of Seattle and Port of Tacoma have petitioned federal regulators to share information with each other on an unprecedented level, a step to closer cooperation.
This is nothing but healthy, but working together won’t come easy.
Think of our ports as characters in a classic cop-buddy movie. “Two Guns” comes to mind.
Mark Wahlberg is the perfect actor for gritty Tacoma, while stylish, cocky Denzel Washington portrays Seattle. Both protagonists are capable, accomplished and competitive. Most of all: Each works alone. And the two don’t like each other. I mean, they really don’t like each other.
This perfectly captures the historic rivalry between the two big ports of the Puget Sound.
But then something happens. In the case of “Two Guns,” the heroes are betrayed and realize they have to work together to survive and get payback.
In our real-life tale, the two seaports have been sold out by a rapidly changing world. Unaddressed, the outcome might not be one winning over the other, but both left to decline.
As the two ports have been beating each other’s brains out, overall market share in container traffic for the Puget Sound has been declining.
Seattle port officials have long tried to engage in a dialogue with their counterparts in Tacoma. It never got beyond some cosmetics.
And no wonder: While Seattle and King County are rich in economic assets, the Port of Tacoma is Pierce County’s crown jewel. Tacoma fears a merger that would leave more populous King County with more votes on a combined port commission.
The much more modest start, filing with the Federal Maritime Commission to share information on pricing and rates, puts a merger off the table.
Still, it is a start to working together. If it succeeds, the two ports will go after new business instead of fighting each other.
It could lead to much tighter cooperation and coordination of the waterfront, eliminating duplicative investments and focusing incentives to bringing in new business.
Each port has advantages. Both can handle the biggest ships and are natural deep-water ports. Tacoma boasts more rail access to docks and better facilities for so-called break bulk, cargo loaded individually instead of in containers.
Neither can count on the status quo continuing.
Container lines are joining together. This follows consolidation of the railroad industry. Four transcontinental railroads once served the Puget Sound. Now there are two.
In the container world, Hapag-Lloyd, MISC Berhad, Nippon Yusen Kaisha (NYK), Japan, and Orient Overseas Container Line (OOCL) joined as the Grand Alliance in 1998. The Grand Alliance moved from Seattle to Tacoma in 2012.
With too much capacity and a need to improve margins, more mergers are likely to come and could affect the lines that still call at the Port of Seattle. Trade between Asia and North America could come to be dominated by two consolidated giants.
They are also building even larger ships, which may require new investments in bigger cranes and reinforcing docks.
As a result, the days when ships hopscotched down the West Coast calling at several ports may be dwindling.
LA/Long Beach is sure to be a winner: The two ports have invested massively in terminals, serve a huge population center and have direct rail lines that have also benefited by spending to improve capacity.
The question is who else continues to grow or even survive.
At least in the near term, Canada is more of a threat than the wider Panama Canal and scramble by East Coast cities to (unfairly) use Harbor Maintenance Tax revenues to dredge and improve their ports.
Prince Rupert is a growing port with the shortest sailing distance from much of Asia and a direct rail connection to the American Midwest.
Vancouver is the country’s biggest port. What happens if the Grand Alliance decides to move out of the Puget Sound entirely, to Canada, when its lease expires?
One big advantage Canada enjoys is that it views its ports as economic generators that more than pay back the public investment made. Too often, we have seen them as ATMs while grousing about paying taxes. The governance model for ports is antiquated and county based when they are statewide assets.
Worse, many in King County don’t realize how important the Seattle seaport is to trade, employment and a diversified economy.
Together, Tacoma and Seattle will also be more effective in Olympia. The Legislature has acted shamefully in failing to fund transportation projects, including fixing and expanding Highways 509 and 167 to move freight faster and more efficiently to and from the ports.
All this said, Seattle and Tacoma are entering these discussions with no predetermined agenda, at least one set by the commissioners. The agenda is being set by outside forces and the question is whether we will make intelligent responses.
But like any good buddy film, the two heroes will need time to get to know each other.