By Coral Garnick, April 8, 2015, Seattle Times
Turns out, combining the cargo operations at the ports of Seattle and Tacoma is every bit as complicated as the commissioners predicted when they announced their intention to form a seaport alliance six months ago.
Port of Tacoma commissioners approved an extension March 19, and the Port of Seattle approved it March 24 — one week before the draft Seaport Alliance agreement was scheduled to be made public and sent to the Federal Maritime Commission for approval.
“The issues are big and the lists are long,” Port of Seattle deputy CEO Kurt Beckett said in an interview last Friday.
“You get into the details and you get more work.”
The original plan was to receive the federal commission’s approval by June 15 and have the two ports formalize it July 1. That date is now estimated to be Aug. 1, Beckett said.
The two ports are betting that unified management of marine cargo will grow jobs and allow them to compete better against other West Coast ports, from British Columbia to Southern California.
They also will face more competition from East and Gulf Coast ports once the widened Panama Canal opens next year.
One of the stumbling blocks to creating the alliance is how to value each port’s assets. The idea is for an even split, so that once the alliance is formed, each port receives 50 percent of the revenues and profits.
Take Terminal 5 in Seattle, for example. The commissioners said it is one of the best container terminals in Puget Sound.
However, it is in the beginning stages of becoming big-ship ready and currently has limited cash-flow, with only an interim lease with Foss Maritime, rather than a long-term tenant.
Port of Tacoma Commission President Don Johnson said at a March 10 meeting that commissioners should not be driven by deadlines, acknowledging more time was needed.
“Everybody needs to be comfortable with the decisions that are on the table,” he said.
“If that happens in April, that happens in April. If it happens in May, it happens in May … we all need to be comfortable with that.”
Another item yet to be worked out is deciding what legal entity the Seaport Alliance will become. Will it be a limited-liability company, an interlocal agreement or a public-development authority?
The staff got the go-ahead to pursue a public-development authority, which would be like Pike Place Market and the Seattle Art Museum.
A bill to create a similar port-development authority passed the state House of Representatives on March 5, but it is still waiting to clear the Senate.
The port staffs also have been working on the business plan, finding ways for the two ports to increase their market share.
In a March 31 joint work session, staff recommended that the 1,082 acres of international-container terminals between the two ports be reduced to 850.
The ports also will each need a terminal that can accommodate two of the megaships coming online.
Currently the average ship size in Puget Sound is about 6,000 TEUs (20-foot Equivalent Units), but ships are being built to carry 20,000 TEUs.
“We need to spend more time with our customers together to make sure that the scenario, the ideas we have, align with their growth opportunities,” Port of Tacoma CEO John Wolfe said last Friday. “There is a bit of work to be done.”