Does Puget Sound ports spat put region at risk?

Print
Email
|

by GLENN FARLEY / KING 5 News

Bio | Email | Follow: @GlennFarley

KING5.com

Posted on March 9, 2012 at 8:20 PM

SEATTLE -- By July of this year, 20 percent of the Port of Seattle's business will steam further south and dock at the Port of Tacoma.

The announcement came this week: Three major shipping companies -- Hapag Lloyd, NYK and OOCL, which work together as the Grand Alliance -- are leaving Seattle for cheaper digs in Tacoma.  A port spokeswoman said the terms of the deal are confidential and not yet approved by the Port of Tacoma Comission.

These kinds of moves have been going on for decades.  Shipping lines move to Tacoma, other shipping lines move to Seattle.  All seeking lower costs.  All seem to generate hard feelings. But these ports are not their only competition.

The bigger question is: Where do the ports of Puget Sound go from here?  And can they move there together? How do they survive in a world where ocean shipping is only getting more competitive?

"In my opinion, both ports are losing," said Port of Seattle chief executive Tay Yoshitani. 

The ports of Los Angeles and Long Beach in Southern California, and Oakland in the Bay Area, are what most people think of in terms of West Coast competition. 

But what about Canada?  The Canadians appear to be the fastest growing competitors, and one only has to look at the Port of Prince Rupert on the British Columbia coast.

Prince Rupert touts itself as the shortest sea and land route into North America.  The port is rapidly becoming as large as the ports of Seattle or Tacoma, with plans to handle two million container units (TEUs) a year.   Most of that cargo is loaded onto trains and run half way across Canada, via rail routes that drop down into Minnesota and stop in Chicago -- giving the port access to much of the consumer dense eastern part of the United States.

One point Seattle and Tacoma agree on is that the Federal Harbor Maintenance tax is hurting them in that competition.  Yoshitani said the tax can tack $80 to $200 onto a container containing imported goods....it's based on the value of the load.   The Canadians don't pay the tax.

The tax helps pay for things like dredging, but the ports of Tacoma and Seattle are naturally deep and don't depend on dredging like ports on the Gulf of Mexico or on the eastern seaboard (which also threaten to become more competitive after the Panama Canal is widened for larger ships.)

"The Port of Prince Rupert puts into their marketing materials, 'Hey come to us instead of Seattle and Tacoma. You won't have to pay the harbor maintenance tax,'" said Eric Schinfeld, president of the Washington Council on International trade, which has both the ports of Seattle and Tacoma as members.

While both ports agree that a tax that provides relatively little benefit to Puget Sound needs to be adjusted, Schinfeld said Seattle and Tacoma need to become even more efficient and cooperative to stay ahead of Prince Rupert.

"It's a question of addressing the policy issues and making the investments.  And if we do that, we can be very, very competitive," said Schinfeld.

But while the ports cooperate in areas like security and legislative issues, they have never come together on the business side.

"I've been asking that same questions since day one. I think we've made a number of overtures to Tacoma," said Seattle's Yoshitani.  Officials from the Port of Tacoma make similar claims. 

Print
Email
|