- THE MAGAZINE
- INFO CENTER
Naturally, 2005 turned out to be a boom year for the ports of Seattle (ww.portseattle.org) and Tacoma (www.portoftacoma.com). But surprisingly, a lot of freight returned to Southern California last year and seems pretty much to be staying there.
Obviously, the Southern California region represents a huge consumer marketplace. It also benefits from a mature infrastructure of distribution centers, highways, and intermodal rail connections. By comparison, approximately 70 percent of the freight that comes into the Puget Sound is moved by rail to Chicago and onward to East Coast markets.
The statistics are sobering: over the past 18 years, Puget Sound’s market share of West Coast containerized freight has dropped almost 12 percent, leaving the region with about 16 percent today.
Executives at the ports of Seattle and Tacoma are candid about the situation. Charlie Sheldon, seaport director at the Port of Seattle, acknowledged in a recent interview that geographically, the port was at a disadvantage. “Lines go where the market is, and we’re far from everywhere. We have to work on that perception. It’s discretionary cargo here, and it can go somewhere else very quickly.” In addition, the senior director of inland transportation at the Port of Tacoma identified rail capacity constraints as part of the problem, which is an issue that other shipping executives have cited.
Nonetheless, there are some bright spots. The Port of Seattle’s new executive director, Tay Yoshitani, is making a major push into ‘greening’ the port, which will not only enhance environmental stewardship and energy efficiency, but will be a centerpiece of how the port will compete, he said, and how Seattle will differentiate itself from rivals. Meanwhile, the port is in the midst of a $120 million conversion of Terminal 30 from a cruise facility to a container terminal, which is slated to reopen in May 2009.
For its part, the Port of Tacoma is celebrating a recent decision by Yusen Terminal Tacoma Inc. (YTTI), a wholly-owned subsidiary of NYK Line, for a $300 million, 168-acre container terminal at the port. The lease agreement will introduce YTTI to the Pacific Northwest. Another subsidiary of NYK Line, Yusen Terminals, Inc., is currently operating a terminal at the Port of Los Angeles.
According to Peter Keller, president of NYK Line North America, “It was important for us to make a long-term decision about our growth. As we looked up and down the U.S. West Coast, Canada, and Mexico, and considered our options for the future, it became clear that our greatest opportunity was here in the Pacific Northwest. The Port of Tacoma offers growth capacity, a robust road and rail system and strong community support.” He added that, “We have long sought to operate our own terminal in the Pacific Northwest. This facility features on-dock intermodal rail, which fits our operational preferences. Moreover, it provides NYK Line capacity for long-term success while providing Washington State with another strong export shipping option.”
Timothy J. Farrell, executive director at the Port of Tacoma, emphasized the importance of the on-dock rail “because it eliminates the need for most truck traffic on and off the terminal. Every three-locomotive train that leaves the port area represents 250 to 300 trucks that are not on our roads, reducing roadway congestion and diesel emissions.”
The terminal is expected to open in 2012 and is designed for an annual throughput capacity of 1.4 million to 1.8 million TEUs.
At the Port of Vancouver (www.portvancouver.com) in British Columbia last month, new federal rules came into effect for harbor truckers that would guarantee minimum pay rates and basic working conditions. However, the port itself is also implementing regulations pertaining to harbor truckers, which are aimed at improving air quality and road safety. Beginning next January, the port is rolling out a licensing system that will forbid harbor trucks older than 1989. By January 2009, trucks older than 1994 will be banned.
The port’s Truck Licensing System (TLS) is described as the most demand container truck safety and environmental licensing standard in North America.
“With our new TLS version, the Vancouver Port Authority is following through on the promise we made in April 2007 to introduce industry-leading container truck safety and environmental standards,” said Chris Badger, Vancouver Port Authority Vice President, Customer Development & Operations.
In addition, new safety enforcement standards within the port’s mandatory licensing system include a three-tiered approach based on a cumulative system of warnings and suspensions and, for the most serious offences over time, cancellation of a company’s truck license. The crux of the rule is that trucks that are chronically out of service because of safety infractions will not be able to obtain licenses to transport containers through the port.
“Effectively, what you’re looking at is two strikes and you can’t access the port-whether or not, after that point, you bring your truck back into service,” stated Fiona Smith, director of trucking programs at the Vancouver Port Authority, to The Vancouver Sun.
In May, an ad hoc safety-enforcement inspection by the provincial transportation ministry and Delta police found that 114 commercial trucks failed out of 250 trucks inspected.
Smith said that “may not be indicative of the entire fleet,” but is “a significant failure rate and significant out-of-service rate, and that’s what we’re trying to address.”
The little guys make wavesThe Port of Portland (www.portofportland.com) has long been considered a distant player in the West Coast containerized freight market. For over one hundred years, the port’s bread and butter have been agricultural exports. Yet, port officials are eager to position the port to capture more inbound boxes. If developers are willing to look at sites as remote and undeveloped as Mexico’s Punta Colonet, they claim, why not start first with a modern, underutilized, prime location port that’s already served by both UP and BNSF railroads?
Marketing efforts by the port are focusing on the plentiful acreage available for industrial real estate development and distribution centers. Columbia Sportswear, Safeway, Dollar Tree, and Nike are just a few companies that have DCs in Portland, but with 10,000 acres surrounding the sea- and airport properties, there is plenty of room to accommodate more warehouses.
The importance of attracting distribution and warehousing to Portland not only results in an increased number of jobs, which directly impacts the local community, it also has secondary positive effects along the distribution chain-more infrastructure is developed and ocean carriers call the port more frequently.
“Similarly, as distribution centers develop, the demand for air cargo services may increase, which may provide critical volumes necessary to attract additional air cargo service to Portland International Airport (PDX),” explains Martin Associates in a report on the value-add of regional distribution centers in Portland. “To the extent that the distribution centers relay on overnight delivery, synergies between the seaport (for the receipt of Asian cargo) and overnight air cargo service (FedEx and UPS) available at PDX may develop. In fact, the availability of both container service at the Port of Portland marine terminals and express air cargo service at PDX should be used to market to distribution centers that rely on catalog and Internet sales.”
Attracting investment to the Terminal 6 container terminal is also high on port officials’ list. Last year, Terminal 6 handled 214,000 TEUs, but it could easily bump that number up to 1 million if it had an investor to convert the terminal to a container-only facility.
Another smaller port that made a big splash recently was Canada’s Prince Rupert (www.rupertport.com), located 500 miles north of the Port of Vancouver in British Columbia. Starting in the fourth quarter of this year, China Ocean Shipping Company (COSCO) will begin calling Maher Terminal’s new container terminal at the port.
“We at COSCO are the first carrier to sign up with Prince Rupert and are extremely pleased to be able to offer our customers a major new gateway to and from the West Coast of North America and Asia. The Port of Prince Rupert provides exporters and importers the shortest route between Asia and North America and the deepest harbor in North America,” said Howard Finkel, senior vice president.
As part of the new program, COSCO (www.cosco-usa.com) and Canadian National (CN) rail reached an agreement to provide rail service from Prince Rupert to key North American markets. This aspect of the program was developed to give COSCO customers comprehensive access to CN’s (www.cn.ca) on-dock, high capacity, double-stack rail network. In order to fill the railcars on the return trip, CN plans to build new depots along a route from Memphis, Tennessee, that will collect soybeans, cotton, paper, and other exports.
The need to find a congestion-free West Coast gateway was part of COSCO’s decision in choosing Prince Rupert. The ocean carrier determined that shippers will be able to decrease their overall transit to specific Midwest destinations by 2 to 3 days from current services.
The timing couldn’t be better for Prince Rupert. During the 1990s, the port was “looking death in the eyes,” recounted the president and CEO of Prince Rupert Port Authority, Don Krusel, in an interview with BC Business Magazine in July. The port was unable to handle containers and its primary bulk exports-pulp, paper, and lumber-were migrating to ports such as Vancouver. Coal and grain, which were two other important commodities for the port, were also faltering. Krusel was determined to make the port viable again, though, and spent the better part of a decade getting investors and the government to share in his vision. “Here’s a port no one has ever heard of talking about getting into containers and doing it with a brand-new, untried business model,” remarked Krusel of the turnaround. wt