Pacific Maritime Magazine - Marine Business for the Operations Sector

Puget Sound Regional Report

 

The Port of Bellingham is cleaning up a former chemical plant, purchased by the port in 2005, in order to add an additional 25 acres to the existing 10-acre lay-down facility. Photo courtesy of the Port of Bellingham.

From Eastern Washington grain and produce to Aerospace, oil and containerized cargo, Puget Sound ports serve much of the West Coast and much of the inland west. Although each port has its niche market, competition is heating up, and Puget Sound facilities must upgrade to remain vital, while working within the ever-increasing regulatory framework.

Allies

The Northwest Seaport Alliance is now a reality. Recently, the Federal Maritime Commission and the Ports of Seattle and Tacoma commissioners voted unanimously to approve the new partnership, which will operate as North America's third largest container trade gateway.

The Alliance will compete on the same level as the other main gateways of Los Angeles and Long Beach and the Port of New York/New Jersey as far as total volume, and handling increasingly larger ship cargoes, says Deputy CEO Don Esterbrook, "But I think the significant difference is we're going to be able to rationalize our capital investments so we can invest in the gateway as a whole for terminal enhancements and infrastructure, working together to improve the utilization levels."

The newly-formed Alliance management team will oversee the operations of all the cargo terminal assets, and is headed up by John Wolfe, CEO of the Port of Tacoma who has the dual role of Alliance CEO for up to five years. Esterbrook and Port of Seattle deputy CEO Kurt Beckett are the deputy CEOs. Other staff will be transitioning into new roles as the two ports consolidate their efforts, but there will be no loss of jobs related to the formation of the alliance. In fact, Esterbrook predicts additional jobs will be created due, in large part, to strategic marketing initiatives needed to raise the profile of the new gateway. Transitional activities are expected to be completed by year's end.

When asked about the emerging near-port partnership trend, Esterbrook says since all industries go through various forms of consolidation, it's logical to think that port authorities could follow suit. "In our case [Tacoma and Seattle], there is no need for us to be competing internally," he says. "However, bringing together two cultures that have been competing for nearly the last 100 years is no small task. The performance will speak for itself, whether we're able to improve the infrastructure and enhance terminal facilities, both on the water side and land side, so it's critically important that we are successful."

Other Than Lumber

The Port of Olympia's marine terminal business dropped this year compared to last year's banner year due to two major factors. For example, a major portion of the marine terminal is leased out to Weyerhaeuser, an international forest products company that export logs to China, Korea and Japan. Activity has declined because the dollar is negatively impacting exports.

"Compared to last year, every log costs anywhere from 15 percent to 25 percent more," says Executive Director Ed Galligan. "As a result, purchasers of logs, and particularly Weyerhaeuser's customers, are looking elsewhere. For example, Russia, Australia and New Zealand can significantly under-price due to the stronger dollar."

Additionally, the dramatic reduction OPEC has put on the cost of a barrel of crude oil has also affected business. Last year, the Port handled the largest volume on the West Coast of ceramic proppant (fracking sand) that came from China. "This year, we are anticipating only one ship. Last year, we had in the range of 18 ships," explains Galligan. "The reason is most of the drilling and fracking, particularly in the Bakken Oil Reserve in North Dakota, has all been put on hold because of OPEC pricing. It's very difficult to compete with that."

Despite fluctuating economic challenges, business continues moving forward. Earlier this year, the Port added a 140-ton Terex/Gottwald heavy lift crane to optimize over-sized, heavy cargo-handling operations. And the Port's marina has been doing well. Capacity is at about 85 percent full with the summer season of haul-outs providing extra revenue.

For now, several planned capital investment projects have been deferred due to changing market demands. "We're deferring forward into next year, a little over $13 million in projects; some include the taxi way at the airport. However, other revenue-driven projects for a range of customers will move forward as planned," says Galligan "The Port has several buildings that were previously privately owned that have reverted to Port ownership. About six of those need some renovation work. We have deferred that right now because we don't have a committed tenant."

Every five years, the Port's goal is to conduct an economic benefit study that breaks down data on its four main lines of business; seaport/maritime cargo, marina activity, real estate and the Olympia Regional Airport. According to the 2009 study, the Port created more than 7,000 jobs, generated $31.2 million in state and local tax revenues and invested more than $10 million in fixed assets. The 2015 study is expected to be available in September.

"I am encouraged by the developer inquiries that are now coming in," says Galligan. "We are in the marketplace on a continuous and aggressive basis with a broad range of sales and marketing opportunities for private businesses. That's one side of the equation. The other side is when potential customers call the Port. As those type of calls are coming back around again, as they did prior to the economic turn down several years ago, that's even more encouraging for the outlook for future growth of the Ports book of business."

Cleanup

The Port of Bellingham recently awarded American Construction with a $30.6 million contract for phase 1 of the clean up of the Whatcom Waterway on Bellingham's waterfront. The waterway is contaminated by heavy industrial activities resulting from long-time operations of the former Georgia-Pacific (GP) chemical plant. The majority of the cleanup work will take place in the inner Whatcom Waterway between the Roeder Avenue Bridge and the Bellingham Shipping Terminal.

The activity will help restore salmon habitat, open up more public access and improve the region's economic outlook. Work has already begun on the first phase of the project, which will see American Construction remove 159,000 cubic yards of contaminated marine sediment and perform other tasks such as removing creosote-treated timber and industrial debris from the shoreline as well as dredge to a minus 35 draft to enhance the terminal's depth.

"We were very pleased that American Construction got the work to do this project for us," says Dan Stahl, Director of Maritime. "They have a very good reputation. They've done similar work at other ports in Puget Sound."

The project has been several years in the making; the Port has been pursuing clean up permits since it purchased the GP property in 2005, which added another 25 acres of adjacent lay-down area to the existing 10 acres.

In the last two years, the Port has spent approximately $5 million on piling and bulkhead work in order to upgrade the shipping terminal's infrastructure so it can be repositioned in the market. The Port is also looking at upgrading the electrical system at the terminal for an estimated $2.1 million, in addition to another $5 million on storm water work that will include extensive paving work, which could begin as early as 2016.

According to the Department of Ecology, who is partially funding the cleanup project, the initiative is expected to create between 500 and 2,000 jobs, generate $490 million in business revenue and $90 million in local tax revenue. "The Bellingham Shipping Terminal has been significantly underutilized since the GP mill shut down in 2000," says Stahl. "We're hopeful by getting the draft deeper and re-injecting some money into the paving and the power upgrades, that we'll be able to get the terminal back to work."

Breakbulk Growth

The Port of Everett has been enjoying a record year in terms of cargo handling volumes. The Port specializes in moving over-dimensional, high value cargoes for aerospace, manufacturing, energy and construction industries. Through the end of June this year, the Port received 71 vessel calls compared to 47 through June of 2014.

The increased activity has been a good problem to have. Earlier this year, the Port took delivery of a new $5.1 million, 150-ton GHMK 7608 mobile harbor crane, which has helped it weather the growth. And additional labor pulled from the Puget Sound region has increased employment opportunities. "We're going to be adding to our normal longshore contingent so that we have additional manpower on a regular basis," says Port spokesperson Lisa Lefeber.

The Port recently completed a new ro/ro cargo berth and heavy lift pad in order to handle the largest ro/ro ships, a two-phased project that cost $4.7 million. Additional expansion plans include building larger berths; increasing from 700 to 1,000 feet as well as new rail enhancements.

"We are a smaller port in comparison to Seattle and Tacoma," says Lefeber. "The Everett customs district did $25.7 billion in exports in 2014. To put that in perspective, that's more export value than the entire state of Alabama."

The Port of Everett is currently working on new projects under the recently-passed transportation package – an injection of $16 billion for state-wide freight corridor improvements was signed by Governor Jay Inslee in July – $38 million is earmarked for freight mobility enhancements on the 41st Street Freight Corridor from the Port to Interstate 5.

"We pride ourselves on good customer service and in our ability to quickly and efficiently handle cargo without congestion or delay," says Lefeber. "And a key part of that is having the right infrastructure and cargo handling equipment to do that."

Alaska Gateway

In February of this year, the Seattle Metro Chamber released its report: Ties That Bind: The Enduring Economic Impact of Alaska on the Puget Sound Region prepared by the McDowell Group and sponsored by more than 20 businesses, including the Ports of Seattle and Tacoma, Foss Maritime Company, Alaska Airlines, and the Alaska Oil & Gas Association.

The study, which has been conducted four times now since its inception in 1985, represents data gathered from Whatcom, Pierce, Snohomish, Skagit, King and Kitsap counties in the areas of freight and cargo connections, seafood, passenger transportation and tourism, petroleum, maritime services, health care, education and tribal ties. The statistics are broken down into exports and natural resources categories.

In a nutshell overview, labor earnings increased 12 percent in Puget Sound during the period 2003-2013, from $4.3 billion to $6.2 billion as the number of Alaska-related jobs grew to 113,300 from 103,500. In 2013, seafood processing alone created $690 million in earnings and 13,000 jobs, and more than 97 percent (3.4 million tons of cargo) was moved by water north through the Ports of Tacoma and Seattle. Additionally, on average over the period, Puget Sound maritime support services to the Alaskan region have generated $390 million in wages with 5,300 jobs.

Port of Tacoma CEO Don Esterbrook commented, "If you rank Alaska with our other international trading partners, it's our fourth largest just behind China, Japan and Korea, so this partnership is critically important."

Port of Seattle spokesperson Peter McGraw said, "The fishing industry in particular represents about a $30 billion-a-year industry in which 40 percent of the landed catch in the United States comes from Alaska. We want to continue to be a driver of the economic growth between both states, whether that be helping the fishing fleet or the catcher-processors move their product through the Port of Seattle and on to national markets. We also want to continue to provide a platform for job training and any other specialty skills necessary in those trades."

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2017