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Cargo Pours Through Ports

by Steve Wilhelm
Puget Sound Business Journal, January 2, 2005

Executives foresee more cargo moving through both of Puget Sound's big container ports in 2005, with the Port of Tacoma expected to handle more than 2 million containers for the first time.

Puget Sound's smaller ports also are growing, as they win some specialty cargoes away from the busy container ports.

2004 already was a big growth year for the Port of Seattle, with container traffic rising by 16.8 percent as of late November, to a projected record of 1.75 million 20-foot containers for the year. Twenty-foot container equivalents are called TEUs in the industry.

"It was an exceptional year," said Kent Christopher, manager of cargo services for the Port of Seattle, who forecasts growth of 10 percent to 15 percent for 2005.

The port's strong year was driven partly by decisions by cargo owners, and by the ocean carriers that move the cargo, to find alternatives to the congestion of Southern California ports in late 2004.

The backups were produced by a combination of record imports, especially from China, and by overloads over Southern California's rail and highway systems. Puget Sound ports started looking good in comparison, especially with the freight mobility improvements the region made in recent years.

Part of the local growth came from existing carriers changing the sequence of ports in their routes. Those changes favor local ports by making them the first entry point for time-sensitive imports. For instance, Cosco, a Chinese carrier, started bringing its ships directly to the Port of Seattle from Asia instead of routing the ships first to the Port of Vancouver, British Columbia.

Also, carriers are moving to ever-larger ships, and this summer the Port of Seattle installed its largest-ever cranes at Terminal 46, where they will unload larger ships being used by Hanjin, a Korean carrier.

While 2004 was a relatively flat year for the Port of Tacoma, with just 1.5 percent growth, port executives expect record 2005 growth as two existing carriers move to larger terminals and one new carrier joins the port.

During 2004, several ocean carriers ran out of room at their Tacoma terminals, stalling the port's growth despite the mess in Southern California, port business planning manager Doug Ljungren said.

The log jam didn't begin to break until December, when Evergreen Marine Corp. started shifting its cargo to the port's new Pierce County Terminal, a $210 million, 171-acre project.

This started a round of musical terminals at the port. K-Line will move into Evergreen's former terminal after it is renovated, and then new carrier Yang Ming will move into the former K-Line terminal while that is renovated. All are adding new ships and new routes, and will expand their volumes.

"Next year we expect to have the most rapid growth in container traffic we've ever experienced," Ljungren said. He expects the port's traffic to jump 19 percent in 2005 to 2.1 million TEUs, and then increase another 17 percent in 2006, to 2.45 million TEUs.

Most observers believe the 2004 congestion in California was an important turning point for both Puget Sound ports, one that will reverse the loss in West Coast market share that plagued Washington ports in recent years.

While the Southern California backups have eased, analysts say this fall's record congestion sent shock waves through the shipping community that will be favorable to the Northwest.

The San Francisco-based Pacific Maritime Association, which represents carriers, now predicts Washington container ports will increase their market share to 17.25 percent of the West Coast next year, rebounding from a nine-year low of 16.5 percent in the fiscal year that ended in June.

The association expects this trend to continue for at least several more years.

"All of a sudden, the pendulum shifts to a significant increase in Pacific Northwest cargo," said Doug Coates, a principal at Manalytics International Inc., a transportation consultancy also based in San Francisco. "I think it's a good thing for 2005 and beyond for the Pacific Northwest."

Even Puget Sound's much-smaller Port of Olympia is winning some spillover business from its much-larger neighbors.

Port of Olympia executive director John Wolfe said ship calls have grown steadily at that port's terminals, with 31 ships and barges loading and unloading cargo this year, vs. 27 in 2003. He expects marine revenues to hit $3 million this year, up from just $750,000 four years ago.

While the port hasn't managed to land a regularly scheduled container carrier, a longtime goal, the ships calling there have been handling a variety of cargoes. Import cargoes included Russian aluminum, garnet from Australia and steel from Asia, Wolfe said. Export cargoes included logs and some military materials.

"We've diversified cargo mix and grown volumes, which has resulted in higher revenue and higher cash flow," he said.

Next year, Wolfe expects the Port of Olympia will handle 40 vessels.

"The prosperity the Port of Tacoma and Port of Seattle have experienced have given us new opportunities," Wolfe said. "This year, with the prosperity Tacoma has experienced, it's made it difficult for them to accommodate the military, and we've handled it down here."

Steve Wilhelm, Staff Writer
Cargo Pours Through Ports
Puget Sound Business Journal, January 2, 2005

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