Seattle port officials reacted bitterly to Thursday's surprise announcement, accusing their neighbor port of inflicting "a very serious blow to the relationship between Seattle and Tacoma" and terming it "another case of Tacoma expanding at Seattle's expense."
However, Port of Tacoma Executive Director Tim Farrell said that if NYK weren't acquiring its own terminal at his port, it would be likely to move to another West Coast state.
NYK Line, a Port of Seattle customer for more than a century, currently ships container cargo through Seattle's 196-acre Terminal 18. The shipper is leaving despite the port's completion of a $300 million expansion of the terminal, nearly doubling its size, just five years ago.
The Port of Tacoma announced it will build a new terminal, its largest, on the industrial east side of Tacoma's Blair Waterway and lease it to Yusen Terminal Tacoma Inc., a wholly owned subsidiary of NYK Line.
The plan was approved Thursday by NYK's board of directors in Tokyo and was to be OK'd by Tacoma port commissioners Thursday evening at a special meeting.
In June, NYK Line shipped the equivalent of 11,319 containers through Terminal 18, accounting for 7.4 percent of Seattle's total international cargo business.
The ports of Seattle and Tacoma have been neck and neck in container cargo volume in recent years although the Tacoma port has enjoyed a faster growth rate. In the first six months of 2007, 949,577 container equivalents went through Tacoma and 944,761 through Seattle.
For Seattle-based SSA Marine, which operates Terminal 18, the move is a double blow.
Not only does the stevedoring company lose a Seattle customer, but it also gains a competitor for a private container terminal that SSA intends to develop with the Puyallup Tribe of Indians on 180 acres of tribal land adjoining the Port of Tacoma on the east side of Blair Waterway.
"We had no idea that announcement was coming," SSA Marine spokesman Bob Watters said. "It was just kind of curious. We're here with private funds getting ready to develop a facility down there, and the port (of Tacoma) is coming out with public funds to do the same thing, build capacity."
In a prepared statement, the Port of Seattle said the move "is doubly unfortunate because we have plenty of capacity at Terminal 18 to accommodate the volume of international trade that NYK brings here."
The statement added: "We had been working hard to cooperate with Tacoma on things like security, the environment and infrastructure, only to find that they had, at the same time, been negotiating to take business away from Seattle.
"It makes no sense from a regional or statewide perspective for them to work to take customers away from Seattle. Their efforts would be better spent -- as ours are -- to focus on the competition with ports in California and British Columbia. In this case, we see public funds being spent to move existing customers around in the state instead of bringing in new business."
However, the Port of Tacoma's Farrell said in an interview that if NYK Line weren't moving to Tacoma, "there was a chance that Washington state was going to lose this business. It could have gone to Vancouver (B.C.), it could have gone to Oregon, it could have gone to California.
"When you've got a company like NYK that is in a multiuser terminal (in Seattle) and is starting to need more elbow room, they have to look elsewhere."
Farrell said that as long as international trade continues growing as rapidly as it has, "we as a region really are going to need to make sure we provide additional (port) capacity if we are to take advantage ... of this growth opportunity in both ports."
The Port of Seattle's statement said it expects "no immediate impact on Seattle's finances. The move is not expected to take place for another five years, and we hope that, working with the terminal operator, we can replace that amount of cargo with new business." The Tacoma terminal is to be completed in 2012.
Apparently a big inducement for NYK Line was the opportunity to operate its own terminal. Tacoma had available land on which to develop a terminal, and Seattle didn't, Port of Seattle spokesman David Schaefer said.
In addition, stevedoring companies operate the Port of Seattle's terminals, but shipping companies operate their own terminals in Tacoma.
"We have long sought to operate our own terminal in the Pacific Northwest," Peter Keller, president of NYK Line North America Inc., said in a statement.
"This (Tacoma) 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 option."
The move seems to be a bigger economic boon to the Port of Tacoma than economic loss to the Port of Seattle.
The Port of Tacoma said the new terminal will provide an estimated 3,000 temporary construction jobs during the two-year development of the terminal and 3,200 permanent jobs -- 1,800 in Pierce County and 1,400 elsewhere in the state -- afterward. The Port of Seattle is losing a customer that uses its terminal but isn't a major tenant as it will be in Tacoma.
Seattle's Schaefer said NYK's business "isn't something where (the port gets) a direct financial return anyway because we lease the facility to the terminal operator, and they pay based on acreage. ... We'll work with the operator of the terminal to try to get other customers in there."
PORT TRAFFIC
The Port of Tacoma grabbed one of the Port of Seattle's oldest shipping customers Thursday. The two ports have been nearly tied in container cargo volume in recent years. In the first six months of 2007
949,577 container equivalents went through Tacoma.
944,761 went through Seattle.
Related Pages:
Container Shipping Report Port of Portland, Oregon (20,633 TEU in 2002)
Container Shipping Report Port of Lewiston, Idaho (9,943 TEU by river in 1997)
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