Northwest Seaport Alliance deepening channels, improving terminals to handle bigger ships.
As the Northwest Seaport Alliance (NWSA) nears the third anniversary of its formation, the agency is moving forward with improvements so that both the Port of Seattle and Port of Tacoma are able to handle the bigger ships now plying the transpacific trade lanes.
John Wolfe, the chief executive officer of NWSA, said the two ports already are seeing calls from ships with carrying capacity of between 10,000 TEU to 14,000 TEU.
Last week Army Corps of Engineers Commanding General Lt. Gen. Todd T. Semonite signed a Chief of Engineers Report for what is known as the Seattle Harbor Navigation Improvement Project, a plan to deepen the channels leading to the container terminals in the Port of Seattle to 57 feet.
The project will deepen Seattle East Waterway where Terminals 46 (operated by Total Terminals International) and Terminals 30 and 18 (operated by SSA) are located. It also would deepen the West Waterway where Terminal 5(T-5) is located.
“We have a heavy agriculture export market here in the Pacific Northwest, so our vessels oftentimes on the outbound leg are weighted out and draw heavy draft. So having even deeper harbors than what we already have, which on average is about 51 feet, into the future is going to be a strategic advantage for us, said Wolfe. “We are looking forward to deepening both Seattle and Tacoma harbor … so draft never becomes an issue.”
He noted that when NWSA was formed, the agency identified terminals in both Seattle and Tacoma that would handle the largest vessels to call Puget Sound.
In Seattle, it chose Terminal 5, which is currently not being used for container handling, and in Tacoma it has been upgrading the Husky Terminal.
Waterways leading to Seattle’s container terminals near where the Duwamish Waterway empties into Elliott Bay currently range in depth from 34 to 51 feet below mean lower low water.
Brian Nelson, the Corps project manager, said, “Some of these shallower spots present navigational and safety challenges. Authorizing deepening the channels removes these challenges and ensures the port can accommodate future generations of container ships.”
The deeper water will give container carriers greater flexibility since ships will not have to wait for high tides to arrive or depart from terminals. Tides in Elliot Bay can vary by 12 feet.
Courtney Gregoire, the president of the Port of Seattle Commission, said, “This project will make the Port of Seattle the deepest container port in the nation.”
The cost of deepening the waterways is estimated at about $60 million, with about $31 million coming from the port and $29 million coming from the federal government. Congress would have to appropriate funds for the project.
Bari Bookout, director of marketing and business services, said it is estimated the deepening project would take place over two years. Work has to be done from about July to February so as not to interfere with the migration of salmon in the Duwamish, which leads to the Green River.
Overhauling Terminal 5 will be much more costly, requiring capital investment of about $600 million, but Wolfe says the port hopes to begin construction in about a year. The renovation will be a public-private partnership with NWSA and a private partner each contributing about $300 million.
“We’ve been talking to multiple parties,” he said, adding, “I’m not at liberty to share more detail at this time.”
NWSA’s fund will be used for things such as rebuilding the wharf and strengthening it so it is able to withstand the weight of the super post-Panamax cranes and upgrading the power supply and storm water system at the terminal. It is expected the private-sector partner will purchase container cranes and yard equipment for the facility.
NWSA also is about to undertake a similar study to deepen the channel to the Port of Tacoma from 51 to 57 feet.
Wolfe noted that the port is in the process of completing major improvements to the Husky Terminal in the Port of Tacoma that will make it able to handle bigger ships.
In March, the port took delivery of four new super post-Panamax cranes that were delivered to Husky.
Husky currently is operated by International Terminal Services, a subsidiary of “K” Line, but Wolfe said the port’s understanding is that terminal operations will be handed off to Ocean Network Express (ONE), the container shipping joint venture that “K” Line formed with Japan’s MOL and NYK.
Wolfe said Seattle and Tacoma have lost market share in recent years. Like other West Coast gateways, they have been affected by the opening of the Panama Canal and shipper discontent with the congestion that developed during the protracted and acrimonious labor negotiations between employers and the International Longshore and Warehouse Union in 2014-15. However, Wolfe said relations between the union and employers have stabilized since then, culminating in last year’s decision by the ILWU and Pacific Maritime Association to extend their contract through 2022.
NWSA continues to feel competitive pressure from the British Columbia ports of Vancouver and Prince Rupert, especially for “intact” intermodal in which containers are discharged and moved by rail to destinations in the upper Midwest and Ohio Valley, traditionally key inland markets for Seattle and Tacoma.
“Although we’ve seen growth in our local cargo and regional cargo, it hasn’t offset the loss of that market share that I described to Canada,” Wolfe said.
He said the port has lost a couple of “first-in” port calls to Canadian ports.
Washington State ports have been disadvantaged by the exchange rate, Wolfe said, as well as the U.S. Harbor Maintenance Tax, an ad valorem tax on the value of imported goods that can add $60 to more than $200 to the cost of moving cargo through a U.S. gateway.
“That’s real money,” said Wolfe.
Cargo flowing through Canadian ports do not have to pay that tax, even though the cargo may cross the border into the United States.
He said NWSA is part of a coalition trying to get some of the funds collected by the Harbor Maintenance Tax directed to donor ports such as Seattle and Tacoma, which do not require large amounts of money to maintain their channels but which could use those funds for other projects.
Another factor is the lower cost of moving cargo over Canadian railroads.
Wolfe said NWSA is partnering with the Union Pacific and BNSF “to see how we can partner to attract some of that cargo back through our gateway through different pricing strategies.”
Another strategy that NWSA has focused on is making sure it has infrastructure available that is attractive to transloaders.
By transferring inbound cargo from ocean containers into 53-foot domestic containers when it arrives on the West Coast, shippers can both reduce inbound transport costs and postpone decisions about where to ship merchandise. For example, if an item is selling well in Florida but is a bust in New York, a company can redirect more of its goods to a distribution center in the Southeast rather than Pennsylvania.
“We have many warehouse distribution transload facilities being built or that have been built in the last several years in and around the port terminals,” said Wolfe. They’re in close proximity to the terminals which helps with the drayage costs. We’ve tried to build upon that business model and encouraging more of those types of facilities in an around the port gateway.”
But it has also been challenge since the marine terminals in the port were built 20 years ago with the assumption that about 70 percent on inbound containers would be intact intermodal cargo bound that could be easily transloaded onto trains at on-dock intermodal yards.
So the fact that more containers are being trucked to off-dock facilities has resulted in extra gate traffic at the port’s container terminals.
“We’re trying to re-engineer aspects of our infrastructure to respond to that business change,” he said.
The port has taken ideas being tried at other ports, such as the used of “peel piles” for shippers moving large numbers of containers and is encouraging some of its terminals to look at possible use of appointment systems to reduce congestion.
Washington ports go for 57 feet
