Back to basics in Tacoma
Wolfe focuses on customer service, marketing efforts for Pacific Northwest port.
By Eric Kulisch
After nearly six months on the job as executive director of the Port of Tacoma, John Wolfe is concentrating on restoring service for existing customers to the levels they enjoyed in the past and trying to attract cargo interests to a marine facility that was battered by the recession and suffered several self-inflicted wounds.
Wolfe has the advantage of not requiring a learning curve, having served as interim port director for the first half of the year, following the departure of Tim Farrell. Before then, he was deputy executive director for five years.
The port's marketing emphasis is underscored by the recent hiring of Don Esterbrook to the new position of chief commercial officer, in charge of operations, commercial strategy and asset management. He worked for 16 years for Hong Kong carrier Orient Overseas Container Line, most recently as regional sales director for the U.S. West Coast. Wolfe, who held some of those responsibilities in his previous role, created the CCO position to more closely align the port's operations, commercial lines of business and real estate and asset management.
'We're still feeling the effects of the downturn in the economy,' Wolfe said in a late-summer interview. 'When we look at the comparison in terms of percentage change, Tacoma is lagging some of the larger container ports on the West Coast.'
Tacoma, located on Puget Sound, has seen a slight uptick in container volumes in recent months, primarily due to Evergreen adding back a service call that was discontinued last year. 'K' Line has also increased its cargo volume through the port. Nonetheless, international container throughput is down 15.5 percent through August to 621,334 TEUs from 735,356 TEUs during the first eight months of 2009.
Total container traffic is down 9.7 percent to 945,671 TEUs, helped by a 4 percent increase in domestic containers (324,337 TEUs) serving the Alaska and Hawaii trade lanes. In August, normally considered the beginning of the peak shipping season, container volume only increased 1.9 percent after declining every prior month on a yearly basis.
Last year the port experienced a 17 percent decline in container volumes from 2008 to 1.54 million TEUs. That is down from the 2006 high of 2.07 million TEUs.
Comparing those container counts to other West Coast ports:
' The Port of Los Angeles is up 17.9 percent to 5.2 million TEUs through August, when container volume jumped almost 25 percent from a year earlier.
' Port of Long Beach volume is up 10 percent for the year to 5.4 million TEUs, including a 24 percent jump to 611,002 TEUs in August.
' The nearby port of Seattle reported a 39 percent increase to 1.43 million TEUs including a 46 percent rise in international containers to 1.22 million TEUs.
' At the Port of Oakland, container volumes rose 14.7 percent through August to 1.5 million TEUs, with August boxes up 22.4 percent.
' Even the Port of Portland is only down 0.9 percent year-to-date, albeit on much lower traffic of 117,527 TEUs.
Part of Tacoma's decline can be attributed to the departure last year of long-time customer Maersk Line to the Port of Seattle. Volumes will increase in mid-2012 when NYK shifts from Seattle to Tacoma and occupies the APM Terminals facility in lieu of having its own dedicated terminal.
The port authority is trying to help carriers, especially Yang Ming and Hyundai Merchant Marine, boost their volumes by trying to convince shippers to take advantage of Tacoma's intermodal capabilities, Wolfe said.
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| John Wolfe executive director, Port of Tacoma |
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| 'Our focus is working with existing customers who are here and making sure we're doing everything we can to help them grow their business. And, our second priority is to look for new business opportunities with new customers.' | |
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'Our focus is working with existing customers who are here and making sure we're doing everything we can to help them grow their business. And, our second priority is to look for new business opportunities with new customers. It's a difficult time because shipping lines are hunkering down and looking to reduce costs,' Wolfe said.
He acknowledged that the port got distracted from its core service function, which includes matching up local shippers with overseas customers, by its failed attempt to build a big new terminal for NYK Line. The carrier's decision not to occupy a custom-built facility after the port spent $190 million on pre-construction development contributed to Farrell's departure.
Negotiating the NYK deal and planning terminal construction diverted internal resources from other activities.
The port is putting more energy into its customer outreach, starting by 'getting a clear understanding from them what their challenges are and sharing with them what we believe are the competitive advantages of the port,' Wolfe said.
The port is optimistic that auto imports, which are relatively flat this year, will grow in the future, he added. Tacoma is also placing more emphasis on breakbulk cargo. A local company began exporting logs again this year at a former Weyerhauser site owned by the port, which neglected that side of the business when container volumes were growing rapidly during the past decade.
In 2009, Tacoma's operating income decreased $4.6 million to $11.4 million due to $4.8 million in customer incentives, or fee reductions, and the decline in cargo business. The port also took a $24 million non-operating expense to write down a bad real estate deal.
Operating profit was $18.8 million in 2007.
Wolfe said the port is tracking well this year relative to its budget, which estimates 2010 operating income at $13.4 million on the strength of new property leases and domestic intermodal business. The port is continuing with rate abatements for carriers because the port needs to make sure they remain financially healthy in the wake of massive industry losses in 2009, he said.
Tacoma is also trying to find tenants and alternative uses for underutilized property, much of which was acquired with the intent of becoming part of the NYK terminal construction on the Blair Waterway, according to Wolfe. Some of the warehouses are being repaired to make them marketable.
In January, Versacold Logistics, the world's largest cold storage company, broke ground on a 200,000-square-foot warehouse on sub-leased port property.
Last November, retailer North West Co. leased a 100,000-square-foot warehouse on port property that the port had purchased and planned to tear down to make way for the NYK terminal.
The port is in the middle of two major constructions projects:
' The Lincoln Avenue grade separation is designed to let intermodal rail traffic in and out of port property without blocking roads. It is scheduled for completion by the middle of 2011.
' The port is also spending about $30 million to extend the Washington United Terminals berth by 600 feet to give Hyundai space should the carrier opt to bring in a second string.
Instead of big terminal deals, Wolfe's team is now devoting resources to maintaining existing infrastructure, such as paving the Evergreen terminal and upgrading the intermodal yards. Operations personnel are taking inventory of all assets to determine which ones need capital improvements in preparation for the next budget.
The assessment process is more extensive and rigorous than normal, Wolfe said, because of the new property additions and the need to prioritize capital spending.
In August, Tacoma agreed to pay $137,000 to settle a dispute with the U.S. Environmental Protection Agency over failure to file on time documents showing the port's financial ability to follow through with clean up of a hazardous material site. The port's position was that the paperwork violation didn't detract from its remediation work at a former aluminum smelter site, but that a legal fight would be too expensive to pursue.
Wolfe said the port incorrectly assumed it had met its obligations by working through the Washington state Department of Ecology.
'Certainly we have some responsibility here because we did not meet the obligation before us with regard to reporting responsibilities. This was a negotiated settlement. And we expect that we won't have this kind of issue going forward,' he said.
Wolfe expressed optimism that the one-year-old collaboration between West Coast ports and the BNSF and Union Pacific railroads to reverse the market share declines for intermodal container traffic will produce tangible results in the near future.
Recent discussions on areas of common interest have included marine terminal operators and dock labor, he said.
The ports can also gain more attention for freight policy improvements in Washington by speaking with one voice, he added.
The open dialogue between competitors is helping create better awareness that their different perspectives on issues are shaped by unique challenges, ultimately leading to consensus, Wolfe said.