There are MANY more than 6 million containers entering the US each year...and you're right...the numbers I've seen that are inspected are about 2%.... The ports are at incredible risk... For example:
Optimism returns to waterfront; cargo business seems poised for growth
By J. Martin McOmber
Seattle Times business reporter
[May 2004]
seattletimes.nwsource.com
DEAN RUTZ / THE SEATTLE TIMES
The Yuguhe arrives in the Port of Seattle Thursday afternoon with cargo to be offloaded. After a decade of stagnation, Port officials expect the next decade to bring significant increases in cargo.
April was a banner month for cargo at the Port of Seattle. The number of containers passing through Elliott Bay's terminals shot up more than 17 percent compared with the same month last year.
That has meant more business for companies like Macmillan-Piper. In its four warehouses near Seattle and Tacoma, workers load containers bound for Asia with frozen fish, paper products and animal feed, while unpacking containers filled with everything from bikes to blouses.
"We are cooking to the point of thinking about expansion and new facilities," said John Odland, Macmillan-Piper vice president. "You never want to get cocky, but we are pretty optimistic about the future."
For much of the past decade, optimism like Odland's has been in short supply on the Seattle waterfront. West Coast ports have boomed, but here, the number of cargo containers has remained stubbornly flat while the city's share of the increasing Pacific trade has fallen by half.
That could be changing. The Port of Seattle is girding for growth — hoping to double the number of cargo containers passing through its three main terminals over the next 10 years.
Independent forecasts set a less ambitious goal. But whatever the growth, Seattle is poised to benefit from trends that are reshaping trade, from China's roaring economy to worries about congestion at Southern California's sprawling ports.
"A big thrust of our sales approach is showing (shipping lines) that Seattle is cheaper, better and faster as an alternative gateway for cargo," said Mark Knudsen, Seattle's deputy managing director for the seaport. "They generally buy that, but it is a long, complicated story."
Busier and busier
About 1.5 million containers moved through the Port of Seattle last year, up about 3 percent over 2002. For the first three months of this year, the overall rate is up 4.3 percent. More important, the number of full containers jumped 8 percent over the same period in 2003.
The Port hopes to maintain that pace for the next decade. The rate that would propel the number of containers to 3 million annually, about as much as the Port could handle.
"That's pretty heady," said Paul Sorensen, a principal at BST Associates, a Bothell market-research company that specializes in the shipping industry.
And it is a departure from recent history. During the past 10 years, the number of cargo containers has grown by an average of 3 percent a year, with much of the increase in the mid-1990s.
BST released a study last week for the Washington Public Ports Association forecasting that container shipping in the Puget Sound region, including the Port of Tacoma, will grow an average of 4 percent a year for the foreseeable future. Last year, BST pegged Seattle's growth rate over the next decade at 2.6 percent a year.
"We are looking at this fairly conservatively," Sorensen said. "Seattle and Tacoma will probably continue to lose market share, but not at as rapid a rate."
In terms of market share, the past decade has been dismal for Seattle. The number of containers flowing through the West Coast has jumped twofold, but the Port's share of that business dropped from 13.2 percent to 7.9 percent.
Seattle was once the busiest cargo port on the West Coast. But competition, especially in the 1980s and 1990s, took its toll. During that time, the Port of Tacoma lured away some of the biggest shipping lines in Seattle, including Maersk Sealand, K-Line, Evergreen and Hyundai. By 2001, more containers were flowing through Tacoma than Seattle, creating a gap that continues to widen.
Meanwhile, the Port of Vancouver, B.C., opened a new terminal and began siphoning away business, offering lower costs and an avenue for shippers to avoid the nearly $100-a-container Harbor Facilities tax charged in the U.S. Vancouver overtook Seattle in 2002 in number of containers handled.
Despite the setbacks, Port officials say the number of containers passing through Seattle today is a sign of success.
"Even with the departure of those major steam lines, we held flat — we didn't decline," Knudsen said. "We really have been growing customers along the way."
But the growth of the sprawling ports of Los Angeles and Long Beach has eclipsed the rest of the West Coast. Last year, they handled almost 12 million containers, two-thirds of what passed through the West Coast.
Southern California's large population makes it an attractive port for shipping companies. Most of the cargo shipped to Los Angeles and Long Beach stays in that area.
But some of the cargo is bound for the Midwest, South and East Coast. Those containers could just as easily pass through Seattle or Tacoma, and both ports are trying to get that business.
One day closer to Asia
Seattle and Tacoma have natural advantages in cargo competition. The ports are 600 miles and a day's sail closer to Asia than Southern California. Both cities have deep water ports that require little if any dredging to handle increasingly large container ships.
Each has spent lavishly to upgrade and expand in recent years.
Seattle created mega-terminals on Harbor Island and West Seattle. It is expanding Terminal 46 near the stadiums. By the time the Port finishes its waterfront building program in the next few years, it will have spent nearly $1 billion.
Tacoma plans to spend $341 million over the next five years on its main terminals. It is finishing work on a new home for Evergreen. The 171-acre terminal will be able handle 840,000 containers a year.
Evergreen's move will free up its current terminal, which could attract more shipping lines to Tacoma. The port's recent pact with the Puyallup Tribe will allow more development along the East Blair Waterway, which could draw even more business to the port.
For Tacoma, the expansion paid off. Last year, it saw an 18 percent jump in containers. That followed an 11 percent increase in 2002.
"The reason we were able to cash in last year was because we are prepared both in terms of land we can develop and the inland infrastructure that is required to support it," said Doug Ljungren, the Port of Tacoma's business planning manager.
The ability of Seattle and Tacoma to handle more cargo underpins BST Associates' forecasts. Growing Asian economies — especially China's — should spur an increase in exports and imports through the West Coast.
While Southern California ports have room to grow, the ports there are grappling with pollution concerns and increasing community opposition, Sorensen said. To the north, Vancouver, B.C., is already nearing its capacity for new cargo.
"There appears to be some opportunities, and that may lead Seattle to predict higher growth rates," he said.
For Port of Seattle commissioner Alec Fisken, that point was driven home in April when a tug-boat strike in Vancouver and trucker protests in Southern California over increasing fuel prices created huge bottlenecks at those ports.
"Volume has just grown now to the extent that you cannot accommodate it in Southern California, and if it continues to grow, it will have to go else where," Fisken said. "It suggests that Seattle and Tacoma are pretty well-positioned to go out and find more business, or they can just sit and wait, and it will come."
Shipping companies in recent years have started moving business to more ports, largely to spread the risk of major disruptions. The effort increased after the 2002 lockout of longshore workers on the West Coast brought trade to a standstill.
That trend bodes well for Seattle and Tacoma, but it also creates a new competitive threat as shipping lines boost cargo they ship directly to ports in the South and East coast.
In the short term, Seattle is hoping to get a boost from completion of work on Terminal 46, which is home to Hanjin Shipping of Korea. Work on the dock has essentially closed one of the two berths.
Seattle also enjoyed a public relations boost late last year when a nationwide poll of shipping companies ranked the Port first for reliability and productivity. Tacoma placed fifth in the poll.
If the predictions of growth pan out, it will be a vindication for the Port of Seattle's long-range plan, Knudsen said.
"The overall market coming from Asia continues to grow, and what you are starting to see is the alternative gateways opening up," Knudsen said. "What we've been doing is building the infrastructure to handle the business with the clear expectation that the business would be here."
J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com |
