THE port authorities of Seattle and Tacoma should cease competing with one another and face their rivals together. They could have a full merger or an agreement to plan, invest, negotiate, price and market as one.
They need to do something to keep up. Canada is investing billions in the British Columbia ports and connecting rail. And in 2015 the widening of the Panama Canal will bring Atlantic and Gulf of Mexico ports into more direct competition.
Merger is an old idea, and always there have been reasons not to do it. The case for joining forces is about the container trade, and each port does things other than move containers. Seattle has Seattle-Tacoma International Airport, Fishermen’s Terminal and cruise ships. Tacoma moves cars and bulk commodities through its terminals.
The cultures around the ports are different. If a rich hedge-fund manager wanted to build an arena in Tacoma and the port cried foul, the politicians would likely call the play for the port. Tacoma’s port people like that status.
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Still the case for consolidation stands.
The two harbors are less than 30 miles apart on the same inland sea. The port districts deal with the same two railroads and their terminal operators negotiate with the same array of steamship companies. In the container trade the two ports offer the same service and they compete on price.
Competition is good for customers, but often not so good for shareholders — and the people of King and Pierce counties are the owners of these two ports.
How much pricing power a combination would have is unclear. “Our customers have choices,” says Tacoma Port CEO John Wolfe. “Price matters to them.”
Of course it does; a combined port would be no monopoly, and its pricing power would be limited. Still, some is better than none, and the ports would be able to plan and invest, negotiate and market as one.
Ultimately, there could be a Puget Sound Port Authority. It would not have to be dominated by Seattle or based there. This is not about Seattle snagging another Russell Investments. It is about making the most of the billions in public money invested at both harbors, to the benefit of the region.