The Federal Maritime Commission has approved plans by Ports of Seattle and Tacoma to unify their marine cargo terminal investments, operations, planning and marketing. Key vote occurs Aug. 4.
The Northwest Seaport Alliance is one step closer to reality after receiving approval from the Federal Maritime Commission (FMC) this week. The last hurdle will be the final votes by both the ports of Seattle and Tacoma on Aug. 4
The FMC on Tuesday voted unanimously to allow the alliance to become effective, allowing the ports of Seattle and Tacoma to unify their marine cargo terminal investments, operations, planning and marketing. The goal is to operate more efficiently and compete more effectively as larger container ships are built, the widened Panama Canal opens; and West Coast ports, such as British Columbia and Southern California, up their games.
“The Pacific Northwest is a key region for inbound and outbound United States cargo, moving cargo not only for the regional trade, but also cargo headed to destinations throughout the entire U.S. Midwest,” FMC chairman Mario Cordero said in a statement. “This Alliance will help the region remain competitive into the future.”
Approval was expected, especially after Cordero, who was in Seattle last month, said he thinks it is important for ports that serve a common region to collaborate.
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In a statement Tuesday the FMC said the alliance agreement is “not likely at this time, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service” under the Shipping Act.
The ports declined to comment on the FMC vote other than to say they are looking forward to voting Aug. 4.
The ports originally announced the alliance in October. After decades of competition, stealing container ships from each other, the two ports said they had to work together to improve their declining market share.
Last year, British Columbia overtook Seattle and Tacoma in terms of container traffic, for the first time since at least 1980, according to data from the American Association of Port Authorities. British Columbia moved almost 3.6 million 20-foot-equivalent units (TEUs) compared to Seattle and Tacoma’s combined 3.5 million TEUs.
To become more competitive, the ports expect to shrink their current acreage of international container terminals from 1,080 acres to 850 acres and grow their container traffic from 3.5 million TEUs to 6 million by 2025, according to the ports’ strategic business plan.
The plan outlines that each port needs a “strategic terminal” that can accommodate two of the mega ships that are coming online, suggesting Terminal 5 in Seattle and the General Central Peninsula in Tacoma, which includes Husky Terminal and the Olympic Container Terminal.
The average ship size to call in Puget Sound is about 6,000 TEUs, with the largest ships carrying 10,000 TEUs. However, mega ships being built now can carry more than 20,000 TEUs.
The plan also calls for repurposing smaller terminals for other marine cargo offerings, which could include logs, domestic cargo, breakbulk and autos.
By working together, the two ports have said they will eliminate duplicate investments in infrastructure and leverage their combined volume as the third-largest gateway in North America, to bring in larger ships that will be making fewer port calls.
While the ports will remain separate organizations with ownership of their respective assets, they are forming a port development authority to manage marine cargo. The airport; cruise business; marinas, such as Fisherman’s Terminal; grain terminals and industrial real estate will remain outside the alliance.