After months of secret meetings and decades of fierce competition, the leaders of the ports of Seattle and Tacoma announced Tuesday they will form an alliance to manage the marine cargo business of both ports.
Both commissions plan to formally vote on the alliance and submit it for preliminary approval to the Federal Maritime Commission (FMC) next week. They expect to ask for final approval in March after six months of working out the details, such as how to split the profits and the costs.
“Where we were once rivals, we now intend to be partners,” Stephanie Bowman, co-president of the Port of Seattle Commission, said in a statement. “Instead of competing against one another, we are combining our strengths to create the strongest maritime gateway in North America.”
The commissioners are betting that the unified management and operation of the ports’ marine cargo terminals will grow jobs and attract more cargo to the region — especially as the state is under increased pressure from the growing Prince Rupert port in British Columbia.
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“Both Seattle and Tacoma were losing market share,” Port of Seattle Commissioner Bill Bryant said in an interview. “This is a way to compete with British Columbia and not with each other. … This is all about keeping jobs in Washington.”
The ports have said there are no plans to lay off employees at either port related to the formation of the Seaport Alliance, and the alliance does not include Seattle’s airport, cruise-ship terminal, Fishermen’s Terminal or waterfront properties.
Both ports face the same problem — as ships get bigger, terminal infrastructure needs to be improved to stay competitive.
Rather than continue to compete for market share against each other and make all the same improvements, the alliance will prioritize investments for each port to make them competitive together.
Together, the two ports are the third-largest port for container shipments in North America, and represent 48,000 jobs.
“This is one of the best things we could have done right out of the gate,” new Port of Seattle CEO Ted Fick said. “It allows us to enjoy the benefits of a merger without the entanglements of that kind of structure.”
All 10 commissioners will manage the alliance, while the individual port commissions will retain their existing governance structure and assets.
Port of Tacoma CEO John Wolfe is expected to be the Seaport Alliance CEO, following FMC approval. It is undecided if he will retain his current position with the Port of Tacoma, spokeswoman Tara Mattina said.
The historic rivalry between Seattle and Tacoma grew stronger in 2012 when a consortium of three shipping lines — Germany’s Hapag-Lloyd, Japan’s NYK Line and OOCL of Hong Kong — switched from the Port of Seattle to the Port of Tacoma.
Volume at the Port of Seattle dropped 26 percent from 2010 to 2013, to 1.59 million standard containers, or 20-foot equivalent units, known as TEUs, while the Port of Tacoma increased its container volume nearly 40 percent for the same time period.
During Tuesday’s announcement, Bowman said the alliance is equivalent to “tearing down the Berlin Wall between Pierce and King County.”
“Under this partnership, it won’t matter if cargo comes into Seattle or Tacoma, both ports will benefit,” she said.
Going forward, both port commissions will hold their scheduled public meetings to provide updates and hear comments on the Seaport Alliance as it moves through the federal approval process.
Once approved, the Seaport Alliance will also hold public meetings, but Port of Tacoma Commission President Clare Petrich pointed out in Tuesday’s conference that private meetings are still possible under the FMC.
Tuesday’s announcement came in Pac-Rim Building Supply’s warehouse in Renton. Pac-Rim sells and supplies construction material to contracts around the Pacific Rim, as well as loads and unloads cargo for other shipping companies.
“Having the two ports not fighting over business is in the best long-term interest for everyone,” said owner John Cahill, who works with both ports. “Having both ports busy is important. Right now it is an underutilized public investment.”