How to fix the Port of Seattle: Splitsville
Cranes at the Port of Seattle. Credit: Chuck Taylor
The hubbub about the Port of Seattle audit is just the latest, most outlandish episode in a string of revelations going back nearly 10 years.
Let me count the ways: Destructive competition between the Port of Tacoma and Port of Seattle’s seaport division. No-bid management contracts for the new cruise terminal. Firings of employees who dared to raise objections, deliver bad news, or ask tough questions. Grandiose investment in airport facilities that raise airline costs to the point of losing carriers. Unwise if not illegal retirement compensation deals. Scandalously low return on investments along the Bell Harbor waterfront. Constant wrangling about mitigation of airplane noise. Squeezing out airfreight facilities and hampering industries increasingly dependent on airfreight from Asia. Deferring maintenance and milking cash flows from Fisherman’s Terminal and Shilshole marina. And on and on.
What the headlines obscure, however, is the underlying structural problem about how harbor and airport operations are managed for facilitating economic development in the region.
Facilitating economic development is the purpose, but of what? King County alone? Pierce County alone? Or what has evolved into an integrated, complex, five-county metro area? The ports operate under a law from a simpler time, an authority granted by the legislature in 1911 – 97 years ago! Our system is badly out of whack.
It’s not just geography that is out of date. The Port of Seattle also fails to recognize that airports and seaports are two very different things. Moving people takes many people. Sea-Tac Airport is a small town of employees ticketing, loading, handling baggage, fueling, controlling, feeding, and retailing. It even has its own fire department and police force. By contrast, the mechanization of moving cargo has increased seaport productivity to the point of needing relatively fewer and fewer people.
Airports are governed in large part by the federal government, layered over with Transportation Security Administration regulations and underwritten by the airlines. Capital investments are repaid by landing fees on airlines and taxes on passengers. Operations are paid for by parking and retail leases. Seaports, by contrast, are run by port authorities which recoup capital costs from terminal leases to shipping lines. West Coast seaports need land for terminal operations and easy connections to railroads and trucks.
For seaports, the focus should be on quick handling and transfer of boxes. For airports, the focus should be on making the gruesome experience of air travel as hospitable and hassle-free as possible.
So what has this disparity of focus brought? The seaport tradition of the Port of Seattle is to engineer and build. (The seaport director once plaintively complained to me, “If we bring projects in on time and on budget, why don’t people love us?”)
At airports, they also build – garages and lavish terminals. (The Port had the chutzpah to name one after the airport director that envisioned such, and then left.) Airlines and feds pay up – to a point. Squeeze airlines too far and they threaten to leave. It could be that our prohibitive landing fees are the reason Seattle business people cannot fly directly to Shanghai or Beijing.
Meanwhile, there more than 20 airports in the Puget Sound region, each operating under a separate authority, many aspiring to compete with Sea-Tac. And none have the authority to plan, plot, develop, and operate a new regional airport that we will undoubtedly need around 15 years from now.
In the case of the seaport, both Tacoma and Seattle allow shippers to whipsaw them to get lower lease rates and reduce returns on capital – underwritten in Seattle’s case by King County property taxes. Each port acts as if it is only for the benefit of one county, which is very old thinking in terms of regional economics.
Given all these anachronisms, I would argue that it’s time to re-visit the whole question of how airports and seaports that serve the region are to be developed and managed. The Legislature should create a Puget Sound Regional Airport Commission focused on facilitating passenger travel and air freight and on making air travel as convenient and pleasant as possible. Such a commission would be responsible for rationalizing usage of each airport in the five-county area. (For a model, look at Vancouver, B.C.’s International Airport, which works at making passenger service a top institutional value. And it added a third runway in about five years!)
In the same way, we should establish a regional seaport and harbor commission focused on efficient use of capital and waterfront land for moving freight and cargo into, out of, and through the Puget Sound metro area. It should balance the land advantage of Tacoma, the short-trip advantage of Seattle, and the specialized niche facilities of Everett and the rest. It should also privatize public marinas, but that is another story.
Our Port operations are not merely mismanaged; they are malformed in a way that almost guarantees low return on capital, poor customer service, and destructive competition. Unless we address the underlying structural problems, we’ll probably continue having a parade of juicy stories and embarrassing audits like those in recent weeks.