Port of Seattle: Challenges coming by sea, by air

Can it maintain its job-creating mojo as competition for international business increases?
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Seattle-Tacoma International Airport

Can it maintain its job-creating mojo as competition for international business increases?

Early this year, Seattle’s port commissioners were called the gang that couldn’t shoot straight after a series of gaffes and missteps. But now, fresh from election triumphs, the Port of Seattle’s five-member commission has a number of big targets to aim at.

Those targets all are connected to maintaining jobs and the middle class in the region. A new CEO, declining business at the seaport and increasing competition are among the issues now facing the five-member commission.

Four “races” for commission seats (two incumbents and two appointed earlier this year) turned out to be barely contested, except perhaps for the one between incumbent John Creighton and Pete Lewis, the mayor of Auburn whose endorsements included that of The Seattle Times. But even Creighton steamrolled Lewis with 69 percent of the vote. The other three up for election — Tom Albro, Courtney Gregoire and Stephanie Bowman — all won by wide majorities.

The commission now consists of Albro, the commission president who is an engineer and businessman; Gregoire, an attorney with Microsoft and former Director of the National Export Initiative; Bowman, executive director of the nonprofit Washington ABC; Creighton, an attorney and longest serving member of the commission, elected in 2006, and Bill Bryant, a trade consultant who was not up for election this year.

One of the reasons the port races garnered so little attention is that few really understand what the port does. Strip away all the port activities and at its heart the job of the port is economic development, commission president Albro said. Ports up and down Puget Sound represent one of the last places in the economy where workers can find good paying jobs without college degrees.

Commission candidates, who like to complain about the lack of attention, usually cited one study that estimated the port was responsible for about 200,000 jobs statewide. That’s significant, making the port as important an employer as Boeing, Microsoft, the University of Washington or other major employers. The figure, which includes calculations of direct and indirect job creation, comes from a 2007 study done by Martin Associates, Lancaster, Pa.

The general public usually thinks of the port in terms of container ships and cranes that dot the skyline like groups of huge insects. And the downtown aspects of the port have driven many of the issues – the proposed basketball arena, the Highway 99 tunnel and seawall. But the port’s real center is the Seattle-Tacoma International Airport. Sea-Tac is operated by the port and represents the largest part of port operations by a factor of three. In 2012, port financial reports show the airport accounted for $386 million of port income compared with $103 million for the seaport and $32 million for the port’s real-estate operations.

Wherever they are, port jobs by and large are blue collar jobs — crane operators, drivers, airport workers on the tarmac and so forth. Gregoire campaigned on more port-generated jobs. One of the keys is more work-force training. There are efforts underway in both high schools and at the community college level, but more has to be done.

But the port commission faces major challenges and decisions as it pursues job creation.

  • Selecting a new CEO: Tay Yoshitani, hired from the Port of Oakland in 2007, has announced that he plans to retire in 2014 and the commission must find a replacement for him. That process is expected to start soon and the choice will have a big role in the future of the port.

“We are unique with both a seaport and an airport,” said Gregoire. “We want a CEO who understands how to connect and work across jurisdictions.” In other words, they are looking for someone who knows how to work with constituents of both the airport and the seaport.

“They need to find someone who can bring business to the port,” said one observer, a reference to the fact that container traffic is down almost 20 percent this year.

  • Relationship with the Port of Tacoma: "Merger is a non-starter on several levels,” said commission president Albro. “But we need to engage our colleagues in Tacoma to rationalize operations and not undercut each other.” Albro said both ports must begin to realize that they serve the state’s interest and “if we worked together we could do a much better job.”

Commissioners as a group support the completion of Highway 167 in Tacoma, a project that would enhance Tacoma’s ability to move freight even more quickly from the port than it does now. “Pierce County represents our best possibility for direct foreign investment,” Albro said, citing available land, rail connections and other factors. “We all should leverage that, not just the Port of Tacoma.”

“We are developing a new relationship with the Port of Tacoma,” said Gregoire. But there is a lot of mutual uneasiness to overcome.

  • Consolidation in the shipping industry: Last June, three shipping companies that represent more than 40 percent of the world’s shipping announced an alliance, known as the P3 Alliance. The three are Moller-Maersk of Denmark, MSC Mediterranean Shipping and CMA CGM of France. Consolidation is a growing trend in the industry as shipping companies work together to conserve fuel and maximize efficiencies.

Last year, another consortium, called the Grand Alliance, moved its operations from Seattle to the Port of Tacoma, shifting the traditional lead in container traffic from Seattle to Tacoma. Tacoma is up about 20 percent this year while Seattle is down about 19 percent. Both ports, however, are seeing container volumes below historic peaks.

The trend also means consolidation of schedules. The P3 Alliance already calls at the Port of Seattle and the port is working hard to keep it that way.

  • Increasing competition: The reason for the container volume challenges for Seattle and Tacoma is competition from other ports. The mega ports at Los Angeles (the largest U.S. port in terms of trade value) and Long Beach (fourth largest) continue to dominate shipping on the West Coast. Tacoma ranks 11th with $46 billion in trade and Seattle 13th with $38 billion.

But the new competition is coming from elsewhere. The ports of Vancouver and Prince Rupert in British Columbia are growing — Vancouver had 2.7 million containers in 2012, about double Seattle’s total. Prince Rupert, open only about six years, is at 500,000 containers. Both benefit from a solid cooperation between the ports, provinces and national government. Both also benefit from direct rail access from British Columbia to Chicago.

Linda Styrk, Seattle seaport managing director, said the port continues efforts to retain and attract business. “We are working to continue to be a port of call on the West Coast,” she said, recognizing that the competition is getting greater. Styrk also said that the election of Ed Murray, who campaigned on trade and jobs, as mayor of Seattle could have an influence.

In addition, the Panama Canal widening is expected to be completed next year, allowing much larger ships to pass through the Central America canal. That is likely to shift some shipping from the West Coast to eastern seaboard ports.

  • The airport: By all accounts the airport is doing well with more than 33 million passengers moving through Sea-Tac last year. One of the important measures of the airport – the number of international flights – is up and Delta Airlines continues to make Seattle one of its international hubs. In August, it announced new flights to Seoul, South Korea, and Hong Kong.

Airlines currently serve six cities in Asia (Beijing, Tokyo, Osaka, Shanghai, Seoul and Taipei), five cities in Europe (London, Amsterdam, Paris, Frankfurt and Reykjavik) and Dubai in the Middle East. In addition Horizon Air has a number of flights to Canada and Alaska serves cities in Mexico.

But the airport needs upgrades as well to make it a truly world-class facility, said Gregoire. Among the upgrades are the international arrival area and the north satellite. “We have passengers tell us they had a better experience at JFK than here,” Gregoire said, referring to the New York airport, which has often suffered consumer complaints about delays, crowding and even thefts.

“We are a global city because we have a global airport,” said Albro. The new flight from Hong Kong could be significant to maintaining the needed levels of service and convenience. Ironically, Albro, participating in a November trade mission to Asia with Gov. Jay Inslee, said he would have to return on a flight from Hong Kong by way of Vancouver. For the port's biggest business, job creation requires keeping up with the competition.


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About the Authors & Contributors

Stephen H. Dunphy

Stephen H. Dunphy

Stephen H. Dunphy writes on business and economic issues for Crosscut. He was a business editor and columnist for a number of years at The Seattle Times.