Continued from previous pageIn addition to lease payments, the private sector companies also would make an initial investment of $140 million for phase one of the project and an additional $110 million for phase two, John Wolfe, the chief executive officer of NWSA, explained.
NWSA said modernization of the 182-acre Terminal 5 “will enable the facility to handle the largest marine cargo vessels now being deployed in the Asia-Pacific trade route, providing a critical link for Washington state exports to Asian markets, both for agricultural products such as hay, apples and potatoes, as well containerized cargo for customers such as Paccar (the truck manufacturer) and Starbucks.
“Competition for Asia-Pacific trade among North American West Coast ports has become particularly fierce over the last few years as marine cargo carriers have consolidated operations into larger vessels with fewer port calls,” said NWSA. “The British Columbia ports of Vancouver and Prince Rupert have grown substantially over the last decade as the Canadian government directly invests in port infrastructure, while the U.S. government does not.”
NWSA said Terminal 5 in Seattle is considered a premier container cargo on the West Coast due to its naturally deep berths, large footprint and availability of an on-dock rail yard, which allows containers to be directly loaded from the ship onto rail lines.
The Intermodal Association of North America said last week that among seven major intermodal corridors it details, the Midwest-Northwest corridor had the sharpest growth in the fourth quarter of 2018 when compared to the same period in 2017. “There was almost a 25 percent increase in international loads based on a sharp increase in container imports through Northwest ports.”
Katie Whittier, a spokeswoman for NWSA, said, “We saw intermodal volumes surge in June and December, in anticipation of each major tariff increase. We also saw discretionary cargo diverted from LA/LB and Vancouver to NWSA harbors due to heavy congestion those ports were already experiencing due to high import volumes.”
In November, the managing members of NWSA authorized Wolfe to prepare a lease, bidding documents and a request for construction funds for the necessary upgrades.
NWSA said new ultra-large containerships expected to increasingly ply the Pacific will require larger, heavier cranes with a longer reach, which in turn requires strengthening the dock and upgrading utilities. The size of containerships calling Seattle has climbed from about 4,800 TEUs in 1997 to 14,000 TEUs today. Ships with capacity exceeding 23,000 TEUs are on order, though not yet operating in the transpacific.
Last June Army Corps of Engineers Lt. Gen. Todd T. Semonite signed a Chief of Engineers Report for what is known as the Seattle Harbor Navigation Improvement Project, a plan to deepen the channels leading to the container terminals in the Port of Seattle to 57 feet.
After the Northwest Seaport Alliance was created in 2015, Wolfe said a goal was to create at least four terminals, two in Seattle and two in Tacoma that would be able to handle two 14,000- to 18,000-TEU ships simultaneously. Last year NWSA approved spending $170 million to improve the Husky Terminal in Tacoma on the Blair Waterway so it could accommodate up to two 18,000-TEU ships.
NWSA said that in addition to basic infrastructure improvements, Seattle and Tacoma port commissioners have directed staff to bring forward environmental investments to enhance water and air quality for the community, including updating stormwater treatment and installing “shorepower” infrastructure, which allows a vessel to plug in to electricity while at berth, substantially reducing air emissions.
The plan also includes technology improvements to manage truck flow around the terminal and a railroad “quiet zone” to reduce noise impacts for the surrounding community.
To support the phase one construction schedule for Terminal 5 modernization, estimated to begin this spring and be completed by 2021, the port commissioners will be considering a realignment of marine cargo in the Seattle Harbor.
• Matson’s Hawaii service would move from Terminal 30 in Seattle to the south berth of Terminal 5 this spring of 2019.
• International marine cargo would be reassigned to Terminal 18 and Terminal 5, beginning with the current customer at Terminal 46, TTI, moving to Terminal 18. TTI is jointly owned MSC's TIL subsidiary, and Hyundai Merchant Marine.
NWSA said, “This presents the opportunity to use Terminal 46 for other project and break-bulk cargo and relocating Seattle-based Foss Maritime to this terminal.”
Terminal 5 was last in use as a container facility in 2014 by APL. More recently Foss Maritime has had a lease there for various non-containerized maritime use.
NWSA added that the Port of Seattle commission also is studying using approximately 29 acres of the 86-acre Terminal 46 to accommodate a cruise berth to meet the demand for the Alaskan cruise industry, “which is a growing business in Seattle.”
Following Tuesday’s public briefing, final action by the port commissioners is expected at a special public meeting Feb. 26 at SeaTac Airport.
At Tuesday’s meeting, some commissioners expressed concerns that the project was being done in phases and that SSA and TIL might be able to lease only half of the facility.
Ed DeNike, the president of SSA Containers, sought to reassure the board that “we’ve done our due diligence on this, we’re not going to let this project fail.” But he also noted that the company is taking on considerable risk and that “there are reasons we do not want to commit to phase two.”
“Being smart, just in case, we didn’t want to commit to phase two yet. But it is our intention, we’re going to take that whole terminal and fill it up and everyone’s going to be happy.”
He agreed that it made sense for only one operator to be at the facility.
“There are other ways that another leaseholder could be there. For example, one of our major carriers may want their own berths, but we would be the operator. We do that in other areas,” he explained.
SSA is headquartered in Seattle and is the largest stevedoring company on the West Coast, he said, providing about 25 percent of the manhours worked by West Coast longshoremen.
“We don’t just move on something like this that easy, but this isn’t the first project like this we’ve done and we’ve been successful in every single one,” he said.
DeNike said more than half the containers imported through West Coast ports are intermodal containers that go to inland locations and that there is opportunity for ports in the Northwest to handle more of that cargo because “California is full, there is going to be no new terminals built in California.”
He emphasized the role of labor in attracting cargo.
“We have to work together to convince labor to do the job we need them to do. If we can do that, this port, this area will be the least expensive. And if it’s the least expensive, that means our costs to our customers are going to be lower. And I can tell you in the future that’s what all these steamship carriers care about. They’re fighting to survive.”