Friday, March 9, 2012

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Grand Alliance shift from Seattle to Tacoma brings aprox. 400,000 TEUs

By Peter Hurme

The Grand Alliance shipping consortium of Germany’s Hapag Lloyd, Japan’s NYK Lines, and Hong Kong-based OOCL will shift their Pacific Northwest port of call from the Port of Seattle to next-door competitor Port of Tacoma as soon as July, bringing with them an estimated 400,000 TEUs worth of container-shipping business, according to announcements and reports.

The Alliance’s move from Seattle’s Terminal 18, operated by SSA Marine, will be to Tacoma’s Washington United Terminal, owned by Hyundai Merchant Marine, and could reportedly boost the latter’s container volume by 25 to 30 percent.

“This is probably the biggest announcement that will be made in the rest of my working life at the port,” said Scott Mason, president of Tacoma’s Longshore Local 23 to the Tacoma News Tribune.

The Port of Tacoma released a statement that said WUT “was selected by the NATC Group, which represents the Grand Alliance.”

The WUT cargo-handling facility was reportedly one of four terminal operations in the Puget Sound region that had bid for the Grand Alliance.

Tacoma completed a berth expansion project at WUT that created the ability to work two containerships simultaneously.

The cost of doing business could reportedly be at play in the Alliance’s shift of its box business, as global container-shipping lines, after enjoying a robust, profitable rebound in 2010 after 2009’s record, money-losing year, were largely back in the red for 2011 and facing a 2012 campaign with too much vessel capacity and struggling freight rates.

According to a Seattle Times report, Port of Seattle Commissioner John Creighton said previously estimated annual revenue from ocean shipments at his port equated to $130,000 per acre over 500 acres, but has been slashed to $70,000 per acre, or $35 million, due to rate competition with Tacoma.

The Times reported the Port of Seattle’s estimate was based on a comparison with Northern California’s only true container-handling complex, the Port of Oakland, which reportedly produces $200,000 per acre.

“The shipping industry has undergone dramatic change in the past three years in response to tremendous economic and competitive pressures. Shipping lines have formed alliances to share ship space, terminal capacity and reduce fuel costs,” the Port of Tacoma said in a statement on the Grand Alliance’s move to WUT.

The addition of the containerized volume the Alliance brings, could reportedly get Tacoma close to its peak box volume period of the middle of the last decade, before the global recession had a widely reported, significant impact on that port’s shipping business, that included losing it’s former top customer Maersk to a vessel-sharing agreement with France’s CMA CGM at the Port of Seattle in 2009.

Seattle has also lost business to its Puget Sound rival to the south before, including its former top customer, SeaLand (which Maersk acquired in 1999) in the early 1980s, Japan’s “K” Line in the late 1980s, South Korea’s Hyundai Merchant Marine in 1997, and in 2007, NYK Line signed a lease for a new container terminal project that was subsequently quashed by the global recession that followed soon thereafter.

“It is important that the [Grand Alliance] business remains in Washington. Unfortunately, though many of the jobs will be preserved, others may not. Some who work in the Seattle harbor could see their livelihood impacted severely or in some cases, disappear,” the Seattle port said in a statement.

The Port of Seattle went on to say that “trading customers” encourages “a downward competitive cycle” for infrastructure investments in the state of Washington.

“As stewards of public infrastructure, ports are compelled to ensure that the investments made in our harbor are used. The short-term local gains for an individual port announced today could very well work to the to the detriment of the state’s economy in the long run,” the port said.

The Port of Seattle handled a record 2.1 million TEUs in 2010, while the recession and losing business like Maersk had a widely reported negative impact on Tacoma’s containerized fortunes, as that port recorded 1.5 million TEUs passing through in 2010 – an almost half-a-million-TEU drop from 2007.

However, with three major shipping lines about to bring a significant amount of business to the Blair Waterway, Port of Tacoma CEO John Wolfe said he’s “confident” his port “will continue to realize new business opportunities.”



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