Friday, October 10, 2014

Seattle, Tacoma Ports Announce Strategic Alliance

By Mark Edward Nero

The Seattle and Tacoma ports said Oct. 7 that they plan to unify the management of their marine cargo terminals and related functions under a single seaport alliance, with the goal being to strengthen the Puget Sound gateway and attract more marine cargo for the region.

The alliance is to manage marine cargo terminal investments and operations, planning and marketing, while the individual port commissions retain their existing governance structures and ownership of assets.

The ports say the level of cooperation between the state’s two largest container ports, which is unprecedented, is a strategic response to the competitive pressures that are reshaping the global shipping industry.

“The ports of Seattle and Tacoma face fierce competition from ports throughout North America, as shipping lines form alliances, share space on ever-larger vessels and call at consolidated terminals at fewer ports,” Port of Tacoma Commission President Clare Petrich said. “Working together, we can better focus on financially sustainable business models that support customer success and ensure our ability to reinvest in terminal assets and infrastructure.”

Taken together, marine cargo operations at both ports support over 48,000 jobs across the region.
“Where we were once rivals, we now intend to be partners,” Port of Seattle Commission Co-President Stephanie Bowman said. “Instead of competing against one another, we are combining our strengths to create the strongest maritime gateway in North America.”

The alliance is the outgrowth of talks that began in January and were held with permission from the Federal Maritime Commission, the agency responsible for regulating the U.S. international ocean transportation system.

Subject to further FMC review and approval, the two port commissions plan to enter into an interlocal agreement, which is intended to provide a framework for a period of due diligence to examine business objectives, strategic marine terminal investments, financial returns, performance metrics, organizational structure and more.

The two commissions expect to formally adopt and move to submit the interlocal agreement to the FMC at a joint public meeting Oct. 14. A more detailed agreement for the alliance is expected to be submitted by the commissions to the FMC by the end of March 2015.

During the due diligence period, Port of Tacoma CEO John Wolfe and Port of Seattle Deputy CEO Kurt Beckett are to co-lead the planning work and coordinate with both port commissions; Wolfe is expected to be hired as the alliance’s CEO next spring following the FMC’s approval of the agreement.

The ports say that citizen and stakeholder public review of the alliance proposal will be undertaken throughout the due diligence period and that information about public meetings, how to submit written comments and other related news will be posted on both ports’ websites in the future as warranted.