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Port Traffic Declines in Tacoma, Goes South by Kelly Kearsley The News Tribune, October 1, 2006

Container traffic at the Port of Tacoma slowed this summer after shippers rerouted cargo that had been coming to Tacoma down through Southern California ports.

It's a dip that means the port won't see the double-digit growth of recent years.

The port still is on track to handle more containers than it did last year. But the gains will seem modest after the growth in the number of containers the port saw in 2005. That was when shippers frustrated with congestion at the ports of Los Angeles and Long Beach in 2004 started diverting cargo to the Pacific Northwest.

The slowdown in container traffic, which include consumer goods and materials shipping from Asian companies, affects more than just the port. Business on rail lines has declined, and the call for longshore workers is lagging.

"I thought it would stay," Doug Ljungren, the port's business planning manager, said of the high-volume container traffic. "I didn't think it would continue to move this way. But I thought what did move would stay."

Instead, shippers are routing cargo back through Southern California. The reasons range from changes in rail operations in Tacoma to improvements at the Southern California ports and the lure of a massive market base there, port and trade experts said.

The result has been a drop in container traffic in June, July and August when compared to the same months last year.

It's also led to a significantly revised growth forecast for 2006. Last fall, the port anticipated another 15 percent increase in containers for this year. Ljungren has since reduced that estimate, most recently to a 2 percent increase in container volume from 2005.

Southern California ports, meanwhile, welcome the business.

The Port of Los Angeles has handled 12 percent more containers over the year than it had last year at this time. Container volume for August was up 21 percent from August 2005.

"We are seeing it starting to come back now," said Theresa Adams Lopez, the port's spokeswoman. "Congestion has improved, and that's one reason why it moved away."

Slowdown hurts WORKERS, RAIL

The downturn doesn't affect the Port of Tacoma's budget, since the majority of its revenue comes from terminal leases.

But it does pain others who depend on the port for business, such as dockworkers and employees of Tacoma Rail, the city-owned rail line that moves cargo between Tacoma industries, the port and the major railroads.

"We have noticed a lag in the amount of jobs," said Tim Faker, business agent with the International Longshore and Warehouse Union Local 23 in Tacoma. "We're used to fluctuations in volume. We'd normally be busier. It's not something new, but it's not something very positive."

The dip in this summer's containers, combined with a change in how the mainline railroads load rail cars, has put the hurt on Tacoma Rail. The city-owned railroad is down 17 percent from last year in terms of the number of rail cars it has moved. Tacoma Rail charges its customers per rail car, so drops in those numbers translates to a decrease in revenue.

The rail line laid off two managers this year.

Now Paula Henry, Tacoma Rail's executive director, is examining how to change the organization's rate structure - and save money in the meantime.

"We're making business decisions to do more with less," she said. Factors Behind the dip

There are a few reasons why Tacoma saw a dip in cargo this summer.

First, a Hyundai ship that used to call on the port went back to California in May, something the port anticipated.

Then new contracts between one of the port's major shipping lines, Taiwan-based Evergreen Marine, and the BNSF Railway included a rate increase that was enough to cause Evergreen to shift its volume to the port complex of Los Angeles-Long Beach, said Brendan Dugan, the port's senior director of container terminal businesses.

The Union Pacific railroad handles Evergreen cargo there.

An effort by the major railroads to balance the number of east- and westbound containers also has led some shippers to divert cargo south, Dugan said.

Rick Wilson, BNSF's director of port development, wouldn't discuss contracts with individual customers. But he said rates have nothing to do with the cargo moving from Pacific Northwest ports to California.

"It has to do with the fact that Southern California has a large local consuming market," Wilson said.

The shipping lines decide where they are going to send their freight, he said. He added that balancing the east- and westbound cargo prevents the railroad from having to move so many empty cars between West Coast ports.

The News Tribune was unable to reach representatives at Evergreen.

James Barnes, spokesman for Union Pacific, said the railroad has noticed Evergreen's cargo volume growing in Southern California.

Long-term growth forecast

Container traffic at ports around the country is up in total, said Paul Bingham, editor of Port Tracker, a monthly publication that tracks port performance. Bingham also is an economist with Global Insight, an economic and financial forecasting group.

"The Puget Sound is in a unique position," Bingham said. "To compare this year to last year is a little bit unfair. It's not believable that they could sustain the same growth as they did last year."

The Port of Seattle also is down in container numbers for August, as well as down over the year by 4.3 percent.

Mick Schultz, the port's spokesman, said the port hasn't lost any ship strings to Southern California. A truck strike in Vancouver brought more, temporary cargo to the Seattle port last year. A change in a shipping line's service also led to fewer containers this year.

The port still expects its container business to grow by 5 percent in 2006, Schultz said.

Port officials and trade experts view the slowdown as short term and expect that Puget Sound ports will continue to grow in the future.

Seattle has another shipping line coming to its port next year. Tacoma's customers have plans for expansion, and the port has property available for terminal development.

Bingham agrees that Puget Sound ports have a bright future.

The Puget Sound still has the advantage of being closer to Asia, and international trade is booming, he said.

Related Pages:
1997 Container Shipping Report by Port of Lewiston
2002 Container Shipping Report by Port of Portland