Seattle is one of the most attractive gateways for transpacific cargo in the nation, with fast and reliable connections with inland points and proven record of performance in efficiently moving cargo between ship, rail, and distribution centers. However, in our efforts to maintain and grow our cargo business, the Port faces a variety of challenges, some of which are expected to intensify over the next few years.

The most immediate challenge, of course, is the weak dollar. Combined with a fragile U.S. economy, it has contributed to a downturn in imports. The Port expects volumes in Seattle to be flat for the next year or two.

Another challenge is an increase in competition from both international and domestic sources. One example is Canadian National’s gateway over Prince Rupert, which, like other Canadian ports, will continue to partner with Canadian Class 1 rail carriers to attract U.S. intermodal cargo. We face similar competition from ports in Mexico. In addition, U.S. ports on the East and Gulf coasts are likely to increase their competitive offering once expansion of the Panama Canal is completed in 2014.

At the same time, several factors put Seattle in a solid position to capitalize on opportunities. High fuel prices will help keep the Seaport competitive with all-water routes serving the East Coast via the Panama Canal. Our port is closer to Asia than East, Gulf, and Mexican ports. Our intermodal rail services offer a stable workforce and fewer weather-related disruptions than Canadian rail options to the north, and are more developed, reliable, and secure than Mexican rail options.

And, we have ample cargo capacity at our terminals, which will only grow with the re-opening of Terminal 30 as a container handling facility, where China Shipping Lines will begin calling in the spring of 2009. The carrier currently calls at Terminal 18 under an agreement with SSA Terminals, and will be an equity partner with SSA in the new 30-year lease.