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December 28, 2006
When Cargo Services Manager Kent Christopher reads the latest numbers on container volumes in Seattle’s Seaport, he generally knows what to expect. He’s in contact with shippers and shipping lines and knows what crosses the terminals on a regular basis. That’s why when the numbers dipped in mid 2006, he took it in stride.
“It’s not exactly a rollercoaster, but you definitely have ups and downs. It’s the nature of the industry,” Christopher said. “You ride it out and keep doing what works.”
In 2004 and 2005 the Port of Seattle was the fastest growing container port in America. Such success came partly at the expense of other ports that experienced labor issues, congestion, and rail and truck strikes. But, recent infrastructure and capacity improvements also helped make Seattle a wise choice for shippers and carriers.
Cargo volumes were up 40 percent over the last two years and even though current volumes are down around 4 percent, the overall trend is up.
What happened to boost Seattle’s growth in recent years? It goes back to 2003, when the Pacific Maritime Association (PMA), which represents major waterfront employers, locked the International Longshore and Warehouseman’s Union (ILWU) off the docks for 11 days. The lockout effectively shut down all West Coast cargo movement.
The reason for the lockout was the inability of the union and the PMA to reach agreement on contract language to allow the introduction of new technology on marine terminals. An agreement was eventually reached, but delays in getting cargo in and out of West Coast ports echoed through the global economy for months.
Once cargo movement resumed, places like the large Los Angeles/Long Beach port complex were overrun with containers, a backlog of ships at anchor, a rail car shortage and a growing truck shortage. Shippers were forced to redirect some cargo to other West Coast ports like Vancouver, Tacoma and Seattle. That activity alone helped both Seattle and Tacoma achieve record volumes.
The following year, some shippers returned to southern California, while others enjoyed the ease and efficiency of the Northwest. The Port of Seattle’s container terminals are less than three miles away from two major interstate highways and two major railroad hubs, so cargo can be quickly transferred from ship to truck to train to Chicago and the East Coast in a matter of days. In other ports it can take days for containers to move from ship to rail.
Another factor that helped Seattle hang on to the huge cargo volume increases of ’04 and ’05 was the fact that over the past six or seven years a number of major importers have established import distribution centers in the Puget Sound area. Companies like Target, Home Depot, Wal Mart, Michael’s stores and Pier 1 have invested many millions of dollars in these facilities. As those companies work to make the most of their investments, they’ll continue to drive cargo to the Port of Seattle.
So why the dip in Seattle’s container volume this year? Let’s make a quick comparison with other ports and see how a number of factors can come into play.
Transportation/logistics professionals and warehouse managers are keenly aware of peak season. Peak season refers to the period of time when manufacturers have ramped up production to get merchandise into warehouses in time for the back-to-school sales and the subsequent holiday shopping season.
The phenomenon of “just-in-time” shipping means that warehouse and distribution centers receive merchandise just in time to repackage and ship it to stores for special sales and catalog mailings.
The congestion issues in some of the nation’s largest ports and rail and truck shortages in other areas turned that theory on its head. People in the logistics industry came up with the term “just-in-case” shipping to describe the move away from the two or three largest port complexes, where risks of delays were growing. Ports like Seattle, Tacoma, Vancouver and even Charleston, South Carolina, benefitted from the trend.
At the Port of Vancouver, increased volumes reflect the merger of two container carriers and one carrier moving from Fraser River Port to Vancouver. The result is Vancouver was up 21.2%, while Fraser Port was down -72.3%.
The Port of Portland saw volumes drop over the past few years when several steamship lines left the port. But Portland’s volumes are climbing after luring a carrier away from Seattle. In mid May 2006, ZIM Israel Shipping moved its service from Seattle to Portland.
Seattle lost another carrier in April 2006 when Maersk, already calling at Tacoma, acquired P&O Nedlloyd. P&O Nedlloyd volumes are now moving under the Maersk name through Tacoma.
“The loss of P&O Nedlloyd was a blow to us, of course, but it just made good business sense for them, and that’s something we can respect. We’re out making calls on new customers that will fill the void. There is plenty activity from China so we are confident in our success,” Christopher said.
“You could look at the slow-down we experienced this year as a chance to catch up with the growth we saw in ’04 and ’05,” Christopher said. “Over the next five years I think Seattle will see strong, steady growth and due, to the investments we’re making, we’ll be able to make that growth pay off for the region’s economy.”
Once cargo is off the ship, a top pick will place the container onto a truck or train.
Trains can quickly move cargo across the country and also help to reduce congestion on the highways.