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The Northwest Seaport Alliance

Shipping gateway to the Pacific Northwest


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Breakbulk cargo in The Northwest Seaport Alliance South Harbor.

Photo courtesy of The Northwest Seaport Alliance

Officially The Northwest Seaport Alliance (NWSA) was launched August 4, 2015, and has been in operation since. According to NWSA Communications Director Tara Mattina, many of the financial changes took place January 1. By either date, “It’s still fairly new,” she says.

It’s not just NWSA that’s new, but even the idea of ports combining resources instead of competing for them. Mattina says it’s the first time this type of partnership has been formed in North America. More than that, there’s only one similar situation worldwide, that she knows of: the Copenhagen Malmö Port, “the logistics hub for the Baltic region,” a partnership between ports in two different countries—Copenhagen in Denmark and Malmö in Sweden. Mattina says the ports are located across from each other, and so a partnership just made sense.

For Seattle and Tacoma, a similar partnership also seems to just make sense. The ports have competed with each other for many years. “This wasn’t good,” Mattina says. “We were trading customers back and forth to the detriment of the entire gateway. We were losing market share to Canada and Southern California.” The ports worked cooperatively to find a new business model.

 

How NWSA Works

Merging the two ports wasn’t an option, as it “would require changes in state law and other complications,” she says. “We came up with another business model that would allow us to participate as one gateway instead of two separate ports.”

In essence, the ports have licensed their marine cargo facilities to NWSA to manage. “Each of the ports still owns their marine terminals,” Mattina says. One significant benefit of the partnership is how it allows for both ports to benefit from any development of infrastructure at either port. “Instead of the two ports trying to woo one shipping company that’s trying to bring in larger ships and investing in both ports just to stay competitive, we as a gateway can say that one terminal is going to be the better fit and invest in that terminal first. Then we can invest in either harbor for further business opportunities to leverage the money, as well.”

She says that NWSA is a response to the shipping industry in general. “Competition in the shipping industry is more intense than ever before,” Mattina says. “Shipping lines have been losing money for several years. To find ways to save money and gain economics of scale, they’ve been forming their own alliances and sharing space on ever larger ships.”

For example, Oceania LLC currently hauls in Tacoma: “They were outgrowing their terminal,” Mattina says. Instead of Tacoma doing anything at all to keep the line in place, NWSA asked Oceania what would best suit the shipper’s needs; it ended up being a terminal in Seattle. “We were able to keep the business in the Pacific Northwest. It didn’t matter if it was in Tacoma or Seattle because the two ports share the profit.” She explains that the Ports of Tacoma and Seattle invested 50/50 into NWSA and will share revenue from the partnership in a 50/50 split.

NWSA is not a combination of all of the properties and operations of both ports. For example, in Seattle there’s an airport, cruise ship operations, industrial real estate, a fisherman’s terminal, and a grain silo that will still be managed by the Port of Seattle. At the Port of Tacoma, there’s a grain terminal and some industrial real estate remaining separate from the partnership. “The Port of Seattle is very large, and what’s left outside [NWSA] is very large; for the Port of Tacoma it’s smaller,” Mattina says.

 

TOTE Maritime ship Midnight Sun in Puget Sound.

Photo courtesy of The Northwest Seaport Alliance

 

Transitions

Mattina says NWSA is in a five-year transition period to become a stand-alone entity. “Right now the commercial and the operations teams are NWSA employees. Everybody else is either a Port of Seattle or Port of Tacoma employee providing service to the alliance through service agreements,” she explains. This transition period is just a matter of practicality, Mattina says. “It’ll take a while to iron out all the details.”

One consideration is that, while NWSA needs to determine what kind of staffing it needs, both ports individually are looking at their needs for whatever lines of business they will continue to manage. All in all, Mattina says the process has been “probably more complex than we thought, and we are seeing quite a bit of success quicker than I thought.”

It’s the commissions of the two ports that make decisions on behalf of the Alliance, a total of ten publicly elected commissioners. In April they voted for significant investment into an international container terminal in the South Harbor. “It will allow us to simultaneously service two of the largest container ships in the world, two 18,000 TEU [twenty-foot equivalent units] ships will be able to land at the same time at that terminal.”

The investment into the infrastructure included strengthening and realigning the berth to handle the bigger ships as well as ordering four new cranes—all told about $160 million worth of work, Mattina says.

 

Client-Driven Changes

So far, she says, the response from their clients has been positive. “The first reaction we got [from our clients] was: What took you so long? We already thought of you as one gateway anyway.” There are still a few wrinkles that NWSA is addressing in that arena as well, mostly just disseminating information about what NWSA is, if points of contacts have or will change moving forward, etc. “We spent quite a bit of time, even before August, getting before our customers and potential customers to explain what it’s all about and how it can benefit them.”

In fact, one of the steps NWSA has taken was setting up an Operation Service Center, which was “designed to give real time information to our customers and all parts of the supply chain.” Many of NWSA’s efforts have been guided by an Executive Advisory Council, which Mattina says is comprised of terminal operators, warehouse distribution centers, labor representatives, trucking companies, railroads, and anyone in the supply chain. “They’re all sitting at the table saying what information would be beneficial to them and letting us know what metrics we should be grading ourselves on; so all of this has been guided by our customers and stake holders,” Mattina says.

 

 

This article first appeared in the June 2016 print edition of Alaska Business Monthly.

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