With a section devoted to Port of Tacoma being featured in the new bi-weekly Business Examiner edition, it might be a good time to expand on that coverage on the Everybody's Business blog, spending a little extra webspace checking on the Port.
After all, Port of Tacoma is, statistically speaking, one of the top 10 container ports in North America, making it a pivotal business driver not just for the South Sound or the Pacific Northwest, but also for the entire state of Washington.
That, of course, sounds great in theory, but it's occurred to us that a lot of folks in our business community, aside from the understanding the Port's basic function of loading and unloading ships, aren't particularly aware of what Port of Tacoma's actual business model is.
That's exactly why we took the time to ask Tara Mattina, the Port's communications director, exactly that question. Not surprisingly, the answer is a multifaceted one.
“If you look at the Tideflats area, there are about 5,000 acres down in the Tideflats and the Port of Tacoma owns about half of it,” she said. “Part of our business model is really to take that property — in some cases, it's contaminated by legacy industrial contamination — and go in and clean it up to put it back into productive use.
“By putting back into productive use, in general, we usually end up leasing out the land for other private companies to operate.”
One of those potential agreements, a plan by Targa Sound Terminal to build a $150 million bulk liquids distribution facility at the Port's former Kaiser Aluminum smelter site, fell through two weeks ago, when the company issued the Port a letter stating that its studies deemed that the project wasn't economically viable. The twist is a setback, conceded Mattina, though she added that the Port is continuing to clean up the site, with a targeted completion date in the fall. The Port is also already working on re-promoting the 96-acre site where the tank farm would have been built; a “very focused RFP for a new bulk facility,” Mattina said, is expected to go out this week “or so.”
Still, while the Targa deal appears dead, the move to diversify remains a positive about-face for the Port. Many still remember, for example, the Port's intent between 2007 and 2009 to build a billion dollar container terminal on the Tideflats between the Blair and Hylebos Waterways — an initiative that collided with a 25 percent drop in container traffic and a mutual agreement between the Port and NYK shipping line to terminate the project. (NYK, of course, ended up at the Port anyway as part of the Grand Alliance's decision to come in last year.)
Now, correlation doesn't necessarily mean causation, and Mattina was quick to point out that the aborted terminal was not a primary driver of the Port's ongoing diversification strategy. The Port is roughly a year into a new strategic plan that emphasizes diversifying cargo and maximizing its current facilities, a plan shaped by adjustments made during the depths of the downturn.
“I wouldn't necessarily tie the two together,” Mattina said. “It's less about not building that terminal over there as it was about the lessons we learned during the recession.”
Indeed, that sharp decline in container traffic all but forced the Port to strengthen other areas of its shipping operations.
Containers, Mattina explained, are used primarily to move consumer goods, like housewares, computers, clothing and so on (“All those things that you buy at Target and Walmart and Hope Depot,” she said, smiling).
“Well, when the recession hit, all that stuff dried up almost overnight,” she continued. “We saw container volumes really drop, especially when the housing bubble burst. It really benefitted us to have those other types of cargoes. Autos were down, for example, but they weren't down as much as the containers were. The breakbulk kind of started to come back during the recession.
“So we have autos. We have breakbulk, which is essentially anything too big or bulky to put into a container. A lot of it is construction or mining equipment, tractors or agricultural equipment. We have grain. We have the grain terminal on Schuster Parkway. We have logs — we started with logs and then they kind of disappeared for a while. Weyerhaeuser went down to Port of Olympia (in 2008), and we had that log yard we were going to develop into something else. But then a customer came to us with a log proposition (in 2009) because the market had come back for logs in China, so now we're handling logs again.”
Early year numbers are promising. As the Business Examiner reported in May, container volumes through Tacoma were up 35 percent YTD through April, an uptick that reflects the influence of the Grand Alliance coming to town. And while breakbulk cargo and grain showed double-digit declines YTD in April, auto imports, log exports and intermodal lifts showed gains in the first quarter of 2013.
Mattina also shared the Port's 2013 percentages of revenue broken down by lines of business. Container operations still dominate the bottom line at 74 percent of total revenue, but non-container business is steady at 14 percent, and real estate — which, Mattina explained, is comprised of revenue from office and manufacturing space like the Fabulich and Early Business Centers that aren't associated with the terminals — comes in at 12 percent.
All in all, it adds up to an atmosphere of cautious optimism around the Port.
“We're expecting moderate growth over the next several years,” Mattina said. “It will probably be a while before we get to that pre-recession peak of 2.1 million containers. But growth is growth, and things are looking up.”