Pacific Northwest terminal operators expect increases

By: | at 10:00 AM | Channel(s): Ports & Terminals  

Terminal operators in the Pacific Northwest and the West Coast of Canada are anticipating a boost in business as the recession recedes. But the region’s terminal operators are also facing new challenges.

Aerial view of English Bay at Vancouver, BC
Aerial view of English Bay at Vancouver, BC

Terminal operators in the Pacific Northwest and the West Coast of Canada who expected to see the flow of boxes gradually increase as North America worked its way out of the recession are finding themselves facing mixed challenges. While there is some optimism in dry bulk, which is good news for the PNW and Canada’s West Coast with a high proportion of mining, lumbering and agricultural exports, in the container sector most shipping industry analysts are predicting that the box trade is still in the process of emerging from the recession and are now expecting modest improvements in 2014 as the shipping capacity glut eases. Expectations are that the demand for containers globally will grow by roughly 4% – 6% over the next couple of years compared to the 2% -3% forecast for this year. Simply stated, bunker prices are very high and there is too much shipping capacity in the world for the amount of trade moving in boxes. And, with the introduction of 18,000-TEU, and larger, mega-ships by shipping lines such Maersk; supply and demand is not expected to return to normalcy for some time.

In this environment shipping lines are cutting costs, struggling to compete and, as a result, some West Coast terminals are being hit hard,

According to Doug Beeber, Vice-President, Seattle-based Jones Stevedoring that has operations throughout Washington and Oregon, the log exporting business has grown significantly in both states recently, however project cargo has slumped.

Jones Stevedoring concentrates primarily on handling breakbulk shipments and project cargo throughout the PNW and Beeber said he is uncertain as to whether these sectors will see much improvement in 2014.

“No matter who you talk to you can really only look two quarters out. I think since 2013 was a little bit down people now have higher expectations for 2014, but I’m not sure that’s going to happen.”

Port of Portland, OR

In a huge blow to the Port of Portland and, in particular, terminal operator ICTSI, the looming departure of Hanjin Shipping from Terminal 6 will have a serious impact since Hanjin moves roughly 80% of the port’s container traffic. Also, this departure, together with labor unrest at the terminal, could make the port less attractive to other shipping lines and potential customers.

Asked the reason for Hanjin’s plan to leave the port, Josh Thomas, port spokesman, told AJOT that, like other lines, Hanjin is struggling to trim costs and the 100-mile trip up the Columbia River to Portland is expensive, particularly considering the fact that two groups of ship pilots must be hired for the trip: Bar Pilots for the treacherous entrance to the river at Astoria and River Pilots to navigate the river itself.

The Terminal Use Agreement between ICTSI Oregon and Hanjin came to an end the end of 2012 and the two parties have subsequently been unable to come to a new agreement.

“This is the heart of it,” Thomas said.

Hanjin’s plan at present is to pull out of the port early in the New Year, however he said there will be meetings with the shipping line in the meantime including the port, Hanjin, ICTSI and the ILWU Local 8. As expected, the port is hoping some type of compromise can be reached.

As far as other cargo such as breakbulk, bulk and automobiles goes, business is stable. Recently the port began exporting Ford vehicles to China and South Korea and remains the second largest auto port on the U.S. West Coast.

Port of Seattle

The move of the Grand Alliance (NYK, Hapag-Lloyd and OOCL) from Seattle to Tacoma last year and tough competition up and down the West Coast has hit the Port of Seattle hard. In fact, reports say the port is now operating at roughly 50% capacity.

Clearly, it’s a situation port operators would like to change and are pushing for meetings with the port to develop a strategic plan that would increase business.

If the request for meetings receives the approval, under the anti-trust regulations of the FMC (Federal Maritime Commission) the port’s three terminal operators (Eagle Marine Services, SSA Terminals and Total Terminals International) hope to discuss just about every aspect of operations including lease arrangements that range from five to fifteen years, work hours, pricing, infrastructure improvements and which, if any, terminal should close.

Tacoma, WA

The move of the Grand Alliance from the Port of Seattle to the Port of Tacoma last year has significantly improved Tacoma’s bottom line. The new service boost lifted container volumes to 1.08 million TEUs for the first seven months of 2013 - an increase of 24% compared to the same period last year.

Accompanying this increase was a August order by the port, for five new Kalmar straddle carriers to be delivered in the first quarter of next year.

However, the bad news was that Targa Sound Terminal announced that it would not be following through with plans for a crude oil logistics center at the port after having “been unable to identify an economical path forward for the project.”

The terminal would have transferred oil from trains arriving primarily from the Bakken oilfields to the port for shipment by ship and rail to West Coast buyers.

Port of Longview

Last year the port was able to claim a new record for operating revenues that pushed Longview into third place as a revenue generator in the PNW behind only Tacoma and Seattle. A large part of this growth was generated by the port’s newest grain handling customer, EGT LLC.

The new EGT terminal, a joint venture between Bunge North America, Japanese-based ITOCHU International Inc. and South Korea-based STX Pan Ocean, is the first new grain terminal built in the U.S. in 25-years.

According to the company, the terminal offers state-of-the-art technology that enables it to operate with greater speed, flexibility and efficiency than other terminals. According to company, the design allows it to “reduce the amount of time it takes grain to travel from field to market, helping to increase export opportunities for American farmers in the Pacific Northwest and beyond.”

Port of Vancouver-Canada

Two of Vancouver’s largest terminals, Deltaport and Vanterm, are operated by Global Containers Terminals, a company that also operates terminals in New York City and Bayonne, New Jersey. As such, company President and CEO, Stephen Edwards understands the vagaries of the terminal management business on both sides of the border.

At present the company is predicting growth of three to four percent next year, which is in line with Port Metro Vancouver CEO Robin Silvester’s predictions.

Both terminals, one located within the City of Vancouver and the other, Deltaport, south of the city near the U.S. border are included within the Asia Pacific Corridor project and the terminals are now starting to see the benefits of the corridor.

At Vanterm the construction of an overpass he said, will make a “significant difference” since trains switching in and out of container terminals, grain terminals, recycling plants and other facilities on the North Shore now create waits for truckers that reduce productivity. These waits, he said, will no longer occur once the project is completed in the next few weeks.

A somewhat similar situation occurs at Deltaport, south of the city, where coal trains destined for nearby Westshore Terminals block container trains when entering and exiting the terminal. An overpass is also being constructed there to improve terminal productivity.

An important addition to Deltaport, completed in January 2010, was a $400 million third berth, Edwards said has worked “extremely well” at the terminal. “A lot of ships are slow steaming,” he said, “and the on-time arrival of ships has not been consistent. The third berth provides the flexibility for them to come in.

“It has been a very good investment and timely.”

Changes at Westshore Terminal, a coal terminal adjacent to Deltaport, have included major investments in environmental equipment, including: an $8.5 million overhaul of the dust suppression system, a $4 million slurry processing facility that removes solids from water collected on the site and two mile air monitoring units to be used in nearby communities to monitor air quality.

Port of Prince Rupert

A new wood pellet export terminal has just opened at the Port of Prince Rupert. Owned by Pinnacle Renewable Resources and operated by Metro Ports Canada the terminal is expecting its first vessel to arrive in November

Company President and CEO, Leroy Reitsma, said in a statement that hiring at the new facility, primarily of local First Nations employees, will be taking place over the next few weeks.

First concrete for the three-silo structure was poured on October 31, 2012. The $42 million terminal has the capacity to export two million tonnes of wood pellets annually, Reitsma said. The company operates six pellet manufacturing facilities in the communities of Houston, Burns Lake, Meadowbank, Quesnel, Williams Lake and Armstrong, British Columbia.

Other terminal projects at the port are: “On time and on budget,” Mike Gurney, port spokesman said. These include a doubling of the coal handling capacity of Ridley Terminals, expansion of Fairview container terminal from 750,000 TEUs to 2 million TEUs and construction of a road, rail and utility corridor to Ridley Island that will open the island to industrial sites including, a major potash handling facility and LNG plant.

Leo Quigley's avatar

American Journal of Transportation