Port of Seattle and Port of Tacoma create Northwest Seaport Alliance, to jointly manage their maritime-cargo operations, on August 4, 2015.

  • By Kit Oldham
  • Posted 3/11/2020
  • HistoryLink.org Essay 20998

On August 4, 2015, Port of Seattle and Port of Tacoma commissioners sign an agreement creating the Northwest Seaport Alliance to jointly operate the container terminals and most other marine-cargo facilities of the two once-fiercely-competitive Puget Sound public ports. The alliance forms the fourth-largest container gateway in North America, annually handling some 3.7 million containers, mostly shipped to and from Asia, along with logs, automobiles, liquid bulk, and breakbulk cargo. The alliance does not include each port's grain elevator; Seattle's Sea-Tac airport, Fishermen's Terminal, cruise terminals, and marinas; or Tacoma's industrial properties, which the separate ports still operate independently.

Local Ports, Regional Rivalry

For nearly a century before their alliance, the ports of Seattle and Tacoma had been rivals, sometimes bitter ones, for the regional and international maritime trade that passed through Puget Sound. The two ports were among the first public port districts created in Washington after the state legislature in 1911 authorized local voters to create independent government bodies run by elected commissioners to operate harbor facilities. The Port District Act created a unique system of local public port districts, some countywide (like the ports of Tacoma and Seattle, respectively encompassing all of Pierce County and all of King County) but many serving just a single local community. By 1988 Washington had 75 separate public ports, far more than any other state.

The Port of Seattle was the state's first public port, created by King County voters just months after passage of the Port District Act. Its first piers and terminals were ready just in time for the huge jump in Pacific trade that accompanied World War I and its disruption of Atlantic shipping, helping the new port grow rapidly. In Pierce County, voters narrowly rejected a proposal to create the Port of Tacoma in 1912. In 1918, seeking to take advantage of the wartime trade boom, port boosters tried again and voters approved the Port of Tacoma, the state's seventh public port district. It also grew rapidly in its first years, before the Great Depression of the 1930s slowed growth at both ports.

Maritime trade and industry, including ship-building, grew at both ports during World War II, but again slumped after the war. Air travel boomed in the post-war years, including at the Port of Seattle's Sea-Tac International Airport, but waterborne trade declined nationwide, due in part to a rise in rail and truck transportation as the interstate highway system grew. The drop was particularly dramatic at the Port of Seattle, where maritime shipping continued to decline through the 1950s and Seattle fell behind the Port of Tacoma and others it had previously outranked. The decline, which led to calls for reform at the Port of Seattle commission that were implemented in the early 1960s, actually positioned Seattle to become one of the first West Coast ports to invest in containerized shipping, then revolutionizing the industry.

In the 1950s, Sea-Land Industries had developed standardized, stackable metal containers that could be rapidly transferred between ships, trains, and trucks, greatly reducing the time it took to load or unload ships. While the end result was increased trade volume, achieving it required huge investments in cranes and containers, and wholesale redesign and rebuilding of terminals. Ports doing well were reluctant to make the plunge; the Port of Seattle, not then doing well, jumped right in. In 1964, Sea-Land chose Seattle as its West Coast headquarters and maritime trade through Seattle grew rapidly for the rest of the decade and into the 1970s as container cranes and stacks of containers rose around the Elliott Bay waterfront.

The Port of Tacoma came somewhat later to containerization, installing its first container crane in 1970. But as worldwide maritime trade grew rapidly in the 1970s and 1980s, so did Tacoma's container capacity and its efforts to woo additional shipping lines, including more than a few from Seattle. In 1976 Totem Ocean Trailer Express (TOTE), a leading shipper to Alaska -- which operated not container ships but roll on/roll off vessels that cargo vehicles drive on and off -- moved from Seattle to Tacoma. A few years later, container pioneer Sea-Land, at the time Seattle's largest shipping tenant, moved its substantial West Coast operations from Elliott Bay to Tacoma's Commencement Bay. Two other container shippers, K-Line and Evergreen Marine, soon followed. The Port of Seattle fought back, bringing in other shipping lines including APL, a major worldwide shipper that operated some of the largest container ships then sailing.

But the fierce competition, and fears that shipping lines were playing the two Puget Sound ports against each other to the detriment of both, led to increasing calls to merge the two, especially from Port officials and civic leaders in Seattle. Calls for consolidating the state's many independent public ports were not new, nor were they limited to suggesting that the two busiest, Seattle and Tacoma, join forces. As early as 1960, there had been attempts in the state legislature, generally led by Seattle-area legislators, to consolidate the state's separate ports into a single agency.

Such calls were strongly resisted not just by Port of Tacoma officials and Pierce County politicians and business leaders, who did not want to see their thriving port district swallowed up by the larger Port of Seattle, but also by commissioners and constituents of small ports around the state, like the tiny Port of Eglon in north Kitsap County, which with other small Kitsap ports successfully resisted multiple efforts to combine the county's many independent ports into a single district. Legislative attempts to combine the two large ports, both in the 1980s and again in the 1990s, after Tacoma won yet another former Seattle customer, Hyundai Merchant Marine, likewise went nowhere.

Increasing Cooperation

While merger was not on the table as far as Tacoma was concerned, port commissioners in both Tacoma and Seattle did respond to calls by legislators and others for their ports to coordinate and cooperate in a wide range of areas, including promoting regional products and Puget Sound's international trade capacity. In 1992, the two ports worked with the state government to open a trade office in Paris. They also worked together on planning and lobbying the federal government on transportation security issues, efforts that took on greater urgency following the terror attacks of September 11, 2001. And they worked jointly to lobby the state and federal governments for improvements to transportation infrastructure.

In the early years of the twenty-first century, as the need to reduce carbon emissions driving climate change became increasingly apparent, the ports of Seattle and Tacoma collaborated on studies showing that transporting goods from Asia via Puget Sound and then by rail to inland areas of the U.S. had significantly lower carbon impacts than shipments via other West Coast ports or the Panama Canal. The ports used these studies to promote their shipping business and to set goals for reducing emissions. In 2008, the ports took cooperation to the next level, beginning a practice of holding some joint commissioner meetings, although Tacoma commissioners made clear that merging would not be a topic at those meetings.

Even as they met together and cooperated in other areas, the two ports continued to handle cargo operations separately and compete for maritime customers. In 2012, another of the Port of Seattle's major shippers, the Grand Alliance, moved to Tacoma, and Seattle lowered terminal rents for other shippers to keep them from moving. As Seattle's container numbers continued to decline, and much of its terminal capacity sat unused, Seattle commissioners and officials continued calls for the two ports to work together on maritime trade and dealing with shippers.

By 2014, with Puget Sound losing trade share to ports elsewhere on the West Coast, especially in British Columbia where three separate ports had merged into a single port authority, Tacoma officials were ready to do so. That January, the two ports announced that they would cooperate in dealing with shipping lines, and would share information about their shipping rates and operations. This type of cooperation between two legally distinct enterprises required exemption from federal antitrust laws that would normally prohibit it, and the ports sought and received antitrust immunity from the Federal Maritime Commission.

Reaching Agreement

Discussions on collaboration continued through 2014. That July "an unusual joint announcement from the ... [formerly] fierce rivals" showed progress was being made (Gillie, "Another Shipping Line ..."). The two ports announced that Westwood Shipping Lines (which in 1983 had moved from Tacoma to Seattle) would be moving back to Tacoma -- not because Tacoma was taking a customer Seattle sought to keep, but because the Port of Seattle planned to renovate Terminal 5, where Westwood had operated, and worked with the Port of Tacoma to keep Westwood in Puget Sound.

The talks concluded in October 2014 with a momentous decision by the two commissions. After nearly a century of competition, the ports of Seattle and Tacoma would jointly form an alliance -- a new separate legal entity -- that would manage the maritime-cargo operations of both ports. It took many more months, until May 2015, to work out all the details of how the seaport alliance would work.

The draft agreement released at that time named the new entity the Northwest Seaport Alliance and outlined its scope, including the terminal facilities at each port it would operate. The alliance would handle most marine cargo, including containers, logs, automobiles, and breakbulk cargo, but not grain, as each port would continue to operate its own grain terminal. The alliance did not extend to other port activities, such as Seattle's airport, Fishermen's Terminal, cruise-ship terminals, and marinas, or Tacoma's industrial properties. The following month the alliance agreement was finalized, unanimously adopted by both port commissions, and sent to the Federal Maritime Commission for approval.

The Northwest Seaport Alliance

On August 4, 2015, with federal approval in hand, the 10 commissioners of the two ports all signed the "Interlocal Agreement Between the Ports of Seattle and Tacoma Creating a Joint Seaport Alliance" and the Northwest Seaport Alliance came into being. That same day John Wolfe, chief executive of the Port of Tacoma, was named CEO of the alliance. Wolfe served as chief executive of both entities until 2019, when Eric Johnson succeeded him as Port of Tacoma CEO while Wolfe continued to head the Seaport Alliance.

From the start the Northwest Seaport Alliance was one of the largest marine-cargo ports in the nation and an economic driver for the Puget Sound region. In its first three full years of operation, container traffic climbed from 3.6 million twenty-foot equivalent units (TEUs, the standard measure of container traffic) to nearly 3.8 million TEUs. Although growth leveled off in 2019 (imports dropped due to a growing trade war between the U.S. and China while exports still grew, leading to an overall decline of less than one percent), those figures made the alliance the fourth-busiest container gateway in North America. Approximately 80 percent of the container trade was international, largely to and from Asia, with China, Japan, and South Korea in the top three spots. For China, by far the largest, containers bringing imports into the U.S. greatly outnumbered export containers, but for both Japan and Korea, more export containers than imports passed through alliance terminals. Alaska and Hawaii were among the domestic destinations that some 20 percent of containers were shipped to and from.

While container traffic accounted for about 95 percent by weight of the marine cargo moved by the alliance, its terminals also handled many other cargo types. Breakbulk cargo, including large machinery and other items not suited to container shipping, was handled at both ports. In 2017, more than 52 million board feet of logs and lumber were exported through the West Hylebos Log Facility in the "South Harbor," as the alliance refers to Tacoma, and some 752,000 metric tons of liquid bulk cargo, both molasses and fuel, were shipped from the "North Harbor" (Seattle). The South Harbor also handled automobile imports, with more than 146,000 autos arriving at Tacoma. In total, 2017 saw nearly 2,000 vessel calls at Northwest Seaport Alliance terminals of all types.

A study of the alliance's economic impact found that in 2017 this trade directly created 20,100 jobs -- 14,900 involving container cargo, 1,300 in automobile shipments, and 3,900 working breakbulk, logs, and other cargo. (The alliance's marine-cargo figures did not include grain exports, which each port still independently managed.) With an average annual wage of $95,000, those direct jobs meant $1.9 billion in income for area workers. When the spending by those workers and by companies doing business with firms directly involved with the seaport were included, the report calculated that the alliance's full economic impact amounted to more than 58,000 jobs generated in the region and more than $12.4 billion in business activity.

As competition with other ports continued -- growth at British Columbia ports in particular continued to outpace that at the alliance -- Northwest Seaport Alliance officials worked to maintain and increase the marine trade that produced those impacts. In October 2018, two innovative straddle-carrier portals began operating at Pierce County Terminal in Tacoma, significantly reducing the time needed for security scans of containers. The terminal had long used straddle carriers, capable of moving a stack of three containers at once, to expedite container movement, but screening containers for radiation, a required federal security measure since the 9/11 attacks, could only be done one stationary container at a time. The first-of-their-kind portals were able to scan three containers together as a straddle carrier moved them through the portal, reducing screening time by as much as 24 hours.

The alliance planned an ambitious project at Terminal 5, the 185-acre Seattle terminal located on Elliott Bay between Harbor Island and West Seattle. With its deep berth and dockside railyard, it had long been a premier container terminal but it had not had a permanent tenant since 2014 and so was a prime candidate for the major renovations needed to accommodate the ever-increasing size of container ships, including larger, heavier cranes and the infrastructure to support them. In April 2019 the 10 commissioners of the two ports voted 8 to 2, with two Tacoma commissioners opposed, to approve $500 million in improvements at Terminal 5, which would be leased to a new marine-cargo tenant to install and operate four to eight new large cranes on a site of 65 acres to start, growing eventually to almost 160 acres. Construction was scheduled for completion in 2021, and officials estimated that by 2050 the renovated Terminal 5 would boost the alliance's annual container traffic to nearly 7 million TEUs, compared to less than 5.5 million without the project.

Acting jointly through the Northwest Seaport Alliance, the ports of Tacoma and Seattle continued to work to promote trade and commerce to benefit the regional economy as they had independently for nearly a century before establishing the alliance.


Sources:

"Interlocal Agreement Between the Ports of Seattle and Tacoma Creating a Joint Seaport Alliance," August 4, 2015, Northwest Seaport Alliance website accessed March 6, 2020 (https://www.nwseaportalliance.com/sites/default/files/150804.ILA%20between%20POS%20&%20POT%20Creating%20Alliance.pdf); "Marine Cargo Economic Impact Analysis" (Community Attributes Inc., January 2019), Northwest Seaport Alliance website accessed March 6, 2020 (https://www.nwseaportalliance.com/stats-stories/economic-impact); Bob Young, "Next-door Ports Still Far Apart," The Seattle Times, March 19, 2008, p. B-1; Emily Heffter, "Crossroads for Port: Is Anybody Paying Attention?" Ibid., October 9, 2013, p. A-1; Emily Heffter and Paige Cornwell "Ports of Tacoma and Seattle Agree to Share Information," Ibid., January 17, 2014, p. B-2; John Gillie, "Ports of Seattle, Tacoma Meet to Lure Customers," Ibid., April 19, 2014, p. A-6; John Gillie, "Another Shipping Line Shifts from Seattle to Tacoma Port," Ibid., July 11, 2014, p. A-9; Coral Garnick, "Rivals No More: Seattle, Tacoma Ports Join Forces," Ibid., October 8, 2014, p. A-1; Coral Garnick, "Seaport-Alliance Proposal Unveiled," Ibid., May 7, 2015, p. A-15; Coral Garnick, "Ports' Panels OK New Alliance," Ibid., June 6, 2015, p. A-8; Northwest Seaport Alliance website accessed March 6, 2020 (https://www.nwseaportalliance.com/); Port of Tacoma website accessed March 6, 2020 (www.portoftacoma.com); Port of Seattle website accessed March 6, 2020 (www.portseattle.org); Kit Oldham and the HistoryLink Staff, Public Ports in Washington: The First Century, 1911-2011 (Olympia: Washington Public Ports Association, 2011); Kit Oldham, Peter Blecha, and the HistoryLink Staff, Rising Tides and Tailwinds: The Story of the Port of Seattle, 1911-2011 (Seattle: Port of Seattle, 2011), 69-74, 88, 93; HistoryLink.org Online Encyclopedia of Washington State History, "Port of Seattle -- Thumbnail History" (by Kit Oldham) and "Port of Tacoma -- Thumbnail History," Parts 2 and 3 (by Kit Oldham), http://www.historylink.org/ (accessed March 5, 2020).  


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