When the Port of Seattle lost the Grand Alliance shipping lines, followed by Hamburg Sud, to Tacoma earlier this year, it cost the seaport at least 20 percent of its container business. The port has dodged another blow by keeping the South Korean line Hanjin Shipping, with a lease extension by Total Terminals at Terminal 46 through 2025.
To stay, Hanjin will get a $4 million fee, funded from seaport operating revenues, and up to $35 million in capital improvements. The port will also make concessions on the rate structure. (The Puget Sound Business Journal first reported the details). This isn’t surprising considering Tacoma’s strong bargaining power, with stalwart taxpayer and political support for the seaport, excess capacity and a willingness to underbid any competitors for business. It’s also small compared with the economic impact of the container line.
The Port of Seattle did itself no favors in the labor dispute over working conditions of short-haul truckers. Although those truckers don’t work for the port, officials came off as aloof and unconcerned — and the protests happened during Grand Alliance bargaining. Seattle lacks much direct rail access to terminals. Still, the big challenge is Tacoma’s ability to underbid.
The port estimates that Terminal 46 generates 20 percent of its cargo traffic, as well as 3,200 jobs. Revenues from the operation are $370 million a year plus $24 million in state and local taxes.
If Seattle had lost Hanjin, it would have been a crippling blow to the container business, the port’s Century Agenda ambitions — and it would have rippled outward. One big effect would have been on the Seattle International Gateway yard of the Burlington Northern Santa Fe railroad, where containers are loaded onto rail cars. It also would have been the end of a long partnership: Hanjin has been operating in Seattle harbor since 1981, and have been at Terminal 46 since 1986.
[UPDATE] The deal was approved at this afternoon’s port commission meeting. Gael Tarleton, commission president, said, “We worked very hard to keep TTI in the Port of Seattle. The cargo handled at T-46 means thousands of jobs and economic benefit for our region, which gets us closer to achieving the goals of the Century Agenda, calling for increasing freight volume at the port to 3.5 million TEUs in the next 25 years.”
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Today’s Econ Haiku:
A slap on the wrist
The fine for HSBC
Too big to indict