Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
November 22, 2013 at 10:33 AM
I was on the road (in the air, actually) for part of the week, so I need to play some catch up:
• My colleague Coral Garnick reported on the Pacific Marine Expo, including a new report showing that the maritime sectors have a $30 billion economic impact on Washington state. Like aerospace, software and biotech/biomedicine, this is a critical cluster.
Among its components: Passenger water transportation; boat and ship building, repair, and maintenance; maritime logistics and shipping; fishing and seafood products; and maritime support services. It is also a source of well-paying, blue-collar jobs.
It faces formidable risks. Climate change and overfishing threaten the ocean and its bounty. Members of Congress keep trying to weaken the Jones Act, which ensures some ship-building is done in America.
Closer to home, policymakers are not acting to ensure that infrastructure is maintained and built to ensure the viability of these sectors. Toxic competition between the ports of Seattle and Tacoma is not growing overall market share. Let’s not that this cluster for granted.
• Unemployment in metro Seattle and Washington ticked up last month. These reports always contain what economists call “noise,” so one month’s numbers should be approached with caution. Still, as my colleague Amy Martinez wrote, “October’s spike in joblessness, which continues a trend begun in August, suggests hiring has cooled considerably from spring and early summer.”
October 1, 2013 at 10:19 AM
Amid continuing tepid growth in world trade in the Great Recession’s aftermath, the EU crisis and a slowdown in China, the Pacific Northwest saw an overall decline in its market share in the second quarter. A Journal of Commerce report said overall container traffic to North American West Coast ports fell by 2.3 percent compared with the same period in 2012 and overall market share also declined. But the pain was not uniformly felt.
In Los Angeles, container volume fell 9.9. percent, but this was offset by Long Beach’s 10.1 percent growth. This helped keep Southern California dominant in its share, up four tenths of a percentage point to 60.1 percent. Oakland was off 0.2 percent but its share grew slightly to 9.8 percent among the West Coast ports.
The story was different in the Northwest. The Port of Tacoma saw its container volume leap 34.3 percent, the best showing among the group surveyed. Unfortunately, most of this came as a result of the Grand Alliance and Hamburg Sud lines moving from the Port of Seattle, where traffic plummeted 28.8 percent, the biggest loss seen that quarter. Portland dropped 13.8 percent. Thus, the Northwest overall fell to 11.7 percent market share from 12.1 percent in the second quarter of 2012 and 12.4 percent in 2011. Share in Vancouver and Prince Rupert grew to 13.8 percent vs. 13.4 percent in 2012 and 12.6 percent in 2011.
July 17, 2013 at 1:14 PM
A new report from the Cruise Lines International Association says that the state posted a record $764 million in direct spending and cruise-industry employment of 19,000 last year. That ranked Washington sixth among the states in cruise industry economic impact. Seattle was the eighth-largest cruise port in the United States with 464,000 passengers embarking, essentially holding its own compared with the previous year. The No. 1 port is Miami.
“After a strong rebound in 2010 and 2011 from the recession induced impacts of 2009, the North American cruise industry continued to expand in 2012 but at a more moderate pace,” the report stated. In 2010 and 2011, global passengers and capacity grew by 10 percent; last year that growth slowed to 5 percent. Among the causes were recession in Europe, continued weak consumer spending in the United States and “negative publicity” from the grounding of the Costa Concordia, which struck a rock off the coast of Italy and whose captain now faces criminal charges. (Really? Negative publicity ripped a gash in the ship? Really?).
Business Research and Economic Advisers, a marketing research outfit, conducted the study for the trade association. As with most economic impact studies, this one should be examined with care. It can’t tell us, for example, what economic activities might increase if the cruise industry was not using consumer dollars. Still, anybody who has been in downtown Seattle this summer understands the big footprint of the industry here. With the Port of Seattle struggling to make up for lost container business, cruising is more important than ever.
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Today’s Econ Haiku:
Ben, on his way out
Blurts out what’s holding us back
Congress, see mirror
June 10, 2013 at 10:42 AM
The Trade Development Alliance of Greater Seattle held its annual dinner last Thursday. Gov. Jay Inslee was the keynote speaker. I was on a panel with Len Jordan of Madrona Venture Group and Jeff Frazier of Microsoft, moderated by Bill McSherry of Boeing. Major sponsors were Boeing, Microsoft and Highline Community College. Among those buying tables were the Port of Tacoma, the Port of Seattle, the Port of Everett, Seattle Metropolitan Chamber of Commerce and Washington State Department of Commerce. In addition to public officials and business people, attendees included consular officials of other countries.
It was an evening that attested to the power of trade here, and to this community’s interest in the wider world. Both are big advantages. Gov. Inslee promised the state would do what it could to win the 777X, said Washington would “feast at the table of technology” and touted the increase in cherry exports under the new Korean-U.S. trade agreement as well as the 100,000th Chrysler exported from the Port of Gray’s Harbor. Our panel was put through the paces in predicting such things as China’s growth and Middle East air traffic in 2013. I’ve worked in cities and states that only gazed at their navels, measured economic success in the number of new tract houses built. This is far better.
On the other hand, we live in our own bubble. Washington is a net winner from the trade status quo. The same is not true everywhere. For example, a year after the free-trade agreement with South Korea was signed, the U.S. trade deficit was larger and the promised increase in American jobs hasn’t happened. South Korea is a currency manipulator, too.
June 6, 2013 at 10:28 AM
I find evidence of the Puget Sound economy’s long reach all over, including in the June issue of Trains magazine. An article highlights the 25-year survival of Montana Rail Link, with a 623-mile main line running from Sand Point, Idaho, to east of Billings, Mont. This is the former Northern Pacific, the first transcontinental to reach our region. But it became redundant with the 1970 merger involving the NP and the Great Northern and creating the forerunner to today’s Burlington Northern Santa Fe. BN did a lease-purchase agreement with MRL founder Dennis Washington in 1987; in 2047, MRL has the option to purchase the main line outright. BNSF uses the former Great Northern as its main rail route, although it sends trains over MRL, too. And MRL has been successful in keeping and growing its own traffic.
One big blow came during the recession when Seattle’s Plum Creek Timber sawmill in Pablo, Mont., was permanently shut down. As a result, MRL was forced to close an entire branch line. “Losing Plum Creek was like losing Sears and JCPenney out of a mall,” the article quotes MRL President Thomas Walsh. The company was hammered by the housing collapse. It had also become a real estate investment trust, a boon to investors who get most of the profits, but a situation that doesn’t allow executives to be patient.
Meanwhile, the magazine — and you have to buy it, this isn’t available on the “tubes” (what a concept) — has a fascinating map showing all the trains operating on Montana Rail Link at 10 a.m. on Feb. 25. Again, the Puget Sound is heavily represented.
June 4, 2013 at 10:24 AM
In its new annual report, Port of Seattle CEO Tay Yoshitani called 2012 “another growth year and …we’re well positioned for 2013.” With 33 million passengers, Seattle-Tacoma International Airport achieved a record. International travel grew by 8 percent. Operating revenue rose to nearly $522 million in 2012, compared with $483 million the previous year. Of $224.6 million in capital spending, 82 percent went to aviation. Yoshitani said finances “were solid in 2012.”
The Midwest drought hammered grain exports, which fell 37 percent to 3.2 million metric tons. The biggest blow to the seaport in years came last year with the loss of the Grand Alliance and Hamburg Sud container lines, which went to the Port of Tacoma. The consequences won’t likely be tallied until next year’s report. Container volume fell 30 percent in March compared with the same month in 2011. The port did see Hanjin extend its lease at Terminal 46 through 2025. The United Arab Shipping Co. is expected to begin calling at Seattle this month in partnership with existing China Shipping service.
The cruise business continued to be a success for the port, with 202 vessel calls and a record 935,000 revenue passengers last year. The port claims that each homeport ship that calls brings $2 million to the local economy.
May 23, 2013 at 9:27 AM
We know trade is important to Washington. It’s even more vital to metropolitan Seattle. According to the U.S. International Trade Administration, Seattle-Tacoma-Bellevue ranked No. 6 nationally in export value, at more than $41 billion. That compares with $53.9 billion in 2007, before the recession. The bad news is that the other top metros, led by New York, recouped their recession losses and showed higher 2011 figures.
I don’t have an immediate answer for our under-performance coming out of the downturn relative to other big export centers. And newer numbers, when they come out, might show a better trajectory of recovery. We know that Puget Sound ports have been losing market share relative to their West Coast peers, even as the Port of Tacoma and the Port of Seattle fight over existing container business. This erosion will grow with a wider Panama Canal enabling large container traffic to sail directly from Asia to the East Coast, where ports are pushing for federal money to deepen their harbors. There’s also competition from Vancouver and Prince Rupert, B.C.
One immediate lesson is that the Legislature shouldn’t be futzing around with transportation funding.
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Today’s Econ Haiku:
Speaking from a posh resort
April 18, 2013 at 9:00 AM
Olympia pays a good deal of attention to lobbyists from Boeing and Microsoft, which is understandable. It’s an open debate whether the tax breaks and incentives for aerospace and technology provide more revenue through job creation and retention than they cost. But do the governor and lawmakers want to take chances in today’s competitive climate? Another important economic (forgive my jargon sin) ecosystem isn’t feeling as much love: Maritime.
A letter was sent to Gov. Jay Inslee earlier this month signed by Eric Johnson, executive director of the Washington Public Ports Commission; John Stuhlmiller, chief executive of the Washington Farm Bureau; Dan McKisson, president of the Puget Sound District Council of the International Longshore and Warehouse Union, and Capt. Michael Moore, vice president of the Pacific Merchant Shipping Association. In it, they express worry that increases in the B&O tax will put Puget Sound ports — and Washington trade — at an even greater disadvantage to rivals. Some of those competing ports benefit from significant incentives and tax breaks.
Among the concerns: A 140-percent proposed increase in the B&O tax on stevedoring (loading and unloading cargo from ships). The letter warns:
Stevedoring companies in (Washington) are struggling to keep the container ports in Seattle and Tacoma competitive to attract cargo. While other West Coast ports, including those in Canada and Mexico, have seen significant increases in their container volumes, the Ports of Seattle and Tacoma have seen those volumes fall. Maintaining the current B&O tax rate on stevedoring alone will not guarantee port competitiveness, but increasing the tax will increase costs for our ports and risk a further decline in cargo volumes, export capacity and waterfront jobs.
Other concerns are a proposed 1.8 percent B&O tax on commercial lease payments and narrowing the tax exemption on import commerce. The former issue, the groups worry, could squeeze revenues from such entities as terminal operators, thus hurting port revenue and their ability to invest in infrastructure, or drive the lessors away entirely. The latter especially worries agricultural interests. One of out biggest exports is air: Containers leave Puget Sound ports empty bound for Asia. Agricultural interests worry that tinkering with the import tax exemption might discourage shipping lines from filling those containers with Washington farm products, even though they provide low revenue for the shippers.
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Today’s Econ Haiku:
Trust but verify
China’s numbers don’t add up
Great wall of data
April 8, 2013 at 9:50 AM
Last week I wrote a commentary on the deplorable working conditions of short-haul truckers at the Port of Seattle. The drivers, who face rotten wages and lack of benefits, are also only allowed to use two portable toilets at the terminal entrance. This brought an interesting response from my go-to guy in the trucking industry, Steve Gordon of Pacific-based Gordon Trucking. He said I “should keep in mind those deplorable restroom facilities are not at all uncommon in our industry in general.”
There are plenty of loading docks at Fortune 500 companies where we do work regularly where our relatively more “professional” drivers in our segment of the business are told that the restrooms aren’t for them. Then to add the cherry on top, you get municipalities like those down here in the Sumner/Auburn/Kent valley that have ok’d lots of warehousing, but won’t OK a truck stop or rest area.
Where do they think truck drivers are supposed to park and take rest breaks? They can’t merely levitate outside these facilities for hours on end. So we then end up with trucks parked on freeway off ramps and city streets, neither of which is a good thing, further reinforcing that negative perception and making it less likely to get an adequate facility.
April 2, 2013 at 10:29 AM
Officials at the Port of Seattle continue to show a strange tone-deafness about the working conditions of short-haul truckers. As the Seattle Times’ Mike Lindblom reports, these drivers are barred from using the restrooms at the Terminal 30 office building. Instead, they must use two portable toilets near the terminal exit. The Port, International Longshore and Warehouse Union Local 19 and terminal operator SSA Marine maintain that it’s a safety issue. The truckers can’t be stopping and walking to the regular restrooms. They might be run over. But they’re already being run over by this nightmare of an American Dream. Two porta potties to serve dozens of drivers, without even a place to wash their hands? That these drivers are mostly African immigrants adds an unfortunate racial dimension to a dispute in this supposedly liberal city.
The controversy is not new. It was one of the issues, along with pay, safety, working conditions and liability that prompted a walkout by 400 of these drayage truckers last year. In both cases, Port officials say, essentially, “not our problem.” If they speak at all. Considering that the protest happened during sensitive negotiations with the Grand Alliance container lines — which ended up moving from Seattle to the Port of Tacoma, ultimately taking about 20 percent of the container business — I’d suggest it is the Port’s problem just from a business standpoint. The walkout was not an inevitable outcome because of those mean old Teamsters, who want to organize the drayage drivers. It was a result of the Port’s inert response to a long-standing problem, always with an excuse that the drivers are “independent contractors” (only technically), or it has no control over the trucking companies and terminal operators.
How’d that work out for you? In fact, for a port with little dockside rail service, these drivers hauling containers to rail terminals are actually a highly important component of the Port’s competitiveness. The response: Two plastic outhouses. There’s not enough resources to invest in a real restroom facility near the gate? Shameful. And stupid. You can’t blame Chris Hansen and the proposed Sodo arena for this one.