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November 16, 2023–The Northwest Seaport Alliance (NWSA) of Seattle and Tacoma has scored big in federal funding under the Biden administration’s Port Infrastructure Development Program (PIDP) with a $54.2 million award from the U.S. Maritime Administration (MARAD).

The federal funding comes at a time when the NWSA also is beginning to experience a welcome reversal of fortune as its container traffic saw a massive increase for the month of September.

“The award will launch a series of critical improvements at Husky Terminal in our South Harbor that will further enhance our gateway’s global competitiveness,” said Deanna Keller, Port of Tacoma Commission President and NWSA Co-Chair.

DRAYAGE WILL BENEFIT

The drayage trucking industry will be a key beneficiary of the award, which MARAD said will reconfigure the Husky terminal yard for better truck circulation, install roughly 40 refrigerated cargo racks and related power supplies, and relocate on-terminal structures.

Keller underlined the significance of the developments saying that “by densifying the terminal and expanding its refrigerated cargo capacity, we will be able to improve service for importers and help agricultural exporters move more cargo to international markets.”

Cargomatic President Ed Aldridge is looking forward to these developments. “Seattle/Tacoma is a major market for Cargomatic that we look forward to growing even further in support of America’s agricultural community. As freight demand increases, both importers and exporters can count on the fact that Cargomatic will be ready to provide the additional capacity.”

NWSA handled some 134,642 twenty-foot equivalent units (TEU) of imports in September, a gain of 31.81% over the 102,148 TEU that came through in September 2022. On the export side, NWSA’s numbers were equally impressive: a 33.58% increase to 61,867 TEU this year over 46,315 TEU last year.

NWSA LEADS THE NATION

In terms of percentage growth, NWSA’s import figure of 31.81% led the nation, with the nearest rivals being the Port of Long Beach at 19.33%, and the Port of Los Angeles at 14.31%. All other ports in the country had negative growth in imports for the month.

On the export side, NWSA’s 33.58% growth was topped only by the Port of Los Angeles, which had a 55.30% increase. The next closest rival was the Port of Houston, which saw a 21.41% increase year over year in September.

The explanation for NWSA’s sudden boost in throughput is partly the result of shippers returning formerly diverted cargo streams back toward the USWC ports in general following ratification of the Pacific Coast longshore labor contract in August.

SHIPPERS DIVERT FROM CANADA

But the uptick in NWSA’s throughput also comes as a backlash by shippers to the dockworkers strike in Canada’s southwestern ports of Vancouver and Prince Rupert that took place in July.

That strike prompted U.S. importers to divert their freight away from the Canadian gateways to USWC ports, especially the NWSA, and railway executives say that the freight has not yet returned to the Canadian ports.

“We have set Rupert up with a premium container service into U.S. markets, and that kind of strategy has been working. And … when the strike occurred, it’s that business that started to move to U.S. ports,” said Canadian National (CN) railway CEO Tracy Robinson on his firm’s earnings call in late October.

Canadian National uses Prince Rupert to by-pass USWC ports

Photo Credit: Canadian National

Canadian Pacific Kansas City (CPKC) railway Chief Marketing Officer John Brooks echoed that view on his firm’s earnings call: “Just look at our train lengths and where our import volume is going. It’s all domestic Canada and very little volume going into the U.S.”

The executives told the October earnings calls that their U.S.-bound international intermodal traffic from the ports of Vancouver and Prince Rupert was down in the third quarter, CN by 23% and CPKC by 10%.

DOWNWARD TREND IN THROUGHPUT

That is welcome news to the NWSA, which has seen a steady erosion of its U.S. import market share over the years, dropping from 9.26% in 2010 to 5.18% in 2021, according to figures of the U.S. Army Corps of Engineers (USACE). 

On the export side, NWSA has seen its numbers fall from a high of 8.75% market share in 2012, to a low of 4.66% in 2021, according to USACE figures.

The situation worsened between 2010 and 2019, when container volumes at Vancouver and Prince Rupert rose by a combined 57% as the two ports connected with the Canadian railways to become leading intermodal gateways to and from the U.S.

At the time, U.S. West Coast volume was up only 9%, and the NSWA was hit the hardest by the shift in trade to the Canadian ports. Between 2006 and 2019, intermodal volume dropped 50% from the two Pacific Northwest ports to the U.S. Midwest with the difference scooped up by the Canadian ports.

U.S. GOVERNMENT BACKS NWSA

The Canadian railways are convinced that the September uptick at NWSA is a temporary phenomenon. “We think that business is going to come back. We’re working with our customers on it. Our call is that it will come back gradually,” said Robinson.

But they may have to wait a little longer than expected, especially with the U.S. government now putting its development dollars behind efforts of the NWSA to regrow its market share. 

Indeed, underlining the particular importance of the Pacific Northwest to the Biden administration, the $54.2m that the NWSA received is the largest single amount in the $635m awarded to 41 port projects across the entire country under the PIPD initiative.