In the annals of local economic development strategies, cooperating with your closest competitor might rank among the more Herculean tasks of local politicians. But that’s exactly what the ports of Seattle and Tacoma, Washington, managed to pull off a few years ago.
Facilities nestled in the picturesque waters of Puget Sound—Seattle to the north, Tacoma to the south—had long jostled with each other for the business of big, ocean-going ships. So in 2015, they created the Northwest Seaport Alliance, a company that now runs two harbors under one aegis.
Leaders of both ports had surveyed the consolidating shipping industry and saw a grim outlook. Shipping lines were growing bigger and cooperating with each other, increasing their negotiating muscle with the port operators whom they pay to load and unload ships of containers and other cargo.
“All of that change is driving ports to look at our business models differently and adjust to the changes we’re seeing globally,” says John Wolfe, CEO of the alliance.
The seaport alliance, though still in its infancy, is a local attempt to solve a global problem. Ports need major investments and workforces need to be ready for the changes. If the partnership succeeds, it won’t eliminate the ups and downs of a notoriously volatile industry, but it may take the edge off.
“We’re going to continue to have peaks and valleys,” says Dick Marzano, president of the Tacoma Port Commission. “The peaks won’t be as high and the valleys won’t be as low as they were in the past.”
Though a mere 32 miles apart, Seattle and Tacoma had been strong competitors for more than a century before they started taking baby steps toward cooperation on security measures in the early 2000s, after the September 11 terror attacks, says John Creighton, president of the Port of Seattle Commission. Around the same time, Canadian ports at Prince Rupert and Vancouver, which can whisk cargo off to the United States as easily as American ones, started eating away at Seattle-Tacoma’s market share.
Seattle and Tacoma port authorities continued working together on environmental issues, but commercial questions remained off limits until the Great Recession savaged global trade in 2008 and 2009, pushing the question of an alliance to the fore. At a meeting at an Italian restaurant in Federal Way, a small town nestled between Seattle and Tacoma, Creighton and Marzano broached the idea.
It took some years, but the Northwest Seaport Alliance scooped the facilities run by port commissioners (who are elected officials, by the way) in both cities into a single company. However, it preserved the existence of the commissions, which have to sign off on major decisions.
“It’s a bit more work for all of us,” Wolfe says.
The governance model has passed some initial tests. For example, the alliance got approval for a $141 million investment in Tacoma’s facilities made possible by fees paid for using docks in both Seattle and Tacoma. The construction, and the purchase of two new cranes, will allow two large ships to unload simultaneously.
That kind of cooperation between the two cities is “unheard of” in any other area of business, Wolfe says.
As most ports continue to vie for individual advantages, shipping lines are forming partnerships to share container-carrying space and extract better terms from ports. The marquee tie-up is A.P. Moller-Maersk and Mediterranean Shipping, the numbers one and two of the industry. Together, the two firms control about 30 percent of the world’s container fleet, according to data compiled by Statista, a research service.
Alongside consolidating shipping lines, ports will need to invest billions in the facilities needed to serve the latest generation of vessels. The fearsome “super-post-Panamax” ships, so named because they can’t pass through the Panama Canal, can be 22 containers wide, and require crane and docking structures that are unbuilt in many ports.
The plan for the Seattle and Tacoma ports to grow in unison has authorities in both cities thinking as well about how to ensure that the workforce is there to move the cargo and maintain the machines.
The cyclical nature of the port business—a few ships unload one day, then a rush comes—has meant that it needs a reserve workforce. And these have to know the equipment, like the giant cranes that straddle stacks of containers.
“In the future, we’re going to try to have more qualified workers than we need at any time,” Marzano said.
With Microsoft and Amazon in the Seattle area, the region is a high-tech hub, which led a lot of local schools to phase out shop classes. But according to a 2014 study, marine cargo operations in the two ports generated $4.3 billion in economic activity in 2013 and directly account for 19,000 jobs between them, with indirect and induced jobs bringing the total to 48,000. The gradual retiring of Baby Boomers means that skilled industrial workers are leaving the job market, Creighton points out.
So the Seattle port commissioners are working with a state initiative known as Core Plus to bring vocational education back. Under Core Plus, local companies help develop high school math and technical educational plans at the region’s schools.
“We don’t want mission creep,” Creighton says. “We want to stick to our knitting. But we want to make sure we’re training the next generation of industrial workers.”