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Originally published March 19, 2008 at 12:00 AM | Page modified March 19, 2008 at 12:15 PM

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Next-door ports still far apart

King County taxpayers subsidize their port to compete with Pierce County taxpayers subsidizing their port. And who benefits? Mainly, big shippers and...

Seattle Times staff reporter

Port of Seattle

Established

1911

Containers*

1.97 million

Total tonnage

21.1 million

Vessel calls

1,221

Acres

1,200

Top trading partners

1. China

2. Japan

3. South Korea

4. Taiwan

5. Indonesia

Top exports

1. Machinery

2. Grain, seed, fruit

3. Cereals

4. Fish and seafood

5. Paper, paperboard

Top imports

1. Machinery

2. Toys and sports equipment

3. Electrical machinery

4. Vehicles

5. Knit apparel

Note: 2007 data

* Container traffic is measured in 20-foot equivalent units, or TEUs

Source: Port of Seattle

Port facts

The Ports of Seattle and Tacoma were created by state law to promote trade, jobs and economic activity.

The Port of Seattle owns an international airport and cruise-ship and fishing terminals; the Port of Tacoma runs only a seaport.

Both seaports operate mainly as landlords, leasing their properties to shippers and terminal operators.

Both are headed by a chief executive officer and overseen by five elected, part-time commissioners.

Port of Tacoma

Established

1918

Containers*

1.92 million

Total tonnage

19.6 million

Vessel calls

1,172

Acres

2,400

Top trading partners

1. China

2. Japan

3. Taiwan

4. South Korea

5. Thailand

Top exports

1. Grain, seed, fruit

2. Cereals

3. Meat

4. Aircraft

5. Inorganic chemicals

Top imports

1. Machinery

2. Electrical machinery

3. Vehicles

4. Toys and sports equipment

5. Furniture and bedding

Note: 2007 data

* Container traffic is measured in 20-foot equivalent units, or TEUs

Source: Port of Tacoma

King County taxpayers subsidize their port to compete with Pierce County taxpayers subsidizing their port.

And who benefits? Mainly, big shippers and terminal operators who, because of the competition, pay lower rents to the ports.

In Seattle, Port commissioners and Port CEO Tay Yoshitani think the state's two busiest seaports should merge.

Their rivalry doesn't increase the number of jobs or ships coming to the region and forces both public agencies to pay more in marketing costs and tenant inducements, say former Port of Seattle Commissioners Henry Aronson and Alec Fisken.

"In my opinion, it doesn't make sense," Yoshitani said of the rivalry.

He knows, however, that Tacoma fiercely opposes a merger — and has for decades — arguing that competition is good for both ports.

Still, Seattle and Tacoma need to link arms to stand their ground against new titans to the north, Yoshitani said.

Just over the border in British Columbia, three ports recently merged to become the Vancouver Fraser Port Authority, with the aggressive goal of tripling their cargo-container traffic by 2020. A new port farther north in Prince Rupert aims to be as busy as Seattle and Tacoma within a decade and already has taken cargo away from Puget Sound.

"I've been telling people that the Port of Seattle and Puget Sound is being outflanked," Yoshitani said.

He's right about that, said industry analyst Paul Bingham of Global Insight, an international economic-forecasting firm. "The first Prince Rupert service came right out of the Puget Sound," Bingham said.

A Canadian government report concludes that a small edge in this competition means a lot for blue-collar jobs: A 1 percent increase in cargo-market share for the new Vancouver Fraser Port Authority would yield 1,700 new jobs.

Aronson and Fisken see a Seattle-Tacoma merger as a way to reform the Port of Seattle, reeling from a bruising state audit of its construction practices. The U.S. Department of Justice is investigating the Port for criminal fraud.

Aronson and Fisken argue a merger could lead to a better-managed Port.

They hope it could lead the two ports to dump their property-tax levies, which this year will cost the owner of a $400,000 house in Seattle $90, and in Tacoma, $74. Together, the two ports expect to collect $92 million in property taxes this year. Ports in British Columbia and California don't have such taxing authority, Fisken notes.

Without the cushion of a taxpayer subsidy, Fisken says, the ports would be forced into efficiencies and business discipline they now lack.

"I think that's a very valid point," said Port of Seattle Commission President John Creighton, who notes that even ports in different countries — such as Malmo, Sweden, and Copenhagen, Denmark — operate as a unified entity.

In the U.S., the ports of New Jersey and New York are under a single port authority, and the ports of Virginia are consolidated in a state port authority.

Effort fails

A few Washington state lawmakers tried to push for a Seattle-Tacoma merger in the Legislature this year. But they got little traction because of stiff opposition from Tacoma.

"They like their port and don't want to be taken over by the big, bad boys from Seattle, which is how they perceive Seattle," said Rep. Ross Hunter, D-Medina, who wanted to create a task force to study Port of Seattle finances, management and a merger with Tacoma.

Hunter said he dropped the merger idea from his proposal because he didn't want a "big, bloody fight with Tacoma" lawmakers.

Rep. Glenn Anderson, R-Fall City, sponsored a bill this session to create a unified Puget Sound port authority, which would have 11 full-time commissioners instead of the part-timers who now oversee Seattle and Tacoma. Six commissioners would be elected by district, and five would be appointed by the governor for their expertise in trade and transportation.

The bill didn't get a hearing. Anderson vows to bring it back next year.

"The fact that we can't even find time to have a study about it [a merger] is a pretty scary thought," Anderson said. "We're sort of the ostrich with its head in the sand."

Tacoma officials argue the status quo sharpens the competitive edge of both ports while preserving local control.

"I'm not convinced that combining the ports would make them nimble and more competitive. Instead, I fear it would simply make them bigger, less responsive and, as a result, less competitive," wrote Dick Marzano, president of the Port of Tacoma Commission in a recent opinion piece in The (Tacoma) News Tribune.

Marzano likened the two ports to the University of Washington and Washington State University, which compete for faculty, students and grants. He said anyone who suggested merging the UW and WSU "would be laughed out of town."

He also contends that competition between Seattle and Tacoma isn't necessarily a race to the bottom in which shippers are the big winners. He points to Tacoma's successful effort late last year to lure a major Japanese shipping company, NYK, away from Seattle.

"When NYK takes over in 2012 and starts paying the full lease, it will be the highest lease per acre of any on the West Coast," Marzano said.

Competition doesn't appear to hurt the ports of Long Beach and Los Angeles, said Port of Tacoma CEO Tim Farrell. The two are right next to each other and are the two busiest container ports in the U.S.

It's curious, Tacoma advocates add, that Seattle wants to merge now that Tacoma has taken away NYK, a prestigious customer that had berthed at Seattle since 1896, and pulled even in key cargo measures, such as total container volume.

Tacoma fought consolidation efforts before, in the 1980s and '90s, when Tacoma also took big shippers from Seattle.

First joint meeting

Merging is such a divisive topic that it probably won't be on the table when the Seattle and Tacoma port commissions schedule their first joint meeting this month or next.

Instead, the two commissions are likely to focus on areas in which they can collaborate, such as marketing and environmental goals. "There are a lot of things we can do to cooperate that can benefit both ports short of consolidating," Creighton said.

Marzano agreed. As does Bingham, the economist, who cautioned against hyping the benefits of merging.

It wouldn't be accurate, Bingham added, to assume both ports would be "sitting fat and happy with super-premium rates if they weren't competing with one another."

Many factors — such as service, reliability, cost and access to railroads — go into shippers' decisions about where to berth, he said.

Although Asia-Pacific trade is expected to boom in coming decades, both Seattle and Tacoma have seen container volumes dip since 2006, while British Columbia ports have reported a slight increase.

Bingham said there eventually will be "enough cargo to go around." But he said in the short term, competition means more jobs for some ports and fewer jobs for others.

"I don't expect we'll reach any agreement in the near term," Yoshitani concluded, "but you've got to start talking."

Bob Young: 206-464-2174 or byoung@seattletimes.com

Copyright © 2008 The Seattle Times Company

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