Seattle’s Port Faces a Cargo Slump

When the Seattle and Tacoma ports put aside decades of competition and formed the
Northwest Seaport Alliance in 2015, officials confidently expected a trade powerhouse that
would boost the fortunes of both harbors. Since then, the Alliance has spent lavishly on shipping terminal improvements to lure cargo from other West Coast and Canadian ports.

But as the alliance’s 10th anniversary approaches, that early optimism has dimmed.
Cargo volumes through the two ports have dropped from a pre-pandemic high of 3.8 million twenty-foot-equivalent units (the standard measure of cargo containers) in 2018 to 2.97 million TEUs last year. At the likely slow rate of future growth, the Alliance will not return to 2018’s high point until after 2029.

Worse yet, the amount of shipping through the Seattle harbor has slipped far behind Tacoma, which had been roughly equal in past years. In the 12 months preceding October, Seattle reported moving about 866,000 TEUs, compared to Tacoma’s 1.26 million TEUs.

The Seattle dockworkers union recently assailed the Alliance for failing to make good on those 2015 promises to boost trade. “In those years, it has failed miserably in that task,” said Ron Manwell of Local 19.

There is no real push to dissolve the Alliance, a 20-year agreement that helped the ports
compete as a united gateway against California and Canadian competition. But there is no
doubt the Alliance faces a new era of trade uncertainty that may further depress shipping
volume to the West Coast.

High tariffs on Chinese goods promised by incoming President Donald Trump will make the televisions, shoes, and household goods we import much more costly, and retaliation by China and other nations could hurt agricultural exports through the ports.
Alliance cargo growth after the pandemic has remained stubbornly slow. This is despite the $500 million expansion and modernization of Terminal 5 in West Seattle, which added a new shipping berth, expensive new cranes, and other improvements designed for new super-sized cargo vessels entering the trans-Pacific service.

Terminal 46, on the East Waterway near Pioneer Square, lost container service in 2019 and
today is used primarily to store imported automobiles. And now it appears that Terminal 30, a 30-acre shipping facility further upriver, will close at least temporarily in January due to a combination of low volume and potential environmental liabilities. The other Seattle international cargo terminals, T-5 and T-18 on Harbor Island, are operating well at close to capacity.

The cargo slump in the gateway, and Seattle in particular, is causing increasing concern among both Seattle and Tacoma port commissioners and Alliance management. They are increasingly voicing criticism of SSA, the Seattle-based global stevedoring company that runs all the Seattle terminals. SSA opens truck gates at the three operating Seattle terminals just four days a week, to save operating cash when volumes are low.

Terminals in Tacoma, however, are open every weekday, plus some night gates. But SSA has rebuffed Alliance offers of financial incentives to open gates additional days to ease congestion and improve service.

Unhappiness about SSA boiled over in a recent Seaport Alliance meeting during debate over lease amendments and incentives for Husky Terminal, a major Tacoma operator.
Seattle longshore union leaders argued against the Husky deal, saying commissioners should not vote for incentives to benefit a Tacoma operator when Seattle cargo volumes are slumping, and T-30 might close.

“We are on the verge of another (Seattle) terminal closing up shop,” said Mark Elvertson,
president of ILWU Local 19 in Seattle. Tacoma terminals used twice as many gangs, or crews, of ship-handling dock workers than Seattle in November.

Commissioners from both ports eventually voted for the Husky lease changes, but only after chiding SSA for failing to cooperate in the gate incentive program. They do not see SSA aggressively pursuing new business.

“There may be a time when we will have to act, if we don’t have a dance partner that wants to dance,” said Tacoma Commissioner Dick Marzano, himself a longshoreman.
“The problem is we have a monopoly in the North Harbor,’’ said Dick Meyer, another Tacoma
commissioner. “I find it very interesting that the same customer (SSA) has other facilities on the West Coast. What are they doing for us?” SSA, through a spokesman, declined to comment.

The company, founded by Fred Smith in 1949 as Bellingham Stevedoring Co., today operates 250 facilities around the world, handling 17.2 million TEUs of marine cargo. The firm recently was sold to Blackstone Infrastructure Partners and no longer has any local ownership.

The company has played a critical role in building Seattle’s maritime economy, spending
millions of its own money with the Port of Seattle in the expansion of Terminal 18 on Harbor Island, and later on T-5 after previous ownership collapsed. But questions have been raised about the company’s continued commitment to Seattle as Blackstone’s investment owners gained control.

Multiple operators run terminals in Tacoma, which promotes better service, said Seattle Port Commissioner Sam Cho. “That competition allows them to open more gates, bring in new customers, and bring down costs,” Cho said.

The development of highly efficient container ships, on-dock cargo handling equipment, and industry integration fueled a boom in international trade in the Northwest throughout the 1990s until the recession triggered by the housing crash of 2008. The shipping industry was shaken to its foundation, and big shipping lines such as Korea’s Hanjin went bankrupt in 2016.

The market rebounded until the global pandemic struck in 2019, depressing trade worldwide and dealing a blow to ports from which they are still recovering. The West Coast’s biggest ports, Los Angeles and Long Beach, are slowly regaining their pre-
pandemic volumes. Los Angeles reported 8.6 million TEUs in 2023, compared to 9.9 million the previous year. Long Beach handled about 8 million containers in 2023, down about 1 million from the previous year.

The good news is that West Coast longshore workers recently signed a long-term labor
agreement, while East Coast dock workers are nearing a January deadline for finalizing their contract after a brief work stoppage this fall.

In Canada, both the Vancouver and Prince Rupert ports are still below their pre-pandemic
volumes. The picture is mixed for East Coast and Gulf Coast ports, which have been chipping away at the West Coast’s trade dominance. New York/New Jersey and Virginia ports reported gains over the previous year, but Georgia was down.

Seaport Alliance officials are apprehensive about the cargo business’s future with the threats of Trump-triggered trade wars on the horizon. The forecast is “volatile and chaotic,” said Tong Zhu, Chief Commercial & Strategy Officer for the Alliance. She noted that even before Trump’s trade threats, China’s commerce with the Northwest has been declining. Isolationism, protectionism, and shifts in manufacturing all are contributing to a forecast for little growth worldwide in 2025.

Medium-sized ports like Seattle and Tacoma face extra challenges in a period of low or negative growth. In the Pacific trade, ships typically call on Asian ports including China, Korea, and Japan before heading east to the U.S and Canada. Shipping lines will tend to consolidate port calls when volumes decline, focusing on the largest ports like Southern California’s with high local demand for cargo.

Seattle and Tacoma are considered “discretionary’’ ports, meaning the local consumption of cargo is relatively small. Many factors drive carriers’ choices about which ports to use, such as whether the carrier has a financial interest in the local port, or who offers the lowest and fastest moves and fastest rail connections. The Alliance has nothing to do with those decisions. To compete effectively, the Alliance terminals have to offer better service and quicker turn times for moving cargo, good rail connections to the Midwest, and lower costs.

“Best in class service’’ has been the strategic goal of John Wolfe, the Seaport Alliance’s chief executive. He has emphasized reducing the time trucks take to get through terminal gates, discharge their cargo, and exit, along with improving rail service and expanding import cargo from inland ports.

One of tools is a financial incentive to reduce gate times, which the Husky Terminal in Tacoma agreed to funding for terminal improvements and other provisions the Alliance sought, such as performance metrics. So far, Wolfe acknowledges he has not been able to persuade SSA in Seattle to participate in cargo incentive programs. “We haven’t been able to get to a final agreement,” he said.

As the Alliance struggles to regain market share, it is also waging legal and regulatory battles over control of contaminated stormwater runoff from container terminals. In particular, the Alliance is asking the U.S. Supreme Court to bar private lawsuits filed by Puget Soundkeepers and others against the ports as a way of enforcing state clean-water standards. The state Department of Ecology should alone have the enforcement authority, the Alliance said.

The threat of environmental litigation against SSA’s operations at T-30 is contributing to the
decision to close the terminal, the Alliance said, although SSA would not confirm that claim.
“Uneven litigation exposure and lack of enforcement predictability across the U.S. directly
impacts our ability to continue to compete economically,’’ the Alliance said. “The situation at Terminal 30 is a prime example that the high-cost and uncertainty around third-party lawsuits has real impacts on ports and businesses.”

The closure of Terminal 30 on the Duwamish River will not affect overall cargo volumes as
vessels will shift to another Seattle terminal. But it is another reputational blow for the Alliance as it searches for solutions to its slow growth.

As the T-30 closure approaches, the Alliance is quietly asking SSA to take over the 88-acre T-46 (just south of the ferry terminal) and re-start container operations there. “They are looking into it,” said Cho, the Seattle port commissioner, although he acknowledges lease negotiations would be complicated, and agrees that the T-46 container cranes are undersized and old.

The questions about how much cargo space is really needed in Seattle will surface again in the coming weeks when the U.S. Coast Guard announces its Base Seattle expansion plans, which have called for the acquisition of up to 53 acres of T-46 to the north of the base. The U.S.C.G.’s Base Seattle sits midway between T-46 and T-30 on the Duwamish. If T-46 is reopened as a container facility, that might create an opening for the Coast Guard to
expand south to T-30, Cho said.

Wolfe, one of the most respected port executives on the West Coast, is trying multiple
strategies to bring back growth to the gateway. But the task will require a concerted effort by the elected leadership, labor unions in both harbors, and commercial operators, including SSA.

“We need to continue to work beside SSA and our labor partners to approach the marketplace’’ and promote the Alliance as a better place to do business, Wolfe said.