The container terminals at the ports of Seattle and Tacoma are running at less than half their capacity, according to a study conducted for the ports.
The study by Mercator International of Kirkland – one of several last year – said no other major port complex in North America is so underused.
Mercator also says Puget Sound ports have been losing ground, even as competitor ports have been gaining.
Puget Sound container volumes have been coasting lower since 2006. The Canadian ports have been growing rapidly.
Among the reasons is the rise of the mega-ship. Ever-larger container ships are the global shipping industry's response to its own crisis. Profit-seeking shipping lines have been partnering up and building ever-larger ships, in exchange for savings on fuel. Ship sizes keep growing. This week the Port of Seattle welcomed its biggest ship yet: the CMA CGM Callisto. It docked at Terminal 18.
So far the Port of Seattle’s Terminal 5 has been one of the casualties of this battle. In 2006, it ran near capacity. When it closed last summer, other terminals easily picked up its remaining business.
While it is closed to containers, the port has tried to make it earn its keep with a lease that put Shell’s Arctic Drilling fleet there. But this launched a flotilla of kayaktivists and a wave of legal action. It is still not clear whether the rig will be allowed to return to Seattle for the winter.
Bari Bookout, who leads the Seaport Alliance’s commercial strategy, says Terminal 5 "is a great terminal for container cargo. But the dock is unable to handle cranes large enough to support the ships that currently call at the Port of Seattle."
But the next generation of ultra-large container ships, being built now at shipyards across Asia, is double the size of the current giants.
Bookout says if the seaports in Seattle and Tacoma want to remain a destination for cargo ships, they must invest. "We don't have a choice," she said. "We can't choose to just handle small ships. We need to have the facilities that will handle the ships of the future."
Terminal 5 was working up to its designed capacity in 2006: 650,000 container units a year. By last year, its work had dwindled so much that other port terminals easily picked up the slack when the terminal closed.
The Port of Seattle is two-thirds of the way through estimating just how much it would cost to modernize Terminal 5. Then the combined ports will figure out how to proceed: Tacoma also needs a terminal where two ultra-large container ships can dock at once. Terminal 5 is empty – but it does have Shell as a tenant for two years.
"The port probably is riding both horses,” said Peter Goldman, a lawyer with the Washington Forest Law Center. He’s involved with the groups that have been protesting the Shell drilling fleet at T-5.
"They're riding the modernization horse, and if that doesn't pan out, their plan would be to allow Shell to establish a permanent home port there."
Goldman said if Shell does strike oil in the Arctic, "Why wouldn't they want to stay for more than two years?"
The ports’ alliance said a lease renewal could be possible, but there would have to be a public vote at the port commission. Two of the commission’s five seats are up for election this November. Last month’s primary has already ensured that one of those seats will go to a progressive candidate. And the last vote on the lease touched off protests, kayaktivists and legal challenges.
But turning Terminal 5 into a modern terminal also has risks. The project is expected to cost hundreds of millions of dollars. And once the terminals are upgraded, the ports say they will have a shot at a successful container business. But in a rapidly changing industry like international shipping, there are no guarantees.