U.S. Representative Jim McDermott, D-Seattle, was correct earlier this year when he said Canada’s West Coast ports are “eating our lunch!”
Washington and British Columbia are blessed with deep water seaports that are closer to Asian markets than those in California, the Gulf states and our nation’s eastern seaboard. There is a rich trade tradition in the Northwest, and for many years, the ports of Seattle and Tacoma were preferred by shippers because they could move large volumes of cargo rapidly.
However, things have changed, and the pace of those changes will accelerate in the years ahead. The gap will widen if our state and federal governments don’t address critical infrastructure needs — highways, ports, harbors, railroads and security — and expedite permitting. Here’s why:
Last year, ocean-going cargo containers grew by 11 percent at Prince Rupert, B.C., as shipping companies seek the fastest route to move goods to and from Asia. Even though Prince Rupert, the deepest natural seaport in the Northwest, is 1,000 miles by road north of Seattle, it is 68 hours closer to Shanghai by boat than Los Angeles.
By contrast, cargo volume at the Port of Seattle dropped 26 percent from 2010 to 2013; the Port of Tacoma’s volume is unchanged since 2008.
The Federal Maritime Commission, the agency tasked with regulating America’s international ocean transportation system, reports that roughly 87 percent of the containers received in Prince Rupert were hauled by rail to the U.S., mostly to Midwest states.
As more and more bulk cargo, such as wheat, coal, potash and refined petroleum, is shipped overseas, those products are leaving the docks in British Columbia, not Washington and Oregon. That problem will worsen if planned U.S. projects continue to languish in the permit approval process as Canada expedites building new terminal capacity.
Bottom line: The growing volume of bulk cargo passing through the state by rail won’t stop here. Those products, the jobs and economic opportunities will continue to shift north of the border.
In December, the Wall Street Journal reported that port congestion at the Seattle and Tacoma ports, labor tensions at U.S. West Coast docks, and America’s container tax spurred shipping companies to look to Canada’s ports. While Congress and our state legislature debated needed highway and road funding, the Canadian government spent $1.22 billion (U.S) over the past decade to improve rail and road access and boost inspection capacity. The provincial governments and private sector sources kicked in another $2 billion.
Canadian National Railway Co. has invested nearly $3 billion since 2010 to cut travel times along its western corridor and has added new container terminals in Illinois and Wisconsin to receive Midwest-bound goods.
Meanwhile, our federal harbor maintenance tax, which shippers say costs anywhere from $25 to $500 per container, is crippling American ports. The Federal Maritime Commission believes repealing that tax would likely allow U.S. ports to win back as much as half of the business now going to Canada.
On the brighter side, the ports of Seattle and Tacoma recently formed what is called the Northwest Seaport Alliance, creating the third-largest trade gateway in North America. Canadian competition pushed the ports to seek legislation allowing them to invest in super docks to handle the mammoth Panamax ships, and the legislature finally passed a transportation funding bill to help relieve congestion. BNSF is investing $189 million in railroad improvements this year.
The volume of cargo handled at B.C. ports has jumped 46 percent since 2006, while our West Coast traffic grew only 3.8 percent, according to the American Association of Port Authorities.
That should be a wake-up call for us and prod our elected officials to act before it is too late and there is no lunch to eat.
Don Brunell, retired as president of the Association of Washington Business, is a business analyst, writer, and columnist. He lives in Vancouver.