{"id":148,"date":"2016-07-10T04:24:58","date_gmt":"2016-07-10T04:24:58","guid":{"rendered":"http:\/\/mikepellegrini.com\/weblog\/?p=367"},"modified":"2016-07-10T04:24:58","modified_gmt":"2016-07-10T04:24:58","slug":"port-metro-vancouver-or-port-of-tacoma-whos-got-the-edge","status":"publish","type":"post","link":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/2016\/07\/10\/port-metro-vancouver-or-port-of-tacoma-whos-got-the-edge\/","title":{"rendered":"Port Metro Vancouver or Port of Tacoma?  Who&#8217;s got the edge?"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-180\" src=\"http:\/\/mikepellegrini.com\/weblog\/wp-content\/uploads\/2016\/07\/IMG_5232.jpg\" alt=\"\" width=\"3264\" height=\"2448\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>According to a report prepared for Port Metro Vancouver (PMV), their <a href=\"http:\/\/www.robertsbankterminal2.com\/wp-content\/uploads\/Port-Metro-Vancouver-Container-Traffic-Forecast-Ocean-Shipping-Consultants-June-2014.pdf\">Container Traffic Forecast<\/a> (which again, I encourage everyone to read), they predict that West Coast container volumes will increase between 3.4% and 5.7% per year through 2030.\u00a0 Based on that, they\u2019re forecasting their share of the traffic will provide increases for PMV from 3.51 million TEUs in 2014 to 7.02 million TEUs in 2030.<\/p>\n<p>According to the report, they believe they will capture the lion\u2019s share of this work because:<\/p>\n<p>\u201c&#8230;Vancouver is considered to have a better competitive position than its immediate competitors \u2013 Prince Rupert, Seattle, and Tacoma \u2013 based on a review of the following criteria:<\/p>\n<ul>\n<li>Physical capability of the terminals;<\/li>\n<li>Planned development of capacity;<\/li>\n<li>Productivity of the terminals;<\/li>\n<li>Cost of transiting the terminals;<\/li>\n<li>Delivered costs to Central Canada and the US Midwest;<\/li>\n<li>Intermodal capacity;<\/li>\n<li>Import\/export balances;<\/li>\n<li>Suitability as a regional hub; and<\/li>\n<li>Existing customer base.<\/li>\n<\/ul>\n<p><!--more-->Why is Vancouver in a better competitive position? \u00a0 Let\u2019s look at the points raised in the PMV report.<\/p>\n<p><strong>Physical capability of the terminals.<\/strong><\/p>\n<p>While the Port of Tacoma (POT)\u00a0 estimates the terminals in Tacoma collectively are operating at about 50% of capacity, I believe the real amount would be closer to 65-70% of <em>effective<\/em> capacity \u2013 at least without major changes\/upgrades.\u00a0\u00a0 Olympic Container Terminal (OCT) and Pierce County Terminal (PCT) are typically close to being maxed out (although that&#8217;s lessened since the departure of Hapag Lloyd at PCT); the same is true of Washington United Terminal (WUT).<\/p>\n<p>The effective capabilities of the terminals are also affected by other factors such as container cranes, for example.\u00a0 Of the eight container cranes directly owned by POT on Pier 3 and Pier 7, the average age is <em>27 years<\/em>.\u00a0 I don\u2019t have the ages of the cranes at Maersk but I\u2019m guessing they\u2019re in the same ballpark, maybe even older.\u00a0\u00a0 The old cranes aren&#8217;t tall enough, strong enough, fast enough, and don&#8217;t have sufficient outreach to work larger modern container ships (modern ships are wider, longer and taller than the older ships).<\/p>\n<p>The cranes at WUT and PCT are newer, but of those, only the ones at PCT and the two newer cranes at WUT can work the 15,000+ TEU ships.<\/p>\n<p>Vancouver, by comparison has 16 Super-Post Panamax cranes all capable of working the largest ships currently in existence.<\/p>\n<p>Much of the other cargo handing equipment owned by the port, such as the straddle carrier fleet, suffers from the same age-related problems.<\/p>\n<p><strong>Planned development of capacity<\/strong><\/p>\n<p>Vancouver and Prince Rupert both have big plans in the works to expand capacity.\u00a0 The only thing presently in progress at the POT is the renovation of Pier 4.<\/p>\n<p><strong>Productivity of the terminals<\/strong><\/p>\n<p>Productivity is impacted by the percent of utilization of the terminals.\u00a0 As the utilization rate goes up, productivity goes down.\u00a0 This impacts us adversely.<\/p>\n<p>Another big factor in Vancouver\u2019s favor is that the terminals in Vancouver are very dense compared to Tacoma.\u00a0 Deltaport, for example, just bought 12 new 5-high RTGs.\u00a0 Their 72 acre Centerm has <em>19<\/em> 5-high RTGs.\u00a0 They push a lot more containers per acre through their yards.<\/p>\n<p>Another example of yards with greater density would be Prince Rupert.\u00a0 In their 59 acre yard \u2013 that\u2019s almost identical in size to OCT \u2013 they use <em>17<\/em> reach stackers.\u00a0 In 2015, they moved a record <em>776,412<\/em> TEUs.<\/p>\n<p><strong>The cost of transiting the terminals<\/strong><\/p>\n<p>This is a function of labor costs and container handling charges.\u00a0 These costs are somewhat lower at Canadian ports.\u00a0 Their estimate is a difference of about $30 US per 40\u2019 container.<\/p>\n<p><strong>Delivered costs to Central Canada and the US Midwest<\/strong><\/p>\n<p>Here, the PMV report compares Panama Canal transit fees for all water cargo routes, versus taxes, rail charges and the Harbor Maintenance Tax (HMT) for intermodal cargo destined for the US mid-west.\u00a0 The HMT is roughly $100 per 40\u2019 container for foreign imports coming through in Tacoma and other US ports.<\/p>\n<p>Clearly Canadian ports have the advantage here because containers entering the US from Canada are NOT charged the HMT.<\/p>\n<p>Altogether, they figure the cost of shipping to the mid-west through Vancouver runs between 9 and 14% less than shipping through Tacoma or Seattle.<\/p>\n<p><strong>Intermodal capacity<\/strong><\/p>\n<p>Tacoma has about a third more intermodal rail track space than Vancouver, so that advantage is ours.<\/p>\n<p>The rest of the factors, import\/export balances, suitability as a regional hub and existing customer base are all relatively equal between here and Vancouver.<\/p>\n<p>So to sum up, the main competitive advantages the Canadian ports believe they enjoy are:<\/p>\n<ul>\n<li>They\u2019ve put into effect massive expansion plans; and<\/li>\n<li>They have better, bigger and newer equipment; and<\/li>\n<li>They have slightly better productivity; and<\/li>\n<li>They have slightly lower labor and freight charges for US bound cargo; and<\/li>\n<li>They\u2019ve got a $100 per container advantage because importers don\u2019t have to pay the Harbor Maintenance Tax in Canada.<\/li>\n<\/ul>\n<p>And basically that\u2019s it.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; &nbsp; &nbsp; &nbsp; According to a report prepared for Port Metro Vancouver (PMV), their Container Traffic Forecast (which again, I encourage everyone to read), they predict that West Coast container volumes will increase between 3.4% and 5.7% per year through 2030.\u00a0 Based on that, they\u2019re forecasting their share of the traffic will provide increases [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-148","post","type-post","status-publish","format-standard","hentry","category-port-of-tacoma"],"_links":{"self":[{"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts\/148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/comments?post=148"}],"version-history":[{"count":0,"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts\/148\/revisions"}],"wp:attachment":[{"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/media?parent=148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/categories?post=148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mikepellegrini.com\/wordpress\/index.php\/wp-json\/wp\/v2\/tags?post=148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}