The Federal Maritime Commission (FMC) has unanimously approved a proposal by the Ports of Seattle and Tacoma in Washington state to gather and share information about each other's operations, facilities, and rates, subject to appropriate legal oversight.
The FMC's decision took effect March 8.
In mid-January, the ports told the agency that the discussions would be designed to "identify potential options for responding to unprecedented industry pressures" and to increase container volumes through the Puget Sound, the nation's third largest gateway. A merger or any other "change in governance" would not be part of any talks, the ports told the FMC at the time. The ports, located about 30 miles apart, are in separate districts governed by their own port commissioners.
In a speech earlier this week before a shipper group, FMC Commissioner William P. Doyle said that much of the inbound container traffic at the ports is "discretionary," meaning that cargoes could be routed to other ports and are not captive to either Seattle or Tacoma.
"Competition is stiff between ports on the U.S. West Coast and the ports in Canada and Mexico. Our ports need to compete on an international level and keep providing good paying jobs—I hope this agreement helps the ports of Seattle and Tacoma figure out their best options for the future," Doyle said.
Like other U.S. ports, Seattle and Tacoma face challenges from the proliferation of ship alliances under which container liners pool their capacity to rationalize their assets. As alliances expand their reach, they could wield significant pricing power over ports and terminal operators by leveraging their massive capacity and volumes. Ports also worry that as ship lines take delivery of increasingly bigger containerships, operators will be forced to consolidate their port calls in order to reduce the costs of operating mega-vessels.
Seattle and Tacoma also faces direct competition from British Columbia's Port of Prince Rupert, which is the closest North American West Coast port to Asia and which touts the shortest land-sea route to the U.S. Midwest through connections with the Canadian National Railway.
Canadian ports that can ship containers by rail to the Midwest also have an advantage because containers arriving in Canadian ports don't pay a U.S. harbor maintenance tax that averages about $100 a container.
