The Port of Tacoma is working with the two western railroads, its local provider (Tacoma Rail), cargo transloaders, Washington State exporters and trans-Pacific ocean carriers to enhance intermodal rail service from the port.
“It’s how we build a better mousetrap,” said Mike Reilly, the port’s director of business development.
The Port of Seattle also has a strong rail program, focusing on intermodal services to the upper Midwest. The booming oil field activities in the Bakken play in North Dakota are generating eastbound shipments of frac sand, pipe and other materials, thereby increasing the number of marine containers available for agricultural exporters so they can ship more farm products through the Pacific Northwest gateway.
Although Seattle and Tacoma have always emphasized rail, they are pursuing intermodal projects today with a sense of urgency. That’s because the Canadian National and Canadian Pacific railroads are moving aggressively to enhance their intermodal services through Port Metro Vancouver and Prince Rupert. The goal of the Canadian railroads is to attract more cargo for the large market that extends from Chicago to Detroit.
Much of the U.S.-bound intermodal cargo that moves though Canada’s Pacific Coast ports could be going through Seattle and Tacoma. The ports feel the loss. When Prince Rupert opened its container terminal in late 2007, more than two-thirds of its container traffic moved to or from the U.S. Prince Rupert’s container volume to and from all destinations peaked at about 565,000 TEUs in 2012.
Until recently, Vancouver was a minor player in the U.S. market. Only about 3 to 5 percent of its container volume was U.S. cargo; the rest was Canadian. That scenario has recently changed. According to port executives in Seattle and Tacoma, at least 10 percent of Vancouver’s container cargo now moves to or from the U.S., and the number could be higher.
Port Metro Vancouver and the two Canadian railroads declined the opportunity to talk about Vancouver’s growing role as a gateway for the U.S., so most of the information available is anecdotal.
The thinking on the U.S. side of the border is that when Prince Rupert opened its container terminal in late 2007, the plan was for that port, located 500 miles north of Vancouver, to be a gateway for the U.S. Canadian National, the only railroad that serves Prince Rupert, runs its intermodal trains to Chicago, Memphis and New Orleans.
Vancouver, meanwhile, was involved in a consolidation effort with neighboring Canadian ports, and its market was primarily Canada. Both CN and CP serve Vancouver to and from Canadian destinations as well as the U.S. Midwest.
Railroads will not speak openly about rates, but CN’s intermodal rates from Prince Rupert to Chicago during that port’s high-growth years were said to be $300 to $400 per container less than what Union Pacific and BNSF were charging from Seattle-Tacoma. Reportedly, CN’s initial contract with China Ocean Shipping Co., the main ocean carrier calling in Prince Rupert, expired last year, and now “there is less of a gap with the U.S. railroads,” Reilly said.
Last year the volume of containers moving through Prince Rupert to and from all destinations declined by 5 percent. Previously, Prince Rupert’s container volume had been increasing by 10 to more than 20 percent a year.
However, Vancouver’s container volume in 2013 increased 4 percent over 2012, although the port’s website did not state how much of the volume originated in or was destined to the U.S. Nevertheless, it is believed that increased U.S. traffic contributed to Vancouver’s growth last year.
Bari Bookout, Seattle’s director of commercial strategy, said U.S. destinations such as Chicago, Detroit and Indianapolis are important markets for the Canadian railroads out of Vancouver. Auto parts are becoming an important inbound cargo.
Executives at both ports indicated that they have no control over what the Canadian ports and railroads are doing in the U.S. market, although they would appreciate any help they could get from the U.S. railroads to keep their gateway competitive.
At the same time, the ports see growing local markets in their region, especially from transloaders that are expanding in Washington State. Transloaders transfer cargo from 40-foot marine containers to 53-foot domestic containers, with many of the domestic containers moving inland by rail.
John Wolfe, CEO at the Port of Tacoma, said the port’s cargo mix used to be 70 percent intact intermodal and 30 percent local, but now it is closer to 50-50. He attributes the jump in local cargo to growth in the transloading sector.
Reilly said the port is working with ocean carriers on stowage plans for loading in Asia that enable containers destined for transloading in the Tacoma area to be offloaded first from the vessel. The operation is moving so smoothly that some of the containers are offloaded, trucked to transloading warehouses, unloaded and returned to the vessel before it leaves for the next port of call, Reilly said.