International trade volumes remained anemic at the Port of Tacoma during the first few months of 2010, but the port is still on track to be solidly in the black by year's end, port executives told Port of Tacoma commissioners this week.
The port expects net income of $20.7 million for 2010, David Morrison, the port’s director of financial planning and treasurer, told commissioners Tuesday afternoon. That’s $200,000 less than the 2010 budget projected, but still a huge turnaround from 2009 when the port posted a $23.2 million loss.
Much of that red ink in 2009 was generated by a $22.3 million writedown for development and planning costs for a terminal project that the port canceled. That terminal project on the Blair Hylebos Peninsula was halted partway through development, when trade volumes fell steeply worldwide.
The port had been constructing that 168-acre terminal for NYK Lines.
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The port’s business has taken a significant body blow from the economy, John Wolfe, the port’s interim executive director, told commissioners at a midyear budget review. But he said he sees a “glimmer of hope” in the developments at the port.
The port has begun broadening its business recruitment beyond the traditional container business, Wolfe said. In some cases, the port is turning back the clock to revive businesses that left the port years ago. Log exports, for instance, have returned to a Hylebos Waterway site owned by the port, and the port has launched a new initiative to make better use of its real estate assets, he said.
At the same time, the port has kept careful control of spending, postponing some capital spending to save cash. Repairs to terminals 7a and 7b, for example, have been postponed and other projects have been deferred.
That careful watch over timing and expenses remains critical to keeping the port bottom line positive because most shipping volumes are still losing ground compared with last year’s volumes, according to those at the port.
International container numbers, for instance, are down nearly 23 percent through the end of April. But domestic containers – containers headed to U.S. destinations such as Alaska – are up 6.1 percent.
Auto imports and exports have stabilized at a new lower level that better reflects the size of the market. Those numbers are off 16.1 percent through April 30.
Grain shipments are off 3.8 percent. Gypsum trade is down 60.2 percent while breakbulk cargo, cargo too large or too oddly shaped to fit into containers, was off 8.9 percent through the first four months. Total vessel calls, reflecting lower demands, were off by 21.3 percent. Some 337 ships called at the port through April compared with 428 in those same months in 2009.
As volumes begin to rise in the second half of the year, expenses will also jump more quickly than revenue, Wolfe said.
Wolfe, one of five finalists for the port director’s job, said the port’s biggest job over the next few years will be to optimize the use of its existing assets. While trade volumes are expected to turn around and rise modestly, according to the port’s projections, the port won’t see the gangbusters growth it experienced in the last decade, he said.
The port’s percentage return on assets, expected to be 1.6 percent this year, can pump up to 4 percent or more if the port carefully spends its money and works diligently to put idle assets to use, Wolfe said.