The Port of Olympia commission got a lesson in global economics Monday as part of a six-month financial update on the port’s operations — and the lesson wasn’t pretty.
That’s because a significant drop in oil prices and a stronger U.S. dollar have slowed imports and exports at the port’s marine terminal.
The port imports ceramic proppants, also known as fracking sand, from China, which it then sends by rail to North Dakota and the Bakken oil fields.
But only one of those ships has called on the port this year, while log exports, though steady, have been affected by the rise of the dollar.
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Port Executive Director Ed Galligan said log exports are anywhere from 15 percent to 25 percent more expensive because of the stronger dollar.
The result is that marine terminal revenue through the first half of the year has fallen 43 percent to $2.38 million, compared with a budgeted amount of $4.17 million, said Finance Director Jeff Smith.
That led the port to revise its financial outlook for the remainder of the year.
The port now forecasts total revenue for 2015, including marine terminal revenue, to be $10.4 million, down from budgeted revenue of $14.8 million.
Port staff also is looking at deferring $13.2 million of $17.7 million in planned capital investments for this year, leaving a balance of $4.5 million for the rest of the year.
Port Commissioner Michelle Morris wondered whether that many port projects could be comfortably deferred.
“These can be safely deferred until 2016 or beyond,” Smith said.
The port also plans no new borrowing for the rest of the year and will not seek to increase its line of credit, he said.
During public comment, resident Denis Langhans of Olympia said he has lingering concerns about whether the port can secure enough future business to replace the proppants.
“I have basic concerns about the profitability of the break-bulk business,” he said, adding that the kind of cargo the port handles isn’t terribly consistent.
But Commissioner George Barner said the port has initiated an aggressive marketing effort.
“We are actively marketing the Port of Olympia all around the U.S.,” he said.
In addition to the drop in revenue, Commissioner Bill McGregor pointed out that slower business at the marine terminal means that local longshore workers have to commute to another port to find work.