By Kelly Kearsley The Port of Tacoma wants to offer its tenants a one-time rebate for business they did in 2009 in an effort to stay competitive with other West Coast ports and to provide some financial relief to its struggling customers.
“It’s about leveling the playing field,” Tong Zhu, the port’s director of commercial strategy, said Tuesday.
The program will come before the port commission at a 10 a.m. meeting today and must be approved by the commission before it’s implemented.
Several West Coast ports have offered some sort of financial relief to their shipping line customers, who have been hit hard by plummeting international trade volumes.
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International shipping rates tumbled to historic lows over the past few years – in many cases to levels that don’t even cover the companies’ operating costs, according to the port’s 2010 budget document.
Seventeen of the top publicly traded shipping lines lost a combined $6 billion in the first six months of 2009. Maersk – which left the Port of Tacoma for Seattle as part of a consolidation with a related shipping company – is expected to lose $1 billion in 2009, the port’s budget reports.
The Port of Los Angeles announced earlier this month a $25.7 million economic relief package that included a temporary rent reduction for its container terminal operators, according to a news release from the organization.
The Port of Tacoma’s program – if approved – doesn’t cut the port’s customers a deal on rent, but instead provides them some much needed cash via a rebate for international containers that have already moved through the port.
The program would pay participating customers $17.50 per intermodal lift – basically the movement of an international container from the terminal onto a train. In return, the customers would agree to extend their lease by one year and participate in the port’s truck emissions improvement program.
“We’re giving them something in exchange for future value,” said Anna Soderstrom, the port’s container terminal business manager.
If the four or five qualified tenants choose to participate in the program, the port would end up paying an estimated $4.2 million. The port collected nearly $93 million in revenue this year.
The program could benefit the port in the future. The amount earned from one year of a single shipping line or terminal operator’s lease could exceed $10 million. Most leases are 20- and 30-year terms.
Zhu said that offering such a program keeps the Tacoma port competitive. Much of the cargo that comes through here is discretionary – meaning it’s headed to points east and doesn’t necessarily have to pass through Tacoma.
“There are no specific customers that want to leave, but what we are aware of is that all the customers are suffering financially and they are still working to consolidate those services – so that kind of threat is very much alive,” Zhu said.
She added that the Tacoma port would be happy to accept new services as the result of consolidations, but certainly doesn’t want to lose any more business.
Kelly Kearsley: 253-597-8573