The Port of Olympia is exploring a second marine terminal warehouse again. Here’s why
The Port of Olympia is again exploring adding a second warehouse on the marine terminal, and public comments shared Monday were critical of the proposal.
At issue is a port customer called Suzano, a Brazil-based company that turns eucalyptus trees into paper products that currently are stored in the existing warehouse on the marine terminal. Suzano wants to do more business with the port, according to Warren Hendrickson, director of operations. He presented the opportunity to the port commission on Aug. 12.
“Suzano would like to bring more ships, more frequently, with greater loads than they currently are now,” Hendrickson told the commission.
Hendrickson proposed a $1 million amendment to the port’s capital budget to begin the design work and procure infrastructure for the 50,000-square-foot warehouse, which would have a modular design and be portable. It would be placed between the existing warehouse and the log yard, according to images shared during the port meeting.
The existing warehouse measures 76,000 square feet and opened in 1983.
Hendrickson estimated the total cost to develop the second warehouse, including the $1 million amendment, at around $2.5 million.
“The sooner we can provide this storage capability, the sooner we can generate significant additional revenue, and the additional capacity will also provide Suzano much improved economies of scale,” Hendrickson said.
If Suzano’s plans should change, they have the additional space for other customers, he said.
“And so if we aren’t able to use the needs for Suzano, or their supply chain should change, then we have this immediate revenue-generating capability for anything else that we might be able to find,” Hendrickson said.
Hendrickson also pointed out the port commission chose not to move forward with a second warehouse in 2013.
“But the good news is we have all of that data (from 2013), all that engineering data, the geotechnical data, which our consultants are now using to evaluate exactly what we have in that particular location on the port property to determine exactly what we would need to support this type of cargo going forward,” he said.
Hendrickson’s presentation was largely well received by the commission. The one exception was Commissioner Bob Iyall.
“I’m just going to say I would feel more comfortable if we actually had some type of commitment from Suzano,” he said, because the cost of building the proposed warehouse is significant.
“I‘m used to seeing what exactly the revenues are, and exactly what that rate of return is and when that break-even point is,” Iyall said.
“I just didn’t see the numbers here verifying it, and without that real commitment, I’m just kind of questioning it.”
Hendrickson responded with this: “I will share that Suzano, although not in writing, has certainly verbally committed that if you build that warehouse, they are going to bring you more product.”
Commissioner Jasmine Vasavada said that disclosing too much in the competitive world of shipping can mean lost business.
“It’s challenging because you want there to be full public transparency in the basis for any decision,” she said. “But sometimes in the marine shipping business, the more detail you put out with your financials, the more likely someone’s going to try to steal what you’re doing.”
The Aug. 12 agenda shows the $1 million capital budget amendment would come back before the commission on Monday, Sept. 23, but that did not happen. However, some residents spoke out about it during public comment.
“I find it difficult to believe that you would go into that kind of speculation without other companies also providing some kind of commitment, which is what you’re saying — that other companies will come forth and provide more products that will fill the warehouse — even if Suzano doesn’t fill it completely,” said Carla Wulfsberg.
“So I find that very difficult to believe that you would really speculate that way with public money,” she said.
This story was originally published September 24, 2024 at 5:00 AM.
