The Seattle Post Intelligencer has noticed COSCO’s plans to use the Port of Prince Rupert and the word from those that they have contacted, is that the development is not particularly good for the Port of Seattle.
The Seattle paper examined the Fairview Container project, including an interview with Don Krusel of the Port of Prince Rupert, who explained the model that Rupert is working under, that of a dedicated rail transportation terminal and the building of a trade corridor through to the American mid west.
Krusel provided an overview of the Rupert project, an update on phase one which will initially handle 500,000 TEU’s, while phase two is scheduled to start construction in 2008 and be completed by 2011, adding capacity of up to two million containers per year.
It’s an addition to the shipping scene that has the folks in Seattle concerned for their current volume of trade, especially from COSCO which currently calls Seattle’s Terminals 18 and 46. COSCO is said to evaluating its options with an August announcement planned for its future in Seattle.
The Seattle article is an interesting examination of the different factors involved in international shipping and how the Prince Rupert terminal may impact upon the industry in the very near future.
Shipping firm's plan for B.C. rattles Puget Sound ports
COSCO to make weekly calls there
By KRISTEN MILLARES BOLTP-I REPORTER
The Seattle paper examined the Fairview Container project, including an interview with Don Krusel of the Port of Prince Rupert, who explained the model that Rupert is working under, that of a dedicated rail transportation terminal and the building of a trade corridor through to the American mid west.
Krusel provided an overview of the Rupert project, an update on phase one which will initially handle 500,000 TEU’s, while phase two is scheduled to start construction in 2008 and be completed by 2011, adding capacity of up to two million containers per year.
It’s an addition to the shipping scene that has the folks in Seattle concerned for their current volume of trade, especially from COSCO which currently calls Seattle’s Terminals 18 and 46. COSCO is said to evaluating its options with an August announcement planned for its future in Seattle.
The Seattle article is an interesting examination of the different factors involved in international shipping and how the Prince Rupert terminal may impact upon the industry in the very near future.
Shipping firm's plan for B.C. rattles Puget Sound ports
COSCO to make weekly calls there
By KRISTEN MILLARES BOLTP-I REPORTER
May 16, 2007
The burgeoning Port of Prince Rupert in British Columbia sent a little shiver through the Puget Sound maritime community Wednesday when it was announced that China Ocean Shipping Co. would begin making weekly calls at the B.C. port's new container terminal later this year.
Beijing-based COSCO is one of the world's largest container carriers, and it is the first to take the gamble on routing freight from Asia through the port at Prince Rupert -- a town of about 15,000 people 40 miles south of the Alaskan border -- down along Canadian National Railway Co. tracks to Chicago and beyond.
Others may soon follow. The question on many people's minds is how much business could Prince Rupert steal from Puget Sound ports -- and when?
"The Prince Rupert terminal offers a whole new business model for the movement of containers on the West Coast," said Don Krusel, president and chief executive of the Prince Rupert Port Authority. "We're building a trade corridor to the Midwest."
Shipping lines that choose to call on the new terminal, to be operated by Berkeley Heights, N.J.-based Maher Terminals, will have one viable option: Put it on a train.
That is both Prince Rupert's draw and its weakness, because, in the past, union strikes against Canadian railways have slowed train movement to a crawl.
Still, Krusel said, "There will be other carriers to be announced soon, and we expect to be at full capacity within 12 to 18 months of operation."
The Prince Rupert container terminal's first phase is set to open in October with a capacity of 500,000 TEUs, or 20-foot equivalent units, the standard measure of container volume.
The second phase of the B.C. port's construction won't begin until late 2008, but is set to open in 2011 to bring its total capacity to 2 million TEUs -- just about the annual volume of each of Puget Sound's two container ports.
"Prince Rupert will definitely impact us," Port of Seattle Chief Executive Tay Yoshitani said at an April 26 Seattle CityClub luncheon.
"Our general rate of growth will be slowed," he added, "but there is sufficient growth that we will be the beneficiaries of (it) -- as long as we continue to invest in infrastructure so that when it arrives, we are prepared."
The Port of Seattle would suffer minimal losses in revenue should COSCO divert cargo north to Prince Rupert because the port leases the land to its terminal operators, which manage the daily flow of cargo and reap its benefits.
Currently, COSCO calls at the Port of Seattle's Terminal 18, operated by SSA Terminals, a division of SSA Marine, and at Terminal 46, operated by Total Terminals International.
Neither could be reached for comment Wednesday -- but Herald Ugles, the president of the International Longshore & Warehouse Union Local 19, said that the labor unions were told that COSCO would be consolidating its operations from Terminal 18 to Terminal 46 in August.
Local COSCO executives declined to comment.
"This clearly is a negative for Seattle, and a big win for Prince Rupert," Port of Seattle Commissioner Alec Fisken said.
"Some of it will certainly be our cargo, and I hate to see it go -- still, in the context of overall growth in trans-Pacific trade, it is a little less threatening than it would be otherwise."
Last year, COSCO ships came through the Seattle port 48 times, and the company has racked up 17 visits so far this year, according to the Marine Exchange of Puget Sound.
The ports of Seattle, Tacoma, Vancouver, B.C., and Prince Rupert are all preparing for an expected wave of trade from Asia, on whose certainty Yoshitani has said: "It's coming, there is no question in my mind."
Unlike the ports of L.A. and Long Beach, which can rely in part on the presence of a large local population to whom Asian exporters would like to sell goods, the ports of the Pacific Northwest depend on being a contact point for containers heading inland to cities such as Chicago.
It is known as "discretionary cargo," which makes up 70 percent of the flow of containerized goods through the Seattle harbors.
If Prince Rupert's (and now, COSCO's) gamble works, a new, albeit remote, route to and from the U.S. heartland will open up; the Canadian National Railway will try to take advantage of the empty containers created by the Asian trade imbalance by sticking items such as grain, timber and cotton into them for the backhaul to Prince Rupert.
"The issue is: How much of the future trade growth will Prince Rupert siphon off?" asked Paul Bingham, the principal of global trade and technology for Global Insight, an economic and financial analysis company.
Bingham ticked off a list of factors that will influence the answer to that question: the carrier's port rotation, the vessel size, the possibility for new services as well as the divergence of existing ones. And COSCO still has to persuade shippers to send freight through Canada's Prince Rupert.
"It's a sign of how strong people see the market that they want to get a lock on terminals for the future," Port of Seattle Commissioner Bob Edwards said. The cargo market is "kind of like the stock market," he said.
"Down one day, up the next, but the overall trend is up."
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