Legislature(2005 - 2006)BUTROVICH 205
04/05/2005 01:30 PM House TRANSPORTATION
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| Port of Tacoma | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE TRANSPORTATION STANDING COMMITTEE
SENATE TRANSPORTATION STANDING COMMITTEE
April 5, 2005
1:34 p.m.
MEMBERS PRESENT
Representative Jim Elkins, Co-Chair
Representative Vic Kohring
Representative Mark Neuman
Representative Bill Thomas
Representative Woodie Salmon
Senator Charlie Huggins, Chair
Senator Gene Therriault
Senator Hollis French
MEMBERS ABSENT
Representative Carl Gatto, Co-Chair
Representative Mary Kapsner
Senator John Cowdery
Senator Albert Kookesh
COMMITTEE CALENDAR
OVERVIEW(S): PORT OF TACOMA
- HEARD
OVERVIEW(S): FEDERAL AVIATION ADMINISTRATION WEATHER CAMERA
PROGRAM
- OVERVIEW CANCELED
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TIMOTHY J. FARRELL, Executive Director
Port of Tacoma
Tacoma, Washington
POSITION STATEMENT: Presented the overview regarding the Port
of Tacoma.
SHARI GROSS TEEPLE, Consultant
Port of Tacoma
Seattle, Washington
POSITION STATEMENT: Responded to a question during the overview
regarding the Port of Tacoma.
EDGAR A. ENGELHARDT, Director
Container Terminal Businesses
Port of Tacoma
Tacoma, Washington
POSITION STATEMENT: Responded to a question during the overview
regarding the Port of Tacoma.
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the joint meeting of the House
Transportation Standing Committee and Senate Transportation
Standing Committee to order at 1:34:45 PM. Present at the call
to order from the House Transportation Standing Committee were
Representatives Elkins, Kohring, Neuman, and Thomas;
Representative Salmon arrived as the meeting was in progress.
Present at the call to order from the Senate Transportation
Standing Committee were Senators Huggins and French; Senator
Therriault arrived as the meeting was in progress.
^OVERVIEW(S)
^PORT OF TACOMA
CHAIR HUGGINS announced that the only order of business would be
the overview regarding the Port of Tacoma.
CHAIR HUGGINS characterized Alaska's relationship with the state
of Washington as an interdependent one that will continue
throughout the future.
1:36:06 PM
TIMOTHY J. FARRELL, Executive Director, Port of Tacoma,
presented the overview. He highlighted the economic links
between Alaska and the Port of Tacoma, and mentioned that ports
in Washington are municipal corporations. In other words,
within a district, the port's board of directors is elected by
the general electorate and, as such, have a great deal of
independence conferred upon them as separate political
subdivision. For example, the structure of such a board allows
it the ability to make public policy statements in the form of
resolutions; one such policy was the Port of Tacoma's resolution
to support the Arctic National Wildlife Refuge (ANWR)
[development]. The purpose of ports in Washington is to create
economic development and jobs, and this is done mostly through
trade and through industrial development of such facilities as
marine terminals, airports, tourism, as well as through
development, manufacturing, and distribution uses throughout the
state of Washington, in particular Puget Sound.
MR. FARRELL said that the ports maintain an independent
financial structure by operating as municipal corporations, have
private revenue streams, through rentals and fees, as well as
expenses. Such ports have the ability to levy a property tax
within the port district, and this amounts to approximately 10
percent of the port's overall income in a given year. Last year
the port generated $89 million in operating revenue and $9
million in tax levy. The operating revenues go to support
operations and a portion of capital investment, which can be
leveraged using general obligation (GO) and revenue bonds. The
tax levy goes towards public infrastructure such as widening and
deepening waterways, and building roadways in and out of the
port.
MR. FARRELL mentioned that for 2004, the Port of Tacoma was
seventh out of the top ten container ports in the U.S., having
moved about 1.8 million containers over its docks in the course
of that year. Of that 1.8 million, over 500,000 containers were
trafficked between the Port of Tacoma and Alaska. Additionally,
about 70 percent of the cargo that is moving out of the Lower 48
and into Alaska is coming through the Port of Tacoma. This also
amounts to in excess of $3 billion worth of trade between Alaska
and Washington. Alaska, as a trading partner with Tacoma, is
Tacoma's third largest trading partner behind China and Japan.
1:41:04 PM
SENATOR FRENCH asked if there was a comparable figure in terms
of dollar volume between Alaska and the port of Seattle.
MR. FARRELL said he would research that issue and get back to
the committee with an answer. He went on to say, though, that
the Port of Tacoma serves the Railbelt, Dutch Harbor, and the
main population centers, while the Port of Seattle serves
Southeast Alaska and some of the "out" ports in the Bering Sea
and North Slope via barge.
1:41:50 PM
CHAIR HUGGINS asked why Seattle and Tacoma service different
sectors of the population.
MR. FARRELL said the main reason is the difference in the labor
force in Tacoma. For example, in order to operate an on-time,
scheduled liner service, as both Horizon Lines ("Horizon") and
Totem Ocean Trailer Express (TOTE) do, it requires a certain
flexibility and business savvy "of the labor force." The Tacoma
longshore union has demonstrated this ability in 1976, when TOTE
move into Tacoma, and again in 1985, when Horizon moved into
Tacoma; the longshore workforce in Seattle, however, has not.
Currently the barge activities in Seattle are conducted by an
affiliate union of the International Longshore and Warehouse
Union (ILWU), the Inlandboatmen's Union of the Pacific (IBU).
Barge activities involve an entirely different type of market,
"not so speedy"; barges are slower and less expensive but it's a
tougher service to maintain.
1:43:12 PM
MR. FARRELL went on to say that among all the trade between
Alaska and Tacoma, 85 percent of it is northbound, with the
remaining 15 being southbound and generally consisting of
seafood products [and tankers]. He noted that all manner of
food, clothing, shelter, and house wares used throughout Alaska,
particularly in the Railbelt, are moved through the Port of
Tacoma. This constitutes a significant enough portion of the
port's business to warrant organizing port staffing around
Alaska's needs. He mentioned several companies that do business
in Alaska via the Port of Tacoma to the extent that they have
satellite operations in Tacoma. The Port of Tacoma has a number
of links to Alaska that have developed over a long period of
time, is a member of the Alaska State Chamber of Commerce
(ASCC), and years ago did a great amount work helping "to stage
for the North Slope development." He relayed that the Port of
Tacoma is prepared to support, and has land available for the
support of, the development of the gas pipeline or Arctic
National Wildlife Refuge (ANWR) or other significant economic
development projects in Alaska that need facilitation from a
port in the Lower 48.
1:45:55 PM
REPRESENTATIVE NEUMAN asked whether the Port of Tacoma is taking
any steps to promote the development of ANWR.
MR. FARRELL reiterated that the Port of Tacoma Commission has
passed the resolution in support of ANWR development, and noted
that the [president of the commission] is engaged in a number of
the lobbying efforts in support of such development. He
characterized the Port of Tacoma as an active, hopeful supporter
of ANWR development. In response to a further question, he
noted that the commission does speak to Washington's state
legislature, though it has not been particularly receptive,
regarding the importance of ANWR's development to Washington's
economy.
1:48:17 PM
CHAIR HUGGINS raised the issue of taking liquefied gas to the
west coast, and whether such would be transported through the
state of Washington; he indicated that the representatives from
the Port of Tacoma would be researching that issue further.
MR. FARRELL relayed that the Port of Tacoma and the Port of
Anchorage have a formal partnership agreement, which was signed
in 1988, and, because of that agreement, have had an opportunity
to work together in developing foreign trade zones, and in
"doing some organizational benchmarking at the governance
level." He mentioned other groups in which the Port of Tacoma
participates, and characterized the development of the gas
pipeline and the ANWR as good for the state of Washington. Upon
development of the North Slope, he remarked, there was a
permanent increase in Alaska's population, which increased the
general level of activity in the Port of Tacoma, since it is
through the Port of Tacoma that most goods are transported to
Alaska's retail stores.
REPRESENTATIVE NEUMAN asked whether the Port of Tacoma has had
discussions with "Port McKenzie" regarding trade or development.
MR. FARRELL offered his understanding that such development is
underway and that trade has already begun between Port McKenzie
and Korea, though he himself has not had contact with the folks
in Port McKenzie.
1:52:12 PM
SHARI GROSS TEEPLE, Consultant, Port of Tacoma, added that she
and others have had contact with those in Port McKenzie over the
years.
CHAIR HUGGINS asked whether the Port of Tacoma receives any
Agrium [Inc.] products.
MR. FARRELL said he did not believe so.
1:53:06 PM
CHAIR HUGGINS noted that shipping items designated as hazardous
cargo drives up the cost of shipping. He asked what sort of
things might help with cost containment regarding hazardous
materials.
MR. FARRELL said different pictures are presented depending upon
which regulator one talks to. For example, the U.S. Coast Guard
has a history of working well with the industry, of having a
regulations-making process that achieves its goals without being
abusive to the industry. Other federal agencies, however, have
not been as interested in the success of the industry as they
have been in enforcement aspects; he characterized the U.S.
Customs & Boarder Protection agency is an example of such.
CHAIR HUGGINS asked whether the Port of Tacoma provides such
agencies with feedback regarding how their processes might be
driving up the cost of shipping.
MR. FARRELL said it does do so, and mentioned an example
regarding feedback on processes instituted during the war on
drugs.
CHAIR HUGGINS surmised that automobiles come through the Port of
Tacoma.
MR. FARRELL concurred.
1:56:38 PM
CHAIR HUGGINS raised the issue of trading companies in Asia.
MR. FARRELL noted that a lot of trading companies in Japan are
large holding companies and could, for example, own construction
or mining companies in the states. Typically in Japan, because
that country is so dependent upon international trade for raw
materials, its trading companies are almost exclusively
international in terms of their base.
CHAIR HUGGINS noted that one of the challenges of building roads
in Alaska is the quality of aggregate rock that can be obtained.
He asked whether the Port of Tacoma ships aggregate rock.
MR. FARRELL relayed that there is significant mining of high
quality aggregate rock in the Puget Sound region, though he is
not aware that such material is being exported to other
locations.
CHAIR HUGGINS asked whether the Port of Tacoma has relationships
with other states similar to what it has with Alaska.
MR. FARRELL indicated that it did not, but did mention that the
bulk of the cargo from international markets that comes through
the Port of Tacoma travels on to Illinois and New York via rail.
In response to a question, he said that typically [cargo] is
branded by the steamship lines, which often own trucking
companies as well, and they're pretty much "branding the move"
itself.
CHAIR HUGGINS asked whether the legislature could do anything to
help ensure less costly shipping.
MR. FARRELL suggested that the legislature keep an eye on the
balance between barge operations and line-of-shipping operations
as a place where some "tweaking" might be available.
2:01:34 PM
EDGAR A. ENGELHARDT, Director, Container Terminal Businesses,
Port of Tacoma, added that there are organizations operating
around the Port of Tacoma that gathers cargo from various
sources and combine them into container loads and trailer loads
in order to provide for their most efficient use. This practice
by such organizations has made the system much more efficient.
REPRESENTATIVE NEUMAN mentioned that there has been talk of
possibly building a rail line between Alaska and Washington that
would pass through Canada. He asked what the effect of such a
line would be on the [barge and container] shipping industry.
MR. FARRELL relayed that TOTE recently deployed new vessels on
its Tacoma-Anchorage route that were capable of handling 53-foot
highway trailers. In between the time that such trailers became
available for use and the time that TOTE deployed its new
vessels, some business did shift to the Alaska-Canada Highway
("Alcan Highway"). He added, "So there is vulnerability there,
from a vessel side; I think there's some pricing discipline
there too." He indicated that the use of rail could have wider-
ranging implications with regard to what areas of the country
Alaskans would be sourcing cargo from, though any impacts [on
the Port of Tacoma] might not be felt for some time.
2:04:06 PM
REPRESENTATIVE NEUMAN surmised that a rail line could make
shipping markets more competitive.
MR. FARRELL acknowledged that it could, but noted that in
addition to the fact that vessel capacity far exceeds rail
capacity, any company that intends to compete with the Port of
Tacoma through the use of rail would first have to address the
issue of economies of scale, which have already been established
at the Port of Tacoma. In response to a question, he said that
typically the cargo that comes to Alaska arrives at the Port of
Tacoma via truck rather than via rail, and that typically rail
cargo at the Port of Tacoma consists of International cargo
going east.
CHAIR HUGGINS mentioned he'd heard that China might be buying
petroleum out of Canada.
MR. FARRELL noted that China has offered to buy "all of the
supply coming out of Venezuela." He opined that China will
continue to be an aggressive "sourcer" of raw materials from
around the world, and has a smart economic development plan in
place. The question will be, he predicted, is at what point
will the rest of the world say, "I'm not willing to put all my
eggs in one basket," and start to spread things around again a
little bit more. "It's an interesting balance between risk
management and being in the low-cost producers' field of
endeavors," he concluded.
ADJOURNMENT
2:07:27 PM
There being no further business before the committees, the joint
meeting between the House Transportation Standing Committee and
Senate Transportation Standing Committee was adjourned at 2:07
p.m.
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