Vancouver is well positioned to capture growing West Coast trade, says Kurt Nagle, president and CEO of the American Association of Port Authorities
The Port of Vancouver will release an economic benefit study in conjunction with a presentation on the Portland/Vancouver maritime economic footprint at the Columbia River Economic Development Council quarterly luncheon next Tuesday, July 11. Featured guest speakers at the event will be Kurt Nagle, president and CEO of the American Association of Port Authorities, and John Martin, president of Martin and Associates Economic Impact Research.
In a recent interview, Nagle shared some insight into issues affecting the nation’s ports.
Vancouver Business Journal: The Port of Vancouver is undertaking a significant expansion to accommodate expected demand by 2010. Talk about what is driving demand for access to West Coast ports.
Kurt Nagle: Ten years ago if Port Y was building a terminal or expanding it was because they were trying to steal business from Port X. It was somewhat seen as a zero-sum game. That is extraordinarily changed now.
The perspective now, not only within our ports and our membership but the broader freight community, is that we need absolutely every port, every mode of transportation to be able to expand to accommodate all of the trade that is expected by all accounts to come. And particularly through the West Coast, with the growth in trade with China, Southeast Asia and India.
The growth of trade with those parts of the world is certainly predominately through the West Coast, but trade is starting to go every which way to get to the U.S. It’s going through the Panama Canal in smaller vessels or with larger vessels through the Suez Canal and into the East Coast ports. From a broad perspective, that is where Vancouver is seeing the demand to dramatically increase its facilities to accommodate that trade.
VBJ: Why is a non-container river port such as the Port of Vancouver well positioned to take advantage of trade growth?
KN: It’s a combination of things. The growth in non-container trade is as dramatic as growth in container trade, such as breakbulk cargos and automobiles. Also, container ports such as Los Angeles, Long Beach, Seattle and Tacoma are looking at every way possible to accommodate as much trade as they can with their limited resources. They have only so much land where they can grow. What has been happening in those ports is they are tending to utilize more of their land for containers. They are gradually, or sometimes less than gradually, moving out of the non-container business. So that existing non-container business is moving to ports that have the opportunity, space and market capability to handle non-container trade, such as Vancouver, plus that trade is growing.
VBJ: The Columbia River is currently undergoing deepening to 43 feet to accommodate larger ships. How important is this to securing expected trade increases and what will be the challenges for maintaining the channel once the deepening is complete?
KN: Vessels are getting larger and shipping lines already have placed orders for larger vessels. As a nation we need to continue to deepen and widen our channels to accommodate these vessels. If you only have to bring in 70 percent of the number of vessels and still handle more trade because those vessels are handling more cargo, particularly in a river system, waterside capacity becomes more efficient, economical and safer.
The largest vessels that are coming on stream now probably need somewhere between 50 and 53 feet, but every harbor needs to be deepened to 53 feet.
Maintenance is becoming an extraordinarily difficult and frustrating issue for ports. Historically, even though it was always a challenge, the U.S. Army Corp of Engineers was generally able to regularly and adequately maintain the channels at their authorized depths. But what is becoming more problematic for more ports is there is not enough funding provided to the Corps to enable them to maintain the channels at their authorized depths.
Shippers pay a harbor maintenance tax to fund maintenance dredging. Roughly a $1 billion a year is collected, but only about $700 million is budget for navigation channel maintenance. If the Corps of Engineers is not provided enough funding to ensure (the Columbia River) is maintained at 43 feet, you are wasting your initial investment if it is not maintained at that level.
VBJ: The Port of Portland and Port of Vancouver have an ongoing agreement to jointly market the region as an attractive port of entry. Is this a unique situation?
KN: We have advocated and encouraged those sorts of things. While it is not unique, they have taken it to a very positive and significant level. There is a lot of value in marketing a region or area.
We’ve highlighted in a variety of our programs over the years the value of increased cooperation amongst ports, particularly ports in the same general regions. Everybody recognizes now that there is more than enough trade for all of us, and if we work together we can attract more trade and economic development.
Vancouver and Portland have had a joint working relationship for years and were probably one of the earliest.
VBJ: What role do ports play in alleviating freight bottlenecks beyond their gates?
KN: Historically ports have focused on what was needed within their own gates to make sure their faculties were able to handle trade and determine what their appropriate markets were. And while that continues to be important, they have also recognized that they need to go outside the gate and be catalysts for raising issues at the local, state and federal levels. Ports are becoming significant players in addressing adequate land-side access. As an association we have been very heavily involved in increasing the focus at the federal level on freight transportation and specifically the intermodal connectors around ports. As a national program it is important to make sure that we have the proper infrastructure connecting our ports to the highway system.
VBJ: What are the challenges to capturing or accommodating increased demand, and what will the consequences be if there is a failure to adequately do so?
KN: We need to look at every way possible to move more cargo through existing facilities more effectively. I think Vancouver is fortunate that it has the land availability to expand. In many cases ports don’t have that. On the water side, we need to deepen and widen and maintain channels, and on the land side improve access.
We need to make sure there is recognition with policy makers that we need to improve our infrastructure, and not just port-related infrastructure, but general infrastructure. I am sure the traffic between Washington and Oregon has increased more than highway capacity has increased anytime recently. And that has manifested itself throughout the country. Our nation’s infrastructure has not kept up with the growth in our population and vehicle movements, much less trade movements into and out of our country.
I think it’s a national economic growth and vitality issue. There is nothing that guarantees the United States will continue to always be the world leader in trade and economic growth. That is the potential downside if those investments aren’t made.
