7b Supp
Item No.: _________7b_Supp_REVISED Date of Meeting: _May 18, 2010________ Seaport Business Objectives & Marketing Outlook Briefing to Port of Seattle Commission May 18, 2010 Seaport Business Segments Container Sustainable Growth to 3 Million TEU & beyond Cruise Retain lead homeport share of Alaska market and achieve maximum facility utilization Grain Target capital investments for reliable, efficient terminal for next life cycle of the plant. Fishing Retain current business and increase utilization across maritime sectors. Tug & Barge Ensure adequate barge moorage and marine terminal space. Seaport Marketing Strategy Focus on retaining current customers in Seattle. Position Seaport to capitalize on growth opportunities as the market returns. Foster the Port's environmental initiatives. Implement through: Sound business strategies Strong & collaborative customer relationships Port Promotion Market Intelligence Near Term Strategy Focus on retaining current customers in Seattle. Position the Seaport to capitalize on growth opportunities as the market returns. Foster the Port's environmental initiatives. Key Marketing Messages CONTAINER CRUISE Fee Free Now Seattle is a Proven Vacation Destination Faster, Better, Cleaner Easy & Convenient Airline Green Gateway Connections Collaboration Collaborative Partnerships Stakeholders Cruise Lines, Airport West Coast Ports & Regulatory Agencies Railroads Business Community Joint Marketing Travel Community Container Customer Categories Shipper Ocean Carrier Railroads Marine Terminal Operator Container Industry Outlook Terminal Operators Ocean Carriers Overcapacity. Overcapacity. Aggressive rate competition. Weak financial position. Shippers Railroads Unemployment still high. Profitable in 2009. Consumer confidence is down Facing legislative hurdles Exporters facing capacity (reregulation). constraints. West Coast Market Share is Shifting Market Share of Imports from Asia by Coast 90% 84% 85% 83% 78% 80% 76% 75% 75% 74% 71% 70% 70% West Coast 70% 60% Lockout 50% Labor Shortages 40% 28% 29% 30% 26% 22% 23% 24% 24% 20% 15% 17% 15% Rail Contract Renewals 10% 0% 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 East/Gulf West Coast Piers Data No Piers subscription in 2002 due to budget cuts. Seattle Historical Container Volumes Seattle Harbor 20-Year TEU History 2,500,000 2,000,000 9/11 & Lockout 1,500,000 LA/LB Congestion 1,000,000 Economic Downturn 500,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Container Competitive Threats Panama Canal Expansion Canada's Asia Pacific in 2014 Gateway Initiative & Prince Rupert Bigger ships will give better economies of scale. Phase 2 expansion to 2M TEU. East Coast Ports expanding & Renewed marketing focus and cost aggressively pursuing business. advantages. Gateway Costs & Productivity Trade Barriers & Fees Efficiency of cargo flow influences routing. Potential for box fees. Escalating costs for maritime HMT advantage of Canadian Ports. services in Seattle. Protectionist sentiment. Ships are Moveable Assets Ocean Carrier Routing Decisions are Driven by Cost & Operational Factors: Revenue Opportunities (Demand) Slot Cost/TEU Labor Costs Vessel Productivity Terminal Costs Rail Costs Fuel Cost Pilots/Tugs/Etc. Port Fees Majority of Seaport Intermodal Cargo goes to the Midwest Prince Rupert Nova Scotia Seattle Oakland New York Norfolk LA/LB Savannah Jacksonville Mobile Lazaro Cardenas Container Business Concerns Competitive pressure from other port terminals in the PNW. Availability of Export capacity Vulnerability to cargo shift to other gateways. Ocean Carrier and Railroad business strategies may not favor our gateway. Upcoming SODO road construction impacts. Changing supply chain patterns of shippers. Seattle Container Growth Scenarios 14,000,000 12,000,000 Widened Panama Canal Opens 10,000,000 Prince Rupert Expansion to 2M TEU 8,000,000 WC Labor Contract 6,000,000 4,000,000 2,000,000 WPPA growth forecast - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 @ 3% Growth @ 5% Growth @ 10% Growth Container Capacity Growth Plan 2M 3M 3.5M 4M 5M 2005 volume = Work Package Work Work Work Package #4 2.1 #1 Underway Package #2 Package #3 TERMINALS T-5 RTG Ops TERMINALS TERMINALS Terminals T-30 Reactivate T-5 increase internal CY RAILYARDS T-5 18 acre expansion T-25 expansion to 16 acres T-46 additional RTG ops On-dock IY at T-18 or 16th Ave RAILYARDS conversion to IY. RAILYARDS Wide span gantry cranes at Main SIG Stacy Yard conversion. RAILYARDS SIG North Expansion SIG ARGO domestic relocation SIG South expansion T-5 IY second shift ARGO re-designed for high density New remote railyard MAINLINE operations shared with POT OFF-DOCK Sound Transit/BNSF new track 20 acre third party container agreement Seattle to Tacoma MAINLINE MAINLINE support Crown Stampede Pass Tukwila-Tacoma track. Could be constrained? Duwamish Corridor Project Sumner Connection TRAFFIC Vancouver bypass OFF-DOCK SR-519 OFF-DOCK Ellensburg/Lind cutoff T-5 surface street T25/30 off-site yard 20 acre 3rd party container support Point Defiance bypass intersection 40-acre 3rd party support EMW grade separation TRAFFIC OFF-DOCK Continuous day gate hours 1st Ave S. & E. Marginal Way TRAFFIC 20 acre 3rd party support Spokane Street Viaduct Increase use of night gates. Steady night gates. Viaduct Construction TRAFFIC accommodates freight. SR-509 More night gates Seaport Project Investment Timeline Cruise Business Outlooks & Projections Net Annual Beds Announced Newbuilds Caribbean 43% 400,000 Alaska 25% 340,136 350,000 316,271 325,096 294,395 Bahamas 25% 300,000 262,690 271,833 Hawaii 15% 244,271 250,000 Mediterranean/Greek 200,000 Islands/Turkey 14% 150,000 Bermuda 11% 100,000 Europe 9% 50,000 Panama Canal 8% Mexico (West Coast) Total Beds in Combined CLIA Fleet 0 2006 2007 2008 2009 2010 2011 2012 8% 15.5% Net Increase in CLIA Member Line Capacity, 2010 -2012 Seattle's Cruise Passenger Growth 1999 - 2011 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 99 00 01 02 03 04 05 06 07 08 09 10 11 1999: 6 vessels and 6,615 passengers 2009: 218 vessels and 875,433 passengers 2010: 223 vessels and 858,000 passengers The Successful Seattle Model Continued proactive partnership Regulatory Cruise Lines Agencies Port of Seattle Terminal Operator Business/ Airport Tourism Community Grain Terminal T-86 capital improvements as part of new long- term lease with Louis Dreyfus. New Kalama and Longview (2011) terminals. Global demand for US grain should remain strong. US supply of grain for export to remain steady. Fishing Industry Tug and Barge Industry Fishing Outlook Tug and Barge Outlook Strong Long Term Stability Strong Long Term Stability Major Fishing Companies consolidating Growth dependent on Core Seaport Business Large Vessel Moorage Facilities are being Dependent on Alaska's economy Tug and reduced in the North West Barge services are critical to the state of Alaska's continued success Common Strategies Retain diverse customer mix and grow our market share Provide cost efficient large vessel moorage and well maintained facilities Continue capital re-investment in industrial moorage facilities Identify emerging markets and opportunities to increase utilization of Industrial Properties Seaport Metrics Performance Indicator 2008 Actual 2009 Actual 2010 Budget Cruise Passenger Count 886,039 875,433 858,000 Cruise Vessel Calls 210 218 223 TEUs 1,704,492 1,584,596 1,600,000 Berthage Utilization 60% (T91 Only) 71% (Harbor wide) *** Grain Volume 6,400,778 MT 5,512,164 MT 5,000,000 MT Container Carrier Retention (+/-) No change +1 -1 Container Vessel Services (+/-) No change -1 +1 Net Operating Income +$50.2 M +$50.1 M +$49.3M (before Depreciation) *** Berthage & dockage revenues are budgeted; berth utilization is not. Long Term Considerations What TEU capacity do we want to grow to? What class container vessel do we want the capability to handle? What investments will be needed to maintain existing assets What investments will be needed to meet growth goals? What new lines of business should be considered? Major Road Projects Project Timelines West Seattle Detours for 1st Ave On-Ramp Closure Hanford to EMW to Harbor Island/lower Bridge Edgar Martinez to I-5 to upper Bridge South on 1st & 4th to W. Marginal Way SW 26 Spokane Corridor Projects Thank you
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