Item 9c Supp
ITEM NO. 9c_Supp DATE OF MEETING Aug 11, 2009 Seaport Division 2010 Business Plan Overview Commission Presentation August 11, 2009 Pier 90/91 Pier 86 Pier 66 Terminal 46 BNSF (SIG - North) Terminal 30 Terminal 5 On-Dock Rail BNSF (SIG - South) Terminal 25 Terminal 5 Terminal 18 UPRR (ARGO) 2 SEAPORT STRATEGIES 2010 ======================================== Protect our current business Position ourselves for recovery and change in the container shipping market Collaborate with others to advance our key initiatives 3 CRITICAL 2010 WORK ================================================ Maintain high performance level for critical functions Deliver on commitments - clean truck plan and container terminal customer support plan Continue the transition and development of Terminal 91 into a multi-use facility Adjust and align our resources to meet our business strategies 4 2010 Preliminary Capital Plan Committed & Business Plan Prospective $'s in 000's 2010 Renewal/Enhancement 40,894 Revenue/Capacity Growth 7,235 Environmental/Safety 2,969 Total 51,098 5 2010 MARKET OUTLOOK ======================================================================================== Overall Container Market (Transpacific) Projected to Grow: -1.5% for imports and 8.9% for exports Seattle Import Container Volumes Projected at a 5-10% Reduction vs. 2009 Plan Cruise Business to Alaska Projected to Remain Strong Grain Volumes (Corn/Soybeans) will again be Positive Demand for Industrial Properties Uncertain 6 FINANCIAL OUTLOOK ==================================== Operating Revenue (excluding grants and reimbursements) is projected to be approximately flat compared to 2009 Budget Primary components of revenue: In place leases Volume: Cruise, Grain, Crane Rent Grants/Reimbursements 7 FINANCIAL OUTLOOK ========================================= Key Revenue Assumptions TEU volume 8% decrease from 2009 budget Eagle Rate increase in July Container Terminal Customer Support Plan T25/30 lease full year of lease payments in 2010 Cruise forecast 6% increase in passengers Grain volumes similar to 2009 budget Properties in transition 8 FINANCIAL OUTLOOK ========================================= Expenses 10% below 2009 Budget (excluding Grant Expenses) Expense Trends and Risks Asset Condition Assessments Repair Costs Environmental Reserves Stormwater Implementation of NW Clean Air Strategy Maintenance Dredging Fender Piling Expense Projects 9 GROWTH RISKS ====================================== U.S. and Global Economic Uncertainties West Coast Terminal over Capacity Increasing Competition for Less Container Volume Port Competitiveness with Respect to Intermodal Pricing Continued West Coast Volume Erosion to All Water Services Prince Rupert's Continued Growth Panama Canal Expansion in 2014 10 CONTAINERS FINANCIAL OVERVIEW Containers & Support Properties 2008 2009 $'s in 000's 2005 2006 2007 Actual Budget Revenue 49,743 53,017 51,865 56,501 62,938 Direct Expenses 10,089 9,799 10,808 14,495 19,133 Income from Operations 39,654 43,218 41,057 42,006 43,805 Corp Allocations 5,383 6,293 5,510 7,314 7,823 Environmental Reserve (2,113) 1,228 3,821 0 0 Net Operating Income 36,383 35,697 31,726 34,692 35,982 Depreciation 20,779 19,291 20,608 17,276 19,125 Net Income 15,604 16,406 11,118 17,416 16,857 11 BUSINESS UNITS MAJOR GOALS 2010 ====================================================== CONTAINERS Maximize efforts to Joint Market our Gateway Market unique value/benefits of Port of Seattle Implement customer support package including clean air plan components Conduct priority asset assessments and/or repairs Increase seaport revenues find tenants for vacant properties (i.e. T-104/106) 12 CRUISE FINANCIAL OVERVIEW Cruise 2008 2009 $'s in 000's 2005 2006 2007 Actual Budget Revenue 4,014 5,461 7,448 9,375 9,252 Direct Expenses 1,782 2,029 1,964 3,109 3,613 Income from Operations 2,232 3,432 5,484 6,267 5,639 Corp Allocations 538 542 1,193 1,558 1,845 Environmental Reserve 0 0 0 0 0 Net Operating Income 1,693 2,890 4,291 4,709 3,795 Depreciation 3,466 3,784 5,373 3,749 4,536 Net Income (1,773) (894) (1,082) 959 (742) 13 BUSINESS UNITS MAJOR GOALS 2010 ====================================== CRUISE Negotiate long-term agreement for cruise lines calling at Pier 66 Evaluate first year operations at Smith Cove cruise terminal and make changes as needed Develop plan for use of Smith Cove cruise terminal as events venue 14 FINANCIAL OVERVIEW INDUSTRIAL DOCKS & PROPERTIES Bulk, Docks & Industrial 2008 2009 $'s in 000's 2005 2006 2007 Actual Budget Revenue 15,526 16,842 18,736 19,549 17,940 Direct Expenses 6,938 7,539 6,793 6,968 6,866 Income from Operations 8,588 9,303 11,943 12,581 11,074 Corp Allocations 3,232 3,324 3,266 3,520 3,331 Environmental Reserve 11 2 0 0 0 Net Operating Income 5,345 5,977 8,677 9,061 7,742 Depreciation 4,449 3,824 5,006 5,587 5,806 Net Income 896 2,153 3,671 3,474 1,936 15 BUSINESS UNITS MAJOR GOALS 2010 ==================================== INDUSTRIAL DOCKS & PROPERTIES Determine customer needs at T-91 and develop plan to meet needs Conduct priority asset assessments and/or repairs Develop operations plan for T-91 Develop capital improvement program for T86 grain facility and align lease accordingly 16 SERVICE UNITS MAJOR GOALS 2010 ========================================= FINANCE Financial analysis of business opportunities Financial return metrics by property Budgeting & reporting 17 SERVICE UNITS MAJOR GOALS 2010 ====================================== PLANNING Complete port-wide maintenance dredging plan City shoreline plan update City comprehensive plan update T-91 operations & planning Transportation Alaskan Way viaduct impacts 18 SERVICE UNITS MAJOR GOALS 2010 ====================================== SECURITY Regulatory compliance Transportation Worker Identification Credential (TWIC) card reader implementation Security grants effective use of available funds, seek flexibility in programs 19 SERVICE UNITS MAJOR GOALS 2010 ====================================== ENVIRONMENTAL Northwest Ports Clean Air Strategy Implementation Meet end of year goals - vessels, trucks, cargo handling Stormwater compliance Cleanup sites Completion of key work Regulatory agency negotiations Cost recovery Regulatory compliance Environmental Review & Permitting 20
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