Marine Cargo Forecast

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Marine Cargo Forecast

• WPPA/WSDOT
• May 13, 2009

BST Associates, in conjunction with IHS/Global
Insight Mainline Management, Inc.
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Agenda

• Why trade matters
• Opportunities and challenges for Washington State
• What we need to do

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Why Trade Matters

• Port/transportation system provides
• Transport of goods at reduced cost
• Cost-effective access to global markets
• Family wage jobs
• Industrial and agricultural sectors
• Most trade dependent state in nation
• One in three jobs linked to trade

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Purpose of the Marine Cargo Forecast

• Project the expected flow of waterborne trade
• Long-term forecast (Through 2030)
• Evaluate the distribution of cargo
• Ports, waterways, railroads, roads, and pipelines
• Forecasts are unconstrained
• Recognized need for upgrades and investment

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World Economy Trade Growth
The fluctuation of world trade growth generally
is an amplification of the fluctuation of
economic growth.
World trade
GDP
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Strong Trends

• State ports have experienced strong and steady
  growth
• Increases since 1982
• Cargo volumes handled by longshore workers have
  tripled
• Containerized cargo has increased fivefold
• All cargo types have shown substantial gains,
  with the exception of log exports

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Opportunities are Strong

• Robust growth opportunities remain
• Waterborne commerce grow at 1.7 per year through
  2030
• There are several challenges
• Fierce competition for cargo
• Infrastructure needs to be improved

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Containers

• Containers are still the fastest growing cargo
• Opportunities remain positive, but ports face
  substantial competition
• Southern California
• British Columbia
• All water services via Panama and Suez Canals
• Rail access critical for containers gt60 of
  imports move by rail

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Port of Prince Rupert
Pure intermodal gateway versus load center
ports.
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US West Coast Market Share of Asian Container
Traffic

• US West Coast has lost market share of both
  imports and exports with Asia
• Losses began in early 2000 but accelerated after
  the ILWU Lockout in 2002 and were further
  exacerbated by the congestion in LALB in 2004/5
• Shifts have occurred to non-US ports on west
  coast and to all water routes

ILWU Lockout
LALB Congestion
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Container Forecast (1,000 TEUs)
Container traffic grew from nearly 3 million TEUs
in 2002 to nearly 4 million in 2007. Puget
Sound containerized trade is projected to grow by
an average of 4 per year, reaching 9.7 million
TEUs in 2030.
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Autos

• Fully assembled autos will also exhibit rapid
  growth
• 3 to 4 per year
• Competitive rail service will be essential to
  meeting this demand as 75 of auto imports
  currently move by rail

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US Auto Sales (units)

• Sales of US cars peaked in mid-1990s and have
  declined every year since
• Transplants (US production by foreign
  manufacturers) grew rapidly
• Imports declined from 1990 to 1996 then increased
  to 23 of US sales in 2007

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Toyota US Market Assessment
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New technologies fuels
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Auto Forecast (1,000 Units)
Auto imports are expected to grow from 220,000
units in 2007 to 542,000 units in 2030.
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Breakbulk

• Breakbulk cargo volumes will grow slowly
• Metal, forest products and other breakbulk cargo
• Containerization and structural changes in the
  industries that produce these cargoes
• Opportunities as ports specialize
• New cargo opportunities
• Wind power equipment, energy systems

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Breakbulk Forecast (1,000 Tons)
Breakbulk traffic through Washington ports is
projected to grow from 2.4 million tons in 2007
to around 3.1 million tons in 2030.
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Grain

• After increasing substantially in recent years,
  grain shipments will grow modestly
• Rail and barge are critical for grain exports
• Key factors
• Lower dollar exchange rate
• Increased meat consumption overseas
• Competition from other producers
• Ocean rate advantage to PNW over Gulf

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Grain Forecast (1,000 Tons)
Grain exports through Washington ports is
projected to grow from 24 million tons in 2007 to
around 27 million tons in 2030.
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Dry Bulks

• Dry bulk trends will continue
• Strong growth in Asia (especially China)
• Some stalwart cargoes (alumina) have decreased
  while others (petroleum coke) have increased
• Rail is critical for most dry bulk cargoes

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Dry Bulk Forecast (1,000 Tons)
Dry bulk exports through Washington ports are
projected to grow from 18 million tons in 2007 to
around 26 million tons in 2030.
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Liquid Bulks

• Crude oil and petroleum products will shift from
  domestic to foreign sources as Alaskan production
  tapers off
• New opportunities for ethanol, bio-diesel and
  other products

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Modal SplitsWashington State Marine Cargo
Rail 60 Truck 37 Barge 3
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Highway Issues

• Truck transport is critical to Washingtons ports
  
• Trucks are a small portion of total traffic
• Auto traffic will increase faster than truck
  traffic
• Challenge will be to protect the functionality
  and reliability of the system for truck transport
  
• Road capacity development will be critical for
  continued economic growth

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Railroad Issues

• Trade prosperity is directly linked to the level
  of rail capacity serving our ports
• Rail cargo through ports is forecast to increase
  from the current 42 million tons to 65 million
  tons in 2030
• Depends on the investments to expand and improve
  rail operations and infrastructure

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Vancouver to Kalama/Longviewwithout Passenger
Improvements
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Vancouver to Kalama/Longviewwith Passenger
Improvements
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Railroad Highest Priorities

• Vancouver Washington Freight Rail Bypass
• Point Defiance Bypass from Tacoma to Nisqually
• Partial third main line from Kalama to Kelso
• Port of Vancouver USA West Freight Access
  Project
• Siding extensions at Mount Vernon and Stanwood,
  new siding at Swift
• Blakeslee Junction at Centralia
• High Speed Crossover Plan from Nisqually to
  Centralia
• East Marginal Way Grade Separation and Duwamish
  Rail Corridor at Seattle
• Bullfrog Junction Realignment at Tacoma

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Railroad Priorities

• Longer-term projects
• Third line between Martins Bluff and Rocky
  Point (Kelso-Vancouver area)
• Clearing of Stampede Pass to accommodate
  double-stack rail cars
• Construction of an Ellensburg-Lind cutoff
  along the old Milwaukee Road corridor
• Completion of the Bridging the Valley project
  between Spokane and Athol, Idaho

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Waterways

• From harbors in Puget Sound to dams on the Snake
  River, our waterways are integral to Washingtons
  economy
• Future challenges must be addressed to preserve
  the viability of the system
• Channel deepening,
• Maintenance dredging and
• Potential dam breaching

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Waterways

• The Columbia River deepening project will
  significantly benefit Washington and Oregon ports
  along the Lower Columbia by
• Transportation cost savings and
• Reducing transit times
• Final piece of the long-delayed deepening of
  Lower Columbia ship channel is about to be
  completed

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Columbia/Snake River Traffic (1,000 tons)
Barge Traffic is critically important. The
Columbia-Snake River navigation system allows
agricultural products to move efficiently from
farm to market, and provides price competition
between modes of transportation
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Opportunities Challenges

• Our ability to cultivate new opportunities will
  depend on the investments made today and tomorrow
  
• Much of the cargo we send to the global
  marketplace is discretionary
• It can move through alternative gateways, so we
  must compete aggressively to ensure our trade
  route is preserved

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Conclusions

• The key to maintaining and expanding our place in
  the global economy is to continue investing in
  our trade route
• Trade brings with it thousands of jobs and
  greater collective wealth, but it also requires
  investment
• If we make wise choices now, our state stands to
  benefit from the growth on the horizon for
  Washingtons port transportation system

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Questions Answers
Paul Sorensen BST Associates PO Box
82388 Kenmore, WA 98028 bstassoc_at_seanet.com (425)
486-7722