Projected Growth for West Coast Ports How Ports and Railroads Can Work Together Larry St'Clair Port

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Projected Growth for West Coast PortsHow Ports
and Railroads Can Work TogetherLarry St.Clair
Port of TacomaNovember 4, 2007INFORMS
Seattle, WA
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Agenda

• How Much Growth is Anticipated?
• Future Plans for the Port of Tacoma Rail and
  Container Terminals
• Current Rail Capacity National and Washington
  State
• The Role of Washington State in Assisting Ports
  and Railroads
• Class I Expansion Plans
• How to Bridge the Gap?

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How Much Growth is Anticipated?

• What will the Future Bring?
• Can we Meet the Cargo Projects and Still give our
  Communities Quality of Life?
• Are there Alternatives to Congestion?

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What We Do Know about Growth

• China Continues to Grow
• Shippers are looking for alternative supply
  chains to get their cargo to market
• Shipping Lines are asking about Ports ability to
  move more cargo by rail to reduce truck traffic
• Panama Canal is Expanding All Water Services
• Pacific Northwest, Gulf and East coast Ports are
  being sold as an alternative to LA/LB for Chicago
  Traffic
• Ships are getting BIGGER

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Projected Port Freight Demand
Volume of trade 2004 (actual) v. 2020
(unconstrained)
15,835
2,557
1,776
Seattle
4,478
4,396
1,798
Tacoma
3,382
2,043
Oakland
6,165
1,437
2,152
1,010
Houston
Miami
Forecast figures are based on an
unconstrained 10-year linear regression, and do
not reflect the expected capacity of each port in
2020.
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Gateways continue to Grow
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Mega-regions will continue to Grow
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Consumption follows Population Growth
How do we move the cargo inland?
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Global Economy to double by 2020
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More Highway Gridlock Coming
Truck Traffic 1998 2020
Source Dept. of Transportation, FHWA Freight
Analysis Framework
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Rail Density is Growing
Rail Density in Tons 2004
Source Dept. of Transportation, FHWA Freight
Analysis Framework
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Ships Getting Bigger - 6800 TEU
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How Big?
The Worlds Largest Container Vessel 1996
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The New Mega-vessel
6800
12,000
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Comparative Carrying Capacity
10,000 TEU Vessel 85 Discharge / Load 50 Local/
50 Intermodal
1 10,000 TEU Container Ship
18 8,000 Foot Double-Stack Trains (27 Miles) (50
Acres)
5,800 Trucks (60 Miles) (95 Acres)
DISCHARGE OR LOAD ONLY !
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Future Plans for the Port of Tacoma

• On-dock Rail
• as a Solution for Urban Congestion

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Rail 2007
South Intermodal Yard (SIM)
North Intermodal Yard
Hyundai Intermodal Yard (HIM)
4 on-dock Rail Yards
PCT Intermodal Yard
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Guiding Principles

• Help our Current Customers Grow
• Prepare for the Future
• Be a Good Neighbor

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Philosophy

• We believe our Port growth is in harmony with
  environmental protection
• Ships travel and salmon swim in the same waterways

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Many different types of Rail - Port of Tacoma
Recognizing the different needs of each Business
Unit

• Customers need a Seamless Solution
• to the marketplace
• An Expressway to your customers door

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Breakbulk Cargo 130,000 Tons
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7 million tons of grain
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166,000 automobiles
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2.1 million TEUs
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1 Goal for the Port of Tacoma

• The Port of Tacoma to be the most efficient and
  reliable intermodal gateway in North America

70 of our intl cargo goes to the MW and upper NE
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2M TEU 0.6M Intermodal Lifts 600 acres of
Container Terminals
Port of Tacoma 2007
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8 M TEUs 3 M Intermodal Lifts 1200 Acres of
Containers Terminals
Port of Tacoma 2020
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Port of Tacoma Long-Term Outlook
Thousands of TEUs
Compounding Growth Rate 2006 2011 10.5 2011
2025 7.7
9,806
Thousands of Intermodal Lifts
7922
2,104 1.8
2,066 15
Year
1,798
Year
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Re-development of the East Blair
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NYK Partnership Considerations

• Financial Strength
• Desire to grow in Washington State
• Corporate Social Responsibility (CSR)
• Rail Intermodal Business Model
• Other Logistics Economic Partnership Opportunities

YTTI
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Global Logistics Company

• Warehousing
• Consolidation
• Trucking
• Freight Forwarding
• Nippon Cargo Airlines

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R
Basis of Design
Terminal Location
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Terminal Capacity Today Port of Tacoma Container
Terminals
Yang Ming
Maersk Horizon
TOTE
K-Line
Hyundai
Autos
Evergreen
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R
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Future Planning - Growing our Business

• Velocity continuous maximum speed / movement
  for all rail traffic.
• Customer benefit faster transit times, less
  dwell time in terminals.
• Density high volumes of cargo for a
  destination.
• Customer benefit less switching, faster transit
  times.
• Reliability On time performance
• Customer benefit - trains depart when scheduled
• Visibility use of Business Exchange, AEI
  readers for tracking and tracing.
• Customer benefit greater knowledge sooner of
  arrivals and departures.

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Impacts to Infrastructure

• Container Yards-
• Land availability (current productivity 4500-8000
  TEUs per acre)
• Productivity (first train out within 4 hours of
  vessel berthing)
• Road Infrastructure (City, State and Federal)
• Tideflats Rail Capacity (land availability)
• Mainline Rail Capacity (BNSF and UP)
• Environmental Capacity (????)

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Increasing Capacity

• Balancing Port Capacity Land Use
• Container Yard Acres
• Intermodal On-dock Acres
• What is the right formula?
• Balancing Densification of Storage with Velocity
  of Rail
• Decrease the Dwell Increased Capacity
• Do you stack it higher, or move it faster?
• Off-site support

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Off-site Near Port Holding Area
Port
Off-site Support
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Maytown Property
BNSF Mainline

• Port of Tacoma
• Port of Olympia

Tacoma Rail Mountain Division
Purchased Property
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Current Rail Capacity National and Washington
State

• Described in Multiple Ways
• On-Dock Ramp Capacity
• Support Track Capacity
• Port Rail Capacity
• Connector Capacity
• Mainline Capacity
• State of Washington
• Nationally

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Rail Capacity Today

• The Port of Tacoma has capacity today - in
  intermodal yards and mainline rail capacity.
• Current Volumes - the Ports of Tacoma and
  Seattle moved approximately 4.2 million TEUs
  during 2005 and 2006.
• The Pacific Northwest (Tacoma and Seattle) has
  rail capacity today and for short term growth
  (approx 7.4 million total TEUs per the
  Washington Public Ports Study)
• The PNW total rail volumes are currently
  approximately 60 of practical rail capacity
  (intermodal is 60 of total rail traffic in the
  state)

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Rail Capacity Today - PNW Combined Ports of
Tacoma Seattle Intermodal Traffic
2011 Forecast 4000 TEU
2010 Forecast 3850 TEU
2009 Forecast 3430 TEU
2006 Volume 2940 TEU
2007 Forecast 3010 TEU
2008 Forecast 3080 TEU
Note All figures are in thousands of TEUs. All
values are based upon 70 of total TEU volume for
both ports moving via intermodal. All figures
assume that growth rates at the Port of Tacoma
and the Port of Seattle are the same from
2006-2011.
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BNSF/ UP Rail Partners
Tacoma-Vancouver Union Pacific and BNSF
Intermodal Traffic
Stevens Pass BNSF Intermodal Traffic
Everett
Seattle
Tacoma
Stampede Pass BNSF Carload Traffic
Portland
BNSF Intermodal
UP Intermodal
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Level of Service
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Capacity Today
Red indicates Only 2 areas (108 miles) over
capacity
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Role of Washington State

• Historically, Washington State has assisted
  Passenger Rail and Agricultural Interests
• Purchase of Shortline RR - Palouse River Coulee
  City Railroad (PCC)
• Purchase of Railcars
• However, recently Washington State through
  Governor Gregoire pledged 25 million for the
  Crowning of Stampede Pass. To date, this remains
  unfunded.
• Additionally, WSDOT has pledged funds to the
  Vancouver WA bypass. This will assist
  international intermodal traffic from the Ports
  of Seattle and Tacoma as it moves north and south
  

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Washington State Rail Study

• Washington State Rail Study completed in January
  2006
• Goals
• To outline existing rail structure throughout the
  state
• To identify existing capacities
• To identify existing bottlenecks
• To outline a mechanism for evaluating each rail
  improvement project in terms of overall benefit
  to the rail system and surrounding community.
• Port of Tacoma estimate (SWAG) is that all
  identified improvements will cost in excess of 2
  billion.

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Funding / Container Fees

• Washington State Legislature initially proposed a
  container fee of 50/TEU, but was unable to pass
  in the last legislative session.
• Ports, labor and others objected to the container
  fee stressing that an increase in fees for
  Washington state only would divert cargo other
  ports.
• The Washington State Legislature then referred
  the fee for study and will bring the matter back
  to the House for the next session.

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Class I Railroad Expansion Plans
Capital Investment as a of Revenue
Source Census Bureau, STB All figures based on
2002 economic census except railroads and
trucking All transportation includes NAICS 48
industries including air, rail, trucking, water
and pipeline transportation Trucking figures are
1999-2005 average for NAICS 484 based on Census
Services Annual Survey Railroad figures are
1999-2005 average based on STB R-1 filings (Class
I railroads cash capital)
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Capital Investment Has Grown inTandem with
Profitability . . . but . . .
Historical nominal dollars invested based on STB
R-1 filings (Class I railroads cash
capital) Industry profits based on R-1 filings of
Class I railroads
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Growth is not being Rewarded
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RR Capital Investment Reality
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Capacity Improvement Process

• Build new Intermodal Facilities and Add new Track
• Add Technology to current Terminals
• Develop Web based Decision Tools
• Improve Financial Returns
• Improve Cashflows
• Document Processes- look for opportunities to
  improve efficiency

Courtesy of UPRR
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RR Expansion Plans for the PNW

• BNSF has just completed an upgrade at the Seattle
  International Gateway converting the north
  intermodal yard from storage to a load/unloading
  intermodal operation, increasing lift capacity to
  about 600,000 lifts annually by the installation
  of new electric cranes
• UPRR continues to review possible expansion plans
  for their Fife WA yard.
• Both railroads continue to investigate the
  development of an additional domestic intermodal
  yard.
• BNSF has indicated they will crown Stampede Pass
  when it is needed and if funding support is
  available from Washington State.
• Additional sidings are being built as needed
  throughout the state.

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Bridging the Gap What its going to take?

• We all must Be TEAM PLAYERS, Its a Team Sport.
• Continue developing the regional perspective on
  growth and demand
• Continue engaging the mainlines and the DOTs
  understand their plans and sharing ours
• Define what is Public and what is Private
• Investigate a wider range of funding options
• Engagement with our neighbors preventing
  deterioration of relationships
• We need more than a Framework - we need a
  National Freight Policy

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Benefits of a National Freight Policy

• Railroads are trying to be Good Neighbors and
  minimize the environmental impacts of their
  projects.
• State Legislators have responded to local
  concerns
• These are driven by concerns for environment and
  pollution, not efficient cargo movement.
• No one wants DC to pre-empt local decisions, but
  we all need to use the same basic playbook.

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A step ahead.