International trade essential to Grays Harbor

Annually, the Port of Grays Harbor makes rounds to the Grays Harbor municipalities to tout its successes and plans. The Port is a public entity with elected leadership, and the annual presentations are a good way to keep the public informed and discuss its partnerships with other elected bodies.

This year, the Port touted its record-breaking year for imports.

The Port has increased its imports to 10 percent (exports, obviously, are the other 90 percent) as of 2017. Compare that to 2014 when the Port had just 3 percent imports. In 2013, the Port came close with about 9 percent in imports.

Looking at the percentages, it doesn’t seem particularly impressive. But it’s an increase of more than 140,000 metric tons. And the increase came in the form of automotive shipping (up about 56,000 metric tons), and liquid bulk (up about 84,000 metric tons).

In a conversation with The Vidette, Port Executive Director Gary Nelson and Deputy Executive Director Leonard Barnes were apprehensive to to give further specifics on the makes and models of the vehicles or the specific liquid bulks. Both noted that shipping and port traffic is competitive, and in the past, positive news coverage had led to the Port being outbid on specific contracts shortly thereafter. They also noted that the Port does not track makes and models, only tonnage.

Navigating uncertainty

Both Nelson and Barnes are proud of the new benchmark.

“Traditionally, we’ve been strong in export, but we’d like to balance that with import cargo,” Nelson said. “We’re a small community, and most of the imports are consumer goods. Our niche is rail-dependent Midwest marine cargo. We’d love to have some more inbound cargo.”

Barnes was a little more excited than Nelson.

“10 percent… I see that as a huge number,” Barnes said.

The Port deals in international trade. The business of international trade is competitive — as stated above — but it also can be turbulent. Often, that turbulence is beyond local control. In recent months, the US under the leadership of President Donald Trump seemed set on a trade war with China. Tariffs were threatened and imposed. In fact, China threatened a tariff on soy — a product shipped out of the Port of Grays Harbor by tenant AGP. It was unclear if that tariff would impact AGP’s business through the local Port (would bulk soy meal, which AGP deals in, be directly impacted?), but recently, China and the US seem to have repaired those discussions and backed off those threats.

While the Port fielded many calls from the media about potential impacts from the tariffs (including calls from The Vidette), the worries behind those calls miss the actual mark of what makes the Port successful.

“People get caught up in tariffs, but I pay attention to the value of the dollar,” Nelson explained. “When the dollar is weak, we do well in exports. When the dollar is strong, we do well in imports.”

A port with a one-dimensional portfolio — for example, a 3-percent import rate — can feel the pinch, significantly, when that turbulence of uncertainty becomes volatile.

The Port officials note they’re continuing efforts to diversify.

“This business is truly international — things go up and things go down,” Barnes said. “We make sure things are diversified. We aim to have the balance, and our marine terminal supports the whole port. It paves the way for a lot of things to happen in the community. Having that balance in different commodities is something (Gary Nelson) has been striving for, and it went well for Port.”

And that’s a change from where the Port has been in the past. In decades past, the Port was timber based, and the local timber industry has seen a steep and steady decline. In order to ensure the Port doesn’t suffer the same fate of so many other timber-industry-based business ventures, the Port’s leadership expanded its portfolio.

“In the 1970s this port and the docks were built on logs. What changed? The spotted owl, the state changed regulations, international supply markets started filling the gap,” Barnes recounted. “That fundamentally made us have to retool and refocus in sustainable international markets.”

The ‘customers’

The way Barnes and Nelson explain it, the overall success has been almost entirely out of the Port’s hands (aside from the determination to diversify). It’s all about relationships with the Port’s tenants, whom the Port refers to as “customers,” Nelson and Barnes said.

“We went to trade shows, did advertising and trade journals trying to get people interested in Grays Harbor,” Nelson said. “We found the success in current customers has provided us more exposure than we could ever dream of purchasing.”

Pasha ships vehicles through the Port. Nelson said they’d show photos of Pasha’s lots full of vehicles and potential clients and other ports were amazed: “They thought cars were Photoshopped in. You can’t buy that kind of exposure. Now we try to steer potential customers to our current customers for references.”

Having a strong relationship with tenants also leads to the improvement of Port facilities, but it’s a matter of finding the companies who want to invest and commit, Barnes said.

“We work with companies that want to invest in our community — employing people or putting capital infrastructure in,” Barnes said. “Willis, Contanda, AGP, Pasha — we have key steady customers who have invested, not just with people but with capital in the ground.”

And the investment helps insulate the Port from the volatility of the international markets.

“Back when I came here we were chasing logs… but we were trying to diversify with transitory goods,” Nelson said. “It’s hard to find someone to consistently stay and provide jobs unless they’ve made an investment. I’d like to say we figured it out, but it was after the fact, we went, ‘Oh, this worked well.’”

Companies that spend their own capital on facility improvements tend to stick out the stormy nature of the industry.

“They’re not just going to pack up and go home the next time there’s a downturn,” Nelson said.

The benefits

A common theme to the Port’s presentations can be summed up simply: When the port does well, Grays Harbor County does well.

The Port and its tenants are major employers in Grays Harbor County.

“Roll on, roll off autos (as with Pasha, where the cars simply drive on the ship for export, or drive off in the case of imports) — there are 75 people working on that ship that are employed here,” Barnes said. “Then down at AGP is an off-loading ship at the same time and another 20-plus people. That’s 100 jobs going when we have ships.”

Those jobs, Barnes noted, support additional full-time jobs directly through labor unions, maintenance staff, security staff, pilots and others.

“There are a lot of different types of jobs. It’s really diverse in what goes on,” Barnes said. “That diversity of jobs serves as an economic engine, and I don’t think people understand because they’re just not close enough.”

And while those jobs boost the local economy and keep families employed, there are other benefits to a healthy Port.

“About 75 percent of our operating revenues are driven by the marine terminal. That’s what drives the ability to provide Friends Landing, the viewing tower, boat launches and the airport,” Nelson said. “That’s why international trade is important to our community.”

The Port hopes to continue building on its momentum. Some property acquisitions could be coming in the future for Aberdeen properties, but Nelson said the Port likely won’t eye purchasing more property in East County in the near future.

“We have a lot less vacant than we did 10 years ago,” Nelson said of the Satsop Business Park. “There were a lot of vacant buildings. Right now there are a lot of autos up there, but that’s temporary. We plan to build on the momentum that (Satsop Business Park manager) Alissa Shay started. And we want to get diversification so it’s not all call centers.”

In Aberdeen, Barnes said current customers are planning expansions and improvements, including Contanda and REG. Those expansions plans no longer include crude oil by rail, Barnes noted.

 

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