Cruise lines get 10-year deal at Pier 91

The Carnival Corporation has earned (net profits) over $9 billion in the past four years combined. Their earning figures for 2008 will be out at the end of December — expect them to be on par with the past three years — between $2.25 and $2.4 billion net profit. And they pay virtually no corporate income tax.

And the Port thinks they need to give them an incentive to dock at our port?

The Puget Sound Action Agenda calls for making Puget Sound a no discharge zone. The least these floating feedlots could do is to spare the Sound their discharges which includes high levels of nutrients not to mention norovirus, heavy metals and all those medicines their elderly passengers take. The MOU with the Port and Ecology allows them to discharge while sitting at the new dock right near the sculpture garden beach.

Surf’s up.

http://seattlepi.nwsource.com/business/390407_port03.html

Holland, Princess given preferential use of new berths

Wednesday, December 3, 2008

By KRISTEN MILLARES YOUNG
P-I REPORTER

The Port of Seattle Commission approved a 10-year agreement Tuesday that gives Carnival Corp., the parent company of cruise lines Holland America and Princess Cruises, preferential use of two new cruise berths to open at Terminal 91 in April.

The deal — which can be terminated at any time by either party for the following cruise season — guarantees that the cruise companies will continue to bring their current level of 420,000 annual cruise passengers and base five vessels in the Seattle seaport through 2018.

Commissioners Gael Tarleton, John Creighton, Bill Bryant and Pat Davis approved the agreement; Commissioner Lloyd Hara abstained from the vote after citing concerns about the $1.06 million in rebates and waived fees over the first two years that the port gave to the cruise lines to seal the deal.

Tarleton congratulated the port staff for “doing a 10-year deal in the middle of a recession, and getting commitment from two high quality lines” and said the city of Seattle and King County “should be incredibly grateful” for the tourism it ensures.

Since 2003, the cruise lines have called at Terminal 30, which was built on top of a vacant container terminal for $18 million in taxpayer funds as a temporary facility while the port staff sorted out possible environmental litigation over its intended final destination for cruise ships, aside from a berth at Pier 66: Terminal 91 in Interbay.

The Terminal 30 building was much more expensive than originally anticipated, but its bare-bones warehouse style didn’t put off the cruise lines: They liked the easy access to the airport that its location south of downtown provided.

When SSA Terminals, a joint venture between Seattle-based SSA Marine and Matson Navigation Co., went to the port asking for more acreage, the port began to plan to reposition the cruise lines to make way for SSA, which has since signed a deal with China Shipping to help manage and bring cargo through the newly revamped Terminal 30 by spring. In February 2007, the Port Commission approved the project to turn Terminal 30 back into use for containers and moving the cruise-ship berths there to Interbay, which currently costs $121.5 million.

The cruise lines, whose ships travel through Seattle from April through October, began to complain of the added cost of shuttling passengers between Interbay and Seattle-Tacoma International Airport, despite benefiting from about $65 million in terminal improvements, which include a new 143,000-square- foot building and which, like Terminal 30, were funded entirely with port money.

“It was originally contemplated that 30 was a temporary site; all along, it was anticipated that the move would go to 91 at some future date,” said Hara, who questioned why the port was being asked to “pump $1 million back in” the cruise lines’ pockets.

Citing the cruise industry’s uncertainty because of the global recession, port staff members said the deal was needed to protect about half the port’s cruise revenue. In most ports, cruise lines agree to call for only one year at a time, using the possibility of their departure the next year as downward pressure on the port’s pricing.

Seaport deputy managing director Phil Lutes said “a year and a half of discussions and negotiations” led to the deal, which “will result in major benefits to the port and the region and guaranteed core business and revenue streams.”

The port is offering Carnival cruise lines a 10 percent to 15 percent discount on fees should they base more ships in Seattle, which would provide more economic benefit to the region than those that merely pass through.

If the cruise lines do not meet the guaranteed minimum passenger and vessel counts, the port is “able to withhold an amount equal to the revenue passenger shortfall,” said Mike McLaughlin, the port’s senior manager of cruise properties.

“I understand where you would look at (the rebates) and say, ‘Why is that there?” said Dan Grausz, Holland America’s senior vice president of fleet operations. “This is an agreement; that’s all I can tell you. We had to make serious concessions as part of this process.”

Davis said Holland America Line has been seeking preferential berth space for quite some time. When it finally got it, the line also eked from the port a 4.5 percent annual cap on the port’s fee increases.

“For the last six to seven years, we’ve had great luck raising our rate every year, but now we’re right up at the market, so we don’t have room to jack up” pricing, seaport managing director Charlie Sheldon said.

The cruise lines also got the port to pay for shuttling passengers between the cruise building and the terminals’ more northerly parking spaces.

“The notion that the cruise lines will necessarily always come back to Seattle … it was not that long ago that the cruise lines weren’t here,” Grausz said.

Before beginning Seattle-based service Holland America Line’s bus company shuttled many of its Alaska-bound cruise passengers from Sea-Tac Airport over the border to the Port of Vancouver, which it still does.

The Vancouver Fraser Port Authority is Seattle’s main cruise rival and is continuously cited by port staff as reason for the commission to approve its requests to bolster Seattle’s cruise business, which Chief Executive Tay Yoshitani has conceded is a money loser for the port but which he emphasized brings revenue to the region.

The cruise lines “bring prosperity that is like manna from heaven,” Davis said, echoing commissioners’ recitations of the $1.7 million in revenue they say enters the economy whenever a Seattle-based ship docks.

P-I reporter Kristen Millares Young can be reached at 206-448-8142 or kristenyoung@seattlepi.com.

1998-2008 Seattle Post-Intelligencer

~ by fredfelleman on December 3, 2008.

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