Plans for a second warehouse at the marine terminal are moving forward after the Port of Olympia Commission unanimously voted to greenlight the project.
After conducting a town hall meeting on Thursday, November 7, to discuss the proposal with the public, the commission voted on Tuesday, November 12, to include $1 million in the port’s 2024 capital budget to initiate design and procure infrastructure for a temporary warehouse.
Port staff expect that they will need another $3 million to complete the project next year.
The 70,000-square-foot warehouse will be built beside the existing warehouse on the opposite side of the rails. It will be made of ripstop fabric over a metal frame and built on a 4–6-inch concrete pad.
Staff proposed having another warehouse to accommodate additional cargo from Suzano, a global pulp manufacturer and paper producer headquartered in Brazil, and other future customers.
Afsin Yilmaz, marine terminal senior manager, explained that staff constantly have to work around the issue of the terminal's lack of capacity.
“Every time a new ship comes, we are having some stressful moments. Sometimes the ship is ahead of the schedule, and we still have a lot of material in the warehouse... When they come, we might be running out of capacity, and we're constantly having to work around that,” Yilmaz said.
During the November 7 town hall meeting, Yimlaz also mentioned that the port had turned down customers because they lacked warehouse capacity.
“[The] marine industry works that way. Basically, you get a lot of inquiries, and not all of them will materialize. But we got four inquiries last year that we had to reject, and that was two of them was for steel coils, one was for rice,” Yimlaz said.
Port staff projects to break even with this investment in two years, assuming they still have Suzano as a customer and five to six years in the worst-case scenario.
Yimlaz assured that the port will use its own revenues from the marine terminal to fund the project and that it would not need to incur debt for it.
Should the port no longer need the warehouse and decide to surplus the asset, it would need to spend around $450,000 to disassemble it.
Executive Director Alex Smith also said the warehouse could be repurposed into a sporting facility.
Debbie Patton, a member of the port’s citizen advisory committee supporting the project, added that the warehouse would also be a significant asset in storing resources should a disaster happen in the region.
While marine terminal workers and labor group representatives supported the proposed warehouse as a second warehouse would increase work at the marine terminal, some public members expressed concern that spending $4 million for the warehouse was too risky as they believe Suzano can leave anytime.
“For the proposed warehouse gambit to succeed, a lot of things would have to go right: business decisions by Suzano, which market to enter, what transportation to use, who to deal with, and on and on,” said resident Bob Jacobs during public comments at the November 11 meeting.
Some demanded that the port form a contract with Suzano so that the company commits to using the warehouse for a certain number of years.
During the town hall meeting, Yilmaz explained that the port commits with Suzano to store a certain cargo each year.
The commitment is made every year. The last one was signed last year, and the next contract is still being developed.
Public members also expressed concern about the prospect of future tariffs that could negatively impact the marine terminal’s business, but Smith was reassured that they had also considered this issue.
“We're going to be having a new president who has threatened tariffs massively for international products. Have you thought about that?” asked resident Janine Lindsey during the town hall meeting.
In response, Smith said, “if the goal is to support manufacturing in the US, then hopefully there wouldn't be tariffs that are too high on raw goods or raw materials.”
“I think one of the things that I did note is this customer, Suzano, has been shipping things to Philadelphia for 14 years, and increasing… the amount that they've shipped from there. And that was during a previous administration where they also had tariffs as their site primary economic policy, and it didn’t dissuade Suzano from continuing to ship to that port,” Smith continued.
There were also concerns as to how a second warehouse fit into the port’s master plan process, with some believing that the warehouse project was premature as the master plan was just getting started.
During the town hall meeting, Smith said that it made sense to continue generating revenue for the marine terminal as it will take a while if the port decides to transition away from industrial use during the master planning process.
Smith explained that the port has a lease contract with Weyerhaeuser until 2032. The executive director added that if the marine terminal is no longer used for industrial purposes, the port would have to repay the federal government for certain assets it received through grants.
“So there's a lot to figure out. And so during that time period, it makes sense to us to continue to generate revenue from the marine terminal until that use is finally terminated and it's transitioned over to something else,” Smith said.
The public also raised environmental concerns about importing wood pulp from South America when the port could otherwise support local production due to its large log stock.
Others also emphasized that the product is problematic due to how it is cultivated.
“Eucalyptus plantations growing in regions spanning South America have significant detrimental impacts on local communities and biodiversity. They rob regions of water, destroy wildlife habitat, and transform large swaths of biodiverse tropical biome into unnatural monoculture,” said resident Harry Branch during public comments at the November 11 meeting.
For a very long time, Weyerhaeuser, a log exporting company, was the primary driver for the marine terminal’s business. Smith had acknowledged that this business model was limited in terms of revenue generation.
According to the port’s finances, the marine terminal has seen improved revenues since 2022.
“In 2022 you can see the revenue jumped up significantly, and that's in large part because Afsin is very well plugged into the break bulk community… and also in part because he recognized the value of the asset of the warehouse,” Smith said during the town hall meeting.
“In 2023 you can see on the income levels before depreciation, the income went up significantly. And that's when we got the bulk paper pulp cargo,” she continued.
The executive director also mentioned that if they were not able to provide Suzano with the extra capacity, the company would likely leave the port entirely.
3 comments on this item Please log in to comment by clicking here
johnvaneenwyk
"limited in terms of revenue generation." says it all. two things at which the Port is well-versed: pipe dreams and ignoring the concerns of the public. "Just send us your tax dollars and then go away." It's the Port that should go away. Maybe one day...
Friday, November 15, 2024 Report this
JW
The Port of Olympia is a money-laundering scheme.
Friday, November 15, 2024 Report this
Porter
Sounds like Suzano has it's hands around Port o' Olympia's neck.
Friday, November 15, 2024 Report this