Breakbulk Business Update

Jeff Brubach Andre Elmaleh Manager, Business Development Sr. Manager Business Development

Item No.: 5B.1_suppDate of Meeting: June 4, 2019

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Breakbulk Business Overview

Breakbulk is a core part of the Northwest Seaport Alliance (NWSA) business portfolio. Both harbors have been handling this cargo since their inceptions. Breakbulk business compliments other NWSA business and adds to the economic vitality of the region, while creating a significant number of diverse jobs.What is Breakbulk?

Breakbulk is cargo that either cannot fit, or isn’t efficient to ship in containers, nor is it large quantities of unpackaged cargo in either liquid or granular form (bulk cargo).

Examples of Breakbulk Cargo Include:

Agricultural/Mining/Construction equipment, Modules for energy projects, Tram Railcars

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Current Breakbulk Handling Facilities

East-Blair 1 (EB-1) Terminal Features

• 18 acres• Pier strength: 1,000 psf with 2,000 psf heavy lift section *• On-dock Rail *• Dedicated professional customer service group• Near-dock processing facility for high and heavy cargo• Easy access to I-5 for truck cargo *

* Critical breakbulk facility feature

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Current Breakbulk Handling Facilities

Terminal 7 / Blair Terminal Features

• Used for military cargo and breakbulk overflow• Available covered storage• Near-dock rail access• Easy access to I-5 for truck cargo *

* Critical breakbulk facility feature

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NWSA Breakbulk Customers...Who Are They?

Ocean Carriers: Carriers have direct relationships with ports and guidecustomers to gateways that best meets their needs.

Beneficial Cargo Owners: BCO's have influence over port selection and work with carriers to create low-cost, quality supply chains.

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NWSA Breakbulk Customers (continued)

Freight Forwarders: Forwarders secure end-to-end supply chain details for customers completing large projects or moving single pieces of cargo.

Engineering Procurement Construction Companies: EPC's perform all services for specific projects, spanning from design to site delivery.

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Top NWSA Non-Container Commodities

1. Machinery/Construction Equipment

170,578 MT (2018)

2. Agriculture Equipment23,978 MT (2018)

3. U.S. Military16,501 MT (2018)

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NWSA: U.S. Military Strategic Ports

• The Port of Tacoma serves as a strategic seaport.

• The Port of Seattle serves as an alternate strategic seaport.

• The NWSA relationship allows both ports to work cohesively in times of national emergency to serve both military and commercial customers.

• The NWSA handles 2-3 U.S. Military outloads per year.

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International Markets Served

• Top Countries of Origin• Japan• Korea• Belgium

• Top Countries of Destination• Japan• Belgium• Panama

NWSA Breakbulk Volume:

80%

20%

Import Export

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NWSA Breakbulk Tonnage Trend

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NWSA Breakbulk Cargo Trends

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2016 2017 2018

Number of Pieces Handled

Import

Export

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Breakbulk Market Trends

• Near-sourcing of project cargo

• Containerized shipment of breakbulk equipment (SKD)

• Shipping on flat racks via container vessels

Breakbulk Market Key Drivers

• Renewable energy project demand

• Housing/construction market shift to "modulization"

• Increased demand from emerging markets

• Project cargo requirements

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NWSA Competitive Advantages

• Geographical proximity to Asia

• Dual Class 1 rail service

• On-dock rail at breakbulk facilities

• Heavy-lift capability

• Experienced labor force

• NWSA customer service team support

• Served by most major Ro-Ro ocean carriers

• Service to Canadian markets

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Competitive Landscape

• Import: 42% (1)• Export: 44% (1)• Total: 43% (1)

NWSA43%

Vancouver, WA37%

Kalama9%

Longview5%

Bellingham3%

Portland, OR2%

NWSA

Vancouver, WA

Kalama

Longview

Bellingham

Portland, OR

Aberdeen

Everett

Anacortes

Olympia

Pacific Northwest Breakbulk Market Share(measured in metric tons)

Source: 2017 PIERS data

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Competitive Landscape

• Import: 15% (2)• Export: 14% (2)• Total: 15% (2)

Los Angeles30%

NWSA15%

Vancouver, WA13%

San Francisco12%

Long Beach11%

Oakland7%

Los Angeles

NWSA

Vancouver, WA

San Francisco

Long Beach

Oakland

Kalama

Vancouver, BC

Stockton

Longview

U.S. West Coast Breakbulk Market Share(measured in metric tons)

Source: 2017 PIERS data

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Competitive Landscape

• Import: 2% (15)• Export: 3% (12)• Total: 2% (13)

Houston21%

Mobile14%

S. Louisiana12%New Orleans

12%

New York6%

Corpus Christi6%

Brownsville5%

Los Angeles5%

Philadelphia5%

Baltimore4%

Galveston4%

Charleston3%

NWSA2%

Houston

Mobile

S. Louisiana

New Orleans

New York

Corpus Christi

Brownsville

Los Angeles

Philadelphia

Baltimore

Galveston

Charleston

NWSA

U.S. Breakbulk Market Share(measured in metric tons)

Source: 2017 PIERS data

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NWSA Breakbulk Commercial Strategy

• Actively manage and grow key customer relationships

• Represent NWSA with targeted customer outreach at industry events

• Align stakeholders to fulfill needs of key customers and increase volume through NWSA gateway

• Strategic use of social media to promote NWSA breakbulk advantages has translated to new business

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Financial Overview

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$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2016 2017 2018 2019 Budget 2019 actual (Estimated)

Military and RO-RO Revenue

EB1 T7

NWSA Supported Breakbulk Jobs

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• Rail Transportation: 1,690

• Truck Transportation, Logistics, Warehousing: 1,100

• Maritime Support Services: 440

• Navigation Services: 340

• Government: 200

• Terminal Operations, Stevedoring, Longshore: 110

Source: 2019 NWSA economic impact analysis

Conclusion• Breakbulk has a rich history in Tacoma and Seattle with a bright future

ahead.

• Breakbulk is a key component of the NWSA's diversified business portfolio.

• Unique in operation and customer base, breakbulk operations are a significant source of jobs.

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