Companies specializing in Alaskan cargo hang on

Trade with Alaska has always been steady and predictable business for Puget Sound ports and companies specializing in sending cargo to the 49th state. While international imports and exports have been more prone to dramatic ups and downs, the Alaska trade has chugged along, typically growing by a few percentage points each year.

But in this recession, even the reliable is vulnerable.

The ports of Seattle and Tacoma both reported drops in their Alaska business this year and local trucking companies, shipping lines and freight forwarders are also reporting declining volumes.

Trade with Alaska is big business in the Puget Sound.

The state is the Port of Tacoma's third largest trading partner behind China and Japan, with $3.5 billion worth of mostly northbound goods shipped out of the port last year. Most of those goods are consumable items - everything from groceries to lumber - headed for store shelves in Anchorage and beyond.

Because much of the trade revolves around consumer necessities, business is fairly stable. In the past decade, the biggest spike in Alaska cargo volume going through the Port of Tacoma was 4 percent and the largest drop was just more than 2 percent.

But this year the port is reporting a 9 percent drop in its domestic container volume, which represents Alaska cargo, though includes a small volume of containers headed to Hawaii. The Port of Seattle domestic container volume is down 10.5 percent

Bill Deaver, president of Totem Ocean Trailer Express, said his company is feeling the effects of the softening Alaska market. The Federal Way-based shipping company known as TOTE sends cargo to Alaska from its terminal in Tacoma's Tideflats.

"The state of Alaska has taken a downturn and northbound volumes are off by (12 percent)," Deaver said. "That's unprecedented for us."

Two TOTE ships leave Tacoma each week. Their cargo includes trailers loaded with items for Alaska's retailers and cars and trucks destined for the state's auto dealerships.

The latter has taken an especially large dip, with the number of vehicles headed to Alaska on TOTE boats down by about 35 percent from an annual average of 25,000, Deaver said.

The business decline has TOTE cutting back on expenses, though the company hasn't laid off any of 140 employees and has no plans to scale back its services.

"We can't cut back on service levels because the state depends on us," Deaver said.

Other companies with Alaska ties are also reporting that business is slow.

Mike Oliver, vice president of sales for Lynden Transport, said the company's volume is down about 3 percent, though he anticipates revenue will be up by at least 1 percent by year's end.

SeaTac-based Lynden Transport moves all sorts of goods from the Lower 48 to Alaska via trucks, ships, planes and barge.

"We've hung in there," Oliver said. "Our earnings aren't what they have been in the last three years, but we are still making a living."

That Alaska's economy is actually faring better that most states bodes well for the Puget Sound companies that do business there.

At 8.4 percent, the state's unemployment rate is lower than the national average. Most of the state's jobs are tied to the oil and gas industry, government or tourism. The mix has served Alaska well, with the state posting year-over-year job growth through May while most other states have been shedding jobs for months.

"Alaska is doing considerably better in almost every measure that you can look at," said Neal Fried, economist with the Alaska Department of Labor.

A few major retailers have opened stores - or are set to this year - in the state, including Kohl's and Walgreens. Their presence and the cargo they need have already given TOTE and freight forwarders such as Tacoma-based American Fast Freight a welcome boost during tight times.

As for the long term, many companies with Alaska ties are optimistic.

They are watching the price of oil - its rise signals more business as many of the transportation companies haul supplies to the North Slope (though the increasing cost of fuel also works against the companies as it ups the cost of doing business).

And many have high hopes for several large construction projects, including a potential natural gas pipeline, which also translates into more jobs and business for those supplying the sites.

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Information from: The News Tribune, http://www.thenewstribune.com