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Vol. 13, No. 48 Week of November 30, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

AK-WA Connection 2008: Alaska trade offers enduring promise

Washington companies and institutions excel in providing crucial support, services for 49th state’s business community, economy

Rose Ragsdale

For Alaska-Washington Connection

As Alaska gears up for the challenges of the next decade, institutions and businesses in Washington State stand ready to support the Last Frontier’s business community in moving forward. Whether in transportation, tourism, fishing, mining, timber and services including the professional, financial, government, entertainment and oil and gas sectors, Alaska and Washington continue to enjoy a mutually supportive relationship that meets the needs of both states and then some.

This Alaska-Washington “connection” is both traditional and intuitive. It dates back more than 100 years to the days of the Alaska Gold Rush, and forges an economic link that brings Alaska and Washington together in increasingly diverse and lucrative ways.

In “The Alaska-Washington Connection — The Ties That Yet Bind,” sponsored by Petroleum News, we examine the enduring economic relationship that exists between the two states and showcase some of the many businesses that sustain that connection.

From Adak to Tok and Barrow to Ketchikan, Washington businesses and institutions play an important and evolving role in providing Alaska’s economy with the critical infrastructure support it needs. In addition, a growing number of Alaska businesses are making a splash in the much bigger pond of the Puget Sound and the rest of the Lower 48.

Often overlooked by residents of both states, the Alaska-Washington Connection is multifaceted, interdependent and enormous.

Anchoring the southern end of the link are the Puget Sound’s two ports, the Port of Seattle and the Port of Tacoma, and Seattle-Tacoma International Airport. These three entities are integral components of Alaska’s transportation, logistics and distribution infrastructure though they are located hundreds of miles south of the closest Alaska community.

On the northern end, the Port of Anchorage and Ted Stevens-Anchorage International Airport, smaller Alaska ports, harbors, airports and the Alaska Highway do their part to ensure that the flow of trade goods and services from Washington State reaches markets in the nation’s northernmost jurisdiction.

Businesses across industry classifications, from accounting to wholesale trade, from attorneys to transportation companies, grow and prosper by serving Alaska’s growing needs.

More than ever, major industries in the 49th state, led by oil and gas, depend on the success of the Alaska-Washington Connection. Whether in adapting to the pressures of high energy prices while serving Alaska communities or in branching out to spur important Alaska sectors like tourism and fishing, Washington companies answer the call of Alaska consumers.

And as Alaska tackles important challenges such as developing an Alaska-Lower 48 natural gas pipeline, it is Washington businesses and infrastructure that play an important part in making it possible.

Slow growth in economy

Alaska created goods and services in 2007 valued at $44.5 billion, up slightly from the previous year, according to federal figures.

Pumping oil from Prudhoe Bay and other North Slope oil fields was the biggest activity, driving the size of Alaska’s gross state product, according to the U.S. Bureau of Economic Analysis.

The value of the state’s oil, natural gas and mining output comprises 31 percent, or $13.8 billion, of the Alaska’s $44.5 billion the bureau said.

Among other major contributors:

• Government - 17.5 percent, or $7.8 billion.

• Transportation - 9.5 percent, or $4.3 billion.

• Real estate - 7.3 percent, or $3.3 billion.

• Health care and social assistance - 5.2 percent, or $2.3 billion.

• Retail - 4.4 percent, or $1.9 billion.

• Construction - 3.7 percent, or $1.7 billion.

Ports anchor the connection

Puget Sound port officials say they cannot overestimate the importance of Alaska to their success, and in that the ports are important economic engines in the Seattle area, to the success of the entire region.

The Port of Seattle was established in 1911, but the Alaska-Yukon Gold Rush of 1897 had much to do with establishing Seattle’s harbor and gateway city. In 1911, the Port of Seattle took control of waterfront properties away from the railroads, to manage in the public interest and create jobs. In 1914, Fishermen’s Terminal became the Port’s first facility, creating a home for the North Pacific fishing fleet.

Today, the Port of Seattle directly or indirectly supports more than 200,000 jobs in the Puget Sound region and generates more than $12 billion in business revenue and $626 million in state and local taxes annually.

As seaport that supports a thriving cruise industry, commercial and recreational marinas, and three container terminals, the Port of Seattle handled 1.97 million 20-foot-equivalent container units (TEUs) in 2007.

Port of Seattle facilities also include the Seattle-Tacoma International Airport, which served 31 million passengers in 2007 and is the single-most important air gateway to Alaska.

The Port of Tacoma, meanwhile, ranked Alaska No. 3 after China and Japan on its 2007 list of top 20 trading partners, even though, the state cannot technically be considered a trading partner. Port officials say the state’s $3.5 billion in annual two-way trade deserves a place in the ranking because of the importance of trade with Alaska to the Port of Tacoma’s continued well being.

A major maritime gateway to Asia and Alaska, the Port of Tacoma handles more than $36.33 billion in annual trade and nearly 2 million TEUs in 2007.

The port is also a major center for bulk, break-bulk and heavy-lift cargoes, as well as automobiles and medium-duty trucks.

Directly or indirectly, the port supports more than 156,000 jobs in the Puget Sound region that generate $637 million in annual wages in Pierce County and $90 million in state and local taxes.

Links in the chain

Companies that facilitate the Alaska-Washington trade have grown and prospered with Alaska over the years. Some, like NC Machinery Inc., can trace their roots from more than a century ago to before the Alaska-Yukon Gold Rush, while others, such as Alaska Traffic Company, can boast of comparatively recent origins, dating back 50, 60 or 70 years. With origins going back as far as 1776, NC Machinery has changed over the centuries with Alaska to become a leading Caterpillar dealership. Alaska Traffic, recently acquired by Seattle-based United Warehouse Co., provides freight forwarding and consolidation for Alaska customers.

A good example of companies that have prospered in the Alaska-Washington trade is the Lynden family of companies.

Today, Lynden’s service area has grown to include Alaska, Washington, Western Canada, with additional connections throughout the United States and internationally, via land, sea and air. Lynden companies specialize in solving transportation problems for their customers and, in the process, built a reputation for serving diverse industries including oil and gas, mining, construction, retail and manufacturing.

Over land, on the water, in the air — or in any combination — Lynden has helped its customers for nearly a century.

Lynden continues to improve

Lynden’s companies also continue to innovate to improve services.

Alaska Railbelt Marine, for example, won recognition this year from Argus Media.

The organization presented its 10th annual Win-Win award to the company and the

Alaska Railroad to recognize how the railroad and the barge company preserved and revived freight deliveries to Whittier for several customers.

The Alaska Railroad has offered rail-barge service between Whittier and the

Lower 48 since 1962, bolstered by development of the Trans Alaska Pipeline System in the 1970s.

By the 1990s, a changing marketplace and maturing oil industry worked to reduce demand for freight traffic, while growing steamship service offered another competitive option for customers. The railroad considered terminating its barge service.

Barge shipment, however, offered one of the most economical ways to transport railroad rolling stock to Alaska, so the short line tried to preserve the service. The carrier focused on building up freight shipments of commodities that made the most economic sense to move by rail.

The railroad teamed with Lynden’s Alaska Railbelt Marine to redevelop the rail-barge business. The two companies designed and constructed three new barges to handle the rail traffic it hoped to move back onto the water. Each barge, which has eight separate rail tracks, can hold up to 50 railcars.

The new barges allowed the railroad and Alaska Railbelt Marine to offer regular service out of Seattle. Barges now leave the city every Wednesday, offering consistency in a formerly haphazard schedule, officials say. That consistency, combined with newer barges, also helped reduce transit turn times from roughly 20 days to 17 days. The barge company’s ability to use Whittier, rather than Anchorage, as its northern terminus also saves two days sailing time and cuts fuel costs.

As business has grown, Alaska Railbelt Marine has expanded the service by adding overhead racks designed to hold containers above the railcars, increasing the company’s overall transport capacity.

To accommodate a widening range of customers who depend on consistent service,

Alaska Railbelt Marine recently launched a fourth barge to be available for backup during dry docking and periods of heavy traffic.

In addition to Alaska Railbelt Marine, Lynden’s family of companies includes Bering Marine Corp., Alaska Marine Lines, Lynden Air Cargo, Alaska Marine Trucking, Alaska West Express Inc. and Alaska West Training Center.

The combined capabilities of the Lynden companies run the gamut from truckload and smaller-load transportation to inter-modal bulk chemical hauls and from scheduled and chartered air freighters to international ocean and air forwarding. Other services include remote site construction and sanitary bulk commodities hauling.

Lynden also offers customers sophisticated technologies, such as ecommerce services to capture data and translate it into information that helps with every aspect of freight and logistics.

Such diversity and innovation is indicative of most companies that succeed in making the Alaska-Washington Connection.

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