Port of Tacoma SWOT Analysis Final Report Presented by Starboard Alliance Company LLC and Mercator International LLC February 10, 2011

Outline Background Project scope Goals Methodology Sample size Representation SWOT Findings by Line of Business Container Intermodal Automotive Breakbulk Real Estate Questions & Answers

Container Line of Business Strengths: Very strong community support Room for facility/capacity expansion Effective marine terminals, with smooth operations Excellent access to interstate highways and harbor drayage transit times For domestic carriers, close proximity to major shippers and forwarders/consolidators Weaknesses: Limited first vessel calls and carrier choices Small local market Limited intermodal service to South Central and Southeast states Harbor Maintenance Tax assessment adds cost

Container Line of Business Opportunities: Intensify marketing to beneficial cargo owners (BCO) Attract more carriers to call at Tacoma Create incentive programs Develop more competitive distribution center (DC) and/or transload facilities Threats: Loss of IPI cargoes to Midwest/Ohio Valley due to: Cost differentials Expansion of Panama Canal, coupled with higher oil prices Abundant capacity on West Coast Lack of improvement in transit times and costs

Intermodal Line of Business Strengths: Sufficient rail line capacity to handle projected growth for the next 10+ years Domestic rail service is a plus Port-managed daily planning process viewed as effective Weaknesses: Relatively small port intermodal terminals Occasional congestion in the local rail network Difficult to optimize train service frequency and transit times to points east of Chicago due to main line track configurations Train service and rates from PNW to Memphis a concern Secondary market for domestic intermodal from Midwest/Northeast

Intermodal Line of Business Opportunities: In collaboration with railroads………. consolidate IPI freight from the Port’s different marine terminals to build larger, more frequent trains build stack-car traffic “blocks” to destinations east of Chicago to increase the number of “steel-wheel” interchanges in Chicago Work with intermodal marketing companies (IMC) to increase volume of domestic/marine containers from Midwest to Puget Sound Threats: Loss of IPI cargoes to Midwest/Ohio Valley due to: Cost differentials Expansion of Panama Canal, coupled with higher oil prices Abundant capacity on West Coast Lack of improvement in transit times and costs

Automotive Line of Business Strengths: Experienced, competent auto processing Sufficient available land for vehicle storage Good intermodal connectivity to/from the Midwest High stevedoring productivity Excellent water depth Low wharfage costs Dual access for railroads Good landside connectivity with Western Canadian markets Weaknesses: Rail connections to the Southeast and South Central states a concern Long distances from the vessel to the first point of rest Sub-optimal satellite locations Lack of dedicated area for marshalling non-automotive RO-RO cargoes such as machinery

Automotive Line of Business Opportunities: Expand marketing efforts to bring other auto manufacturers and non-automotive RO-RO cargo (BCO’s) to Tacoma Work closely with stakeholders to maximize Tacoma’s share of projected growth in vehicle movements between Asia and U.S. Midwest Improve layout/capacity of the automotive terminal to gain 10 to 40 acres for storage/processing Establish a dedicated on-dock area for non-automotive RO-RO cargo marshalling/processing Threats: Loss of business if Tacoma does not: Address current congestion in the local rail network before 2007 volume levels return, Improve layout efficiency and capacity of the automotive terminal, and/or Make the total cost per unit more competitive

Breakbulk Line of Business Strengths: Short sailing time to/from Asia Good rail connectivity to/from the U.S. Midwest Available space for developing new on-dock warehouses Weaknesses: Lack of a dedicated marine terminal with heavy lift capabilities Lack of modern on-dock warehouses with extensive capacities for handling dry and reefer breakbulk cargoes Limited on-dock acreage at T-7 for cargoes requiring extensive lay-down space Limited marketing focus on project cargoes, U.S. government-controlled foreign-aid cargo, and breakbulk reefer cargo  High total cargo handling charges Rail service/costs for cargoes originating or terminating in multiple Midwest states a concern

Breakbulk Line of Business Opportunities: Adjust the Port’s cost structure to enhance its competitiveness Develop a marketing program to capture more export project cargoes and foreign-aid cargoes Pursue other breakbulk carriers Capitalize on solid growth prospects for project cargo, especially exports Threats: Loss of existing business without improvements in infrastructure and costs

Real Estate Line of Business Strengths: Abundant Port-owned developable land available for logistics/distribution facilities Plenty of additional developable land within 20 miles of the Port Business oriented and good reputation Good intermodal rail connectivity and service for distribution centers and transload facilities Weaknesses: Relative lack of 1 million+ square-foot buildings or land parcels available in or near the Port Small local market size and limited train service/frequency to Midwest and Eastern markets constrains demand for large-scale distribution facilities Existing warehouse facilities within the Port lack sufficient truck parking for large-scale DCs Restrictions on developers under certain leases

Real Estate Line of Business Opportunities: Partner with real estate developers to build new buildings of the right type and size on Port-owned properties More favorable and flexible lease terms to BCO and logistics customers Invest in transload facilities outside the Port to increase the local import/export market Continue to partner with labor to provide a competitive business environment Threats: Expansion of East Coast ports could shift cargo away from West Coast ports and make Tacoma a less attractive location for DCs and transload facilities, after the Panama Canal expansion

Starboard Alliance and Mercator International Thank The Port of Tacoma