PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
9a
Date of Meeting
February 10, 2009
DATE: January 22, 2009
TO: Tay Yoshitani, Chief Executive Officer
FROM: Nora Huey, Director, Central Procurement Office
Mike Burke, Director, Container Operations
SUBJECT: Resolution No. 3610, First Reading of the Port Commission of the
Port of Seattle declaring certain personal property surplus (Port of
Seattle Crane 54) for Port of Seattle purposes and authorizing its
sale or disposal.
ACTION REQUESTED
First Reading of Resolution No. 3610, declaring Port of Seattle Crane 54 (IHI Crane S/N
IC10001) surplus for Port purposes and authorizing its sale or disposal.
SYNOPSIS
Hanjin and Total Terminal International (TTI), the tenant at Terminal 46 (T46), have
requested that Crane 54, a non-preferential crane under the lease, be removed from the
terminal. Crane 54 is not desirable to either Hanjin or to the Port of Seattle (Port) for
future container handling needs. Hanjin cannot justify maintenance and apron space for
such seldom-used equipment.
Crane 54 has no hours of operation in the last two years.
At the end of 2008 there will be a remaining book value of $102,893 from the 2004
electrical upgrade of this crane.
The Seaport Division requests approval to surplus Crane 54 and to dispose of property by
sale for use by others or sold as scrap.
PROJECT DESCRIPTION AND JUSTIFICATION
Crane 54 is 40 Long Ton capacity and 50 foot gage cargo crane. Its age, 24 years,
coupled with its design, is not desirable as we progress toward a modern Post Panamax
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
January 16, 2009
Page 2 of 4
harbor. This crane was designed for early Panamax container ships and is not suitable for
the larger ships now calling at T46.
T46 is currently supported by five newer Post Panamax cranes. The older crane 54 has
been stored at the extreme north end of T46 and is not used by TTI.
Mechanically, structurally and electrically, Crane 54 is still in fair condition.
Considering its age, it compares favorably with many similar cranes on the used crane
market. However, without use, equipment such as cranes will deteriorate due to
corrosion, evaporation of lubricants, and moisture penetration into electrical components,
so our time horizon to market Crane 54 is limited.
PROJECT SCOPE OF WORK AND SCHEDULE
The scope of work is to advertise and sell Crane 54 for use by others or as scrap.
Unfortunately, the used crane market is very volatile now and crowded with cranes of
this size and vintage. Other U.S. ports are giving similar cranes away or paying to scrap
them. For this reason, our actual sale price could be very low, or it may not sell. There
are two parties interested in this crane, but there is no commitment from either of them.
When a buyer is found or the crane is removed, the crane may be transferred with at least
one older spreader beam and with any spare parts that have no value for re-sale and no
other use to the Port.
If the crane does not sell within 12 months, staff will dispose of it in accordance with Port
procedures including paying to have it dismantled and scrapped.
STRATEGIC OBJECTIVES
This project supports the Port's strategy to "Ensure Airport and Seaport Vitality" through
completion of evaluation, design and construction of upgrades for T46. This action to
surplus Crane 54 will allow for growth and development of marine and marine related
business at T46.
BUSINESS PLAN OBJECTIVES
Improve operating efficiency of T46. Removal of Crane 54 will allow the newer
cranes to make use of the north end of the terminal.
Support tenant’s objective to control costs and improve efficiencies. Hanjin cannot
justify maintenance and apron space for this seldom used equipment.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
January 16, 2009
Page 3 of 4
FINANCIAL ANALYSIS:
Source of Funds
No funds are needed for this request.
Financial Analysis Summary
CIP Category
N/A
Project Type
N/A
Risk adjusted Discount
rate
N/A
Key risk factors
Key risk factors include the possibility that no buyer will be
found for Crane #54, and the Port may eventually need to
consider paying for the demolition and removal of this
crane.
Project cost for analysis
N/A
Business Unit (BU)
Container Operations
Effect on business
performance
There is no impact to business performance from this
request to surplus Crane #54. The sales proceeds, if any,
and the related recognition of gain or loss on sale of fixed
assets will be recorded as a non-operating activity in the
year of sale.
If this crane is sold for less than the remaining book value
of the asset (approximately $100K), then the result would
be the recording of a non-operating loss.
IRR/NPV
N/A
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS
Alternative 1 - An option of doing nothing would leave Crane 54 where it is. This
would limit the use of T46 North Apron. The required maintenance and certification
expense to keep the seldom used crane operational does not benefit the tenant or the
Port.
Alternative 2 (Preferred Alternative) – Sale or Disposal of Crane 54 will support the
tenant’s objective and is consistent with the Port’s business strategy to “Ensure
Airport and Seaport Vitality”.
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
In 1974, the original cost for Star Crane 54 was approximately $3,000,000.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
January 16, 2009
Page 4 of 4
In 1992, an upgrade of $15,983 was approved to add anti-sway braking and fall arrest
systems.
In 1996 $59,607 was approved to convert the hoist brake to disc-brakes.
In 2004, $320,000 was approved to convert the electrical supply from a trench to a
cable-reel system.
