"Willapa" carried 79 passengers, 23 horses, and several hundred tons of cargo. A rate war then ensued with the Pacific Coast company, forcing Pacific Coast to cut its rates by more than 50%. On March 19, 1897 at 2:30 a.m., bound for Mary Island, Alaska, "Willapa" was proceeding in a heavy snow storm in Seaforth Channel, a part of the Inside Passage, when the vessel struck ground on Regatta Reef. The passengers were removed without casualty by a schooner and local canoes manned by First Nations people. Much freight was also salvaged, but several head of horses could not be rescued and were therefore shot. Although originally considered a total loss, later "Willapa" was purchased from the underwriters by Canadian interests, removed from the reef, and repaired. Subsequently, "Willapa" came into the control of the Canadian-Pacific Navigation Company, one of the dominant shipping companies on the coast of British Columbia and in the Alaskan Panhandle. This company used "Willapa" as a relief boat on various routes, including the service to including Clayoquot on the west coast of Vancouver Island. In November 1902, Capt. C.E. Curtis in association with the Bellingham Bay Transportation Company, acquired "Willapa" from the Canadian-Pacific Navigation Company, and renamed the ship "Bellingham". During 1903, the rapidly growing Puget Sound Navigation Co. acquired Bellingham Transportation Company, but "Dode" and "Willapa" did not go to PSN operational control until the spring of 1904. It is also reported that Canadian-Pacific sold "Willapa" to the Thompson Steamship Company before the vessel came into the ownership of Puget Sound Navigation Co. Thompson Steamship was a Port Angeles concern run by the Thompson brothers, including John Rex Thompson. John Rex Thompson was a business ally of C.E. Curtis. A news report from late 1902 stated that "Willapa" was to be purchased by a syndicate headed by John Rex Thompson. In May 1904, allegations were made in court of financial malfeasance and breach of trust by C.E. Curtis, causing Bellingham Bay Transportation Co., a company owned by local farmers, to become financially insolvent. On return to Puget Sound, "Bellingham" was placed on the Seattle – Bellingham route, which included through service by local steamer from Bellingham to Blaine and Point Roberts. Running against "Bellingham" were the "Utopia" and the old sidewheeler "George E. Starr", both owned by the Puget Sound Navigation Company.