Despite the exit of ocean carriers Hanjin and Hapag-Lloyd, Portland director says the port has “a valuable, unique market.”
The Port of Portland, Oregon should be able to attract a new container service, said Bill Wyatt, executive director of the agency, in a recent statement.
“We have a valuable, unique market here,” said Wyatt. “The focus on exports will help but we mustn’t lose sight of the importance of imports because they drive our container business here.”
The two largest ocean carriers operating at the port — Hanjin and Hapag-Lloyd — terminated service to Portland earlier this year after a plunge in productivity at its only container terminal and acrimony between the International Longshore and Warehouse Union and the terminal operator International Container Terminal Services, Inc.
“The very first step must be a common commitment by the ILWU, and terminal management and the Pacific Maritime Association to bring this terminal along with its contribution to the regional economy, back to life,” said Wyatt.
“Some think we just need a new terminal operating company. I’m just going to say plainly: that is hopelessly naïve,” he added. “Should ICTSI, the terminal operating company which has 22 years remaining on their lease at Terminal 6 choose to buy out their lease and exit the market, the Port would not take over operations at T6. It would simply be cost prohibitive.
“The Port spent two years, at a time West Coast terminal assets were on fire, searching the globe, assisted by Morgan Stanley, to find someone willing to take on a long term commitment here in Portland,” Wyatt told an audience a the port’s annual Gateway to the Globe luncheon. “In the end, ICTSI, the fourth largest independent terminal operating company in the world, was the lone proposer. With the strong and unambiguous support of the ILWU our port commission approved this lease, and for the first time in over 40 years Oregon taxpayers were protected from the wild volatility we have experienced in the cost of operating this facility. It all looked so promising because the first year of operations at T-6 under ICTSI management established record productivity, only to see business brought to its current state by disputes over labor jurisdiction.
“We have an obligation to taxpayers to work toward strong financial performance there and we need a private operator like ICTSI with broader global connections, stronger market leverage and a keen focus on building their business to ensure we can realize the potential of the niche operation we have with the T6 facility.
“And let’s be honest, if for any reason ICTSI is unable to succeed at Terminal 6, no one…and I mean no one, would be foolish enough to come to Portland and enter the container business,” said Wyatt.
“While the lease at the terminal helps ensure Oregon taxpayers don’t foot the bill for operating T6, it doesn’t release the Port from its obligation to ensure continued access to markets. Personally I can say that the thing that keeps me up at night is the more than 650 waterfront jobs that were lost when container services left and the collateral damage to the more than 1,000 Oregon companies that need those services,” he said.
Wyatt said, “Repairing the situation isn’t just about restoring efficient operations. Our biggest challenge will be to restore confidence — from producers, shippers and shipping lines. Locally, we must create a shared vision of how we can transform the terminal into the most cost efficient terminal in the PNW.
“It is a tall order, but I am committed to working through this; to identify short and long term solutions for shippers; to help resolve the labor management challenges; and to doing whatever else it takes through legal, political and business means to ensure the Port continues to live up to our mission of assisting Oregon businesses in accessing global markets,” he added.
Portland handled 164,931 TEUs of containerized cargo in 2014, 7.6 percent less than the prior year. In March 2015, volumes plunged to 5,755 TEUs compared to 13,818 TEUs in March 2014. Those numbers don’t yet fully reflect the departure of Hanjin and Hapag-Lloyd though, which accounted for 90 percent of the port’s container traffic. A Westwood multipurpose ship is continuing calls in Portland.
Automobile volumes were 257,457 units last year, also down 2 percent, and breakbulk cargo saw a 10.5 percent decline to 808,059 tons.
Wyatt said despite those declines, overall volumes at the port were up 8.1 percent to nearly 12.9 million tons because of increased bulk shipments of minerals and grain.
Closure of the container terminal would mean shippers of products such as hay must transport their products further.
In addition, the Port of Lewiston, Idaho on April 8 said its container-on-barge service would be suspended until further notice because containers bound to the Hapag-Lloyd ships in Portland represented approximately 90 percent of the Port of Lewiston’s 3,240 outbound containers last year.
While container-on-barge volume represents approximately 15 percent of cargo tonnage leaving the Port of Lewiston, the port said “loss of container on barge service will have a significant impact to the region. Pea and lentil industry customers have expressed concern that inland transportation costs could increase by 60 percent to 100 percent over the next several months due to worsening truck shortages and reduced intermodal transportation competition.”
Portland ‘should’ be able to attract container carrier
