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Shipping Company to Pull Out of Portland

by Jeff St. John, Herald staff writer
Tri-City Herald, July 30, 2004

Shipping Mid-Columbia agricultural products to East Asia could become more complicated in September.

That's when major shipper Hyundai Merchant Marine plans to stop serving the Port of Portland, the destination port for containerized cargo carried down the Columbia River by barge.

Now shippers worried about a possible bottleneck in the Columbia River transportation system are looking at the option of fighting for space on Portland's remaining cargo ships or sending containers by truck or train to the ports of Seattle and Tacoma.

For shippers who use the Port of Pasco's barge terminal, the presence of terminal operator Northwest Container Services Inc. is a plus. That's because the company provides train transport for containers to west-side ports.

"We've been getting calls from a lot of the shippers in the area, because they know we have another means of getting cargo to the Puget Sound," said Wayne Plaster, the company's operations general manager in Portland.

But that also is likely to cost more, he said. Though shipping costs vary widely depending on volume, time of year and other factors, he estimated the cost of carrying a container of cargo by truck or rail from Pasco to the Puget Sound at $650 to $700, compared with about $350 to carry it by barge to Portland.

"A good percentage of the business we did (in barge container traffic from Pasco) was with Hyundai and their vessel partners," he said. Unless the other two remaining shipping companies remaining in Portland, "K" Line and Hanjin Shipping, can pick up that business, "our barge business will go down," he said.

It's not clear how severely Hyundai's pullout will affect the cost of shipping goods. Shipping lines have come and gone at the Port of Portland before.

Hyundai, which announced the pullout earlier this month, carried about 18 percent of all full containers out of Portland, said Eric Hedaa, Port of Portland marine and business development division spokesman.

Hyundai has said it will honor contracts with shippers to get their cargo to ports it will still serve after the September pullout, Hedaa noted.

The Port of Portland is asking its two remaining containerized cargo shippers to see if they can increase the number of containers they ship to make up for the shortfall Hyundai's departure will leave, he said.

"But that's going to be rough," Hedaa said, because the river isn't deep enough to allow the newest generation of cargo ships to fully load, and plans to dredge the channel have stalled for years over environmental concerns.

"We're not exactly sure how much capacity they'll be able to provide," he said. "Our hope is that we'll be able to bring in another carrier to fill the void Hyundai's leaving."

Until that happens, shippers are likely going to have to make do with limited options, said Ken Casavant, a transportation economist at Washington State University in Pullman.

"Depending on their timing, they may have to divert" some shipments from the river to truck or train, he said.

Grain shipments, which travel on chartered cargo ships, will not be affected by Hyundai's decision, he said.

But most other cargo coming down the Columbia River system -- mainly hay, peas, lentils, frozen vegetables and wood products -- do travel in containers, he said.

Given that fact, Jim Toomey, Port of Pasco executive director, is happy that Northwest Container Service has given the port the flexibility it needs to serve its customers.

"Price and dependability, those are the two factors" shippers will be looking at in making their decisions, he said.

The volume of goods shipped from the port's barge terminal has grown from 25,000 tons in 1998 to 73,000 tons in 2002, spurred on by millions of dollars of improvements to the terminal and its rail connection.

Agricultural exports account for about 95 percent of the cargo that passes through the barge terminal, and hay makes up about 60 percent of those exports. Port of Pasco tenant Zen-Noh Hay Co. on its own sends about 2,500 hay-filled containers down the Columbia each year.

Even though barge shipping is by far the least expensive choice for bulk agricultural products, plenty of shippers already use the Puget Sound ports for their products, said Northwest Container's Plaster.

"I'd guess fully a third of the export product in the Basin moves through Puget Sound now," he said.

During the monthlong Columbia River dam lock closure earlier this year, Northwest Container was able to move enough cargo by train from Pasco and other points to Seattle and Tacoma's ports to make up the difference, Plaster said.

"We've done it. We've proven it works," he said.

As for the price, "It's just going to be a function of the market."

Jeff St. John
Shipping Company to Pull Out of Portland
Tri-City Herald, July 30, 2004

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