Port of Portland Container Terminal Would
by Molly Harbarger
An agreement between 29 west coast ports and longshoremen over new contract terms this week did little to ease tension at the Port of Portland.
In an interview Wednesday, Port Executive Director Bill Wyatt said lingering bad blood between longshoremen here and container-terminal operator ICTSI Oregon could have serious long-term consequences for the region. If ICTSI were to leave in the wake of a decision by Hanjin Shipping Co. to pull the plug on Portland, Wyatt said, the Port's Terminal 6 will be out of the container business permanently.
Wyatt said he doubts it will come to that. Port and ICTSI officials plan to continue drumming up new business for the container terminal in an effort to replace Hanjin, though that effort has been largely ineffective in the past.
Wyatt reiterated what many in Oregon who rely on global trade are saying: The labor dispute needs to be resolved. The local International Longshore and Warehouse Union has long clashed with ICTSI, weighing down productivity at the port and ultimately driving away Hanjin.
The U.S. Department of Commerce released numbers Thursday that Oregon exported $20.4 billion, mostly in computers and electronics, agricultural goods, machinery -- a record-breaking year. The Oregon export industry supported 92,000 American jobs, according to the data.
The figures were released a day after possibly the last Hanjin ship -- the Copenhagen -- left port. The Hanjin Copenhagen sailed at 6 a.m. Wednesday after 20 days in port.
Ships aim to turn around in one to two days. This ship took nearly 80 percent of the container terminal's business with it.
ICTSI Oregon is locked into a 25-year lease that started in 2010. In the first year, productivity at the container terminal increased and the union and new operator seemed harmonious. Disagreements popped up soon after, though, and tensions have frayed steadily. Now, the local longshore workers and ICTSI Oregon officials constantly blame each other for the remarkably slow pace of loading and unloading ships in Portland.
The Port of Portland operated Terminal 6 on its own for nearly 40 years. When the Port Commission finally ceded control to ICTSI, the port had only made a profit two years in that time period. In 2009, the port lost $17 million on the container terminal.
Portland was the last port authority to still operate its own container terminal. To resume those operations again, the Port would have to shell out millions just to buy the needed equipment.
"I don't think anybody is willing to underwrite us to do that," Wyatt said.
Portland's container terminal is relatively unattractive for shipping lines to call on even in good times. Ships must sail the 100 miles up the Columbia River, unlike most West Coast ports that sit directly on the ocean.
Traversing the Columbia River requires highly paid experts to steer the narrow shipping channel, and extra time. It's also not large enough to accommodate several boats at a time. The container terminal can only accommodate ships up to 43 feet in depth. Most modern ships are larger, so only a few shipping lines can even reach Portland in the first place.
On top of the local restrictions, West Coast ports are in peril of losing more business each year to the East Coast and the Gulf with the widening of the Panama Canal.
Despite all that, ICTSI Oregon is unlikely to leave any time soon. The parent company, Philippines-based International Container Terminal Services Inc., is on the hook to fulfill the about $60 million remaining lease if the Oregon headquarters can't cut it.
"They're not going to go away easily," Wyatt said.
ICTSI Oregon chief executive Elvis Ganda has reiterated his commitment to staying in Portland several times since Hanjin. announced it would withdraw service from Portland on March 9.
"ICTSI Oregon remains as committed as ever to making Terminal 6 a world class terminal that drives economic growth and creates jobs," Ganda said Thursday. "However, to attain the goals of a 25-year lease, we must be able to operate without labor disruptions and daily hard-timing. We are doing what we can to keep T6 open, and the union is doing all it can to shut the terminal down. If the ILWU thinks its tactics will drive us out, they are sorely mistaken. We're not going anywhere."
The longshore union maintains that the port operator is entirely to blame if the container terminal folds. Union members have railed against the port operator for years, saying the company doesn't know how to do business in the United States, even though the Oregon headquarters are staffed domestically and Ganda is a veteran of West Coast ports. The union rhetoric has at times reached the point of essentially telling the company to pack up and go back overseas.
"With respect to what the Port will do with the terminal if ICTSI leaves, one can only speculate," said ILWU spokeswoman Jennifer Sargent on Thursday. "One thing that's sure is that Oregon's workers, farmers, importers and exporters deserve better service than ICTSI has delivered."
For the last nine months, a west coast-wide contract negotiation with the union focused attention away from Portland.
Now that a tentative contract has been reached, Wyatt is hoping he can recruit support from the Pacific Maritime Association, a coalition of the 29 West Coast operators, for the issues here.
The container terminal is 15 percent of the marine port's revenue. The marine arm of the Port of Portland also moves grain, potash, soda ash and automobiles. All of that combined is just 20 percent of the port's overall business -- the airports and industrial leasing makes up the rest.
So, losing the container terminal wouldn't be a catastrophe for the Port of Portland, nor for the Oregon economy.
But it could break some farmers and small shippers.
Shelly Boshart Davis runs a compressed hay business out of Salem, one that exists on narrow profit margins and a customer base solely outside the U.S.
She had 40 containers waiting to be loaded on the Hanjin Copenhagen, but was unsure if the ship finally left port, whether her boxes would go with it. Some had been there since Jan. 15. During normal times, her company deals with a few schedule changes for the 40 to 60 "cans," as the industry often calls containers, they ship per week.
As the backlog of ships at West Coast ports increased, her staff was constantly filling out the paperwork that comes with 20 to 30 changes per day.
Her company owns its own trucks that take the containers of compressed hay to ports and brings the empty ones back for refilling, which is a luxury many small companies do not have. Davis started cutting out Portland months ago, rerouting shipments to Seattle and Tacoma instead.
Because her customer base is in Asia, there's likely no coming back to Portland. Davis expects her business to survive, though.
"We are able to get skinny as good as anyone we can," Davis said. "We've always been taught to plan for the bad times, that's just how farming is."
But merely surviving is not a long-term solution. Davis said farmers and agriculture industry officials in the region kept quiet about problems at the port for years, weathering the ups and downs of labor strife. But, this latest round was so bad they are speaking up.
"We'll have to join forces and not just get back to work as normal, but move forward and say something has to change in the future."
At the first Port Commission meeting after Hanjin's announcement, Wyatt said not to expect a replacement for the South Korean shipping line for at least two years. Mechanization, labor relations and the new Panama Canal could make Portland's container terminal obsolete in that time, though, even if peace between ILWU Local 8 and ICTSI Oregon could help attract new business.
"If everything is working properly, this is still a tough sell," Wyatt said.
Port Extends Ocean Carrier Subsidies by Mateusz Perkowski, Capital Press, 12/10/14
Lewiston Container Shipping Fact Sheet, 1997, by Port of Lewiston
Portland Container Shipping Fact Sheet, 2002, by Port of Portland
learn more on topics covered in the film
see the video
read the script
learn the songs