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Loss of Shipping Line Means Headache for NW by Mark Engler Capital Press, August 6, 2004

Agriculture exporters worry that a major international steamship line’s recent decision to suspend service to Portland will create a ripple effect that could increase transportation costs and make it more difficult to compete in the global economy.

Citing difficulties meeting its sailing schedules to all 11 U.S. and Asian ports along its Pacific Northwestern rotation, South Korea-based Hyundai Merchant Marine Inc. will indefinitely eliminate its service to Portland beginning in September. That leaves only Hanjin Shipping and K Line to serve the port.

A lack of business at the Port of Portland isn’t really the problem, port officials said. In fiscal year 2003-2004 the port moved 12,390,901 tons of cargo, a record-setting 8.2 percent increase for total tonnage from the year prior, according to port figures. More than 3.5 million tons of bulk grains moved through the port’s Terminal 5, representing a 24.6 percent increase over last year.

While export cargo business is booming right now — the market is actually underserved, said port officials — ships are often forced to “light-load” by as much as 500 containers to navigate the 40-foot-deep shipping channel.

That’s costing carriers “hundreds of thousands of dollars for each ship” under capabilities, said Port of Portland marketing specialist Eric Hedaa.

The export bottleneck will ultimately force ag producers who typically use the Columbia River to move their products to Portland to instead ship overland via rail and truck to Tacoma and Seattle at greater expense, said Pat Boss, executive director of the Washington Potato Commission.

“From a competitive standpoint and an economic standpoint, its far better to have shipping by barge to the steamships as opposed to having to ship by truck or by trains to the other ports,” he said. “It’s very hard anymore even to get rail cars, let alone get decent rates with the Class I railroads. The downriver barge traffic really keeps things competitive across all different modes of transportation.”

About $100 million worth of potato products were exported out of Portland last year, with another $150 million leaving Tacoma and Seattle, respectively, he said.

Furthermore, Seattle and Tacoma simply don’t have the ability to absorb any significant overflow of trucks and trains hauling products into the ports that couldn’t be served in Portland, said Boss.

Tim McGreevy, executive director for the U.S. Dried Pea and Lentil Council, said the news of Hyundai’s departure hardly bodes well for legume growers either — or, by extension, wheat farmers, who often grow peas and lentils as alternate crops. Given that legume harvest is getting under way now, and that 60 percent of all Northwest peas and 70-75 percent of lentils are shipped to foreign markets, diminished shipping in Portland is a problem of immediate concern, he said.

“This is obviously happening at an inopportune time,” said McGreevy, who added that the primary period for overseas shipping for peas and lentils begins in September and runs through March.

Just when digging on Columbia River navigation channel between Astoria and Portland will begin in 2005 is still an open issue.

In June members of the U.S. House of Representatives Energy and Water Appropriations Subcommittee approved $3 million for the first phase of the project to start removing the estimated 14.5 million cubic yards of river bottom silt, sand, rubble and sludge to deepen the shipping channel from its current minimum depth of 40 feet to 43 feet.

However, the bill fell apart in the Senate and won’t be taken up again until Congress reconvenes after Labor Day, said Dave Hunt, executive director of the Columbia River Channel Deepening Coalition.

Although Hunt says he’s optimistic the Senate Appropriations Committee will vote to provide at least a portion of the $15 million needed to get the $150 million project into its first phase, “whether it is going to be exactly 15 million or less, I’m not sure.”

“I’m confident it will be enough to award a contract and begin the deepening work in 2005,” he said, adding, that if appropriations debates continue to be delayed through the fall and past the November election, “it will start getting to crunch time.”

Hunt said Hyundai’s decision is problematic on at least two levels for the port, both because it immediately represents a loss of one-third of the port’s shipping capacity but also because the effort to recruit a new line is almost certain to get hung up on the channel depth issue as well.