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Hyundai Will End Service to Portland

by Dylan Rivera
The Oregonian, July 15, 2004

After the shipper leaves, the two remaining companies serving the Port of Portland
will not be able to fill the gap, officials say

Hyundai Merchant Marine plans to stop serving Portland, reducing by one-third the number of shipping companies hauling containerized cargo to and from Asia at the Port of Portland, company officials said Wednesday.

The two remaining carriers -- "K" Line and Hanjin Shipping -- will be able to absorb only a portion of the shipments that Hyundai will abandon in mid-September, Port officials said. Hyundai, like the other two carriers, primarily handled agricultural exports to Asia. It also delivered some consumer product imports to Portland.

The decision will not affect automobile imports and grain exports, which are shipped by different companies.

With one less carrier, exporters of hay, alfalfa and frozen vegetables from as far east as Boise will likely bear the cost of trucking freight to the Puget Sound ports of Seattle and Tacoma.

That extra cost -- as much as $250 for a 40-foot shipping container -- could erase the profit margins of some exporters, said Terri Bartle, director of operations for Portland-based Geo. S. Bush & Co. Inc., a freight forwarding and logistics company.

"It will add costs, which reduce margins and affect the client's ability to maintain their level in the marketplace," she said.

Hyundai, based in Seoul, South Korea, said it decided to drop Portland because it needed to increase the speed of its shipments by eliminating one West Coast stop. Ships pick up and drop off cargo from as many as 11 ports on one trip. The company also is eliminating service in Yokohama, Japan, to reduce transit time to fast-growing Chinese ports.

Under the carrier's current schedule, Hyundai ships have been up to a day or more late in visiting Portland and other cities.

Maintaining the carrier's schedule integrity was the "driving force" behind the decision, said Anthony R. Galati, district manager for Hyundai Merchant Marine.

"When you're delayed or early by a small amount -- in some cases hours -- you lose your opportunity to get on that berth," he said. "There's such a demand for them, if you're either early or late you may or may not get on."

Hyundai's small Portland sales office will not be affected. The company does not have other employees based here.

The carrier's decision added fuel to the ongoing debate over dredging the Columbia River channel, with both sides claiming it supported their arguments. Supporters say it shows the need for a deeper channel to keep big shipping lines, while opponents say it shows the wisdom of pursuing a different type of carrier.

"You talk to any of the carriers, and the channel is the first thing they want to talk about," said Sam Ruda, Port marine director.

The Hyundai vessels are designed to sail at about 45 feet, but the 40-foot navigation channel forces ships to reduce their loads so the ships draft no lower than 38 feet to 39 feet, to allow for some clearance under the vessel.

David Moryc, Columbia River coordinator for American Rivers, said the Port should focus on a niche strategy to stay viable rather than trying to compete in the wide market of container shipping.

"There are international economic pressures that dictate how shipping lines choose their ports that are above and beyond channel depth," he said. "It's another reason to consider solidifying Portland as a market a lot like Delaware, where it's focused on specific commodities, rather than this race to the bottom with Seattle and Long Beach (Calif.)."

Container lines are constantly revamping their schedules, said Daniel S. Smith, transportation consultant with The Tioga Group in Moraga, Calif.

The Evergreen America line pulled out of Portland in 2001, saying it would consolidate at the rapidly growing Port of Tacoma. Hanjin Shipping pulled its service in 2001, then returned a year later.

Hyundai, which began serving Portland in 1984, suspended service in 1985 and didn't return until 1994.

Containerized cargo accounts for the widest swath of the $750 billion in goods handled by West Coast ports each year. That's in part because the cargo -- everything from electronics to frozen french fries -- generally has a higher value than bulk commodities, such as wheat.

While the Port of Portland's container business loses money most years, and its market share has shrunk to less than 2 percent, Port officials feel enormous pressure to remain in the game to save exporters the cost of shipping to Puget Sound ports.

In addition to the Asian lines providing weekly service, Italia Line offers less frequent container service between Portland and Europe.

Dylan Rivera
Hyundai Will End Service to Portland
The Oregonian, July 15, 2004

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