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Loss of Lines Worries Ag, Shipping Officials by Mitch Lies Capital Press - September 3, 2004

PORTLAND -- Shipping expert Hayden Swofford was told to keep his remarks short at a conference here Aug. 26, so Swofford said he could sum up his speech in one word:

“Help,” he said.

An administrator of the Seattle-based Pacific Northwest Asian Shippers Association, Swofford said what many of the speakers at the Columbia River Vessel Service Summit repeated: Imports pay the bills at ports, and unless the Port of Portland attracts more imports, its odds of attracting another shipping line are slim.

Sponsored by the Oregon Department of Agriculture through a USDA grant and organized by the Washington, D.C.-based Agriculture Ocean Transportation Coalition, last week’s conference was designed to bring together shipping officials to analyze transportation options after two shipping lines in a month announced they were discontinuing service to the Port of Portland.

At the end of this year — after “K” Line and Hyundai Merchant Marine pull out — only Hanjin Shipping will be serving the port. Hyundai is scheduled to leave in September. The loss of “K” Line in December will leave Portland without direct service to Japan, Oregon agriculture’s largest export market.

The loss of service is expected to raise transportation costs and cut into agricultural exports, which make up the vast majority of exports leaving Portland.

Many of the 15 speakers at the conference said it is vital that the port attract at least one more carrier in order to sustain competitive shipping rates. But, they said, it will be difficult to attract another shipping line without a strong import market.

To illustrate the point, Gary Caldwell of the Portland-based Northwest Container Services pointed out that 80 to 85 percent of the imports into Portland are shipped east, mostly by truck, to Chicago. Seventy percent of the imports into Tacoma, meanwhile, are shipped east, he said.

Some long-term solutions presented at the conference were to develop inland distribution centers along the Columbia River that would facilitate trucking goods east and to develop the infrastructure for a low-cost ocean barging system. The port also needs to get its channel dredged to 43 feet to accommodate newer ships with deeper carriage, industry officials said.

In the short term, however, shipping by truck or rail to another port, such as Tacoma or Seattle, is apparently the only option for agricultural exporters. And that isn’t a particularly good option, officials said.

Puget Sound and California ports already are heavily congested, officials said. Adding to the congestion could lead to costly delays in shipping perishable agricultural goods and make it hard for exporters to meet schedules.

“Our cost of doing business is significantly higher than that of our competitors, so we have to sell our service,” said Len Spesert, president of Hazelnut Growers of Oregon. “It’s critically important that our buyers know they’re going to get our products when we say they will. But now it is going to be harder to be true to our commitment.”

Officials also said they are worried that once markets are lost, it will be hard to reclaim them.

“If filberts aren’t moving out of here, the Japanese buyers aren’t going to cry,” said Peter Friedmann, executive director of the Agriculture Ocean Transportation Coalition. “They’re just going to call up Turkey. And then we’ll have problems getting that market back.”

In addition to problems with congestion at the ports, a shortage of rail cars and truck drivers will make it difficult to get products to the Puget Sound ports and increase shipping costs dramatically over current rates, officials said.

David Doeringsfeld of the Port of Lewiston, Idaho, said the rail car shortage is so severe that railroad lines don’t return his calls anymore.

But Caldwell said he has a commitment from Union Pacific officials to move freight from Portland to the Puget Sound ports.

“Is it going to cost more?” Caldwell asked. “Yes.”

Bill Wyatt, head of the Port of Portland, said the port is talking with other shipping lines about starting a Portland service and that talks are going well. But he, too, said shipping lines are concerned over Portland’s lack of an import market.

“I think there is some reason for optimism for getting back to Japan,” Wyatt said, “but we need to create an import mechanism here.”

Wyatt said citizens need to support efforts to enhance Portland’s import market, such as the effort to expand the urban growth boundary around the Portland metro area for industrial uses.