Loss of Port Service
by Editorial Board
In the 1987 comedy "Planes, Trains and Automobiles," Neal Page, played by Steve Martin, experiences a series of misadventures as he tries to get from New York to Chicago for Thanksgiving. Change the transportation options to "Trucks, Trains and Ships," and the film serves as an apt metaphor for the circumstances Oregon agricultural producers face as they try to get this year's harvest to distant markets.
This year has become one of lost opportunity for many growers who export their products, and it's no laughing matter. If shipping options don't improve by the 2016 harvest, the economic damage will spread well beyond agricultural producers. Oregon officials, from the governor to directors of the state's ports, must make sure that doesn't happen.
Various state and local agencies spent the summer holding six meetings around Oregon to gather information on possible transportation alternatives in the wake of two shipping lines' decisions to end container service at the Port of Portland. Not surprisingly, they did not find any easy solutions. That leaves them no choice but to tackle the difficult ones.
Some of the challenges can be attributed to timing. Hanjin Shipping and Hapag-Lloyd withdrew from Portland at a time when problems exist with every mode of freight shipping. The trucking industry is hobbled by a shortage of equipment and drivers. Railroads have consolidated, and the two primary lines serving the Western U.S., Burlington Northern and Union Pacific, are choosy about where and when to add or expand service. And though Portland has deeper waterfront labor problems than other markets, tensions have been present in the container operations at many ports both because of issues related to union contract negotiations and because of ongoing changes in how shipping lines operate.
There is more than enough pain to spread around. If full-service container lines don't return to the Port of Portland, consumers likely will face higher prices for some products as businesses pass along the added shipping costs. Businesses with more price-sensitive products will have to absorb the costs or reduce costs in other areas -- such as payroll. Already, jobs have been lost. Exporters could lose sales to competitors, both because they have trouble competing on price and because it's harder for them to meet delivery deadlines.
But no industry faces as much immediate hardship as agriculture, which represents 10 percent of Oregon's economy with annual farm-gate revenue (value when products leave the farm) of about $5 billion. Almost 20 percent of the export containers leaving Oregon contain Northwest agricultural products, ranging from onions to berries to hay. Farmers have little control over prices, which in many cases are set by world markets, so they ending up absorbing most of the increased shipping costs.
The highest demand for these products runs from fall harvest through spring. For both short-term (some products spoil) and long-term (customer relations) reasons, it's vitally important that agricultural products arrive when expected. "These markets are all temporal in nature," said Terry Fasel, trade development manager for the Oregon Department of Agriculture.
The ideal solution, of course, is resumption of container service by major shipping lines -- something that likely will happen only if relations between terminal operator ICTSI Oregon Inc. and the International Longshore and Warehouse Union improve. Both ICTSI and the Port continue to pursue shipping lines that might serve Portland. Port Executive Director Bill Wyatt told The Oregonian/OregonLive editorial board that he would place the odds of accomplishing that goal within the next 15 months at 65 percent. That qualifies as an encouraging estimate given the tensions that have engulfed the container terminal since 2012. But it's likely that few farmers want to bet their futures on those odds. State officials must aggressively pursue alternatives even as the Port recruits shipping lines.
Participants in the summer workshops identified a number of potential workarounds in the absence of container service. Some, including better use of technology to match up loads and solve other logistical problems, are best handled by private companies. Likewise, improved rail links rest in part on Oregon farmers' and businesses' ability to convince railroads that there is enough business here to support expanded service. The state potentially could help with the cost of infrastructure for new or improved loading facilities, but it also would need evidence that the facilities would be fully used.
One of the challenges that state agencies and the Legislature face is deciding whether to make long-term investments that assume a loss of container shipping or to bet on the Port restoring service. "Realistically, you need to have both options," improvements in rail and resumption of container service, said Peter Friedmann, executive director of the Agriculture Transportation Coalition and a participant in all six of the Oregon transportation meetings.
Certainly, Oregon farmers and agriculture-related businesses can't afford another harvest season like this one. When the Legislature convenes in January, it needs to treat this issue with the same urgency that producers this fall have as they seek ways to get their crops to distant markets.
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