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Port Offers New Perk as Business Sinks by Alex Pulaski The Oregonian, October 18, 2005

Portland officials, trying to lure back carriers, dangle leases with more control

A year ago, Port of Portland officials cast their eyes south to the dozens of vessels at anchor in Los Angeles harbor, hoping that congestion there would drive traffic to less-busy ports such as Portland's.

It did, but the ports of Tacoma and Seattle have benefited most. Meanwhile, container volumes at the Port of Portland hit bottom in June, sinking to their lowest monthly level in more than 14 years.

After courting shipping lines and spending thousands of dollars on trade ads, the Port has been unable to regain ground it lost when two carriers stopped calling in Portland last year, leaving one vessel a week sailing to Asia.

Northwest exporters remain frustrated by their lack of options, but the Port -- having shifted tactics in approaching carriers -- remains optimistic about attracting more service by 2006.

"I think we'll have another carrier here by the end of the second quarter," said Barry Horowitz, the Port's general manager for container marketing.

Port officials are in Asia this week talking to shipping lines and have been courting European carriers much of this year.

Greg Borossay, the Port's general manager for liner development, said a fundamental shift in the Port's approach has been to offer long-term leases that would allow carriers a share in owning and operating their own terminals.

Such agreements are common elsewhere. For example, on Monday, the Port of Tacoma opened the third large-scale container terminal it has completed this year, a dedicated facility for Yang Ming Marine Transport Corp.

Until this year, the Port of Portland has refused to consider such an option. While maintaining ownership and control, it has run the risk that an apartment landlord faces: watching two of its tenants -- Hyundai Merchant Marine and "K" Line America -- walk away from month-to-month agreements.

With just one carrier making a weekly call to and from Asia each week, the Port has realized the expected drop in service that led the agency to trim 10 percent of its staff last September. Revenue from containers is expected to fall 44.3 percent from two years ago, to $23 million. The figure is about 10 percent of the Port's operating budget.

Hanjin Shipping says it has been pleased with the business it has done as Portland's only trans-Pacific carrier.

The Hanjin Geneva was in port Monday, expected to load and unload 1,851 containers.

The Port's import container volume has dropped 18 percent from a year ago -- an encouraging sign, given that one line is doing the work of three. But exports from Portland, historically a lumber and agricultural export port, have fallen by 58 percent.

"Most of the business we used to get is going through Puget Sound," Horowitz said.

The lack of options has frustrated shippers. Larry Schroeder, distribution manager for the Potlatch Corp.'s paperboard group in Lewiston, Idaho, said nearly all of its paper rolls are now sent by truck or rail to Puget Sound.

All that traffic was previously transported by barge to Portland.

"All of us shippers in the region need the added capacity and competition into the Pacific Rim," he said. Bob Coleman, president and chief executive officer of Portland-based Total Logistics Resource Inc., has been a blunt critic of the Port for not moving more aggressively to attract carriers. He said offering long-term options makes sense but that the Port needs to do more, including pressing Oregon-based businesses to use the Port and subsidizing pilotage and maintenance fees.

"When you've got nothing to offer, what you do is put everything on sale if you want people to come through your door," Coleman said.

Horowitz said he understands exporters' frustration but that the Port continues to make long-term investments designed to attract carriers. Included are a new crane for Terminal 6 next year and the long-planned deepening of the Columbia River channel, begun this year.