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Port of Portland to Lose Second Shipping Company by Jeff St. John, Herald staff writer Tri-City Herald, August 17, 2004

Another major container shipping company at the Port of Portland has announced plans to pull out by year's end, leaving Mid-Columbia agricultural exporters even more concerned about the rising cost of getting products to East Asian markets.

On Thursday, "K" Line said it would stop serving Portland in December. The announcement came less than a month after Hyundai Merchant Marine said it would stop serving the port by the end of next month.

The two companies together accounted for about half of Portland's full container exports so far this year, said Eric Hedaa, the port's marine and business development spokesman.

"K" Line's departure "came as a surprise, and it's another setback on top of the loss of Hyundai," he said.

Jim Toomey, Port of Pasco executive director, agreed that "K" Line's departure will bring increased uncertainty to Mid-Columbia shippers of hay, vegetables and other containerized agricultural products.

"The loss of capacity is a big deal," he said. Shippers from the Port of Pasco's barge terminal who are unable to secure space on remaining Portland cargo ships could be forced to spend more money to send containers by truck and train to the ports of Seattle and Tacoma.

Hedaa said "K" Line had explained it was dropping Portland as a port in order to add its first Chinese port of call to its schedule.

With Chinese products headed to America commanding a much higher rate of return for shippers than America's commodities headed back to Asia, many shippers are choosing to return empty cargo containers to be filled at East Asian ports rather than wait for American goods to carry back over, he said.

The Port of Pasco's barge terminal operator, Northwest Container Services Inc., can provide train transport to the Puget Sound ports. But a company official has estimated train or truck transport can cost nearly twice as much as carrying the same container by barge to Portland -- and that barge traffic likely will drop unless Portland's re-maining container cargo carrier, Hanjin Shipping, can pick up the business left by Hyundai and "K" Line.

On a more positive note, President Bush announced Friday that an initial $15 million will be available to begin deepening the lower Columbia River's shipping channel from 40 feet to 43 feet. That would allow oceangoing ships to carry more cargo and reduce their costs of shipping to Japan, China and other East Asian nations.

While the project isn't expected to be complete until 2007, and Congress has yet to approve the entire $150 million for it, Hedaa and others expressed hope that the first round of funding will give shippers a reason to look again at the Port of Portland.

"The (shipping) lines leaving Portland is not disconnected to the channel depth" issue, Toomey said.

Pat Boss, executive director of the Washington State Potato Commission, agreed.

"Clearly it's in our best interest to make sure the river can be dredged and the Port of Portland can have a viable service overseas," he said.

Washington exported about $500 million of frozen french fries to East Asia last year, he said, with about $100 million going through Portland and the rest through Seattle and Tacoma. While most of that product travels to the ports by truck, the availability of barge shipping helps keep competition steady and prices down, he said.

"Without the barging system, rail and trucks become your only mode of transportation, and that lessens competition and raises prices," he noted. "We used to ship a lot more by barge and rail, but if you look over the last 20 years, barge and rail has gone down. We're trying to reverse that trend."

Hanjin Shipping, told The Oregonian newspaper Friday that it had no plans to pull out of the Port of Portland.