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Razon-led ICTSI Ends Contract with Port of Portland by Chrisee Dela Paz The Rappler, March 1, 2017

ICTSI will pay the Port of Portland $11.45 million in compensation and return the equipment
it bought when it took over management of the terminal in 2011

MANILA, Philippines -- After 5 years of labor strife, Philippine-listed International Container Terminal Services Incorporated (ICTSI) and the Port of Portland agreed to terminate the 25-year lease agreement to operate Oregon's only container terminal.

Enrique Razon Jr-led ICTSI told the local bourse on Tuesday, February 28, that its wholly-owned subsidiary ICTSI Oregon Incorporated will stop operating the Oregon container terminal, owned by the Port of Portland, effective March 31, 2017.

In exchange, the Port of Portland will receive $11.45 million in compensation to rebuild business, as well as additional container handling equipment, spare parts, and tools at the terminal.

Due to a labor dispute dating back to June 2012, ICTSI's unit in Oregon has been operating at under historical levels.

In the last quarter of 2014, ICTSI had said that the level of production at Terminal 6 in Portland was about 13.2 moves per hour, down 47% from a year earlier.

"For this reason, the deliberate and continuous work delays since June 2012 threaten the terminal's future viability as a critical hub of regional economic activity," ICTSI had said.

'Safety conditions, stewardship'

ICTSI claimed that during the 2014 holiday season, the International Longshore and Warehouse Union (ILWU) engaged in about 36 work stoppages and slowdowns for varying durations.

ILWU is a labor union representing dock workers on the West Coast of the United States, Hawaii, and Alaska, and in British Columbia, Canada.

The Port of Portland leased the container terminal to ICTSI Oregon in 2010.

According to a report from Oregon Live, ILWU claimed jurisdiction over jobs plugging refrigerated containers that had traditionally belonged to union electricians who worked for the Port of Portland.

The news report added that ILWU complained about safety conditions and ICTSI's stewardship of the terminal.

Oregon Live reported that South Korea's Hanjin Shipping Company once called the Oregon terminal weekly, accounting for 78% of the container terminal's business.

But Hanjin, along with other local shipping lines, stopped servicing there, saying that the idle time caused by the work stoppages and slowdowns "was too costly."

ICTSI established ICTSI Oregon to operate Terminal 6, and took over operations in 2011 after a review of the transaction by the US committee on foreign investment. Terminal 6 is a 78-hectare facility at the Port's Rivergate Industrial District.

The Port of Portland lease is ICTSI's first venture in the US and is said to be the largest financial transaction in the history of the city's maritime port.

ICTSI has a portfolio of 29 container terminal operations in 21 countries across 6 continents.

The shares of ICTSI remained unchanged at P76 apiece on Tuesday.

Related Pages:
Shipping Authority Seeks to 'Adopt' Portland by Staff, Port Strategy, 5/12/16
Here's Why Portland Won't Get New Shipping Container Service Anytime Soon by James Cronin, Portland Business Journal, 5/9/16