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Portland Asking Hard Questions on Future in Containers by Bill Mongelluzzo Journal of Commerce, July 27, 2017

Portland will have a better idea of the types of container business it can attract back to the port by year-end, as well as the model port officials will follow to operate the only dedicated container terminal in Oregon. The port is also working to calm the labor aggression that chased the business away two years ago.

The Port of Portland Commission will receive a report from consultant Advisian Worley Parsons Group that will suggest types of carriers that can be attracted, with the best bet being niche carriers in trades that do not require large ships. Carriers such as Westwood Shipping, which until last summer specialized in hauling forest products westbound to Asia and consumer merchandise eastbound into Portland; Westwood had a profitable operation. Another possibility for the port would be carriers operating in the north-south trades.

The commission also needs to determine what operating model is best suited for Terminal 6. The intention will be to operate the facility efficiently while at the same time winning the support of labor. Portland's problems with the powerful International Longshore and Warehouse Union began when the port in 2010 switched from being an operating port to a landlord port.

"We still think there is a future for containers, but it will be more of a niche play than it used to be," said Keith Leavitt, the port's chief commercial officer. There are many possibilities, possibly including linking liner services with a rail shuttle from the on-dock railyard to Seattle-Tacoma, he said.

Portland for decades was the primary gateway for containerized exports from Oregon and eastern Idaho. The port also served a core group of importers in the region. At its peak in 2003, Portland handled 339,571 TEU, mostly in the trans-Pacific trades with Asia, and the container lines appeared to be happy with the profitability of the services.

However, after a tortuous three years of work slowdowns by the ILWU from 2012 to 2015 that started as a jurisdictional dispute, Portland's three container carriers -- Hanjin Shipping, Hapag-Lloyd, and Westwood Shipping -- pulled out of the port. Portland's Terminal 6 has not had a regular liner service in the past two years. Through May this year, the port has handled 2,476 TEU, according to the Pacific Maritime Association website.

Most containerized imports and exports from Oregon now move through the Northwest Seaport Alliance of Seattle and Tacoma, but port executives are convinced that if they market Portland's 200-acre terminal and on-dock intermodal railyard to the right carriers, liner services -- most likely in niche trade lanes -- will return.

Over the past two years, consolidation in the ocean carrier industry, the restructuring of global vessel-sharing alliances, and the regular deployment of vessels of 8,000- to 14,000-TEU capacity to West Coast ports has effectively shut Portland out of the mainline trans-Pacific trades. As a river port with a depth of 43 feet, Portland can accommodate vessels up to 6,500-TEU capacity.

Nevertheless, there are a number of niche trade lanes in which Oregon exports would support regular liner services, and there is enough of a local import market to provide some balance. Leavitt said those lanes could be in the north-south trades, where vessels tend to be smaller, or even in trans-Pacific, where Westwood Shipping's former head-haul was carrying forest products westbound to Asia and consumer merchandise inbound.

Attracting the right liner companies back to Portland is only half of the equation. The Portland commission must also determine what business model is best for operating Terminal 6. The container industry in the US has two basic models, the landlord ports that are dominant on the West Coast and in New York-New Jersey, and the operating ports in the South Atlantic.

Portland has tried both. For decades, it was an operating port, but after a series of unprofitable years, culminating in the loss of $17 million in 2010, Portland went out to bid for a private-sector operator to run Terminal 6, choosing ICTSI. After an initial period of good productivity, with crane moves per hour in the mid- to upper-20s, things went bad.

Bill Wyatt, executive director at the time, said ILWU Local 8 wanted Portland to return to being an operating port. That model was marked by wasteful work practices, and the port let the union get away with it. Productivity dropped precipitously to as low as 12 container moves per hour during the three years of slowdowns. ILWU Local 8 charged that the low productivity was due to equipment in ill repair and Philippines-based ICTSI operating Terminal 6 like a "third-world" employer.

Port managers know they must get union buy-in if Portland is to bring container lines back to Terminal 6. The port now includes the ILWU and the International Brotherhood of Electrical Workers in regular stakeholder meetings with the transportation community. Leavitt said this persistent engagement is sending the right message to the industry. "We want a really strong relationship with labor," he said.

Yet that still leaves open the question as to the type of model that should be implemented in Portland -- landlord port, operating port, or a hybrid model. The answer should become clearer later this year, Leavitt said.

Related Pages:
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Barge-Rail Service on Upper Columbia, Snake Rivers by Joseph R. Fonseca, Marine Link, 12/1/15
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