What happened in Portland?

News

Before the Port of Portland announced the closure of Terminal 6 later this year it acknowledged that the container facility “has never been financially sustainable” and had been losing progressively larger amounts of money since 2021.

In April the Port of Portland announced it would cease container operations at Terminal 6 by 1 October 2024, effectively shutting its container terminal down. However, less than a month later, the port said it would continue providing container shipping services at the terminal.

After having no container services at all for parts of 2017 and 2018, Portland bounced back to handle 171,481 TEU in 2022. There are plenty of terminals that combine this level of container traffic with other cargo types to run a viable business.

However, it turns out the 2022 result was driven by the pandemic-era congestion on the US west coast, when shipping lines were looking for alternative gateways. During this period Portland loaded import containers on intermodal rail services for Chicago, something it had never done before. However, as the boom subsided the supply chain pivoted back to lowest cost options, and volume moved away from Portland.

Keith Leavitt, Chief Trade & Economic Development officer at the Port, explained to its Harbour Commission that its container terminal “has never been financially sustainable”. The port’s cargo base is agricultural exports, which do not support the same freight rates as head haul import cargo, of which Portland has relatively little.

Portland gets an annual subsidy from state property taxes, but it is fixed, and has fallen to just 4% of the port’s operating revenue. At the same time the costs of calling at Portland for shipping lines are higher than other west coast ports.

Portland is 100 miles upriver, with a maximum depth of 43ft. It requires two different pilot services (bar and river) to access, which adds additional cost.

Operating shortfall

Furthermore, since ICTSI left the port in 2018 the Port Authority has operated the terminal using a hired stevedore, Harbour Industrial, which Leavitt said is “very inefficient” from a financial perspective.

Portland’s losses increased to US$5m in 2022, which Leavitt said was “acceptable” and could be subsidised by revenue from other cargo types. However, in 2023 that loss ballooned to US$13.3m and is expected to rise to US$13.7m in 2024.

Although its two main container customers, SM Line and MSC, both agreed to “materially higher” rates this year, the port is facing a US$8m operating shortfall.

A pitch to the state government for the funding was contingent on finding a new operator, who would need to invest in new cranes with a larger outreach. In April, unable to sign up a new operator willing to take on the facility, the port decided to cease container operations.

As noted in above, the port then changed course and said it will continue providing container shipping services at the terminal. This followed the State’s plan to provide the port with US$40m in financial support over the next two years.

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