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Portland stages a comeback

A shipping service is returning to Terminal 6 in Portland, Oregon, but the long term viability of the terminal is still in considerable doubt.
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Last week Oregon Governor Kate Brown, the Port of Portland, and Business Oregon today announced that Swire Shipping will begin a shipping service at the Port of Portland's Terminal 6 next year. 

“I am absolutely delighted to announce new container service will begin at the Port of Portland's Terminal 6," Governor Brown said. "Not only does the container service support jobs for Oregonians, it's going to give more options to Oregon companies as we work to maximize Terminal 6”.

The service is a start, but Portland has a long way to go towards maximizing Terminal 6. Swire Shipping has not yet announced details, but Portland media have reported it will be calling on a 33 day rotation with a mixed general cargo/container service. The Governor said the service is “a critical first step toward restarting container service at Terminal 6 and will aid in efforts to attract an additional service in the future.”

The Port of Portland also operates its airport, where Cathay Pacific, also part of the Swire Group, has stated an air cargo service. 

Terminal 6 was the scene of the ILWU’s long running battle with ICTSI, where a dispute over demarcation for reefer plugging work provided the opportunity for the ILWU to instigate a general go-slow that eventually undermined ICTSI Oregon’s business, forcing it to withdraw from the port.

ICTSI Oregon recently scored a legal victory when a US Court unanimously affirmed two National Labor Relations Board (NLRB) decisions that held the ILWU violated federal labour laws. The company is still pursuing the ILWU for damages. “Our effort continues in federal court here in Portland to hold the ILWU accountable and obtain compensation for the harm it has done,” said ICTSI Oregon’s CEO Elvis Ganda.

In the meantime the port has been working to "reset" relations with the ILWU. In a Terminal 6 Industry Leaders Committee meeting in September, Port CCO Keven Leavit noted Portland “reached a milestone with the ILWU - settling our litigation and resetting the relationship.” Though the outcome is not known the agreement apparently settles the dispute between the port, the ILWU and the IBEW (International brotherhood of electrical workers) over the reefer plugging jurisdiction issue, and has been ratified by ILWU members and “supported” by the ILWU International. 

Attracting containers back to Terminal 6 is going to be a much more difficult proposition. A study identified a cargo base of 407,000 TEU in Portland’s hinterland. In 2014 Portland handled about half that amount, but after Hapag-Lloyd, Hanjin and then Swire Shipping stopped calling the business has gone elsewhere, mostly to Tacoma and Seattle. 

Furthermore, the terminal had a long history of making a loss, even when it was handling 200,000 TEU. The port has previously paid incentives to lines to call, and this looks set to continue with the new service. Local press have reported that the state’s strategic reserve fund has contributed US$250,000 to help reestablish port operations, which will “help” Swire offset the US$20,000 in extra pilotage costs associated with the 100 mile journey up the Colombia River to the port. 

The port also faces high fixed costs to keep the terminal open regardless of volume. It is understood the port received around US$10-12M from ICTSI when the parties agreed to terminate ICTSI Oregon’s 25-year lease. The industry leaders committee has said the port has “only three years of money in the bank” to keep the terminal operating. 

Ultimately this does not allow Portland to really “reset” and redevelop Terminal 6 as a general cargo/mixed terminal that handles some containers  - with a much lower fixed cost. With Tacoma and Seattle having plenty of excess capacity, and the container industry consolidating on the liner side, it will be difficult for a container facility with seven cranes that is limited to vessels under 6,500 TEU (because of the water depth of the Colombia River) to find room in the market. 

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