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Container Shipping Costs Could Increase

by William McCall, Associated Press
Seattle Post-Intelligencer, August 26, 2004

PORTLAND, Ore. -- West Coast shipping costs could increase and U.S. agricultural exports are likely to suffer unless the Port of Portland finds a way to replace two departing steamship lines that carry container cargo, officials said.

Portland is dwarfed by California ports. But any decrease in container traffic through the Pacific Northwest, and its rail connections to the Midwest and South, could increase costs for all Pacific freight and cargo, according to industry and state officials at a shipping conference Thursday.

The ports of Los Angeles, Long Beach and Oakland in California, along with Tacoma in Washington state, are already congested and struggling to keep up with container traffic, officials said.

Congestion is so bad in Los Angeles the port has a $40 surcharge per container that is refunded if the shipper loads or unloads after peak hours, industry experts said.

"This is a big national problem," said Peter Friedmann, spokesman for the Agriculture Ocean Transportation Coalition.

The conference was organized by the coalition after Hyundai Merchant Marine and the "K" Line announced they would halt service to the Port of Portland by the end of the year, leaving only Hanjin Shipping to handle oceangoing container traffic along the Columbia River to Portland.

The big 20- to 40-foot containers can be packed with just about anything, from electronics to clothing to perishable fruit.

Farmers as far inland as the Midwest use containers to pack agricultural products such as fruits, peas and lentils, or specialty crops, such as hazelnuts from Oregon, the world's second-largest producer.

But shipping companies such as Hyundai and "K" Line are moving to bigger vessels that need deeper water than the Columbia River, which already adds costs for the 104-mile transit along the river compared to the ocean ports in California and Washington state.

President Bush announced Aug. 13 on a campaign swing through Oregon that he would urge Congress to approve a $150 million dredging project that will deepen the Columbia River channel by 3 feet to an average of 43 feet all the way from Portland to the Pacific.

Bush had originally rejected funding in his initial federal budget proposal in February, and his decision to support the project was welcomed by regional business and political leaders.

But many of those same leaders agreed Thursday the project will begin too late to prevent Hyundai and "K" Line from changing course, forcing farmers, manufacturers and wood products companies to consider alternatives that appear costly.

"This is not free," said Terri Bartle, a Columbia River Customs Broker & Freight Forwarder Association board member. "Somebody is going to have to pay for this."

The three main alternatives are loading containers on oceangoing barges in Portland for shipment to the container yards in Tacoma, or shipping them by rail or truck to Tacoma.

Each alternative has drawbacks, and the cost increases with all three. Barging is the least expensive and trucks the most costly.

Truckers would have to add extra-heavy duty trailers to their fleets in order to carry the extra weight on already crowded highways and freeways, increasing wear and tear on roads and adding to air pollution, said Heather Stewart of China Pacific Co., a freight forwarder.

Gary Cardwell of Northwest Container Services, a short-haul railroad, said his company can handle the overflow container traffic that would be routed from Portland to Tacoma. But in terms of lower costs, "the winner is the river," he said.

Barging would be cheaper, but Richard Lauer of Sause Bros., which has operated ocean barges since the 1930s, said there are a number of problems - including the time spent on the 443-mile trip over water between Portland and Tacoma, compared to about 140 miles by rail or truck.

"It's not cheap, and it's not going to be competitive," Lauer said of ocean barging.

Related Pages:
Port of Portland Container Shipping Report, 2002

William McCall, Associated Press
Container Shipping Costs Could Increase
Seattle Post-Intelligencer, August 26, 2004

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