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'K' Line Shipping Will Drop Port Stop by Richard Read The Oregonian, August 13, 2004

Though the Japanese container-shipping company will keep some services in Portland,
its decision affects hundreds of jobs

One of two remaining Asian container-shipping lines serving Portland plans to pull out, leaving the Port of Portland without enough vessels for carrying trans-Pacific cargo.

A "K" Line official confirmed the plan Thursday, a day before President Bush planned to visit Portland and announce funding to begin deepening the Columbia River shipping channel for larger vessels.

News of the withdrawal by the Japanese carrier came a month after Hyundai Merchant Marine, a Korean shipping line, said it would stop calling on Portland in mid-September. "K" Line's decision to end service in December is a blow to the Port, jeopardizing hundreds of longshore and trade jobs and leaving Portland with one trans-Pacific container carrier, Hanjin Shipping.

"K" Line will continue its car-ship service and bulk-grain service to Portland.

"It came as a tremendous surprise," said Bill Wyatt, Port of Portland executive director. "This is tough. It'll have an economic impact on our region and a financial impact on the Port."

The withdrawals raise the question whether Portland, located 100 miles upriver from the Pacific Ocean, can remain viable as a container port. Thousands of high-paid international trade jobs, and Oregon's stature as a global commercial center, depend on the answer.

The decision alarms Oregon freight forwarders and cargo brokers.

"We're basically down to one main line, and who's to say that the Port's going to stay open just for them?" said Dave Miller, Portland import manager for James J. Boyle & Co., a customs broker and freight forwarder.

Wyatt said the development provides the strongest argument yet for dredging, which would deepen the 40-foot channel to a minimum of 43 feet. Environmentalists oppose the controversial project, saying that dredging would damage habitat for endangered fish species.

"Nothing more clearly punctuates the need for this project than 'K' Line's decision here," Wyatt said. "I am quite confident that if the channel were deepened tomorrow to a depth of 43 feet, they would continue their rotation here."

Wyatt said the Port learned of "K" Line's plans Wednesday. He said the decision resulted in part from the shipping company's plans to replace vessels requiring a 39-foot depth with bigger ships designed for 42 feet. Hyundai, which said it needed to eliminate its Portland stop to speed up trans-Pacific service, also cited the shallow channel, Wyatt said.

"It is clear that the channel was an insurmountable obstacle in both cases," Wyatt said.

But a "K" Line manager denied the channel depth was a factor.

"It has nothing to do with the dredging," said Mamoru Mori, senior vice president of liner operations for K-Line America Inc.

Mori said "K" Line would stop serving Portland because the company was adding a stop in Shanghai and needed to save time by cutting a U.S. call. Also, the opening of a larger terminal in the Port of Tacoma would boost capacity there, said Mori, speaking from the company's U.S. headquarters in Richmond, Va.

"This is not a happy decision for us," Mori said. "We have been a very good friend to Portland." He said that "K" Line's car-ship service and bulk-grain service to Portland would continue.

Representatives of forwarders, brokers, shippers, ports, barge operators and related industries plan to meet Aug. 26 in Portland to consider options. Alternatives might include launching feeder service between the Columbia River and ports in Puget Sound or California.

During his Portland visit today, Bush is expected to pledge $15 million toward the $150 million dredging project. That would enable its completion in 2007, barring legal challenges and other potential delays. The project has been mired in controversy for more than a decade.

Wyatt said the timing of "K" Line's decision so close to Bush's appearance was a coincidence. He said the Tokyo-based carrier has been shipping about 63,000 containers a year through Portland.

The Port's marine-marketing managers have been aggressively trying to recruit steamship companies, Wyatt said. He said that in the long term, bigger West Coast ports such as Long Beach, Calif., would reach capacity, pushing carriers back to Portland.

"I'm actually, believe it or not, pretty optimistic about the future," Wyatt said. "It's the present that keeps me up at night."

Mori, of "K" Line, said his company's ships might return someday.

"The trade between the United States and other countries is always changing, no one knows what will happen 10 years later," Mori said. "I hope the day will come when we will come back to Portland."