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Northwest Container Looks Outside the Hubs

by Shelly Strom, Business Journal staff writer
Portland Business Journal, November 12, 2004

Bringing services closer to the destination cities

Facing the specter of a volume of cargo that could hamstring the West Coast, Gary Cardwell is looking for a solution.

As CEO of Portland-based Northwest Container Services, Cardwell is looking to build momentum behind an unusual approach to international trade that calls for putting trade hubs in some out-of-the-way places.

"We have enough big-box import distribution centers near downtown Portland. Where we need to try to locate these operations is in places closer to our base of exporters, places like Boardman, Umatilla, Eugene and Lewiston, Idaho," Cardwell said.

One of only a few independently owned short-haul rail carriers in the United States, the company specializes in moving cargo via shipping containers by rail to destinations no more than 600 miles apart.

In recent years, Cardwell said an increasing amount of the company's business is happening outside of traditional trade hubs and closer to rural exporters.

The sort of import centers that Cardwell thinks would be well-suited for rural areas are used by retailers such as Target, Wal-Mart and others, as well as manufacturers such as Columbia Sportswear and Nike.

Products made overseas are brought to these stateside facilities for sorting and redistribution to retailers throughout the country.

Import distribution centers can sprawl throughout 1 million square feet and employ just a handful of people per acre.

"It's an excellent concept. The more options we can generate for our producers, the better off we are," said Gary Neal, general manager of the Port of Morrow in Boardman, about 165 miles east of Portland. Neal said the port is in the process of adding to its holdings 1,000 acres of industrial-zoned land.

With available land, inland import centers could make a lot of sense for Oregon, said Bill Wyatt, executive director of the Port of Portland.

"There is growing urban resistance to million-square-foot facilities with few employees and lots of trucks. But it is not an issue in places like Boardman, where the jobs are needed and are relatively high-paying," Wyatt said.

"The only question is, are importers ready yet, are they feeling enough pain in the urban areas and beginning to think about this remote distribution concept?"

Cardwell thinks the time is now. He cites a deal he recently inked in California as a harbinger.

A deal between his company, the Port of Oakland and the city of Shafter, Calif., 250 miles east of Oakland, would create an inland intermodal distribution center. The city would build what already has been dubbed the California Integrated Logistics Center.

Proponents contend the facility would mean thousands of trucks wouldn't be needed to ship cargo between the San Joaquin Valley town and the Bay Area Port of Oakland.

Instead, goods would be carried by Northwest Container Services rail cars on railroads owned by Union Pacific and Burlington Northern and Santa Fe Railway Co.

The arrangement is seen as a sort of relief valve in response to congestion the Port of Oakland is experiencing. Many California ports have handled record amounts of containerized cargo in recent years. In turn, record congestion has meant days-long waiting lines at docks and cargo ships being sent northward to less-crowded ports.

Officials at the Port of Oakland say the alliance will help Oakland compete in its attempts to attract more international trade.

"International trade is growing and all West Coast ports are seeking new ways to take advantage of it," said Marilyn Sandifur, spokeswoman for the Port of Oakland.

"The [$620 million worth of] improvements and expansion projects of recent years are geared to increasing our ability to become the first port of call for ships coming from across the Pacific. This would be another way to make us a more viable competitor. It would certainly improve our ability to ship agricultural products overseas," Sandifur said.

In Oregon, such an arrangement could work like this: Containerized cargo would be brought to the Port of Portland on an ocean-going shipping vessel, unloaded and reloaded onto either a river barge or railroad car for shipment. Upon arriving at the inland destination, containers, which are owned by the shipping lines, would be emptied. In turn, those containers would be close at hand for exporters in the state's rural areas.

The empty containers are at the crux of the concept, Cardwell said. Right now, containers are brought into Portland by importers such as Nike, Columbia Sportswear and Fred Meyer.

But without a corresponding lineup of heavy-hitter exporters, the Portland area is rife with empty containers.

That leaves the relatively smaller pool of Oregon exporters -- mostly commodity producers struggling to turn a profit and located far from Portland metro -- paying to truck, barge or railroad empty containers to their farming operations.

If those containers could end up closer to the agriculture producers, Cardwell said, they could cut their shipping costs by as much as half.

"No one wants to move empty containers. We're going where we think we can match up importers with exporters," he said. Cardwell thinks the strategy is a good way to keep the transportation infrastructure working on the West Coast.

"We in international transportation and freight need to start developing more efficient transportation models now. People are saying we don't want Portland to be like L.A. and Long Beach, [Calif.] and I certainly don't want Portland to be in that situation," Cardwell said.

Shelly Strom
Northwest Container Looks Outside the Hubs
Portland Business Journal, November 12, 2004

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