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Hyundai Decides to Bypass Port

by Jeanie Senior
Portland Tribune, July 20, 2004

Loss of cargo service will deal blow to farmers, port workers and more

“It’s just a business decision,” Port of Portland Executive Director Bill Wyatt says of Hyundai Merchant Marine’s announcement that it will stop sending its ships to Portland in September.

But Hyundai’s exit also will deal a multimillion-dollar blow to the regional economy.

When Hyundai goes, so will Mitsui OSK Lines and APL Lines, the other two members of the New World Alliance shipping group, which now handles about 30 percent of the container traffic in and out of the port’s Terminal 6 on the Columbia River. Hanjin Shipping and K-Line are the other major T-6 users.

“I don’t want to characterize this in any other way: It’s a very significant loss for us,” Wyatt said of Hyundai’s announcement.

The hit to Portland longshore workers’ payroll alone is expected to be about $10 million, he said, and “that’s a very small part” of the total impact.

Wyatt has ordered a hiring freeze at the port. He said it’s too early to tell whether layoffs will follow. “There will definitely be reductions in our budget,” he said.

Del Allen, the owner of Allports Forwarding Inc. in Portland, was more blunt about Hyundai’s pullout: “What does this mean to the Columbia River region? It’s a tremendous blow.”

Allports, a freight forwarding company, has numerous customers who are farmers in Eastern Oregon, Eastern Washington and Idaho, growing such crops as lentils, dried peas, hay and onions. The commodities are shipped down the Columbia-Snake river system by barge, then loaded onto Asia-bound ships in Portland.

Farmers could suffer
Allen said the barge system is one of Portland’s great strengths as a port. “It’s cheaper to move stuff on a barge down to Portland, cheaper than putting it on trucks and moving it to Seattle or Tacoma,” he said.

The farmers also cultivated the Asian market for their goods. Now, Hanjin and K-Line, at least with their current ship rotations, won’t be able to absorb all the extra cargo, Allen said.

Allen said the farmers’ already-low profit margin on bulky, low-cost commodities could be wiped out if they have to pay $200 to $250 per load to truck goods to container ports in Puget Sound.

Along with Portland, Korea-based Hyundai is removing Yokohama, Japan, from a current 11-port circuit that sends ships from Asia to Puget Sound; Vancouver, British Columbia; Portland; and back to Asia. When the schedule is altered in September, Hyundai will add Kwanyang, South Korea, as a destination.

“We had strong indications that this was coming,” Wyatt said, because Hyundai was having trouble staying on time in its 11-city port schedule — and the delays fostered further delays because of missed berthing times.

Both Wyatt and Sam Ruda, the port’s marine director, said they are confident another service can be recruited to replace Hyundai; they’re already approaching ocean shippers that serve both Asia and the Northwest.

“The long-term trends and signs for the Portland container business actually is pretty positive,” Wyatt said.

Toward that end, he said the port will continue to invest in T-6. Just last month, the Port of Portland Commission agreed to spend $1.4 million on four new “reach stackers” to handle containers at T-6.

Allen, meanwhile, said he’s hopeful the Hyundai announcement will prompt all the players in the shipping industry, from importers and exporters to river pilots, longshore workers and the port, to work together to attract new business.

Hyundai’s pullout also revs up the port’s push to get the Columbia River channel between Astoria and Portland dredged to a depth of 43 feet from its present 38 to 39 feet. Wyatt said the deeper channel would allow container ships to add another 500 loaded containers to their cargo loads.

“Candidly, we think this really helps punctuate the argument around channel deepening,” Wyatt said.

Preliminary work on the $130 million project will begin later this summer, funded by a $10 million congressional appropriation.

Jeanie Senior
Hyundai Decides to Bypass Port
Portland Tribune, July 20, 2004

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