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Exporters Feeling the Squeeze

by Wendy Owen
The Oregonian, September 22, 2004

THE DALLES -- Fruit growers in the Columbia River Gorge learned years ago what some in other agricultural circles will discover shortly -- you can't catch a ship out of Portland.

Pear, cherry and apple producers exporting fresh fruit from their mid-Columbia River orchards to international markets send nearly all of it 230 miles north to the Puget Sound in Washington by truck rather than going 65 miles west to Portland.

Each load costs growers several hundred dollars more because of the added mileage, but they say the Port of Portland simply hasn't provided the options they need to ferry their fruit to other countries.

"Most of our export cherries are shipped out of Seattle," said Bob Bailey, owner of Orchard View Farms in The Dalles. "They have more ships going out on a schedule. Our fruit needs to go. It can't sit on the dock."

The problem is about to get worse, since two of the Port of Portland's three container shipping companies will be gone by the end of the year.

The experiences of Columbia River Gorge fruit growers could prove instructive to other exporters looking for alternative ways to get their products to Asia. They also help explain why container shipping has declined at the Port.

Hyundai Merchant Marine left Portland as of last Thursday, and "K" Line America said it will pull anchor in December, leaving only Hanjin Shipping serving the market. All three companies primarily export agriculture products to Asia, a top fruit market.

Hyundai was the only direct shipper to Japan, the largest market for hay and french fries.

As a result, the fruit-growers' path to ports in Seattle and Tacoma is about to become a little busier. By January, french fry, hazelnut, hay, lentil and other agriculture producers will be vying for space on Hanjin. Many already have plans to ship out of the Puget Sound.

Bailey, of Orchard View Farms, said a 40-foot container of cherries is worth as much as $80,000 for his operation. He ships about 70 of the metal boxes overseas annually, worth $5.6 million. The company shipped only five of those containers through Portland this season.

About 720 shipping containers full of pears are grown in Oregon for export annually, according to Pear Bureau Northwest in Milwaukie. About 10 percent of those end up being shipped out of Portland. Valued at about $15,000 a container, the exports total $10.8 million annually.

While the Port of Portland says it wants to export the fruit, growers and producers along the mid-Columbia River in Washington and Oregon say port representatives have never consulted with them about how to make it feasible.

Cranes lift the 20- and 40-foot metal containers from the backs of semitrucks, barges or railcars onto ships the size of three football fields, which will ferry them overseas. About 4,400 of the 20-foot containers fit on each ship, according to the Port of Portland.

Increasingly shipping those containers through Puget Sound rather than Portland could have a ripple effect on the region's economy.

Agriculture producers, for example, are uncertain of what it will mean for their finances. The impact varies by commodity and profit margin, but they worry that sending fruit to Puget Sound will cost more and could make their products too expensive to compete in the global market.

But even before the loss of Hyundai and "K" Line, the number of barges carrying agriculture products down the Columbia River to Portland had declined, according to Port of Portland statistics.

The reasons for the drop in barges vary, said Port spokesman Eric Hedaa. After the Port lost Evergreen Shipping, one of its four container shippers, in 2001, and a labor lockout shut down barge service for a time in 2003, some agriculture producers started trucking to the Puget Sound.

The Port of Portland calls the loss of exports to another port "leakage," and it estimated that 40 percent of export cargo that could leave from Portland, departs, or leaks, from other ports instead.

Columbia River Gorge fruit growers have been part of this leakage for nearly a decade.

For years, Underwood Fruit in Bingen, Wash., across the river from Hood River, has sent the vast majority of its 100 annual containers of pears, apples and cherries to Tacoma. Diamond Fruit Growers Inc. in Hood River trucks 90 percent of its 300 containers of pears and cherries to the Puget Sound, too.

Depending on the quality of the harvest, Bailey said he flies, via commercial airline, about 30 percent of his cherries overseas. But with relatively few direct flights out of PDX, he still has to truck the fruit to Seattle first.

Forty countries import Oregon pears, said Jeff Correa, international marketing director of Pear Bureau Northwest. He said the shift to the Puget Sound began with the lack of empty refrigerated containers in Portland.

It's an old problem that continues today because the Port draws few importers, which bring the empty containers, Hedaa said.

"We're working hard to regain our carrier service levels we've had in the past," Hedaa said, denying that the shipping problems are intractable.

The Port is working on a project in Boardman to import fruit juice concentrate in refrigerated containers, he said. The containers could then be loaded in Boardman with fresh fruit and barged to Portland for shipment overseas.

That fruit, however, would likely come from Eastern Washington, not 50 miles downriver from the mid-Columbia, said John Akre, the Port's regional marketing manager. It's still faster to truck fruit from the Hood River area to Puget Sound than it is to barge it to Portland.

The bottom line, said China Pacific exporter/importer Heather Stewart, is that the Port hasn't done enough to recapture the fruit business. "You lose your exporters because you lose your capability to export," she said.

Related Pages:
Portland Container Shipping Fact Sheet, 2002 Port of Portland

Wendy Owen
Exporters Feeling the Squeeze
The Oregonian, September 22, 2004

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