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Container Shippers Push Port to Find Alternatives by Alex Pulaski The Oregonian, October 5, 2004

Oregon freight forwarders and importer-exporters, desperate and frustrated over limited sea-going options, are increasingly bypassing the Port of Portland and openly suggesting the necessity of dramatic tactical changes.

Decisions by two of three container shipping lines to discontinue Portland service this year have intensified pressure on the Port. Hyundai Merchant Marine pulled out last month and "K" Line America plans to leave in December. That will leave Hanjin Shipping as the Port's only trans-Pacific container carrier.

The container business is enormously important to the Port. Of its general fund -- that not related to aviation uses -- 60 cents of every dollar last year came from container revenues.

The Port's strategy in recent years has been to push for dredging the Columbia River, a $150 million endeavor that would allow larger and more fully laden ships to pass, but has also raised environmental and cost objections.

Some freight forwarders, who act as travel agents for cargo, say the Port's single-minded pursuit of dredging ignores other avenues that might lure carriers to serve Oregon customers.

Among them:

• Give up on Portland as a deep-water port, ceding that role to Longview, Wash., or Astoria. Some suggest deep-water vessels could anchor in Astoria and transfer containers directly to and from barges.

• Instead of pursuing carriers, go after importers. The carriers will follow.

• A recent proposal suggesting that containers be barged out of the Columbia to Puget Sound, then transferred to deep-water vessels.

Port officials counter with this: They are wooing carriers and expect that West Coast port congestion is going to push some of them back to Portland. When is unclear.

"When people question the viability of Portland, that's not new," said Sam Ruda, the Port's marine director. "The river hasn't gotten any longer. It's always been tough in Portland, and it always will be tough."

Container lines sometimes mimic lemmings, rushing to follow each other. They are also notoriously fickle: Hanjin, for example, ended Portland service in late 2001 and then reinstated it the next year.

With Americans' appetite for imports -- the country's monthly trade deficit regularly exceeds $40 billion -- the container lines' business is geared for eastbound traffic. Keeping it running requires making sure that containers filled with toys from China or lawn furniture from Taiwan get to dock quickly, either for consumption in the immediate area or transfer to rail or truck.

Portland, as the West Coast's least densely populated container port, has an immediate disadvantage: fewer consumers to buy those products.

It has good rail connections, but shipping lines have to endure the time and expense of piloting for the 105-mile one-way journey on the Columbia River.

Most everyone, including the Port of Astoria, concedes that Astoria doesn't have the room, money or rail connections to establish itself as a typical container port. Peter Gearin, the Astoria port's executive director, says a century-long feud between his city and Portland over port supremacy is long dead: Astoria is instead nurturing a niche as a stop for cruise ships.

Gearin said the Port had not studied the possibility of establishing an anchorage to allow direct transfer from ships to barges. But he said the idea immediately raised questions about handling costs.

Bill Wyatt, the Port of Portland's executive director, also questioned the wisdom of adding new handling costs to goods traveling the river's length.

George Cress, director of planning and development for the Port of Longview, says it expects to continue concentrating on bulk products moved by barge, such as steel and logs. He says he can't foresee that Port spending millions of dollars on cranes and infrastructure improvements to compete for container cargo.

"We'd be closer to the Pacific," he said, "but we just don't have the existing market here to cater to filling up containers."

Freight forwarders say profit margins of their customers have grown so slim -- particularly agricultural exporters -- that even solutions appearing far-fetched need to be examined.

Heather Stewart, an importer-exporter with China Pacific, said that in 17 years in the business she has never seen so few options for exporting Oregon's agricultural and other goods.

"Dredging is going to be a moot point if we don't have carriers here," Stewart said.

With Hyundai's exit two weeks ago, Stewart said, hay, onions and potatoes are more often traveling by truck to Puget Sound. But a driver shortage is crimping options: one-sixth of the onion containers she hoped to export from Oregon since then couldn't be moved because no drivers could be found.

More and more often, Stewart said, freight forwarders are talking about Longview or Vancouver, Wash., beginning to replace Portland as the region's container port.

"One of the reasons for looking toward Longview," Stewart said, "is that maybe if the Port of Portland realizes this is serious they will get moving. But I'm not sure what would jump-start them; they've always been reactive."

Both Wyatt and Ruda traveled to South Korea recently in an attempt to recruit shipping lines, Ruda said.

Bob Hansen, president of International Freight Systems, a Portland-based freight forwarder, said he hasn't given up on the Port of Portland's long-term viability. But like others, he said the Port needs to aggressively pursue agreements with businesses that import in volume.

"The biggest single thing they could do to attract more ships is to generate an import market," Hansen said. "They need to change their marketing strategies, and we've been telling them that for over a year."

Eric Hedaa, a Port spokesman, said the Port had pushed hard in recent years to increase imports, hiring a manager in that role in 2000. Since then, he said, import container volume has risen 75 percent. Still, Portland remains a hard sell for importers.

"The first obstacle we always hear about is (the depth of) the channel," Hedaa said.

Two weeks ago, when the Port laid off 10 percent of its staff in response to cuts in container revenue, it eliminated of one of two positions responsible for courting importers.

Terri Bartle, director of operations for Geo. S. Bush and Co., a Portland customs broker and freight forwarder, said Longview might represent the best alternative to Portland.

"There are a lot of conversations going on right now about barging and other options," Bartle said. "We are losing options day by day and so we have got to become creative."

Tony Galati, Portland-based district manager for Hyundai Merchant Marine, said a former boss used to talk about how God never intended for Portland to be a deep-water port.

"The truth is that in some ways he was right," Galati said. "Portland doesn't have all the amenities that Seattle and Tacoma do."

Nevertheless, Galati expects that port congestion in Washington and California is ultimately going to push carriers to reassess Portland -- even with its river passage -- as an attractive alternative.

Ruda of the Port concurs.

"People are right to question whether there is a future," he said. "But we're committed to try to turn it around, and we won't dismiss any options."

Related Sites:
Port of Astoria
Port of Longview
Port of Vancouver, Washington