Posted on August 26, 2024
The Port of Portland on Friday gave Gov. Tina Kotek a report that explains what’s needed to keep container operations at Terminal 6 open for the long haul.
Its answer: millions in state funding, a renewed push to find a private-sector operator and lots of new customers.
The port had planned to end container service this fall after a deal with a potential operator fell through. Curtis Robinhold, the port’s executive director, said at the time container operations at the terminal had lost $13 million in each of the last two years and the port expected about the same this year. (Terminal 6 also has breakbulk and auto shipping.)
Kotek intervened, proposing a $40 million infusion of state funding to keep the container service running. At the same time, she requested a plan for operating it sustainably.
In Friday’s 47-page response, the port outlined a plan that includes using the $40 million in proposed state funds for operations, channel maintenance and capital improvements in the next two years. The plan also calls for finding a private operator by 2025 and handing over operations by June 2026.
The port’s already working to reduce the service’s operating losses. It’s increased rates it charges container carriers and reached an agreement to restructure management costs. It’s also meeting with labor unions to talk about how to offer the service more efficiently.
But achieving long-term financial sustainability would require doubling container volumes to 120,000 by 2032 and increasing volumes to 180,000 after 2032.
The terminal from 2010 to 2017 had a private operator who clashed with longshore workers, a dispute that spiraled into a yearslong work slowdown. Shipping lines stopped calling at the terminal altogether. After the operator, Philippines-based ICTSI, pulled out, the port and its longshore union workforce banded together to convince shipping companies the years of dispute was in the past, and some shipping lines again started putting Portland on their routes.
“Together, the port, the state, and Oregon’s shipping community can stabilize, sustain, and grow Oregon’s international container service in the years to come,” Robinhold wrote in a two-page cover letter submitted with the report.
The container service supported 696 direct jobs and another 871 indirect jobs in 2022, representing $208 million of personal income, according to the transportation consulting firm Tioga, which worked on the report.
“Container service provides hundreds of local jobs, along with many more in connected industries and communities,” Leal Sundet, secretary of International Longshore and Warehouse Union Local 8, said in a press release. The union’s membership includes most of the terminal’s workers. “The people who work these jobs spend their money locally, and they’re supporting shippers and industries from all over the state.”
The service also accounts for $20 million in annual state and local tax revenue.
Key exports handled at the terminal include hay and animal feed, recycled materials, grass seed, wood products and grains and vegetables, according to the report. Key imports include furniture, toys, tires, auto parts and apparel.
If container service ends, companies that use it would spend an additional $19.2 million annually to truck products between Portland and Seattle or Tacoma. The cost to ship a container would increase about $585.
“Making sure container service remains available for Oregonians and businesses across the region – whether they’re in the seafood, grain or animal feed industry, or sell building supplies, tires, shoes and toys – will require public and private support,” Robinhold said. “This is a critical piece of Oregon’s economy, and it urgently needs financial assistance from the state to continue to serve shippers across all of Oregon.”
The terminal’s location 100 miles upriver, and the 43-foot depth of the Columbia River, has left some to argue it’s an obsolete location for a container facility given the size of modern ships.
The port argued otherwise in the report.
“All cargo can’t flow through mega ports on mega ships – you also need niche ports,” the port said. “Supply chain resilience along the West Coast is critically needed, as we saw during COVID, geopolitical unrest in the Red Sea, and drought conditions affecting the Panama Canal.”
The port also said it’s not unreasonable to expect big increases in container volumes, noting the terminal was essentially dormant in 2019 and now moves 60,000 containers annually, with two North Asia-based companies only serving 25% of the market. If they grew to 50%, that would double volume.
“At that point, the operation is at a much more sustainable level and should attract public and private long-term investments,” the port said.
Kotek’s proposed $40 million in funding includes $5 million for operational support that would need to be approved by the Legislature’s Emergency Board in September and $35 million for capital improvements and channel maintenance that would need to be approved by the Legislature in the 2025 legislative session.
