The Port of Portland’s largest international shipping company announced plans to pull out by next month.
South Korea-based Hanjin Shipping accounts for 78 percent of the container traffic at the port’s Terminal 6, Oregon’s only deep draft international container terminal.
Josh Thomas, a spokesman for the Port of Portland, said Hanjin is scheduled to stop service on March 9.
“(Hanjin’s service) is vitally important to hundreds of regional importers and exporters that depend on that service to get their goods to and from international markets,” said Thomas.
Thomas said in October 2013 Hanjin wanted to leave the Portland market because of increased costs and low productivity, which included inefficient loading and unloading.
Hanjin executives recommitted to Portland and reviewed those two metrics on a quarterly basis, he said.
“Unfortunately, productivity has not rebounded to historic levels and the costs have increased,” said Thomas.
Oregon’s agriculture industry will be affected the most because it exports the most, he said.
Hanjin’s decision comes as the International Longshore and Warehouse Union, and ICTSI Oregon — the company that hires union workers to offload container ships at the port — are locked in a labor dispute.
On Monday, ILWU employees did not go to work despite the fact a Hanjin vessel was at the port waiting to be offloaded.
In a statement Wednesday, ICTSI Oregon CEO Elvis Ganda blamed the ILWU for Hanjin’s departure.
“Hanjin’s decision to leave the Port of Portland on March 9, 2015 due to the sustained and deliberate actions of ILWU workers is a significant blow to the regional economy,” said Ganda. “As we move forward, it is important to underscore that the success of Terminal 6 requires the ILWU to end its more than two-year campaign against carriers, ICTSI Oregon and the Port of Portland.”
The ILWU did not immediately return a request for comment.
Oregon’s business community said Hanjin’s decision is bad news.
David Kahl is the CEO of Ergo Depot, which makes a popular stand-up desk called Jarvis.
Last summer, the company moved its distribution center from New Orleans to Portland.
Kahl said his import costs will increase 20 to 25 percent because they’ll have to truck in containers from ports in Seattle or Oakland.
“In an industry like ours, prices are coming down on the retails side of things, so we really can’t pass that cost along to our customers because our competitors are lowering prices,” he said.
Kahl said right now his team of 20 employees has the No. 1 stand-up desk in the market. He said his options are to either survive on a thinner margin, or put less money into product development.
“This is a big blow to our economy,” he said. “This isn’t just Nike and Columbia Sportswear. This is going to be a drop in the bucket for them. For companies like ours this is huge.”
Sandra McDonough, president and CEO of the Portland Business Alliance, said trade exports have been growing by 8 to 12 percent per year.
“We’re doing well on our trade based economy here,” she said. “So something else is going on, and we think a clear factor in it is the labor dispute and what we’re seeing is a fallout from that.”
She said Portland’s Terminal 6 employs more than 650 people, and contributes about $12 million in state and local taxes.
Portland Mayor Charlie Hales said he was “troubled by the reports that a labor dispute” drove Hanjin away, and asked the company to reconsider.
“Hundreds of jobs and millions of dollars in wages hang in the balance,” Hales said in a statement. “It is my hope that both sides quickly come to a fair and equitable solution to the dispute, and that Hanjin reverses its decision to withdraw from Terminal 6.”