More than a year and a half after the final ship sailed following a bitter labor dispute at Oregon’s only international container terminal, container ship service is poised to return to the Port of Portland in January.
It’s the port’s final push at demonstrating to global carriers and the region’s shippers alike both that there’s a market and that labor conditions have improved between the International Longshore and Warehouse Union and its employer.
"Is this our last, best hope? Probably," said Port of Portland CEO Curtis Robinhold. “I’d say it’s far from hopeless. We have some really good options. We just need to make it work and everyone needs to do their part, from labor to the port to the shippers."
Starting in January, Hong Kong-based Swire Shipping will start calls at the Port of Portland’s Terminal 6, roughly every 35 days. The route takes goods from Portland to Australia and New Zealand, and then onto China, with a possible stop in South Korea before returning to Portland.
The deal was finalized last month during Gov. Kate Brown’s trade mission to Asia. Brown and Robinhold met with Swire executives in Hong Kong.
The new container service is “going to give more options to Oregon companies as we work to maximize Terminal 6,” Brown said in a statement. “Strong trading partnerships and access to global markets allow our Oregon businesses to grow, helping to sustain a thriving statewide economy.”
In 2014, some 8,000 containers moved through the Port of Portland, taking agricultural goods from around the Northwest to Asia and European markets.
Containers were packed with crops like peas, beans and lentils from eastern Washington and central Idaho's Palouse region, barged down the Columbia River and trucked, with hay, from the Willamette Valley.
The region’s shippers imported things, too. Fred Meyer grocery stores served as a solid base. But the region’s small businesses relied on the port, too, bringing in goods designed in cities like Portland and manufactured in Asia.
In March 2015, the region's container service changed dramatically. First, South Korean-based Hanjin pulled out. Shortly after, German-based Hapag-Lloyd said it too was done with Portland. Together, the two carriers represented between 95-99 percent of the Port's container service.
In May 2016,
at the Port of Portland. Westwood’s decision left Portland the lone major West Coast city without container ship service.
The carriers complained it was taking too long to load and unload ships because of a nearly three-year local labor dispute between the ILWU and its then-employer, ICTSI Oregon.
Being about 100 miles upriver from the coast, Portland is already a tough sell, compared to the bigger ports of Seattle and Tacoma. The added local labor challenge proved not to be worth it to the carriers.
In March, the port and ICTSI Oregon dissolved their 25-year lease. ICTSI paid the port about $11.5 million in cash. It also left about $8 million in equipment at Terminal 6, known as T6.
Now, with Swire’s decision to restart container ship service next year, the Port of Portland is trying to demonstrate that its labor problems are a thing of the past.
"This is really walking before you can run," said Robinhold, the port’s CEO. “What we're really trying to do is show we can get T6 working again."
Robinhold said he’s spent time personally with the unions that work at the port, particularly the ILWU.
"We have essentially resolved all of the lawsuits between the Port of Portland and the Longshoremen,” he said. “What we've essentially said is we want to push the reset button, get going again and really give it a try. And if we can't, we're going to have to have some harder conversation about what to do with T6. This is really our last meaningful chance to get container service started again.”
The ILWU Local 40 in Portland declined to comment.
With ICTSI Oregon out of the equation, the port’s resolved a sticking point for the ILWU, which said it objected to the way the company conducted business.
"What we are really needing to prove now is that we can make it work and that it can make money; at least that it can break even,” Robinhold said.
He said the port has identified five or six smaller carriers that could be a good fit.
The governor’s office has chipped in $250,000 from the state’s strategic reserve fund. It’ll help pay for bar pilots who navigate vessels up the Columbia River. Robinhold said it takes two bar pilots and costs carriers $20,000 more to call on Portland compared to other ports.
The goal is a sustainable service that at least breaks even and supports the needs of shippers in Oregon and southwest Washington. A year from now, Robinhold said he could see a “couple of thousand” containers per month moving through the Port of Portland with service that hits some “key Asian markets.”
By mid-2018, Robinhold said he expects the port will be able to show it’s up and running, which he hopes will lead to more carriers and larger ships.
But the days of weekly service from a major global carrier may be something of the past.
"The large weekly call may not happen,” he said. “The challenge of us is to really figure out what the niche looks like. We know that we're not one of these mega ports. So, is our niche weekly service? Maybe. Is it every other week? Probably, at least. So, really the challenge for us is what's sustainable."
Swire’s first ship is booked, carrying a combination of containers and break-bulk, Robinhold said. The shipment includes Daimler’s Western Star Trucks that are manufactured in Portland. They’re bound for Australia. Agricultural goods are also on the ship, he said.
Congestion in Seattle-Tacoma and increased costs of getting containers trucked there could buoy Portland’s efforts.
Carriers are operating under tight windows and need to get in and out of ports quickly. It's equally critical for shippers to know when their goods will arrive for customers both in the Northwest and overseas.
And that's where Robinhold sees an opportunity.
“It's really about reliability,” Robinhold said. “That's really the frustration of the service at some of our competitor ports right now, that it's somewhat unreliable. And that's what we've got to cover. We've got to be a reliable, niche port."