JULY 2007: COVER STORY
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OREGON'S PORTS: Possibilities and problems
 Terminal 6, Port of Portland Photo by Adam Bacher |
“I can tell you that 10 years ago, I would have sat right
here and said there will only be two super-ports [on the West
Coast], Southern California and the Puget Sound,” says
Dale Sause, president and CEO of Coos Bay-based marine cargo
company Sause Bros. “I would have said everything in
between didn’t count. But I can’t say that same
thing now. We are in a new world.”
But, if Portland, which works closely with Washington’s
Port of Vancouver (which, at just 197 TEUs moved last year is
even smaller than Portland), is a diamond in the rough for
shippers who want to hedge their bets by bringing cargo into
the U.S. through a less-congested port, it certainly
isn’t the only one. Newly developed ports in Mexico and
Canada are also gearing up to absorb more West Coast trade
traffic and will be competing for the same shipping business
with the same low-hassle marketing message.
To win in the trade game, the Port of Portland has to give
shippers what they want: conven-ient access to markets. With
its paltry population, Oregon isn’t a hotbed of consumers
hungry for Asian imports, but with two national rail lines and
two interstate highways crisscrossing near its largest port,
the state could position itself as a gateway to the
Midwest.
The problem is that in their current condition the capacity of
the state’s highways and rail lines is not sufficient to
support such a claim. And while the Port of Portland is picking
away at the improvements it can make itself, the authority and
the money to make upgrades to the transportation infrastructure
is tough to pin down.
FOR AN INDUSTRY THAT’S AS OLD AS THE HILLS (the Port of
Portland was founded in 1891 to oversee shipments of wheat to
England), it’s a dynamic time to be in the port business.
The sheer volume of imports coming from Asia is continuing to
bolt upward and the game plan for how to get all that stuff
into the hands of consumers is changing quickly.
“Shippers are looking at every little dent in the
coastline wondering if they can make it work,” says Port
of Portland executive director Bill Wyatt. “Just the
other day, China Ocean Shipping Company announced it would
start sending large container ships to Prince Rupert.
It’s not because there’s a market there.”
That the world’s largest steamship company would sign up
to be the first customer for an untried port in British
Columbia — Prince Rupert’s new cargo terminal
is set to open this fall and a rail line will take shipping
containers straight into the U.S. heartland — is a
demonstration of how the desire to avoid the congestion of the
big ports has affected the market.
 "Shippers are looking at every little dent in the coastline wondering if they can make it work.” — Bill Wyatt, executive director, Port of Portland Photo by Adam Bacher |
And news this spring that another shipping giant, A.P.
Moller-Maersk Group, is eyeing Coos Bay for a terminal that
would be similar to the one in Prince Rupert highlights the
fact that Oregon could benefit — in the form of the jobs
and revenue that come from handling freight — from the
growing demand for port capacity.
In May, several hundred people representing North-west ports,
shippers, logistics companies and manufacturers converged in
Portland for the first Northwest Intermodal Conference, a
meeting to discuss the issues that Northwest ports face —
namely not enough railroad capacity, not enough truck capacity,
not enough people, not enough love from the general population
and not enough sunshine.
One after another, presenters at the conference, representing
all sides of the businesses, begged for more cooperation among
shippers, ports and customers and more funding from the federal
government. Doug Tilden, CEO of Marine Terminals Corp., an
Oakland, Calif.-based terminal operator, put it this way:
“If the national infrastructure is behind, and it is,
then this discussion really belongs on the federal
level.”
The Port of Portland’s version of the outdated
in-frastructure nightmare is being called the Portland Triangle
Bottleneck. The interstate railroads, Burlington Northern Santa
Fe and Union Pacific, both of which have tracks through
Portland, are running longer trains in order to increase their
efficiency which require more yard capacity and more tracks to
allow trains to meet and pass. A complex web of rail lines,
switches, yards and terminals converges in Portland.
A study completed last year for the port identifies rail as
one of the port’s biggest issues. Rail congestion
threatens to erode the Portland/Vancouver port system’s
major asset: its reputation as a more manageable and less
choked port than those in Southern California.
But clearing the congestion becomes more complicated when you
consider that BNSF and UP, while they do share tracks where it
makes sense to both sides, are highly competitive with each
other and often don’t play nicely. And both railroads are
investing in system improvements in proportion to where
they’re seeing the most traffic — mostly along
lines that serve the larger ports.
“The railroads say they will offer intermodal service as
long as there is traffic to support it, so Portland will have
to come up with that volume,” says Monica Isbell, a
logistics expert with Portland-based Starboard Alliance
Company. “But the railroads are going to have to invest
in Oregon at some point.”
Both railroads are making incremental improvements to their
tracks, but for a major increase in capacity it will take more
decisive action. For example, one proposal in the port study
calls for a track sharing agreement between BNSF, which owns
and operates the rail line north of the Columbia River Gorge,
and Union Pacific, which owns the track on the south side, that
would have both railroads running all their eastbound trains on
the south side and all westbound trains on the north side. The
result would immediately double the capacity of the important
east-west corridor for both companies, but neither railroad is
willing to entertain the possibility at this time.
Wyatt and other industry experts expect that this kind of
cooperation will happen eventually, but not until both sides
are feeling the pain, sometime in the next decade or two.
“These things happen when everything is on the verge of
catastrophe,” says Wyatt.
Wyatt makes the comment with a wry smile, but waiting for a
catastrophe is no way to run a business. 
PORTLAND HAS ANOTHER MOTIVATOR for fixing its transportation
issues and winning more import traffic: empty containers.
Oregon’s always been an export-heavy state, shipping
lumber and agricultural goods, and the state still has plenty
to sell. The Port of Portland is the third-largest export
center for grain in the world and the largest wheat export port
in the United States. Top exports by volume include wheat,
potash, soda ash (both used in making glass and detergents) and
compressed hay. By pursuing importers, the port ensures that
Oregon exports have a ready ride to Asia.
In 2003, Virginia discount retailer Dollar Tree opened a
distribution center in Ridgefield, Wash. Now the Port of
Portland is the No. 1 U.S. port for Dollar Tree’s
considerable Asia import trade.
Columbia Sportswear’s port traffic has mirrored the
port’s fortunes. In 2004, 90% of Columbia’s imports
— clothing and footwear manufactured in Asia — came
through the Port of Portland. In 2005, Columbia opened a
footwear distribution facility in Kentucky, requiring the
company to route more of its cargo through Southern California.
At the same time, the Port of Portland lost two container
shipping lines, forcing more of Columbia’s cargo up to
Seattle. Now that container traffic is back up in Portland,
Columbia routes half of its cargo through its home port.
During the port’s lean years of shipping service, Oregon
agricultural exporters either had to pay to get their goods up
to Seattle for shipping or forgo exporting altogether. Port
officials are still working to get their import volume up to
where it was earlier this decade, but with the incoming volume
of trade from Asia, the port would have to try pretty hard
not to grow in the
coming years.
Assuming, of course, that the rail congestion issues are
addressed. Congestion will get worse if Maersk starts sending
shipping containers from a new terminal in Coos Bay on trains
up to Portland.
The Port of Portland must get serious about finding creative
financing opportunities to build the infrastructure it will
need to take advantage of what is shaping up to be the age of
trade.
One example of cooperative financing sits just to the west of
Terminal 6: the Ramsey Rail Yard. Wyatt credits U.S. Rep. Earl
Blumenauer with securing $7.1 million in 2005 federal funds to
improve the yard for more rail car capacity. The 2006
ConnectOregon bill kicked in another $6.8 million, and the
project was rounded out by a contribution from BNSF. Completion
of the yard, expected by June 2009, will make it easier for the
terminal to accommodate long freight trains, but more than a
place to stash rail cars, Ramsey represents the kind of
cooperative funding magic Oregon will need to see more of in
the near future to beef up its container capacity.
Jay Waldron, who hands over the title of Port of Portland
Commission president to former PacificCorp CEO Judi Johansen
this month, is more optimistic now about the port’s
prospects than he’s been during his six years as head of
the commission. Despite the fact that ports in Washington get
nine times more tax revenue than does the Port of Portland,
Waldron says that smart investments, helped along by
ConnectOregon funds — ConnectOregon II is expected to be
passed this legislative session — will help the port take
advantage of new opportunities.
“With bulk, low-margin freight we’ve been doing
great,” Waldron says. “With container freight
we’re positioning ourselves to do better.”
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