Northwest Container Services Inc.
Not all news is good news.
Three weeks ago, when the Port of Portland announced it had launched rail service out of its Terminal 6, after a multi-year stoppage of rail and storage container transfer, it seemed a cheery way to start the new year. But it was followed by a stark message in a consultant’s report: The Port must diversify at T6 to offer a variety of pass-through options such as multi-modal, breakbulk, cars, etc.
The economic engine potential of movement of goods through the Port cannot be underestimated. A full one-third of Oregon’s economy is based on goods movement dependent industries, with as many as 93,000 U.S. jobs being supported by the goods that move in and out of Oregon. Experts estimate it’s a $300 billion economic impact of imports and exports that move around and through our state.
But the possible launch of rail service at the Port highlighted a particularly worrisome element: The Port is using both public settlement money and the heavy hand of rail service owner and billionaire Warren Buffet to try to recoup its substantial losses over the past several years by attempting to compete with private, commercial entities.
Many questions now arise about subsidizing such a move with a public entity to both duplicate and compete with established commercial companies. Why the duplication if the recommendations are to diversify? And, why the unnecessary and disruptive duplication in our local marketplace?
The settlement money, arising from the shutdown and successive dispute, awarded the Port about $11 million in public funds and drove out private operator ICTSI Oregon. And, during and after the stoppage, Oregon shippers were forced to absorb annual costs of more than $15.1 million. During these high-profile problems, the last remaining container shipment and logistics business at Terminal 6 were driven away.
Unlike other ports on the West Coast, Terminal 6 is publicly owned by the State of Oregon. Now with the questionable use of the $11 million in settlement money, the Port is going head-to-head with well established commercial entities. The result is that our own Port of Portland is actually underwriting new steamship service at other ports, including Tacoma.
Likewise, the Port’s new partnership is with both Buffet and BNSF Railway Corp., which is headquartered in Texas, a far cry away from local interest in improving Oregon’s local economy.
That the Port of Portland has resolved the longstanding disruptions and shutdown is indeed encouraging. However, these issues also highlighted why the Port got out of the container business; it lost millions and millions of dollars running the container terminal. Data show Terminal 6 as far back as 2003 did not reach quantitative nor economic capacity, only running at about 50 percent of capacity. Now, we wonder if this new partnership will continue throwing good money away.
During and after the shutdown, we in the private sector worked even harder, shouldered more costs, made new investments and grew this sector. Our company expanded and grew our jobs base.
The container-by-rail sector in the Pacific Northwest shows continued growth with commercial investments, and limited public dollar infusion. It just makes good sense for commercial entities already doing it to keep up the good work. For example, Northwest Container Services has capitalized $8 million in company growth, creating numerous local jobs.
In 2014, we retrofitted stacker machines with diesel particulate filters, so pollution can be mitigated — air quality has greatly improved and shows how private investment is working well.
And, on the horizon are the opportunities ahead in infrastructure growth from the Oregon’s newly minted $5 billion statewide “Connect Oregon” transportation package. One such leading proposal is poised to create a rail and intermodal logistics facility in our growing Willamette Valley. We partnered with eastern Oregon’s Port of Morrow on a similar investment and have moved more than 30,000 containers through there, where transport would have otherwise occurred on roadways.
Industry watchers agree the troubles of the containing shipping saga at Terminal 6 aren’t likely to go away anytime soon. Many now wonder if the Port of Portland’s expenditure of public money (and the loss of more than $15 million annually) to subsidize and duplicate out-of-market infrastructure and compete with efficient commercial providers is really the right policy for Oregon.
Gary Cardwell is divisional vice president for Northwest Container Services Inc., a commercial logistics provider headquartered in Portland, Ore., that transports more than 25,000 containers each year.