Iowa Public Television


Port Dispute Boosts Agriculture Shipping Costs

posted on July 18, 2012

PORTLAND, Ore. (AP) — With container ships avoiding the Port of Portland because of a labor dispute, companies that export agricultural products are confronting higher costs to get their cargo to alternate ports and ultimately to Asia.

John Neal, president of ORPAC Feed and Forage in Junction City, Ore., said Tuesday his business hasn't shipped anything in four days as it searches for a feasible way to get its containers to Seattle or California by truck or rail. He said the suspension is costing the company $10,000 per day and he might have to lay off some of his roughly 50 employees if the ships don't return soon.

"It's just going to add a lot more costs and reduce our profit margin quite a bit," Neal said.

The two main shipping lines that serve the port's Terminal 6 — Germany's Hapag-Lloyd AG and South Korea's Hanjin — have diverted their weekly ships to Seattle because of a work slowdown triggered by a dispute between two unions: the International Longshore and Warehouse Union, and the International Brotherhood of Electrical Workers.

More than 1,000 regional businesses depend on the container terminal to get their goods to or from international markets. Businesses such as SL Follen Co., a Portland-based exporter of hay and feed products, have paid upward of $1,000 per container to reroute their cargo to Seattle. Operations manager Vic Follen said the company recently used truck and rail to move about 10 containers to Seattle.

"We were able to use both of those options to get out of the jam," he said.

Portland's Terminal 6 is the smallest of the six container-shipping ports on the U.S. West Coast. Even before the slowdown, SL Follen sent most of its shipments through the Port of Seattle because it has more carriers and shipping lanes.

Follen said customers affected by the three-week dispute have been understanding. And, unlike some agricultural products, a brief shipping delay will not harm the hay and alfalfa pellets bound for Asia.

"In shipping, nothing ever goes perfectly right," he said.

The work slowdown and ensuing diversion of ships have been a bigger headache for Neal's company because it does not regularly use Seattle to send forage to Japan, Taiwan and South Korea. Moreover, Junction City is 100 miles south of Portland, making it difficult for truck drivers to reach Seattle and return home within their hours of work.

He described the reactions of his customers as "not positive." He noted than an already tight supply in drought-stricken South Korea can only be made worse by delays here.

Neal expressed concern that the labor dispute might persuade the container-shipping lines to abandon the Port of Portland, which is less convenient than other West Coast ports because it's inland, along the Columbia River.

"It's not a desirable port for any of the steamship carriers to really want to service," he said. "This may be just kind of pushing the future a little bit."

The unions are contesting the equivalent of two full-time jobs plugging in and unplugging refrigerated shipping containers known as reefers. The electrical workers have maintained the reefers for decades under an agreement with the Port of Portland. The question of whether they should continue to perform it arose after the port leased Terminal 6 operations to ICTSI Oregon Inc., a subsidiary of a company in the Philippines.

A federal judge appointed former Oregon Gov. Ted Kulongoski to help broker a solution, and the parties were negotiating Tuesday.

Neither side would comment on the progress of the talks.

Tags: agricultural exports agriculture exports Oregon Portland shipping