The Port of Portland is seeking $10 million from the Oregon Legislature to address financial deficits at Terminal 6, a crucial hub for international cargo.
The Port of Portland is seeking $10 million in state funding to assist with the financial losses incurred at Oregon’s sole international shipping container terminal, which handles imports and exports from all over the world.
The Port of Portland has officially submitted a request to lawmakers ahead of the upcoming five-week legislative session, set to begin on February 5th. In a letter addressed to the budget committee, the port highlighted the financial struggles faced by Terminal 6. Over the years, the facility has experienced substantial losses, with a projected deficit of $14 million expected this year.
The terminal serves as a vital link between Oregon’s consumers and industries, including agriculture, seafood, and retail. Its scope of operations goes beyond the transportation of shipping containers, as it also handles the import and export of cars and other bulky materials.
According to a letter written by Curtis Robinhold, the Executive Director of the port, the port has incurred financial losses in order to ensure that the terminal remains accessible for Oregon importers and exporters. Robinhold states that this practice has never been financially viable and that the port is facing a projected loss of $14 million this year. As a result, the port is requesting gap funding while they negotiate rate increases with carriers and search for a long-term lease with a third-party terminal operator.
Container operations at Terminal 6 contribute to the support of 1,500 direct and indirect jobs. These jobs include workers from the International Longshore and Warehouse Union, terminal operators, trucking firms, railroads, steamship agents, freight forwarders, and marine construction companies. The letter highlights that the terminal plays a significant role in generating over $20 million in state and local tax revenue through wages and businesses each year.
The Capital Chronicle managed to obtain a copy of the letter. In the letter, the port expressed its concern and warned that if there is no additional funding to cover the continuous losses related to container operations, they will have no choice but to consider terminating container service at T6.
The letter also emphasized that T6, the terminal, would still handle various types of cargo, even if container shipping were to cease. The letter assured that regardless of the future developments in container shipping, T6 would continue to operate as a functioning marine terminal.
The Port of Portland manages three airports, four marine terminals, and five business parks.
The port officials have expressed their desire to ensure the continued operation of the terminal.
Keith Leavitt, the chief trade and economic development officer for the port, expressed in a statement to the Capital Chronicle the significance of container operations at T6 for Oregon businesses and the regional economy. He emphasized the port’s dedication to preserving this service and highlighted their commitment to collaborating with the shipping community, industry stakeholders, and legislative leaders to determine the next steps.
Lawmakers are currently facing multiple crises in Oregon that require funding, such as affordable housing and drug addiction. However, they have not made any commitments to provide funding for the port project.
According to Senator Elizabeth Steiner, who co-chairs the Joint Committee on Ways and Means and handles budget requests, maintaining a strong container shipping capacity is crucial for Oregon’s economy. She emphasized that this request will be carefully considered alongside other important requests, such as those related to housing affordability and addressing the drug crisis, during the short session.
Terminal 6 is not only dealing with financial difficulties but also facing various other challenges. One such challenge is the restricted 43-foot depth of water in the Columbia River navigation channel. Additionally, Terminal 6 has a relatively smaller consumer base compared to cities like Seattle or Los Angeles on the West Coast. Moreover, ships have to travel a distance of 105 miles from the ocean to reach Portland, which adds to the transit time.
The terminal has faced numerous challenges over the years, prompting the recent request. Back in 2011, the port entered into a 25-year lease agreement with International Container Terminal Services, Inc. This decision was made in light of the port’s significant financial losses, totaling over $100 million in the preceding decade. However, the challenges did not end there. In 2012, a labor dispute between two unions erupted, centered around the question of who was accountable for tasks related to refrigerated containers. This led to work stoppages and legal battles, further exacerbating the terminal’s difficulties.
In 2017, following a study, the port and operator decided to terminate their 25-year agreement. Subsequently, the agency began exploring ways to establish a sustainable business model for container shipping. By 2018, officials acknowledged that relying solely on container operations was not financially viable.
In the past, there have been various attempts to address this issue, but they have struggled to gain traction. For instance, back in 2018, BNSF Railway launched a new initiative to transport ocean containers to and from the ports of Seattle and Tacoma on a regular basis. However, this operation was eventually discontinued in June 2022 due to challenges such as a shortage of rail cars and the high costs of operation. Consequently, the terminal experienced a decline in revenue.
In an effort to reduce costs, the port made the decision to decrease the number of days that the terminal gate is open, from five days a week to four. This change was implemented in April 2023.
The port has scheduled community forums in the upcoming months to engage with the shipping community.