By Richard Read, February 13, 2013, The Oregonian
Port of Portland commissioners, struggling to keep shipping lines calling on the city, approved another subsidy Wednesday for their terminal operator in the face of continued longshore labor problems.
Commissioners voted 6-1, with one abstention, to authorize as much as $3.7 million in rent rebates to ICTSI Oregon Inc., which operates the Port’s international container terminal. The Port intends the payments, in the form of rent reductions, as savings that ICTSI can pass on to shipping lines so the ocean carriers will continue sending vessels to Portland.
The program comes atop incentive payments to shipping lines of as much as $1 million approved by commissioners last month. By using rental income for the subsidies, the commission avoids spending tax revenues. But together the programs would exhaust the Port’s entire 2013 rental income from ICTSI if the public agency spends the full amount authorized.
“It’s the most we can offer,” said Bill Wyatt, Port of Portland executive director, after the vote. “We’re going to do everything we can to preserve the flow of cargo and carriers here, because once that stops, the likelihood of starting it again is not great.”
The rebate program is the Port’s latest attempt to rescue Oregon’s largest international cargo hub, where a union dispute that broke out in June has snarled freight and caused ships to bypass Portland. Litigation continues over the dispute, in which the International Longshore and Warehouse Union claims the equivalent of two jobs performed at the North Portland terminal by members of the International Brotherhood of Electrical Workers.
The longshore union denies staging slowdowns at the terminal. But a federal judge found workers did slow work and ordered them to resume the pace of loading and unloading containers.
Port managers say productivity remains low, increasing costs for ICTSI and the three shipping lines that call on the terminal. Trucks backed up once again Wednesday for more than a mile outside Terminal 6 as drivers waited to pick up and drop off containers.
ICTSI’s contracts expired Dec. 31 with the ocean carriers, which are Hanjin Shipping Co. Ltd., Westwood Shipping Lines and a partnership between Hapag-Lloyd America Inc. and Hamburg Sud. The Port’s latest subsidy program is designed to help ICTSI reach contract agreements with the shipping lines.
In one of several federal suits, the San Francisco-based longshore union is trying to block Port subsidies approved previously for ICTSI. A union spokeswoman did not reply Wednesday to a request for comment on the new rent rebate plan.
Elvis Ganda, ICTSI Oregon chief executive, welcomed the plan but called on the union to boost productivity, saying the terminal cannot succeed unless it does.
Six of the Port commission’s nine members voted in favor of the rebate plan, one being absent from the monthly meeting. Commissioner Tom Chamberlain, president of Oregon AFL-CIO, abstained.
Commissioner Bruce Holte, president of ILWU Local 8, voted against. Holte read a statement saying commissioners should be allowed to see the financial terms of the expired Hanjin and Hapag contracts before waiving rent.
“ICTSI is a failed enterprise that cannot realize the profits that it expected given the constraints of its labor obligations in the U.S. environment,” Holte said.
“The Port has sunk funds in the enterprise but has received no measurable partnership from ICTSI in return,” Holte said. “At some point it must walk away and allow capitalism to work.”