Friday, March 3, 2017

ICTSI, Port of Portland Terminating 25-Year Lease

By Mark Edward Nero

Port management company ICTSI Oregon and the Port of Portland said Feb. 27 that they’ve mutually agreed to terminate a 25-year lease that the two sides entered into just seven years ago.

The agreement, pending Port Commission approval, allows ICTSI Oregon to be relieved of its long-term lease obligations regarding operation of the container facility at Portland’s Terminal 6, effective March 31. In exchange, the port is expected to receive $11.45 million in compensation to rebuild business, as well as additional container handling equipment, spare parts and tools at the terminal.

Portland signed a lease with ICTSI Oregon in 2010 in attempt to ensure a long-term funding mechanism for Oregon’s only deep draft international container terminal, but Terminal 6 has been hampered by labor problems in recent years, with the International Longshore & Warehouse Union allegedly using work slowdowns and stoppages as a tactic during a jurisdiction battle between it and an electricians union that dates back over five years.

The ILWU has said the work disruptions have been due to pay disputes and associated grievances. As a result of the issues, two shipping companies, Hapag-Lloyd and Hanjin Shipping, pulled out of calling at Terminal 6. Hanjin at the time represented 75 percent of the terminal’s traffic.

“Small businesses, farmers, agricultural producers, shippers and communities throughout the Columbia River region deserve and need a fully-functioning container terminal,” ICTSI Oregon CEO Elvis Ganda said. “Hopefully, this agreement with the port will make it possible for business to return to the terminal more quickly.”

“However,” he said, “ICTSI Oregon will continue to address the labor issues that gave rise to its decision to enter into this agreement and will pursue its legal claims against the ILWU.”

Port Executive Director Bill Wyatt said the lease termination was the best opportunity to launch a new strategy to restore carrier service for Oregon and Northwest shippers.

“While the global carrier industry continues to undergo rapid change, we now have a new path to redefine our future in this business and launch new strategies to bring the terminal back to life,” he said in a statement.

The port says it plans to engage with a broad range of stakeholders including ocean carriers, shippers, railroads, truckers, barge operators, terminal operators and labor to create a new plan to bring business back to the terminal.