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.

ILWU Appeals NLRB Ruling

By Mark Edward Nero

The International Longshore & Warehouse Union has officially appealed a ruling by the National Labor Relations Board ordering the union and two locals to not engage in activities at a Port of Portland container terminal that violate federal labor laws.

The banned activities cited by the NLRB include engaging in slowdowns and work stoppages, and using threats and coercion to disrupt the operations of ICTSI Oregon, which operates Portland’s Terminal 6. On Oct. 1, the ILWU and locals 8 and 40 filed a petition with the US Court of Appeals asking it to review the labor board’s late-September decision, which affirms an earlier decision issued by Administrative Law Judge William Schmidt.

Portland’s labor issues are related to a jurisdiction battle between ICTSI, the ILWU and another union, the International Brotherhood of Electrical Workers, which date back to June 2012. The two unions fought over disputed jobs involving the plugging/unplugging and monitoring of refrigerated containers at Terminal 6.

Since then, workers have walked off the job numerous times due to what the longshore union calls “multiple pay disputes and associated grievances” associated with the “mismanagement” of the terminal.

Elvis Ganda, CEO of ICTSI Oregon said ICTSI is gratified by the NLRB’s September ruling, which rejected the ILWU’s legal arguments.

“Hopefully, this decision will bring us one step closer to ending the ILWU’s orchestrated and illegal campaign to undermine the success of Terminal 6, and to convincing the shipping companies to return to the Port of Portland,” Ganda said in a statement. “A fully functioning, productive Terminal 6 is critical to the regional economy and benefits local businesses, importers, exporters, farmers and workers across various industries – including rank-and-file ILWU longshoremen who have suffered a substantial loss of work as a result of their leaderships’ actions.”

Anti-Labor Slowdown Bill Introduced

By Mark Edward Nero

A Port of Portland-based maritime shipping terminal has helped craft legislation in the US Senate that could help prevent the type of maritime labor slowdowns at West Coast ports that disrupted domestic and international trade earlier this year.

The Preventing Labor Union Slowdowns Act of 2015 (PLUS Act) was introduced in the Senate June 18 by Republican Idaho Senator James Risch. It was the result of efforts by ICTSI Oregon, the terminal operating company for the Port of Portland’s Terminal 6, to focus congressional attention on the ongoing problem of maritime labor slowdowns.

The measure would amend the National Labor Relations Act to make intentional slowdowns by maritime unions an unfair labor practice. Offending labor organizations would be subjected to federal court injunctions against slowdowns as well as damage claims to injured parties.

“If enacted, the PLUS Act will help ensure that a small number of workers cannot engage in unfair labor practices that threaten our nation’s economic prosperity and hold our economy hostage,” ICTSI Oregon CEO Elvis Ganda said.

ICTSI Oregon representatives recently made trips to Washington, DC to propose and build support among congressional lawmakers and trade associations for reasonable maritime labor law reform, and the company says it has worked closely with Sen. Risch and his staff to finalize the PLUS Act for Senate consideration.

ICTSI has been locked in a battle for about three years with the International Longshore and Warehouse Union, which the terminal operator has accused of intentionally slowing down productivity by about 47 percent in 2014 as part of a labor dispute.

“This legislation represents an important change to maritime labor law that will go a long way toward ensuring a more stable work environment at West Coast ports, one in which innocent parties are not subjected to severe economic damage by unfair union slowdown tactics,” Ganda said.

The PLUS Act has been referred to the Senate Committee on Health, Education, Labor, and Pensions. More about the bill can be read at https://www.congress.gov/bill/114th-congress/senate-bill/1630

Hanjin Planning Port of Portland Exit

Hanjin Shipping says that because of escalating costs, it will cease its direct-call service to Port of Portland as part of its Pacific Northwest Hanjin Express Service (PNH) effective January 2014.

With the change, all shipments currently being served via the Port of Portland will be rerouted through the Seattle or Tacoma ports, according to an Oct. 17 letter to customers. All other port calls on the PNH service are expected to remain the same.

“Decision to stop Portland port call service comes with much difficulty knowing the level of appreciation received from our customers with this exclusive service in and out of great State of Oregon,” the letter reads in part. “However, the cost of serving this port has escalated significantly this year to deter us from maintaining quality service which you have come to expect.”

Hanjin is the largest container carrier calling at Portland’s Terminal 6. The service represents about 80 percent of container throughput at the terminal, averaging about 1,600 containers per week. Hanjin has had a presence in the area since 1994, and has contracts with many of the area’s largest shippers.

The departure of Hanjin would leave Hapag-Lloyd, Hamburg Süd and Westwood Shipping as the remaining direct calling carriers at Terminal 6. The port says the change would not affect other business lines such as autos, minerals, grain, steel or liquid bulks.

Hanjin leadership staff is expected to meet with officials from the port and terminal operator ICTSI Oregon in coming weeks. Meanwhile, Hanjin will continue weekly direct calls at Terminal 6 for the duration of the calendar year.

“Hanjin has been a valued customer of the port for almost 20 years and we continue to believe that they have a valuable container shipping franchise in this market,” Port of Portland Chief Commercial Officer Sam Ruda said in a statement.

Port of Portland Approves ICTSI Subsidy

Just a month after it approved a temporary container subsidy plan to boost business at its struggling Terminal 6 facility, the Port of Portland has sanctioned a subsidy for the terminal’s operator, ICTSI Oregon.

On a majority vote during its Feb. 13 meeting, the nine-member Port of Portland Commission authorized as much as $3.7 million in rent rebates to ICTSI, which operates Terminal 6 under a 25-year lease. The vote was 6-1, with one abstention and one board member was absent.

Commissioner Tom Chamberlain, president of Oregon AFL-CIO, was the abstaining member, while the lone vote against the subsidy was cast by Commissioner Bruce Holte, president of ILWU Local 8. In explaining his opposition to the rebate plan, Holte called ICTSI Oregon a “failed enterprise” that the port must “walk away” from.

No tax dollars are involved in the subsidy: the rent rebate, effective during the 2013 calendar year, comes directly from the $4.7 million in annual rent received from ICTSI Oregon, with the amount not to exceed $308,333 per month. The port says it intends the payments, which take the form of rent reductions, to be savings that ICTSI can pass on to shipping lines so the ocean carriers continue bringing vessels to Portland.

Commission President Jim Carter said the rebates are viewed as just a temporary measure.

“Moving forward, we must stay focused on long term solutions,” he said. “The end game is keeping the container terminal operating.”

The agreement requires that existing container services are retained and that the carriers call at the same frequency as during 2012. If there are changes in service levels during the rebate period, the port has the discretion to reduce payments in proportion to the service change. Also, if labor productivity improves, the port has the ability to decrease the rebate payments.

Under a similar rebate plan, which was approved on a 7-2 vote Jan. 9, a $10 per container subsidy is being given to carriers calling at the facility, with the amount to be doled out capped at $1 million. Like the newly approved rebate plan, the money comes from ICTSI’s rental payments.

“The container terminal has been a mission critical part of our marine operations and we are doing everything we can to ensure it remains that way,” Sebastian Degens, the Port of Portland’s general manager of marine and terminal business development, said. “This is a delicate and complicated phase of a relatively new terminal lease arrangement. It is in our shared interest to ensure it is successful and that our customers have certainty of continued, reliable service through Terminal 6.”

NLRB Awards Portland Jobs to Electricians Union

The National Labor Relations Board has ruled that disputed jobs hooking and unhooking refrigerated containers at the Port of Portland’s Terminal 6 should go to union electricians, rather than a longshore workers union that had tried to commandeer the work.

In a five page decision issued Aug. 13, the three-member NLRB panel said that after reviewing all the information presented before it, it believed that the work in question should be performed by members of the International Brotherhood of Electrical Workers, not the International Longshore and Warehouse Union.

The dispute dates back to 2011, when ICTSI Oregon entered into a 25-year agreement with the port to operate the dock at Terminal 6, and chose to honor a collective-bargaining agreement between the port and the District Council of Trade Unions, of which the IBEW is a member.

The IBEW has performed the work since operations began at the terminal in 1974.

The ILWU, however, began to claim that under the collective bargaining agreement between the ILWU and the Pacific Maritime Association – of which ICTSI is a member – longshoremen should be doing the work.

“After considering all the relevant factors, we conclude that employees represented by IBEW are entitled to perform the work in dispute,” the NLRB’s decision reads in part. “We reach this conclusion relying on the factors of collective-bargaining agreements and employer preference and past practice. We note that the factor of employer preference, although not itself determinative, is entitled to substantial weight.”

To that point, the board specifically cited the testimony of the Port of Portland’s chief commercial officer, Sam Ruda, who said officials insisted during negotiations with ICTSI that “work jurisdictions be maintained” when the new terminal operator took over the facility.

In June, a noticeable drop in productivity began, coinciding with the escalation of labor dispute. ICTSI Oregon and other stakeholders labeled a work slowdown by ILWU Local 8. Although the union denied it was engaging in a slowdown, a federal judge in July issued an indefinite injunction banning slowdowns pending the results of the NLRB investigation.

The labor issues had resulted in fewer vessel calls at the terminal the past two months, although two shippers, Hanjin and Hapag-Lloyd, resumed service at the port after having bypassed Terminal 6 multiple times earlier in the summer.

The ILWU has yet to confirm whether or not it plans to appeal the NLRB decision.

Terminal Operator, Unions Reach Temporary Deal in Jurisdiction Dispute

The Port of Portland, terminal operator ICTSI Oregon and the International Brotherhood of Electrical Workers have agreed to temporarily allow members of the International Longshore and Warehouse Union to perform work at the Terminal 6 container facility that has been historically performed by the IBEW, which for now remedies a bitter labor dispute.

Under the agreement, which was announced July 3, the ILWU will handle the plugging, unplugging and monitoring of refrigerated containers at the terminal until the National Labor Relations Board rules on a jurisdictional dispute case the ILWU has filed. Under the dispute, the ILWU says its contract with the Pacific Maritime Association requires the terminal operator to hire longshore workers.

“We are optimistic that this represents a positive first step in resolving the ongoing issues that have taken place at the terminal,” Port of Portland chief commercial officer Sam Ruda said of the agreement.

As part of the interim arrangement, IBEW electricians have agreed to stand down and avoid any disputes with the ILWU at the terminal while the issue of jurisdiction is considered by the NLRB.

Also under the deal, the port has committed to assign other work to its IBEW employees so that they won’t be displaced and suffer economically due to the lost work assignments. Also regarding the labor dispute, a federal judge issued a 10-day restraining order, also July 3, in response to a request filed by the NLRB to address the weeks of work stoppages and slowdowns at Terminal 6.

In his ruling, US District Judge Michael Simon barred longshore workers from “engaging in slowdowns, stoppages, withholding of services, or threatening, coercing or restraining ICTSI Oregon Inc., or any other person engaged in commerce” over the 10-day period. Enforcement of the order’s provisions has been assigned to the U.S. Marshals. On July 4, the Cape Manila, a 696-foot container ship operated by German-based Hapag-Lloyd called at Terminal 6 and no problems with work flow were reported during the day.

Federal Judge to Hear Portland Labor Dispute

Arguments are scheduled to take place before a federal judge June 22 regarding a request by the National Labor Relations Board for a court order barring a work slowdown by disgruntled union members at the Port of Portland’s Terminal 6.

A hearing is scheduled for 1:30 pm in US District Court, with Judge Michael Simon presiding. The NLRB wants the court to issue a temporary restraining order against International Longshore and Warehouse Union Local 8, which the labor board says is conducting a work slowdown as part of a dispute at the terminal.

The labor board’s litigation followed similar unfair labor practice charges against the ILWU by the Port of Portland and terminal operator ICTSI Oregon. All three complaints contend that the union began the slowdown as part of a dispute over labor jurisdiction.

The ILWU is attempting to claim work through the District Council of Trade Unions that’s historically been performed by another union – the International Brotherhood of Electrical Workers. The disputed jobs involve plugging/unplugging and monitoring refrigerated containers at Terminal 6.

Although the ILWU says its contract with the Pacific Maritime Association requires the terminal operator to hire longshore workers, the work in question at Terminal 6 has been performed since the early 1970s by the IBEW under a collective bargaining agreement with the port launched at commencement of terminal operations. When the port transitioned control of container terminal operations to ICTSI Oregon in 2001 under a 25-year lease, continuation of the IBEW work was included in the lease terms.
Although the longshore union has denied engaging in an orchestrated slowdown, since June 6, operations at Terminal 6 have slowed at times to the point that incoming drayage trucks have been kept waiting in line for hours or had to be turned away.

At the time of the hearing on whether to issue an injunction against the union, Judge Simon is expected to also consider an ILWU request that ICTIS Oregon be ordered to hire longshore workers for the jobs now held by IBEW members.

ICTSI Oregon Receives Business Award

ICTSI Oregon, the company that runs the container and break bulk operations at the Port of Portland’s Terminal 6, was awarded the Foreign Direct Investment Business Award during the International Awards and Scholarship Dinner in Portland on May 15.

The awards, which are presented annually by the Oregon Consular Corps and the City of Portland, honor globally-focused businesses throughout the state.

The award was presented to ICTSI Oregon CEO Elvis Ganda by Portland Mayor Sam Adams and Jose L. Cuisia, Jr., the Philippines’ ambassador to the US.

ICTSI Oregon began Terminal 6 operations in February 2011 as part of a 25-year lease it negotiated with the port in 2010.

“It is an honor to be recognized alongside other successful colleagues from the business community in our region,” Ganda said regarding the award. “Our first year in Portland has been characterized by a lot of hard work and long hours, and we appreciate the recognition of how our investment and growth positively impacts the local economy.”

The Port of Portland saw a nine percent increase in container traffic and a 27 percent increase in full export containers in 2011, something it partly attributes to the presence of ICTSI. Productivity is also up, and last May the longstanding single shift production record at Terminal 6 was broken, with moves averaging 47.75 gross moves per hour, according to the port.

In addition to ICTSI Oregon, other honorees during the business awards included the Intel Corp., which received the Global Leader award; Columbia Steel Casting Co., which was presented with the Export Leader honor; Chris King Precision Components, which received the Small Business Exporter award; and DECK Monitoring, which was honored with the Small Business Exporter award.

TEU, Tonnage Numbers Jump at Port of Portland

For the second straight year, the Port of Portland handled the third-most tonnage in its history, as 2011 totals improved upon results for 2010. Year-end reports show a two percent increase, with 13.37 million tons handled compared to 13.12 million the year before.

Growth was driven primarily by container volumes, which improved by nine percent, going from 181,100 twenty-foot equivalent units in 2010 to 197,446 TEUs last year.
Full export containers grew by 27 percent, representing a jump in demand for regional products heading overseas.

The growth is partially accounted for by the February 2011 start of a 25-year lease of the port’s container terminal to ICTSI Oregon, which over the course of the year also helped full container imports improve by five percent to 92,785 for the year.

Aside from containers however, most other cargo categories stayed flat or showed minor declines in 2011.

Grain remained essentially unchanged at 4.7 million tons. Mineral bulks – primarily potash used in fertilizer and soda ash used in glass production – dropped by half of a percent, to 5.2 million tons.

Break bulk, mostly steel slab and steel rail, dipped 2.6 percent for the year to 941,120 tons.

Auto imports also lagged; the 234,048 vehicles handled by Portland in 2011 was an 11.5 percent year-over-year decrease. The port attributes the decline to multiple global factors, including effects of the earthquakes and tsunami in Japan and recent flooding in Thailand.

The disruptions to auto parts suppliers caused domino effects throughout the supply chain at factories, ports and dealerships.

The downward trend could turn around this year however, as Portland recently began exporting Ford vehicles to South Korea for the first time and Subaru has finished construction on a 413,000-square-foot facility in the port’s Rivergate Industrial District that includes auto parts distribution, a service training center and regional offices.