What’s the Impact of Hanjin’s Exit?

Last week it was reported that container shipper Hanjin will stop calling on the Port of Portland in January, this morning the Business Journal starts to figure out the impacts.

I expect that some will begin speculating about what this might mean for development of terminals on West Hayden Island. I honestly don’t know the answer to that. I suspect that the loss of revenue (Hanjin represents 80% of the container traffic for the Port) on the Port’s income statement could cause some challenges in financing future projects. On the other hand, the WHI terminals are intended for non-container traffic (grain, bulk minerals and possibly auto import/export), so this may not really provide any information about market viability.

In the short term it is certainly bad for the region’s carbon footprint. Trucking those containers to/from Puget Sound will use a lot more energy and output a lot more emissions than floating them up the Columbia does. And it will cost more, which will almost certainly get passed on to consumers here in some form.

I’m hoping Hanjin gets an earful from their customers and changes their mind.

23 Comments

23 Responses to What’s the Impact of Hanjin’s Exit?

  1. Dwaine Dibbly
    October 21, 2013 at 12:24 pm Link

    I’m generally pro-Labor, but when Hanjin started diverting ships to other ports during the labor problems at the Port, I think this move was set in place. What does this mean for Portland producers, load containers here, truck them to Seattle, then put them on a ship? Anybody have any idea of what the added expense might be to have to do that? How many workers (Union and non-Union) will be affected. Does the WHI annexation make sense now? Couldn’t some of the shipping container space be re-purposed for bulk cargo?

    • EngineerScotty
      October 21, 2013 at 2:14 pm Link

      How much of this is union activity (there have been plenty of labor disputes at other West Coast ports), and how much of this is simple deepwater port-vs-river-port logistics? Portland will always have a disadvantage compared to deepwater ports like Seattle, Tacoma, and several in California. This isn’t the first time that container shippers have decided not to call on Portland–it almost seems that Portland gets container traffic mainly when the other West Coast ports are busy.

      How soon will it be before ideas such as building container terminals in Astoria or elsewhere, start to get kicked around?

      • Oregon Mamacita
        October 21, 2013 at 9:38 pm Link

        Scotty, do you think that Hanjin blaming labor issues in Portland could be saber rattling actually aimed at larger ports?

        I can’t imagine them pulling out of any port and not citing labor issues (just as a strategy).

        If they are thinking about Astoria, then labor issues in Oregon can’t be a real deterrent. It must be the water.

        • EngineerScotty
          October 21, 2013 at 11:44 pm Link

          Wouldn’t surprise me–though the shipping lines are not the employers of the longshoremen in question; the various ports are. But as noted above, Portland is a small part of Hanjin’s business, and Portland frequently sees container lines come and go. I’ve heard this dance before.

  2. Lenny Anderson
    October 21, 2013 at 3:25 pm Link

    Keep in mind that during the best of times, T-6 handles about 1% of West coast containers. I expect that even with Hanjin calling, lots of exports are already on the many container trains that run up to Tacoma & Seattle. Not sure of truck vs rail volumes, costs, etc., but generally rail is cheaper but not as quick.
    Also container exports out of T-6 are mostly ag products…straw cubes, frozen French fries, etc. so the effects may be felt more strongly in the interior, but ag prices for things like alfalfa, hay, etc. are so robust now it may not make much difference.
    The Ports big export/import numbers are wheat, minerals/autos respectively.

  3. Chris I
    October 21, 2013 at 7:59 pm Link

    Why is the default fall-back interstate trucking? These are shipping containers, so why don’t they send them via rail? The stacked container trains are extremely efficient.

    • Nathanael
      October 24, 2013 at 8:20 pm Link

      I would, in fact, expect to see a large boost in BNSF container trains from Seattle/Tacoma to Portland.

      The reason why trucking is the default is kind of stupid. Far too many ports do not have on-dock rail with direct transfer of containers from ship to train. Instead, they have stupid five-block or ten-block truck routes hauling containers between trainyard and port. This is, as I have said already, kind of stupid, and if you’re doing something this stupid, you start defaulting to leaving the containers on the trucks.

  4. Oregon Mamacita
    October 21, 2013 at 9:33 pm Link

    What about farmers in Eastern Oregon and Idaho? Will they be badly hurt by the loss
    of Hanjin?

    You know, I suspect that we will just take the grain terminals, put in bike racks and a brew pub, zone it dense residential and wait for a flood of Richard Florida’s creatives to fill the void left by Hanjin.

    With enough public money, back room deals and the best of intentions, magic happens.

    Seriously, this does sound like bad news, with a real trickle down effect. Maybe it will at least save Hayden Island from the current crop of planners.

    • EngineerScotty
      October 21, 2013 at 11:43 pm Link

      Mamacita,

      Hanjin is a container line–their business is taking big metal boxes (containers) which are full of stuff from baby clothes to barbecues, sticking it on a ship–and then sailing such things around the world to terminals where cranes lift said metal boxes onto the backs of trucks or trains (or even barges, which can ply rivers not navigable by ocean liners), which then transport them to their destinations. And vice versa.

      Grain, and other bulk commodities, are generally not shipped by container–instead this stuff is stuffed wholesale into a ship’s hold. The grain terminals aren’t likely to be effected by this. (And I don’t know anybody who suggests that the Port of Portland terminals–many of which are located in residentially-undesirable places such as Delta Park–would be better off repurposed as housing…)

      Portland has a big bulk commodity business (not affected by Hanjin’s decision) and a small(er) container business. We also handle a lot of West Coast (Japan and Korea mainly) auto imports; cars being too big to fit in containers and needing special handling.

      The loss of local container export will probably have a bigger effect on processed food manufacturers, many of who ship via refrigerated containers, but less effect on producers of raw materials and crops.

      • Oregon Mamacita
        October 22, 2013 at 12:16 pm Link

        Thanks, Scotty. You are the reason I read this blog.

        • Oregon Mamacita
          October 22, 2013 at 12:18 pm Link

          I was being sarcastic about the brew pubs in the grain terminals. What about the Zidell property tho- isn’t t going to be used for residential even though it could be industrial?

          • EngineerScotty
            October 22, 2013 at 2:56 pm Link

            The problem with the Zidell site (I assume you mean just south of the Ross Island Bridge) is that it’s not really an ideal industrial site, for many reasons. There’s no room to grow (even without SoWa); and being upstream from all the downtown bridges is inconvenient for a business that involves large boats.

            But given it’s proximity to downtown, it is a good location for mixed-use residential/commercial/light-industrial.

            So it’s being partially re-developed (some industrial uses will remain on the site). But it’s not being developed by a cabal of well-connected real-estate sharpies, who twisted Zidell’s arms into surrendering up a prime chunk of close-in real estate; it’s being developed by Zidell itself–who apparently have decided that real estate is a fine business to be in.

            http://zidell.com/the-yards/

            • Oregon Mamacita
              October 26, 2013 at 9:52 am Link

              Scotty,

              Has the city done a decent job of setting aside industrial land?
              I am concerned that the mania for residential has consumed some land meant to support jobs, and that the City Planners are gunning for golf courses because they did not do a good job of planning.

              I would also offer that Portland may indeed be built out for industry, and that growth may occur in our region, but not Portland and that’s okay. We’re Oregonians, right? Is it a tragedy if Oregonians from another city get some jobs?

            • Chris Smith
              October 26, 2013 at 9:58 am Link

              We do indeed have a shortage of industrial land. Whether we’re willing to convert open space to industrial land to fill that gap, or prepared to avoid that by letting industrial jobs go to other parts of the region, is going to be a major decision point in the Comp Plan process.

            • bjcefola
              October 26, 2013 at 10:50 am Link

              Notice that decision point includes a tradeoff. Less housing development on industrial land means more housing elsewhere, i.e. in neighborhoods.

            • Chris Smith
              October 26, 2013 at 10:55 am Link

              The distinction however, is that we already have sufficient zoned capacity for our anticipated residential growth for the next 25 years. We don’t have to upzone or add new areas of residential zoning to accomodate that growth.

              But we do have to add or upzone for industrial if we want to meet those projected needs.

  5. Lenny Anderson
    October 22, 2013 at 12:15 pm Link

    The lower Columbia ports, including Portland, is one of the largest grain export facilities in the world…not likely to change. If Paul Allen can’t buy out Cargill’s facility next to the Steel Bridge, who could?

    • Oregon Mamacita
      October 22, 2013 at 12:21 pm Link

      That’s a relief, Lenny. I would hate for Eastern Oregon to get a sucker punch from Hanjin.

    • joebobpdx
      October 22, 2013 at 6:35 pm Link

      Sorry to be nit-picker, but it’s Dreyfus, not Cargill at the Steel Bridge. But each of them is richer than God and about as secretive.

      To the point of the article, it seems like Portland and containers are a loser’s game. And that’s too bad.

      • Anandakos
        October 22, 2013 at 8:56 pm Link

        JoeBob,

        No it’s not; it really doesn’t make sense to land containers here. There is relatively small local consumption — it’s the fact that local delivery in California consumes nearly 1/4 of the TEU landings at Los Angeles/Long Beach that keeps that very expensive port in operation.

        Our relatively small local consumption can easily be met by drayage from Seattle/Tacoma.

        And the reefer boxes that Scotty talked about can be drayed to Seattle as easily as they can be drayed here. Producers of frozen and other refrigerated foodstuffs — apples from Wenatchee, fresh produce from the Yakima valley and frozen seafood — are not going to send their products on trains for the short distances involved.

        No, we’re about 100 miles up a deep but not deep enough river and we only have a couple of million potential consumers close by. It makes a lot more sense to use Puget Sound ports to serve our local consumption needs.

        Now cars? That’s a business that makes sense here: they’re relatively light for the value so the river depth isn’t a limitation and nearly all of them leave on a train car.

        • Nathanael
          October 24, 2013 at 8:24 pm Link

          Producers of containerized stuff in Oregon and Washington produce terribly low volumes and so they’re going to keep their products on trucks.

          However, imports… with a few million people in the Portland area, it makes perfect sense to run a container train down from Seattle or Tacoma to Portland on a regular basis. If there’s direct container transfer from ship to train (without an intervening truck) at Seattle or Tacoma — and if there’s a good train-to-truck intermodal container yard at Portland. I think both are true. This converts long-haul trucking (Portland-Seattle) into local trucking (…Portland-Portland), an entirely different and cheaper business.

          • Anandakos
            October 24, 2013 at 10:13 pm Link

            There is no direct to rail transfer anywhere in Puget Sound. Harbor Island has drayage within the terminal but many of the big cranes are squeezed between the east waterway and East Marginal Way. Containers which are landed along Marginal don’t have to be drayed very far; nothing like some are in LA. The UP has an entrance to Argo right off East Marginal and BNSF is right across the Highway 99 Freeway. But to get to both those yards, the boxes are drayed on busy city streets, not freeways.

            In Tacoma there’s no direct to rail, but the drayage is completely within the terminal as at Harbor Island.

            You may be right that ship to truck to rail to truck is the cheapest way to bring things down here, and I love it when the rails get new business. But I wouldn’t bet much on it. It’s only 160 miles which is a mighty short rail haul.

  6. Lenny Anderson
    October 22, 2013 at 7:44 pm Link

    Thanks for that correction, and you are right they are both bigger than God and tougher to figure out.

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