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Brave ICTSI quits Portland, pays US$11.4 million to break Terminal 6 lease

MANILA's International Container Terminal Services Inc (ICTSI), the daring port operator which ran terminals in Syria and Iraq, has finally been defeated by Portland, Oregon, and its impossible situation at Terminal 6.

In exchange, for US$11.45 million, the Port of Portland will allow ICTSI Oregon Inc to break its 25-year lease on March 31 and cease to operate the container facility at Terminal 6, leaving behind container handling equipment, spare parts and tools.

While the low price of crude oil has since entered the picture, the main reason for departure was a tiny, but chronic labour dispute with the International Longshore and Warehouse Union (ILWU) over two jobs of plugging and unplugging reefer boxes at the waterfront terminal.

This led to legal paradox in which ICTSI's lease agreement with the port authority, demanded the disputed jobs go to the electricians' union, but that contradicted the terms of a coast-wide settlement the port operator had co-signed with fellow employers, which gave all waterfront jobs to the ILWU.

This led to courtroom situations in which the ILWU made common cause with the employers' Pacific Maritime Association (PMA) against ICTSI and the Port of Portland with both endeavouring to uphold the terms of the lease agreement while the dockers and their employers fought to uphold the larger union contract.

Court cases resolved nothing other than petty matters such as whether a go-slow could continue or could not depending on specific circumstances. Labour boards then horned in.

Twice in 10 weeks in 2015, the National Labour Relations Board (NLRB) affirmed an administrative court ruling that the ILWU violated federal law by engaging in coercive activity against its employer. From which damage suit arose against the union by ICTSI - and are pending.

With the chronic labour trouble, the terminals main customers Hapag-Lloyd and Hanjin Shipping ceased to call and added to the build up further north on Puget Sound at the ports of Seattle and Tacoma, which were rapidly developing the critical mass for a joint marketing strategy and eventual merger.

Soon Portland customers boiled down to obscure Westwood Shipping with its 2,000-TEUers rotating through Vancouver, Longview, Portland, Sendai, Hitachinaka, Shimizu, Yokohama, Tokyo, Busan, Osaka, Nagoya, Shimizu, Tokyo, Everett, Tacoma and back Vancouver.

Meanwhile low oil prices entered the picture, making the Port of Portland less economically viable for container shipping, said port boss Bill Wyatt.

Low oil prices has caused trucking rates to drop well below expected levels, making direct container service to the Puget Sound region less competitive.

"Trucking up to Puget Sound is a lot less expensive than people thought it was going to be a year and a half ago. Freight rates are very cheap right now, " he said. "I don't expect to see any new carriers here for a while," he said. "With the cost of oil where it is."

But ICTSI Oregon CEO Elvis Ganda said: "Small businesses, farmers, agricultural producers, shippers and communities throughout the Columbia River region deserve and need a fully-functioning container terminal.

"ICTSI Oregon will continue to address the labour issues that gave rise to its decision to enter into this agreement and will pursue its legal claims against the ILWU," Mr Ganda said.