Commissioners of the Port of Portland last week voted to give up to $3.7 million in rent rebates ($308,333 per month) to ICTSI Oregon, the manager of its main container facility, because of reduced productivity linked to an ongoing labor dispute between the terminal operator and the International Longshore and Warehouse Union.
The action last week is on top of a program approved last month to give carriers a $10-per-container incentive to call at the port, not to exceed $1 million. Last year, the port handled 183,203 TEUs.
Last year the port also rebated $2.7 million to ICTSI Oregon.
ICTSI Oregon, which is a subsidiary of the Manila, Philippines-based International Container Terminal Services, Inc., has operated Terminal 6 on the Columbia River - Oregon’s only deep-draft container terminal - since February 2011 under a 25 year lease. This year’s two programs total to the same amount - $4.7 million - that ICTSI currently pays in annual rent for the terminals.
Josh Thomas, a spokesman for the port, said last May a jurisdictional dispute arose between the ILWU and International Brotherhood of Electrical Workers over jobs related to plugging and unplugging refrigerated containers at the terminal.
“It’s really only a couple of jobs, but it was the bigger picture jurisdictional issue, and that has yet to be resolved,” he said. He added there's ongoing litigation over the issue.
The two programs, with payments to carriers and ICTSI, are “aimed at sustaining the mission-critical nature of the terminal, keeping the gate open, keeping cargo moving while these longer term issues are resolved. These business disruptions have resulted in costs and when you have uncertainty with shippers, that is never a good thing because they start looking at their decision on where they route cargo,” Thomas said.
"Sustained productivity declines resulting from labor disputes at Terminal 6 have caused operating costs to increase,” said a port press release. “Consequently, without any offset, terminal manager ICTSI Oregon must incorporate the economic impact from productivity declines into the already increasing rates charged to the container carriers calling Terminal 6. The rebate program provides an offset to the increased operational costs caused by the productivity declines to assist ICTSI Oregon in successfully concluding contract negotiations with carriers on mutually acceptable economic terms."
In addition to the ILWU-IBEW dispute, Thomas said the port was engaged in contract negotiations last year with the Marine Security Officers, Local 28 of the ILWU.
The port “saw some slowdowns, shutdowns, diversions related to those disputes and ended up causing a sustained reduced level of productivity at the terminal,” Thomas said. Local 28 reached agreement with the port on a new contract in December 2012.
The port said crane productivity at Terminal 6 dropped from around 27-29 net moves per hour to about 22-23 net moves per hour in May of last year for the services that the CKYH Alliance and Hapag-Lloyd and Hamburg Süd bring to the port. He said the port also had backups at the gate to the terminal.
Last week, Hapag-Lloyd said for cargo moving to, from and via Portland, it will apply an additional $150-per-container charge "due to considerably higher terminal costs."
Thomas said since December ICTSI has been in negotiating terminal use agreements with carriers, and in January, the port commission approved a carrier-incentive program.
ICTSI has come to a use agreement with Westwood Shipping, which operates a westbound transpacific service but has yet to complete deals with Hanjin for the CKYH transpacific service or Hapag-Lloyd and Hamburg Süd for their services, which operate between the U.S. West Coast and Mediterranean.
The port said for the maximum amount to be paid to ICTSI under the rent rebate program existing container services would have to be retained and the carriers would have to call at the same frequency as during 2012.
“In the event that there are changes in service levels during the rebate period, the port has the discretion to reduce payments in proportion to the service change. In addition, if labor productivity improves, then the port will have the ability to decrease the rebate payment to ICTSI to reflect the improved productivity and decreased operating costs," Thomas said.
Thomas said the ILWU has also sued the port, its commissioner and staff over the rebate programs.
Craig Merrilees, a ILWU spokesman, said ICTSI has been sued by both the union and employer Pacific Maritime Association over the electrical work.
The ILWU said the lawsuit, which was filed on June 13, 2012, seeks an order requiring ICTSI to comply with the Pacific Coast Longshore and Clerks’ Agreement, which establishes jurisdiction between the ILWU and all PMA-member signatories. It said ICTSI joined PMA in 2010, but has claimed it has a right to look at efficiencies.
Is the Port of Portland getting in the middle of a dispute between one of its tenants, ICTSI and the ILWU?
Thomas said that has been the ILWU’s contention, but he added “we would disagree with that 100 percent… This has been a contractual obligation since when the terminal opened in 1974. The IBEW employees have performed the work—it was part of the agreement when we operated, and it was part of the agreement when ICTSI operated it.” He noted the Port of Portland was not a member of the PMA. - Chris Dupin