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A Hanjin ship loads at the Port of Portland's Terminal 6. Hanjin says it will stop calling on Portland in January, finding the port too expensive.

(Benjanmin Brink/The Oregonian)

Hanjin Shipping Co. Ltd., the Port of Portland's biggest trans-Pacific container carrier, confirmed Friday the shipping line intends to pull out of Portland, ending two decades of service to exporters and importers.

Ending weekly service would be a major blow to the Northwest economy, hurting big importers such as Fred Meyer and Columbia Sportswear Co. and numerous exporters that would have to pay more to truck containers to the Port of Seattle. The pullout in January would also end a $250,000 weekly payroll for longshore workers who load and unload the vessels at Terminal 6 in North Portland.

It could jeopardize, too, the international container terminal as a business entity, potentially pricing out the remaining two carriers, Westwood Shipping Lines and Hapag-Lloyd.

Portland has always been an expensive port, as shipping companies have to hire pilots and take the time to bring their vessels 100 miles up the Columbia River for relatively low container volumes. But a festering longshore labor dispute and increased terminal charges also appear to have taken a toll on Hanjin, a global company that badly needs to cut costs.

Jeff McEwen, Portland manager for the South Korean shipping line, said container handling costs and low longshore labor productivity helped make Portland too expensive.

“The actual charges have substantially increased, and when productivity doesn’t meet our norms,” McEwen said, “the cost goes up even more.”

Elvis Ganda, chief executive of ICTSI Oregon Inc., which operates the terminal, blasted the International Longshore and Warehouse Union in a statement emailed to The Oregonian.

“The ILWU's tactic of intentionally suppressing productivity at Terminal 6 to well below pre-labor dispute levels, resulting in increased costs, made this issue an important factor in Hanjin's decision,” Ganda said. “Having previously threatened in the summer of 2012 to send Hanjin packing, the ILWU's misguided aim to drive business out of Portland appears to have been achieved for the time being at great economic cost to this region and the interests of its own union members, many of whom will now be unable to find work opportunities locally."

But the ILWU issued a statement saying ICTSI was trying to blame others for its “failed business model.” The union said ICTSI tried in contract negotiations to increase rates charged to Hanjin, while insisting that workers speed up and abandon longstanding work practices. The most recent Hanjin-ICTSI contract expired Dec. 31.

“ICTSI intransigence in its negotiations with Hanjin is the reason for Hanjin’s decision to leave Portland,” the union statement said. “It's unfortunate that Portland continues to suffer from this Philippines-based carrier.”

Ultimately Hanjin’s decision could have as much to do with global shipping trends as local conditions. Hanjin has lost more than $100 million this year, one of many carriers to have incurred losses amid a glut in vessel capacity.

Port of Portland managers said Friday the decision may not be final, and pledged to do what they could to retain Hanjin or find a replacement.

“They have reached out to us,” said Sam Ruda, Port of Portland director of marine and industrial development. “Their senior vice president of sales, marketing and operations wants to come out here within the next two weeks and certainly talk to the Port and ICTSI.”

sent to customers Thursday and obtained by The Oregonian did leave an opening for reconsideration. “Hanjin Shipping will continue to review the resumption of direct call service based on changing circumstances,” it said.

Hanjin, which began its Portland-Asia service in 1994, pulled out at one point in 2001 and returned three or four months later.

Bob Coleman, president of the Columbia River Customs Brokers & Freight Forwarders Association, called Hanjin’s decision devastating.

“And there’s a whole bunch of people that need to stand up and do something. The Port of Portland, ICTSI, the ILWU needs to pick up production.”

Coleman, of Allports Forwarding Inc., said a withdrawal would hurt not only importers but exporters in eastern Oregon and Washington who ship their products by barge, truck and rail down the Columbia River. Exporters of products such as compressed hay, for example, have low margins that may not justify an extra $400 or $500 charge to truck a container to Seattle or Tacoma.

Each Hanjin vessel loads and offloads an average 1,600 containers per weekly call, according to the Port of Portland. Hanjin’s service represents about 80 percent of the container terminal’s volume, said Josh Thomas, a Port spokesman. He said the service supports an estimated 771 jobs in the region.

Longshore union members won’t lose all their work on the ships, because dockworkers will still load and unload any cargo shifted to Seattle. But members of Portland-area locals will take a hit, in addition to being locked out of Columbia Grain Inc. in Portland and United Grain Corp. in Vancouver as part of a separate labor dispute.

In connection with that dispute Friday, a lawyer for Tidewater Barge Lines released a video taped on one of the company’s tugboats claiming to show longshore picketers in boats blocking access to Tidewater’s grain barges. Attorney Michael Garone said the picketers were defying a preliminary injunction issued Tuesday by U.S. District Judge Ann Aiken, who ordered the union to stop targeting neutral parties in the grain dispute.

Union leaders maintain that restricting water pickets violates free-speech rights.

-- Richard Read