Portland's small businesses suffer from Hanjin's departure, port disputes – OregonLive.com
When David Kahl moved the distribution center for his ergonomic desk company from New Orleans to Portland last June, he thought he was making a smart decision.
The Swan Island location was perfect: it was cheaper than operating out of the Big Easy, it was just a few miles from the headquarters for his company, Ergo Depot. The close proximity to the port, where Kahl receives desks from China, made for shorter lead times, too.
But the decision didn’t look so good Tuesday, when Hanjin Shipping Co. announced it was going to stop servicing the Port of Portland, taking the bulk of the port’s cargo-container business with it. As the primary link between Portland and Asia, Hanjin was a lifeline for local businesses wanting to bring in raw materials and manufactured goods or to export agricultural goods.
Now, those businesses are forced to consider other shipping routes, all of which are slower and cost more, or other distribution options entirely. For Kahl, this would mean shipping his goods into Seattle or Oakland and then trucking them to Portland.
“It’s unfortunate because we made a big bet on Portland when we moved our distribution center here,” he said. Hanjin’s departure, prompted by ongoing friction between the longshore workers’ union and the company that manages the Port of Portland’s Terminal 6, “puts us at a measurable disadvantage,” Kahl said.
Ergo Depot only brings in about four containers a month, but it can’t operate without them. And right now, that problem extends beyond Hanjin and Portland. Ergo Depot has been on backorder status for about three weeks now, as strikes, lockouts and alleged slowdown tactics have clogged ports up and down the West Coast amid a broad contract dispute.
Kahl was expecting a container on Feb. 3, but it was diverted to Seattle and is just now being offloaded because of the congestion. After the container is unloaded from the ship, Kahl will need to hire a trucker, which will cost him even more now than normal because of the increased demand tied to the regional backlog.
While Kahl estimates this process will only add a few days to his shipping process in more normal times, his import costs will rise about 30 percent.
For Don Brostoski, president of Golden West Billiards, the congestion means he can’t easily get the slate for the pool tables he manufactures in Southeast Portland – and can’t ship his finished products out to customers without far more hassle.
Brostoski is still waiting on a container he was supposed to receive around Christmastime. It was rerouted to Seattle, and he expects it will take weeks more to get it on the rail down to Portland.
Meanwhile, business stagnates. He’s had to reduce hours for 20 of his 35 workers, because without raw materials, they can’t build pool tables. And his clients are growing impatient as they wait to receive tables they ordered months ago.
“It’s creating a hell of a hardship,” he said.
But Brostoski said he plans to keep his headquarters in Portland regardless of extra shipping costs. He’ll ship his slate in through Seattle, Canada, or even Houston. The added cost of bringing it into Portland by rail will increase his costs, but that’s a hit Brostoski’s willing to take.
Kahl, however, is not. Without Hanjin in the picture, keeping his distribution center in Portland might not be sustainable.
“We certainly need to think about moving our distribution center,” he said. “If someone doesn’t step in or Hanjin doesn’t come back, there’s no point in being on Swan Island anymore. There are no swans and it’s not an island, so there’s not really any point. It sounds a lot more glamorous than it is.”
— Anna Marum