LISTED ports operator International Container Terminal Services Inc. (ICTSI) said it has agreed to terminate a deal to operate a container facility at a terminal of the Port of Portland in Oregon, US, due to labor issues that idled the terminal and led to the eventual departure of major cargo carriers.
In a disclosure to the Philippine Stock Exchange on Tuesday, ICTSI said its subsidiary ICTSI Oregon Inc. and the Port of Portland mutually agreed to terminate the 25-year lease agreement to operate Terminal 6.
This will relieve ICTSI Oregon of its $5-million yearly long-term lease payments effective March 31, which is still subject to approval by the Port Commission, ICTSI said.
In exchange, the Port of Portland will receive $11.45 million in compensation to rebuild the business, as well as add container handling equipment, spare parts and tools at the terminal.
ICTSI’s exit stemmed from a labor dispute with the International Longshore Workers Union (ILWU) ever since the company secured the 25-year lease contract in 2010.
The company’s $5-million per year lease provided steady revenue to the Port of Portland, but the disputes with ILWU “brought productivity at a standstill” in Terminal 6, international reports said.
This drove away major cargo carriers from Portland such as Hanjin Shipping, Hapag-Lloyd, and Westwood Shipping.
ICTSI said in its website that the Portland lease deal was its first venture in the U.S. After contract signing in May 2010, ICTSI formed ICTSI Oregon and took over Terminal 6 operations in 2011. Terminal 6 is a 78-hectare facility at the Port’s Rivergate Industrial District.
Incorporated in 1987, ICTSI is a port operator incorporated in 1987 mainly to operate, manage and develop the Manila International Container Terminal (MICT), which handles international container cargo at the Port of Manila. At present, it has operations and projects across the Asia Pacific, the Americas, Europe, the Middle East, and Africa.