Port of Portland

Rolling on the riverThe Port of PortlandÔÇÖs Sam Ruda explains to Gary Toushek the myriad responsibilities that go with operating, maintaining, and marketing port facilities. Located on the Columbia River, 105 miles inland from OregonÔÇÖs coast, the Port of Portland includes four marine terminals, six industrial parks and four airports (Portland International plus three smaller, cargo airports).  Sam Ruda, director of marine and industrial development, with a handful of managers and 144 staff members, is responsible for the operation, maintenance and marketing of the marine facilities, as well as marine environmental planning and development, a number of different lines of marine business (such as containers, auto, bulk and grain) and the acquisition and development of industrial property. ÔÇ£The Port has a core competency in developing industrial parks,ÔÇØ Ruda says, ÔÇ£and we do it with a high standard. A lot of our past forays into this kind of development came about because we used to create a significant amount of land through the annual dredging of the Columbia River in order to maintain the navigation channel. This yielded dividends such as creating employment and expanding our industrial base. Disposal sites for the sand are still needed today, but due to environmental considerations associated with sediment removal, the Port is simply not creating large parcels of industrial land any longer.ÔÇØThere is a project now under way (scheduled for completion in 2010) for the deepening of the Columbia River navigation channel at a cost of $155 million. The states of Oregon and Washington are each providing $37.7 million, with the balance coming from the federal government. ÔÇ£WeÔÇÖre one of only a few waterway civil works projects that were itemized in President BushÔÇÖs budget,ÔÇØ Ruda says, ÔÇ£so weÔÇÖre delighted that this project has had the backing of this administration from the outset.ÔÇØ The navigation channel is being deepened from 40 to 43 feet to accommodate bigger and more fully loaded ships. Another project, now in development, is the Rivergate Corporate Center III, a new 113-acre, 2.5-million-square-foot warehouse and distribution development located near Terminal 6, the site of the portÔÇÖs container operation. ÔÇ£The market for industrial space has softened from where it was a year ago,ÔÇØ says Ruda, ÔÇ£but the near-term prospects look favorable, given the scarcity of industrial-zoned sites in the region. I believe this project has a bright future.ÔÇØ The structures being built will be LEED certified, which is no surprise since the city of Portland has been a leading advocate of LEED-designated buildings. ÔÇ£It offers some good disciplines in the engineering and construction engineering process, and itÔÇÖs an important component to environmental sustainability. My own experience with LEED has been positive, so IÔÇÖm a believer,ÔÇØ he adds. LEED is also factored into the new Port headquarters being constructed at Portland International (for completion in 2010) to consolidate marine, aviation and corporate staff. ÔÇ£The way the Port is structured,ÔÇÖ says Ruda, ÔÇ£we share a corporate overhead with the airport that includes HR, Public Affairs, Engineering, IT, Finance, Legal, Security and Public Safety [interfacing with agencies including the Transportation Security Administration, Coast Guard, Customs and Border Protection]. As such, the marine managers and airport managers are working with some of the same staff, and there are efficiencies in being co-located. Organizationally, there are no designated ÔÇÿmarine engineersÔÇÖ or ÔÇÿaviation engineers,ÔÇÖ as an example. Rather, the work is more project-specific. In a consolidated port with both aviation and marine functions, there can be a tendency to accentuate the operating differences and downplay the similarities, but in the end, there are more similarities.ÔÇØ Ruda and his managers have spent more than a year conducting a thorough strategic review of the PortÔÇÖs container franchise and terminal operating model, and examining options including public-private partnerships, which are gaining a good deal of interest nationally, especially pertaining to toll roads and airports. ÔÇ£ItÔÇÖs about sustainability of the franchise and not necessarily sustainability in the pure environmental context,ÔÇØ Ruda says. ÔÇ£While we certainly do a great job operating the container terminal [through a management agreement with Ports America], we evaluated the future of the business, the franchise, and felt that the right partner could be identified through a structured process leading to a long-term lease concession of the container line of business. ThereÔÇÖs no book out there that explains what model to follow to make a port work properly, but I think we have a solid process. In January we submitted a request for qualifications and received ten responses. The next step is the receipt of non-binding offers of valuation in late July.ÔÇØ Ruda says that this process should play itself out during 2008.Pursuing long-term clients for its terminals and industrial parks is one of the key goals for the PortÔÇÖs marine franchise, but Ruda contemplates what kind of planning for new facility development is appropriate in an uncertain global economy. ÔÇ£For some ports the mission has historically been about economic development through job creation,ÔÇØ says Ruda. ÔÇ£At the same time, there are different and often competing visions for what waterfront development should look like. Ports are increasingly in the business of justifying their existence given very real environmental pressures and encroachment with expanding residential development and the green space that often accompanies this type of urban growth. The stakeholder groups are vastly different and more organized and engaged than 15 to 20 years ago. Ports, therefore, need to focus on those areas where they bring real value to their communities and stakeholders. This will require increased focus on land use planning, infrastructure planning and integrated sustainable business practices into the operations. All of this is leading to a fundamental need to increase operating efficiency and utilization on an increasingly constrained Port footprint.ÔÇ£Nationally, weÔÇÖve had a lot of growth in container volumes in the last five or six years,ÔÇØ he continues, ÔÇ£both import and export, so appropriate decisions need to be made on the strategic planning side. We need to understand the development and market risk factors and establish a framework for allocating these risks appropriately to determine how much investment and debt a port should undertake. The idea that ÔÇÿif you build facilities, the business will followÔÇÖ is completely out of date. Making decisions on expansion and taking on debt financing is risky when the trajectory of the global economy is so volatile. Long term, I am very optimistic about growth, though I believe it will be much slower growth. ItÔÇÖs the short term that keeps me up at night.ÔÇØ ┬á