Consultant: Rails will aid port’s success

By Alexander Rich, Staff Writer
Friday, October 17, 2008 | 3 comment(s)

COOS BAY — Oregon International Port of Coos Bay officials don’t think the idled Coos Bay rail line is worth much, but they know it’s valuable for their future.

At a port commission meeting Thursday, consultants from Don Breazeale and Associates suggested Coos Bay could become the most competitive port on the West Coast — as long as it has rail service.

“We have to have a railroad to make that work,” said Jack Finholm, senior associate. “Access and egress is pretty difficult without the railroad.”

At the port’s request, Finholm and company president Don Breazeale met with 14 companies who deal with transpacific trade. Of those companies — such as Cosco, Evergreen and “K” Line — Breazeale said 85 percent felt the port should take over the railroad.

The consultants said there are many advantages to Coos Bay, including low-cost land, less congestion than Los Angeles and a shorter transit from Asian markets compared to Southern Californian ports.

That said, there are no guarantees businesses would come to the area, especially considering the aggressive sales and marketing organizations in California and Washington ports, Breazeale said. He recommended the port undertake a professional sales and marketing effort of its own to attract commodity, auto and, eventually, container ships.

But first, the port needs to resolve the rail line issue.

“The rail has got to be the answer,” Breazeale said.

The port should know whether it can buy the rail line from Central Oregon & Pacific Railroad by the end of this month. That’s when the U.S. Surface Transportation Board is expected to rule on the port’s feeder-line application and the railroad company’s abandonment application.

Port Executive Director Jeff Bishop said the economic downturn may actually benefit the port in its efforts to rehabilitate the line. He noted that steel and oil prices have dropped recently, making repairs less costly.

He also said the market for scrap metal has fallen, from $610 a ton at the start of the month to $275 a ton as of Oct. 15.

Given the change and the port’s argument that most of the value in the line is in the resale of its rails, Bishop said as of this morning the port is dropping its net liquidation value for the line to $2.3 million.

“If we see a radical decline between now and the end of the month, we may do another one,” he said.

Several people at the meeting said they were excited about the prospect of a container terminal coming to town. Others were pessimistic about the likelihood of businesses actually investing in the area.

Camby Collier of Barview asked how wide the channel would need to be to attract the shipping companies. The consultants said the largest ships coming to Coos Bay would be about four and a half stories tall. They would draw about 46 feet.

The port hired Don Breazeale and Associates as part of its due diligence in preparing plans to dredge the Coos Bay shipping channel to accommodate larger ships, Bishop said. The next phase of the dredging study will cost about $4 million, he said, and opposition groups were suggesting Coos Bay was not an attractive location to shippers.

“We wanted to make sure we weren’t wasting that $4 million,” Bishop said. “The commissioners wanted to have a reality check.”

The reality check came at a cost of $75,000, the consultants’ fee, Bishop said.

Bishop said port staff didn’t have a recommendation to present to the commission about the next stage of the dredging project.

“We’re all pretty much in the railroad business these days,” he said.

The port will return to the dredging issue next year, he said.