4/14/2016

1

Port of Portland and the Regional Economy

Keith Leavitt, Chief Commercial Officer, Port of PortlandNorthwest Environmental Business Council

April 14, 2016

Outline

• Context

• Port Business Update

• Market Outlook

• Look to the Future

4/14/2016

2

• Oregon is the 14th most trade dependent state in the nation

• 80% of Oregon exports are goods: 20% are services

• In 2014, Oregon businesses exported $20.9 billion in goods. Imports to Oregon totaled $13.8 billion.

• Over 500,000 Oregon jobs were connected to trade.

• A total of 5,922 companies exported from Oregon locations in 2013. Of those, 5,247 (88.6 percent) were small and medium-sized enterprises with fewer than 500 employees.

Oregon Trade Dependent State

Port of Portland“The mission of the Port of Portland is to enhance the region’s economy and quality of life by providing efficient cargo and air passenger access to national and global markets, and by promoting industrial development.”

4 Marine Terminals 3 Airports 5 Business Parks

4/14/2016

3

Port of Portland Facilities

Strategically located at the intersection of two major highways, two rivers, two transcontinental railroads, upriver barge system and an international airport

Hillsboro Industrial Area

Economic Impact

• For every $1 collected in property tax by the Port, $6 is generated in property taxes around the region

• Other Port related economic impact:

– 1 in 13 jobs in the region

– $166.5 million in state and local taxes

– $5.8 billion in business revenue

– $1.7 billion in income

*Based on 2008 study

4/14/2016

4

General FundAviation

PDXMarine & Industrial

DevelopmentNavigation

General Aviation

Shared Services• Executive Administration

• Financial & Administrative Services

• Human Resources

• Legal

• Project & Technical Services

• Public Affairs

Port Financial Structure

Aviation Portfolio

4/14/2016

5

PDX – The Region’s Gateway• 3,300 acres, 3 runways

• 218,021 operations

• 16.85 million passengers

• 16 passenger airlines

PDX Results

• Best U.S. airport– Travel + Leisure (2013, 2014, 2015)

– Conde Nast Traveler (2006, 2007, 2008, 2010)

– J.D. Power (2015 Highest Customer Satisfaction)

• 53 non-stop domestic destinations

• 10 non-stop international destinations

4/14/2016

6

Expanded Air Service

• Non-stop international destinations: Tokyo, Amsterdam, Reykjavík, Frankfurt, Vancouver, B.C., Calgary, Toronto, Guadalajara, Puerto Vallarta, Los Cabos

• Service to 44 out of 45 top regional markets

Toronto

General Aviation

Hillsboro Airport (HIO)• Second busiest airport in Oregon with 186,402 operations in 2015

• 965 acres, 2 runways

• Business aviation focus with three Fixed Base Operators

• Intel air shuttle, Nike, and Columbia Sportswear corporate aircraft base

• Served by Customs and Border Protection fee-based facility

• Hillsboro Aero Academy is one of the largest combined fixed-wing and helicopter flight training schools in the western United States

Troutdale Airport (TTD)• Air traffic control towered airport with 129,033 operations in 2015

• 261 acres, 1 runway

• One Fixed Base Operator

• Two flight training schools

• Airport Master Plan study nearing completion

4/14/2016

7

Aviation Market Outlook

• Demand for air travel at record levels; PDX forecast for 2017 nearly 40% above recession

• International flights, Alaska, Southwest driving PDX growth

• Airline consolidation continues (Alaska/Virgin America)

• Air service to small communities at risk: Klamath Falls, Pendleton

• Cargo at PDX continues to grow

• E-commerce shipments to Asia present cargo opportunity12

13

14

15

16

17

18PDX Passenger Volumes (FY)

(in millions)Red text indicates estimates

2016-17 Air Service DevelopmentPDX Facility Investments • Rental car quick turnaround area

• Rental car/public parking shared use garage

• Terminal Core redevelopment

• Terminal balancing

• Concessions redevelopment

• Atlantic Aviation relocation and redevelopment

Air Service Expansion• Recruitment of Cathay Pacific cargo service

• Recruitment of Orlando and mid-continental markets

General Aviation • Hillsboro Airport Master Plan

• Troutdale Airport Master Plan implementation

2016-17 Aviation Initiatives

4/14/2016

8

Marine Overview

The Transportation AdvantageRoads, Rivers, and Rail

4/14/2016

9

Portland’s Working Waterfront

Air Liquide BNSF Lake Yard

Columbia Forge & Machine Works

McCall Oil and Chemical

Port of Portland Terminal 2

Union Pacific Railroad Albina Yard

Freightliner Corp

Hampton Lumber

Port of Portland Terminal 6Port of Portland

Terminal 5

Columbia SportswearSchnitzer

Steel

Port of Portland

Terminal 4

West Hayden Island

Linnton Energy Cluster

Siltronic

PacTerm

Shell Oil Terminal

ConocoPhillips

Louis Dreyfus and TEMCO grain

export facilities

Gunderson

Vigor

Evraz Oregon Steel

Advanced American Construction

4/14/2016

10

Portland

Medford

Missoula

Vancouver

Boise

Calgary

Edmonton

Saskatoon

Winnipeg

Thunder Bay

Toronto

Canadian Pacific RailCanadian Pacific Rail Canadian National Railway

Canadian National Railway

Union PacificUnion Pacific

BNSFBNSF

ChicagoKansas City

Denver

Detroit

St. Louis

Minneapolis

Salt Lake City

. Prince Rupert

North America Import and Export Gateway

Marine Terminals - The Region’s Gateway• 4 marine terminals

• More than 12.9 million tons of waterborne cargo in 2014

• Diverse cargo: Bulk, autos, mineral bulk, break-bulk, containers

4/14/2016

11

Marine Business Line Volumes

Autos

+16%

Breakbulk

Mineral Bulks

-3%

Grain

+20%

-20%

Containers

-96%

Significant New Port Tenant Investments

• Kinder Morgan/Terminal 4

• International Raw Materials/Terminal 4

• Columbia Export Terminal/Terminal 5

• Portland Bulk Terminals/Terminal 5

• Auto Warehousing Company/Terminal 6

4/14/2016

12

Terminal 6 Container Service Update

• Niche container port – multi-state region (OR, ID, WA)

• Terminal operator 25-year lease to ICTSI in 2011

• Ongoing Terminal 6 labor issues

• Loss of two container services (Hanjin and Hapag-Lloyd)

• Shipper access focus

• Recruitment efforts

Marine Market Outlook

• Columbia River sustained cargo growth: 2.5%/year since 1962

• Carriers industry overcapacity

• Despite low fuel prices, market is challenged; cyclical, not structural

• High value of US dollar

• Low commodity prices

• Low freight rates

• Upside potential with growing world middle class, long term growth in grain demand

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

196

2

196

7

197

2

197

7

198

2

198

7

199

2

199

7

200

2

200

7

201

2

Met

ric T

ons

(1,0

00’s

)

Coastwise Shipments

Coastwise Receipts

Foreign Imports

Foreign Exports

Columbia River Trends

4/14/2016

13

2016-17 Marine Business Initiatives

• Terminal 6 Labor-Management Resolution

• Carrier Marketing

• Statewide Shipper Solutions

• Auto Expansion

• Marine Facilities Master Plan

• Terminal 2 and Terminal 4 Cargo Development

Industrial Portfolio

4/14/2016

14

Industrial Land

• Port is the largest owner of industrial land in the State

• Significant generator of traded sector economic development

• Adequate supply of large, market-ready industrial property is competitive requirement for traded-sector investments

• Site readiness is not occurring at a pace to keep up with growing demand

• Brownfield redevelopment, including Portland Harbor, requires special focus within the Urban Growth Boundary

• Acquisition and development requires new business model to preserve and replenish General Fund capital

Industrial Properties Land Inventory

Rivergate- 2,780 Total Acres- 1,874 Acres sold and leased- 60.3 Acres available

Swan Island- 430 Total Acres- 5.5 Acres available

Portland International Center- 458 Total Acres- 20 Acres available

Troutdale Reynolds Industrial Park- 350 Total Acres- 14 Acres available in Ph. 1- 219 Acres in Ph. 2 and Ph. 3

Gresham Vista Business Park- 221 Total Acres- 179 Acres available

Hillsboro Properties- 142 Total Acres available

Total Acres – 4,382 AcresAvailability – 639.8 Acres

4/14/2016

15

Industrial Land Tenants and Owners

• MEPT: RivergateCorporate Center I, II, and III (Colgate & United Stationers, Subaru)

• Capstone: BybeeLake Logistics Center I and II

• Columbia Sportswear

• Georgia Pacific

• Oregon Transfer

• Evraz Oregon Steel Mills

• Nordstrom

Rivergate Swan Island PortlandInternational Center

Troutdale Reynolds Industrial Park

• Daimler Trucks North America (Freightliner)

• UPS

• CEMEX (Rinker Materials)

• Vigor Industrial (Portland Shipyard)

• FedEx Ground• MEPT: Alderwood Corporate Center

• Ceva Logistics

• OIA

• Silver Eagle

• Cascade Station Retail: IKEA, Best Buy and Sports Authority

• Embassy Suites, Starwood Aloft, Hyatt Place, Residence Inn Hotels

• ITT, Cascade Station Corp. Center I, FBI

Gresham Vista Business Park

• Physicians’ Capital

• Subaru Distribution

Troutdale Reynolds Industrial Park

4/14/2016

16

TRIP Phase 2 Mitigation & FedEx Ground Expansion

Gresham Vista Business Park

4/14/2016

17

Subaru Distribution Center Construction (GVBP Lot 4)

Industrial Market Outlook

• Industrial vacancy rate at or near historical lows

• Rental rate increases climb into double digits

• Continued strong growth in gross regional product

• 2nd fastest employment growth among the 50 largest metros

Portland Industrial Market Vacancy Rate

Source: Kidder Matthews

4/14/2016

18

2016-17 Air Service Development• Troutdale Reynolds Industrial Park

Phase 2 and Gresham Vista Business Park site readiness

• Industrial Land Inventory Update and Opportunity Assessment

• Swan Island Development – Daimler Construction

• Portland International Center Build Out

2016-17 Industrial Initiatives

Look Ahead: Major Issues

• Retain/expand international air service

• Terminal 6 Resolution

• Where/how to grow marine and industrial business

– Funding

– Superfund

– Brownfield redevelopment

– Alignment

4/14/2016

19

Questions?