Philippine terminal operator International Container Terminal Services Inc. (ICTSI) has announced that its subsidiary ICTSI Oregon Inc. and the Port of Portland, USA, have mutually agreed to end the 25-year lease agreement to operate the container facility at Terminal 6 as from 31 March 2017, reports The Philippine Star.

Following approval by the US Port Commission, ICTSI Oregon will be relieved of its long-term lease obligations. The Port of Portland will receive USD 11.45 mln in compensation to be used to rebuild business, as well as additional container handling equipment, spare parts and tools at the terminal.

Having struggled for years with unpredictable revenues from Terminal 6, the Port of Portland signed the lease agreement with ICTSI in May 2010. The agreement was to provide the port with a steadier revenue stream of about USD 5 mln per year in lease payments.  ICTSI Oregon started its operations in 2011. This became ICTSI’s first venture in the United States.

After a strong first year, ICTSI Oregon got entangled in a legal dispute with the International Longshore and Warehouse Union, which seriously affected the terminal’s productivity. In February 2015, Hanjin Shipping, that at the time accounted for about 80% of T6’s container volume, announced it would stop calling Portland, and a few months later Hapag-Lloyd followed suit. Since last May no vessels have been calling T6.

ICTSI Senior Vice President and Chief Financial and Compliance Officer Rafael Consing commented: “Terminating the contract to operate Terminal 6 at the Port of Portland will have no material impact as it represents only 0.1% of ICTSI’s consolidated revenue. Strategically, the cost of terminating the contract is reasonable, but the value accretion arising from the savings in recurring cost is materially compelling.”

ICTSI, which owns the Manila International Container Terminal, is involved in about 30 concession and port development projects across 20 countries, mostly in emerging markets of Asia Pacific, Latin America and Africa. In Europe and the Middle East it has port projects in Croatia, Iraq, Poland and Georgia.

In its most recent financial filing for 9 months of 2016, ICTSI reported a 12% volume growth, up to 6.4 mln TEU, a 5% rise in revenues (USD 835 mln) and a 4% rise in net income (USD 141.9 mln) as compared to the same period in 2015.