The Port of Coos Bay hopes to turn two vacant parcels into a large container shipping terminal. It would transport imported goods on a port-owned rail line to a freight hub near Eugene.Adriana Gutierrez/The Oregonian

Lots in the north point of Coos Bay were once piled high with lumber, as ships waited by the docks to take wood products overseas.

But today, many of Oregon’s lumber mills have contracted or closed. With them have gone the ships by the dock, and many working-age locals have moved away, too.

Some local officials say a $2 billion plan for a major shipping terminal in the city could change all that. They say the port could bring all manner of imports to the Pacific Northwest and then the rest of the continent, and send Oregon crops and other exports overseas. And, they say, it could employ 2,500 to load and unload as many as 1.2 million shipping containers a year.

The idea is gaining support, and not just locally. Oregon senators Ron Wyden and Jeff Merkley, along with Rep. Peter DeFazio, are asking for $1.24 billion in federal infrastructure funds.

“The Mega Grant program was meant to support major infrastructure with regional significance,” Merkley said, referring to a grant program housed in the U.S. Department of Transportation. “We realized in these last two years that we do not have enough port capacity on the West Coast. It has been a huge part of our supply chain challenge, and this project would increase that West Coast capacity by 10%.”

Wyden said he expects a decision by year’s end.

Backers envision the Port of Coos Bay would be mentioned in the same breath as the much larger ports of Los Angeles-Long Beach and Seattle-Tacoma. But Coos Bay, 80 miles from the nearest interstate and more than 200 miles by road from the state’s population center in Portland, might not seem the likeliest candidate for a major shipping terminal.

Experts say smaller ports are not unheard of, however, and Coos Bay’s location might give it some surprising advantages. It offers easy access to the massive ships crisscrossing the Pacific Ocean. Trips to and from certain major ports in Asia, like Shanghai and Yokohama, are nearly 700 miles and 650 miles closer from Coos Bay than Los Angeles-Long Beach, respectively.

David Kratochvil, a logistics expert who chairs the Supply Chain and Logistics Management Council at Oregon State University, said that the port could make up for its smaller size with a novel business strategy.

“They’re not going to be a Los Angeles, they’re not going to be a Seattle,” Kratochvil said. “They have to look at the logistics aspect and you’d have to design what I would call a logistics port … where things move immediately on arrival and there’s no delay.”

Kratochvil said port officials’ prediction they would handle 1.2 million containers a year is probably a bit high. He said the Coos Bay channel can likely only accommodate one or two cargo ships parked for offloading at a time, slowing down the containers handled per day.

Nonetheless, if Coos Bay were able to attract customers with small-volume, high-priority shipments, it could carve out a valuable niche.

“I think Coos Bay has a chance, offering something that nobody else does,” Kratochvil said. “Everybody’s looking for it.”

Boosters are pitching the idea as one way to avoid bottlenecks like the one caused by COVID-19 delays in 2020. And that may be a compelling pitch.

“Most people are wanting to get it done in one day — unload first and then loading the empty back on,” said Daniel Wong, global logistics professor at Portland State University. “That’s what makes it attractive for a steamship line wanting to call on your port. If I’m operating a large steamship line and you make me sit there for four days, I’m losing money.”

But it wouldn’t be the first time Oregon has tried to be a major player in ocean shipping.

Dwindling returns at the Port of Portland’s container terminal show the potential risk for such a venture, especially if the port does not have solid partnerships with international shippers. And labor unrest has the potential to upend terminal operations, as did a dispute between the longshore workers union and a private operator brought on by the Port of Portland.

“Let’s not forget the lessons of less than 10 years ago,” Wong said. “That was devastating.”

The Port of Portland was first opened in 1974, but by 2004, major carriers began backing out, citing high costs for outbound transportation.

Things continued downhill for the port in 2011, when they brought on a private terminal operator — International Container Terminal Services Inc. — which clashed with the International Longshore and Warehouse Union. The union staged a series of work slowdowns beginning in 2012.

In the years that followed, the container terminal lost virtually all its business and has yet to recover previous cargo volume even after ICTSI cut ties with the port in 2017 and the port began to recruit shipping companies back.

Reducing the state’s reliance on the Port of Portland is part of the pitch for the Port of Coos Bay, Wyden, Merkley and DeFazio said in their letter advocating for funding.

“It would be a complementary piece of Oregon’s port dynamic along with the Port of Portland,” Wyden said. “The Port of Coos Bay also can accommodate container ships that could never cross the Columbia bar.”

Coos Bay has long been looking for a new line of business to help make up for the timber industry’s decline. Most recently, a proposal for a liquefied natural gas terminal and pipeline failed to win supporters. As the Jordan Cove Energy Project grew less and less likely, priority shifted to the container terminal.

Container shipping forms the backbone of modern global trade. Standardized, stackable boxes go back and forth across the seas, carrying a load of electronics bound for stores one way and agricultural products back.

Most times, these containers end up at ports in major cities, where the infrastructure and job force can support their offloading.

“We did not have the infrastructure here that places like LA-Long Beach and Seattle-Tacoma or even the Port of Portland have, but that’s not a bad thing,” said John Burns, chief executive officer for the Port of Coos Bay. “We’re not inhibited by what was created 10, 20, 50, a hundred years ago that we’ve got to go back in and reconfigure to make it fit the model. For us, the beauty was that we could create something here that is otherwise not to be found in the U.S.”

The container terminal proposal includes two empty sites on the North Spit of Coos Bay totaling approximately 365 acres.

Key to the proposal is a short rail line that connects to the national freight network in Eugene. The spur has served the port for nearly a hundred years as a means of small freight travel.

The Port of Coos Bay hopes to turn two vacant parcels into a large container shipping terminal. It would transport imported goods on a port-owned rail line to a freight hub near Eugene.Adriana Gutierrez/The Oregonian

In 2009, the rail line was unexpectedly put up for sale. The owners of the line announced plans to tear up the rails — leading from the north end of Coos Bay and into Eugene — for scrap metal.

Caddy McKeown, a Coos Bay port commissioner in 2009, negotiated with the company to sell the rail line to the port for $13 million — the amount that Rail for America would have gotten for the scrap metal.

“It was a scary thing to do, but we needed to maintain the asset,” said McKeown, who now works for the company that’s leading the effort to develop the new terminal.

NorthPoint Development, based in Kansas City, invests nationally in real estate and e-commerce. It’s been involved in the container terminal proposal since 2017.

“A public entity could not take this on itself, a private entity could not take this on itself,” said John Burns, chief executive officer for the Port of Coos Bay. “It’s the merger of private and public enterprises to create these opportunities.”

It took millions more to get the rail line in working order. Lottery bonds and federal programs covered a little more than $80 million in updates to the line. The state of Oregon invested another $19.3 million for rail improvements, half of it a loan the Port will eventually have to pay back.

Projects completed on the rail line between 2007 and 2014 included fixes to the steel line, bridges and tunnels, ensuring that container freight could travel efficiently into Lane and Douglas counties. The most recent replaced railroad ties, allowing trains on the line to reach speeds of 20 mph instead of 10.

“What that means is that we can make the transit from Coos Bay to Eugene in 6 1/2 hours, and that’s critical because our railroad employees have hour restrictions on how long they can work,” Burns said. “The ability to take a train non-stop gives us the opportunity to operate more trains, more safely.”

Burns said upgrades to bridges along the rail line will continue through 2024. It also plans to add side tracks in spots to accommodate two-way traffic.

Updates to the port infrastructure may take longer.

The container shipping site on the North Spit is still waiting on a construction permit from the Army Corps of Engineers, a process that began in 2017. Once approved, NorthPoint President Chad Meyer anticipates the terminal would be able to take its first load of cargo within two years.

The Coos Bay channel will also need to be widened and deepened to accommodate massive modern cargo ships, the largest of which can be 1,300 feet long. That will cost between $350 million to $400 million.

NorthPoint has invested between $3 million and $5 million in the project on initial design and engineering, Meyer said. The entire project, including all updates to rail and the Coos Bay channel, will cost nearly $2 billion dollars, with between $1.2 to $1.7 billion in federal funding and an expected $500 million of private investment from NorthPoint.

Coos Bay Mayor Joe Benetti says the project is a good alternative to the Jordan Cove liquified natural gas proposal, which Benetti supported but which sparked fierce opposition over the project’s contribution to climate change by exporting liquified natural gas, a fossil fuel that releases carbon dioxide into the atmosphere when burned.

His worry now is the need for more housing in the city for construction workers and the longshore workers who eventually would load and unload ships.

“We’re hoping that we can stay ahead of it,” Benetti said. “But of course, this takes time.”

Other locals hope the project can reverse the city’s fortunes, long tied to the decline of the timber industry.

Steve Greif, a lifelong resident of Coos Bay and retired history teacher at North Bend High School watched as the dynamics of the town shifted. The population at the high school he taught at slowly declined over the 30 years he was teaching, until he retired in 2010.

“When the wood products (industry) went down, some people adjusted, some people left,” Greif said.

Coos County was the sixth poorest county in Oregon, according to 2020 data from the U.S. Census Bureau, with 16.1% of residents living below the federal poverty rate.

Tourism has taken on new significance as a local industry. In few places is that more clear than at what was once Central Dock, a lumber processing yard that now is home to restaurants, a brewery and retail stores. There’s been recent employment growth in education and health services as well, said Guy Tauer, regional economist for Coos, Curry, Jackson and Josephine Counties.

The port estimates that the project will create 4,500 new jobs — 2,000 in construction and 2,500 in full-time work at the port.

“That’s a huge increase if you look at its proportion to the overall economy,” Tauer said. “In Coos County, that would be a huge impact.”

Readers may direct questions or comments about this story to business editor Elliot Njus, enjus@oregonian.com. Our journalism needs your support. Please become a subscriber today at OregonLive.com/subscribe.

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