The Northern California port says there is ample capacity to absorb cargo business at other Oakland terminals after a “unilateral” decision to depart by the joint operators of Outer Harbor Terminal LLC.
The second largest terminal at the Port of Oakland is planning to cease their operations and turn the terminal back over to the port by the end of March.
Outer Harbor Terminal LLC (OHT), a joint venture between Ports America, the largest stevedore and terminal operating company in the United States, and Terminal Investment Ltd. (TIL), the stevedoring affiliate of ocean carrier Mediterranean Shipping Company, said it “is developing a cooperative 60-day transition with the Port of Oakland to wind down operations and return the leased terminal property to the port.
“During this transition, OHT intends to run business as usual and to service its customers and vessels for the next 30 days,” the company said in a statement. “OHT expects to take an additional 30 days to complete the delivery of import and empty containers and transition out of the terminal. Import and export operations at OHT will be reduced or shifted to other terminals with the objective to maintain service at the Port with minimal disruption. OHT will work to achieve a successful wind down with a continued focus on both safety and service delivery.”
“We’re disappointed that Ports America is leaving,” said Port of Oakland Maritime Director John Driscoll. “But we’re in advanced discussions with our maritime partners here to prevent disruption to the Oakland business.”
The port said it “expects Ports America to meet all of its lease obligations until the two sides agree on an orderly transition of the property,” adding it has “engaged in prolonged discussions with Ports America about the operator’s future in Oakland.”
The Port of Oakland said “the decision to terminate the lease was made unilaterally by Ports America,” and its departure provides “two significant opportunities: ships and cargo can be redirected to Oakland’s other marine terminals which have excess capacity; and the Port can find new, better uses for Ports America Outer Harbor Terminal.”
(Ports America said it wanted to clarify that the decision to terminate the lease was made by OHT, not Ports America alone.)
A spokesman for the port said one example of other types of cargo that might be handled at the former OHT site would be roll-on/roll-off cargo (automobiles and other vehicles), but that it would not include coal. A proposal for possibly handling coal as a bulk cargo at a nearby pier outside the Port of Oakland’s jurisdiction has sparked fierce opposition.
OHT, which encompasses berths 20-26 at the Port of Oakland, handles about 448,000 TEUs annually, according to Ports America. The Port of Oakland handled 2,277,515 TEUs in 2015 and more than 2,000 ships, mostly from Asia, berth at its terminals each year. OHT has about 50 employees and is major employer of longshoremen, who are expected to be needed in greater numbers at other terminals as business at those terminals increase.
“We know we have the terminal capacity to redirect cargo,” said Driscoll. “Our priority is ensuring that the terminals ramp up to move cargo in a timely manner.”
The port added, “There is ample capacity to absorb Outer Harbor’s volume at other Oakland terminals” and that other terminal operators are already preparing for the cargo migration.
It noted Oakland International Container Terminal, which is operated by Stevedoring Services of America, has opened Saturday and occasional weeknight gates for the past two months. The extra hours enable harbor truckers to pick-up or drop-off cargo outside peak hours.
And the port said a port-wide Saturday gate program is expected to launch in the first quarter of 2016.
Carriers that call OHT include Hapag-Lloyd, Hamburg Süd, Pasha, Mærsk, MSC, Polynesia Line, US Lines, Yang Ming, United Arab Shipping Co., China Shipping, CMA CGM, ZIM, Hanjin, COSCO, Hyundai, APL, “K” Line and MOL.
Ports America said it is “currently focusing its business strategies on increasing its West Coast presence through additional investments and expansion of services into new terminals. Areas of concentration include Los Angeles, Long Beach, the Pacific Northwest and western Canada. These regions have been identified as most suited to its realignment goals.”
“It is a strategic decision, and strategy is about making choices,” said Peter Ford, the chief strategy officer of Ports Amerca.
“We are extremely excited about the future of those two markets” he added, saying “It is in our best interest, as part of our strategy, to leverage our large presence in those locations.” Ports America handles a total of 5.38 million TEUs at West Coast terminals, in addition to those at OHT.
The move by Ports America and TIL is a sharp reversal from 2009 when they were awarded a 50-year concession and lease agreement and had grand ambitions for the future of the terminal.
Today, Ports America is involved in several joint ventures at other ports with partners on the West Coast, including:
• West Basin Container Terminal in the Port of Los Angeles, a joint venture between Ports America, China Shipping and Yang Ming.
• Olympic Container Terminal in Tacoma, also a joint venture between Yang Ming and China Shipping.
• International Transportation Service in Long Beach. Ports America acquired a 30 percent interest in ITS from “K” Line in 2014. It uses the brand ITS for its Pier G operation in Long Beach.
• In Tacoma, ITS also operates Husky Terminal and Stevedoring. Husky is straightening its berth to accommodate larger ships.
In addition, Ports America is one of five companies or groups shortlisted to respond to requests for developing Roberts Bank Terminal 2 Project, a new terminal at Port Metro Vancouver in British Columbia that will have three berths. The port plans to issue a request for proposals once a federal environmental assessment process is completed.
Ports America said its West Coast strategy complements what it “has accomplished on the East Coast by investing in superior equipment and infrastructure at Ports America’s locations such as Port Newark Container Terminal (PNCT), Seagirt Marine Terminal in Baltimore and Miami, where, upon completion of the Panama Canal expansion, the markets will demand it.”
The terminal operator plans to invest $500 million at PNCT by 2030 for expansion and $500 million in Baltimore where earlier this month it reached an agreement with CSX to operate the Intermodal Transfer Service, an on-dock rail facility at the Port of Baltimore.
TIL is a partner with Ports America at PNCT, and the TIL website indicates it is also involved in the TTI Terminal at Pier T in Long Beach, the TTI Terminal in Seattle, the SSA Terminal at Pier A in Long Beach and the Termont Terminal in Montreal.
NEWS FLASH: Ports America, TIL to exit Port of Oakland
