About six years into their 50-year lease, Ports America announced they will be ceasing operations in Oakland.
The original agreement between the Port of Oakland and Ports America included lease rates significantly below market in exchange for Ports America performing the necessary capital improvements at Outer Harbor Terminal. This agreement brought on the ire of the other terminal operators in Oakland, so much so, that SSA sued and eventually came to a settlement with the port.
During their six-year tenancy, Ports America did not upgrade the terminal as agreed. Instead, they plan to cease vessel operations in the next 30 days and evacuate the terminal in the next 60 days. In an effort to smooth the transition, Port of Oakland management is working with Ports America to extend the timeline.
Ocean carriers who have been calling Ports America are actively looking for new homes for their vessels and containers. It is expected that CMA, Maersk and MSC will land at SSA and K-Line at TraPac. TraPac, already in negotiations with the port to expand their terminal, is looking to take over an additional two berths and 44 acres.
In the port’s opinion, the marine terminals in Oakland are operating below capacity and the traffic at Ports America can easily be absorbed by the remaining terminals. The port intends to explore non-containerized operations for Outer Harbor Terminal including ro-ro and bulk businesses.
In our opinion, while there may be enough berth space and land to handle the business, yard and gate operations will suffer. Evergreen temporarily moved to SSA in December while they upgraded their terminal, and that move created congestion and long truck turn times at SSA. The addition of CMA, Maersk and MSC will surely have a negative impact on truck turn times.
SSA plans to operate night and weekend gates to accommodate the increased volumes. The frequency of night gates and the specific transaction types accepted are yet to be determined. The Port of Oakland has plans to subsidize night and weekend gates during the transition period to ensure a successful conversion.
There are many moving parts to this change. We are unsure how it will all shake out, but we will keep you informed.