A Port of Oakland terminal where just last month the largest container ship ever to visit the U.S. docked is set to close in the next 60 days as the operator is prematurely ending its 50-year lease, port officials said Tuesday.
Ports America is ending its lease for the Outer Harbor Terminal, the port’s second-largest terminal, as it seeks to expand its operations at other West Coast ports, including in the ports of Los Angeles, Long Beach and Tacoma, Washington, Ports America officials said.
The company wasn’t even six years into its 50-year lease when it announced the decision to pull out of the Port of Oakland. The exceptionally long lease, much longer than the typically 10- to 15-year duration for terminal operators, was announced in March 2009.
In exchange for the long lease, Ports America had agreed to invest in capital improvements for the Outer Harbor terminal, port officials said.
Ports America’s CEO at the time, Stephen Edwards, said as the lease was signed, “We are extremely excited to work with the Port of Oakland to help implement their vision in taking this major American port to its fullest potential, now and for the long term future.”
But with more than 40 years to go on the lease, Ports America suddenly announced it was shutting down the terminal, citing only that they were leaving for “business reasons,” port spokesman Michael Zampa said today.
The announcement has left the port working to make sure the other terminals in the port can take in the traffic from the Outer Harbor terminal while finding a new lessee for it.
The terminal is one of five leased to private companies at the Port of Oakland. Port officials said traffic that would normally go to Outer Harbor will be redirected to adjacent terminals where there is enough capacity to absorb Port America’s traffic.
Some terminal operators have already been taking on longer hours to take in more ships. The Oakland International Container Terminal, the port’s largest, has been operating longer weekday hours and on Saturday for two months already and other terminal operators are considering opening their gates on Saturday as well, port officials said.
“We know we have the terminal capacity to redirect cargo,” port maritime director John Driscoll said in a statement. “Our priority is ensuring that the terminals ramp up to move cargo in a timely manner.”
Meanwhile, the port is determining how to move forward with the Outer Harbor land, and it’s possible it might not be used for container ships in the future — a deviation for the Port of Oakland, which has exclusively received container ships since the 1960s, port officials said.
Zampa said the port is already in negotiations for leasing parts of that property for continued container use, but is open to all possibilities.
“We’re going to look at any appropriate maritime use for the property. Certainly the first thing to come to mind is container operation, that’s what it’s been used for, but this could be an opportunity to diversify,” Zampa said.
The Outer Harbor terminal recently made headlines when the largest container ship to ever visit a U.S. port docked there in December.
The massive CMA CGM Benjamin Franklin, capable of holding 18,000 shipping containers, is expected to be the first in a new breed of “megaships” that will make regular visits to the port.
Such large ships have been operating on cargo routes between Asia and Europe for years but have until recently been unable to visit the U.S. because ports here lacked the capacity for them.
The port spent millions on improvements, including dredging channels, raising cranes and modernizing the terminals before the Benjamin Franklin could dock there.
Zampa said today that those investments were made throughout the port and all port terminals are now capable of taking ships the size of the Benjamin Franklin.
“Our aim is to keep all of the ships in Oakland and we’re working very hard with the terminal operators right now to find a home for all of that cargo,” Zampa said.
Scott Morris, Bay City News