Ports America, the largest terminal operator in the United States, revealed this week that it would be ending a 50-year lease with the Port of Oakland, with cargo operations ending in 30 days and a full terminal shutdown in 60 days.
In its announcement, the stevedore service provider explained that the decision to cease business with the Port of Oakland terminal operated by Outer Harbor Terminal, LLC is part of its new strategy. Ports America said it aims to grow its presence on the West Coast, with a specific interest in ports located in Long Beach, Los Angeles and the Pacific Northwest.
Rerouting container ships
The company also added that its expansion plan will be fueled by its continued partnership with the West Basin Container Terminal and International Transportation Services, which it recently acquired 30 percent of.
"We're disappointed that Ports America is leaving," Port of Oakland Maritime Director John Driscoll said in a statement. "But we're in advanced discussions with our maritime partners here to prevent disruption to the Oakland business."
Until the location shuts down in March, the port said it will continue to move cargo and redirect vessels to nearby terminals. The statement also noted that the decision to cease operations was not a mutual agreement.
However, the source also pointed out that this change presents a couple of opportunities, rerouting container ships to other terminals that have more availability and it "can find new, better uses for Ports America Outer Harbor Terminal."
Alternatives the port suggested include using the property for something entirely independent of shipping containers. But, as of right now, its main focus is on reducing the negative impact the transition has on business. One way in which it is doing this is by expanding the operating hours of the Oakland International Container Terminal so for the next 60 days it operates on nights and weekends.
Shippers consolidate operations
According to The Wall Street Journal, this announcement is occurring at a time when the maritime industry is in a transition period. There is little growth in freight rates and, as a result, some shipping companies are merging and forming partnerships to stabilize and strengthen operations.
"Ports America may have decided they're going to put their money where their volumes are," Jock O'Connell, an international trade economist, suggested to the source. "All of this plays into the decisions of terminal operators as to where they're going to concentrate future investments."
O'Connell also indicated that industry officials have to identify opportunities for growth and take advantage of wise investment deals that don't require excessive resources for expensive equipment.