Ports America, the largest stevedore and terminal operating company in the U.S., will terminate its lease with the Port of Oakland as it focuses 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. Ports America’s long-standing joint venture partnership at West Basin Container Terminal (WBCT) and its recently acquired 30 percent ownership of International Transportation Services (ITS) are key locations for Ports America’s strategy. Accordingly, Ports America is active in planning its expansion and investment opportunities in its existing locations at both the Port of Tacoma and the ports of Los Angeles and Long Beach. Further, Ports America has been invited into the process for new opportunities in the Pacific Northwest.
Given this strategy, the JV partners in Outer Harbor Terminal, LLC (OHT) have decided to change the arrangement with the Port of Oakland by returning back to the port the OHT leased property. OHT is organizing this exit transition to ensure seamless continuity of services.
OHT will be coordinating closely with equipment suppliers and other vendors as it continues to provide vessel services for 30 days and then take an additional 30 days to transition out of the terminal. This West Coast strategy complements what Ports America already has accomplished on the East Coast by investing in 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.
Editors Insight: This Ports America announcement focuses on the investments the terminal operator is making far more than on the decision to exit the Port of Oakland. The company clearly is investing in those areas it deems make the best sense, but the decision to leave a major West Coast port must have something to do with the rising cost of accommodating larger vessels as container carriers consolidate.
From the shippers’ perspective, carrier rates remain low, according to a recent Wall Street Journal analysis. A slowdown in global trade is contributing to low rates.
The container rate pressure is one of several developments that favor shippers. Food Logistics reported last week that pressure on rail cargo volumes are at levels not seen outside of a recession.
The current scenario could change with progress in transnational trade agreements. 1-20-16 By Elliot Maras