Friday, July 26, 2013

Settled Litigation Clears Way for Oakland Mega-Terminal

The Port of Oakland has approved a litigation settlement agreement with SSA Terminals (SSAT) that paves the way for the creation of what could become the third largest container terminal on the West Coast.

The settlement, which SSAT revealed July 18, involves four of the port’s seven marine terminals, all of which are along Oakland’s Inner and Middle Harbors: Howard Terminal at Berths 67-68; Global Gateway Central (GGC) terminal at Berths 60-63; Oakland International Container Terminal (OICT), inhabiting Berths 57-59; and Total Terminals International (TTI) terminal at Berths 55-56.

Under the settlement, SSAT will lease Berths 57-59 and Berths 60-63 terminals through 2022 at current rates and conditions; terminate its lease for Howard Terminal effective Sept. 30, 2013; and dismiss current litigation against the port.

Additionally, and independent of the settlement agreement, the TTI lease will be assigned to SSAT through 2016, with an option to extend to 2022.

SSAT had sued the Port of Oakland in 2009, accusing the port of violating the Federal Shipping Act of 1984 by signing a 50-year lease deal with Ports America. Under the deal, the Port of Oakland had agreed to turn over operation of some of its terminals to a private investor in exchange for $686 million.

Settlement talks between the port and SSAT began in 2012 and were concluded with the July 18, 2013 announcement. Prior to the settlement, the port had been facing the expiration of all four terminal leases along its middle and inner harbors in 2016-2017.

The contracts also had very short renewal notification periods, which left the port vulnerable in the event one of the operators decided not to renew its lease.

The settlement and the independent assignment of the TTI terminal lease now allows SSAT to move forward with the creation of the proposed 350-acre mega-terminal, which would be the largest in Northern California.

“These terminal expansions are a prerequisite to remain viable to our customers and for them to continue to retain Oakland as a port of call,” SSA Terminals Vice President Jon Rosselle said. “It also further enhances the logistics chain for exporters and importers in the local region and well beyond.”

The port says agreement also provides Oakland with important competitive benefits that would facilitate the efficient flow of cargo through the terminals.

“We reached this litigation settlement to protect the port’s long-term viability as a job-creating economic engine for this region,” port Board President Ces Butner said. “This is a fair deal and creates a lease in line with current market realities.”