Tuesday, December 16, 2014

Bay Area Ports Offer Diversity and Cooperation

By Mark Edward Nero

The five seaports in the San Francisco Bay Area may be overshadowed in the public eye by their two massive competitors in Southern California, but that doesn't mean they're inert or sitting idly by.

In fact, the ports in Oakland, Redwood City, Richmond, Sacramento and San Francisco have all in the past year engaged in or completed infrastructure improvements geared to help bring in more revenue.

The largest rival in the Bay Area to the Los Angeles and Long Beach ports as far as container traffic goes is the Port of Oakland. The term "rival" may be stretching it a little, however, since Oakland's five terminals moved 2.3 million TEUs in 2013, while LA moved about eight million TEUs last year and Long Beach terminals saw 6.7 million over the same time period.

That said, the Port of Oakland had its busiest month in more than a year in October 2014, with total volume increasing 2.87 percent compared with the same month last year, while imports were up 7.1 percent over the same time period.

And Oakland is trying to increase its market share. Currently, the port is working to turn a 185-acre plot of nearby land into a global trade and logistics center, which would include, among other things, a new intermodal rail terminal, 30 acres of truck parking and two million square-feet of warehousing.

The multi-phase project, called the Oakland Global Trade & Logistics Center, has been in progress since October 2013. Phase 1 consists of building a new railyard to accommodate growth by increasing capacity from 17 cars to 200 cars at a time.

Also included are 29,000 feet of new track, which would allow the facility to handle two 7,000-foot-long trains daily; and a million square feet of new warehouse space.

As many as 200,000 additional cargo containers could pass through the waterfront annually and two million metric tons of bulk product would move in and out by rail once the facility's up and running, according to the port.

The project's second phase includes a new intermodal terminal; 15 acres of designated drayage truck parking; additional warehouse and logistics space; and a new grade separation.

The first phase is expected to cost $500 million to build, while the project as a whole is estimated at $1.2 billion. Construction of Phase 1 began in 2013 and is scheduled for completion by fall 2015. The schedule for Phase 2 is contingent upon the completion of Phase 1.

The project is expected to utilize over $400 million in state, local and private funding, as well as a $15 million federal grant. In November, Alameda County voters approved a half-cent sales tax hike to fund $7.8 billion worth of transportation infrastructure improvements, including improvement of highway connections to the Port of Oakland as well as upgrades of roads that connect to the port's intermodal terminal.

Even as the improvements are in progress, the port has experienced an increase in traffic volumes as a result of congestion at the LA/Long Beach port complex.

"Yes, customers have shifted some of their discretionary cargo over to Oakland due to the congestion issues they are facing in Southern California," a port spokesman told Pacific Maritime Magazine. "We're aggressively marketing Oakland as a key hub for West Coast and intermodal cargo."

Meanwhile, in September, the Port of San Francisco completed its largest maritime infrastructure project in decades: a new cruise ship terminal.

San Francisco has a very different focus from other Bay Area ports; while Oakland's main maritime revenue stream is container traffic, San Francisco's is passenger traffic. The port currently handles 60 to 80 vessel calls each year and 200,000 passengers annually, numbers that are expected to increase due to the opening of the James R. Herman Cruise Terminal at Pier 27 in September 2014.

The $100 million project includes a new terminal building, mobile passenger boarding bridge, shoreside electrical power, three-acre provisioning area, three-acre ground transportation area, and a three-acre public park. On non-cruise days, Pier 27 is used as a facility for conferences, trade shows and special events, while the existing two-berth terminal, Pier 35, remains in service for multiple-ship days.

Although passenger traffic is San Francisco's bread and butter, the port does also have a hand in the bulk and breakbulk industry. Not only is it the Bay Area's only breakbulk cargo port, it is considering expanding its bulk cargo operations.

"The port's dry bulk business has been steady for more than 10 years, with over one million tons of aggregate imported annually from Canada," Port of SF Deputy Maritime Director Peter Dailey told Pacific Maritime Magazine. "We are investigating the feasibility of establishing a bulk export facility for shipping iron ore to Asia, which would be a major boon to our cargo portfolio."

While the Port of Oakland focuses on bulk cargo and the Port of San Francisco dominates the passenger market, the Port of Redwood City's niche is in a different area altogether: aggregates.
The Port of Redwood City, located 18 nautical miles south of San Francisco, is the only deepwater port in the South San Francisco Bay. It specializes in bulk, neo-bulk and liquid cargoes. Fiscal year 2014, which ended June 30, 2014, was good to the port, with increases in both tonnage and vessel calls.

The fiscal year's total tonnage was almost 1.8 million metric tons, a 19 percent increase over the previous FY. About 75 percent of that dry bulk cargo was construction aggregates – sand and gravel – from British Columbia, 1,352,000 metric tons worth, according to the port.

"Demand for this material is expected to continue to grow as the increase in construction continues from San Francisco to San Jose, in other words the greater Silicon Valley," Port of Redwood City Executive Director Michael Giari told Pacific Maritime Magazine.

"You could do a whole separate story on the millions of tons of construction aggregates from British Columbia being brought into SF Bay Area ports on large self-unloading ships," Giari said.

In April 2014, the port completed a $17 million wharf modernization program under which a wooden dock from the 1940s was replaced by a new 430-foot by 60-foot concrete structure that is used to dock Panamax-sized dry bulk ships and handle aggregates as well as other dry bulk cargos.

And this past fall, the port began a $12.8 million dredging project under which its navigation channel was dredged to 28 feet between October and December. It is also set to be dredged to its fully authorized depth of 30 feet by mid-2015.

The ongoing projects in Oakland, San Francisco and Redwood City serve as examples of the role diversity of the San Francisco Bay ports, as each has its focus on a different market from the others.

"The San Francisco area has such diversity in cargo mix: we have containers that go to Oakland, we have passenger ships that come to San Francisco, we have tankers that go up to the Richmond area, and car ships that go up to Benicia and Richmond, and then the break bulk ships that go up to Stockton and Sacramento," Capt. Lynn Korwatch, executive director of the Marine Exchange of the San Francisco Bay Region said.

"Unlike LA and Long Beach, which are really kind of competing for the same business, in our area, each one of the ports really has kind of established its own little cargo niche," Korwatch said. "I don't want to say there's no competition, because there is some to some degree, but San Francisco gets all the passenger traffic, they get no container traffic. San Francisco gets no container ships that come in their way, Oakland gets no tanker ships."

Although some Bay Area ports are expanding their footprint, the Port of West Sacramento is actually seeing its shrink. In October 2014, the City of West Sacramento began a 10-week project to demolish six concrete, 180-foot high silos as part of a waterfront revitalization project under which retail and residential development is planned.

"This is an important step forward in the ongoing revitalization of the waterfront, the de-industrialization of the waterfront," West Sacramento Mayor Christopher Cabaldon said during an Oct. 28 ceremony at the demolition site.

The Port of West Sacramento, located about 80 nautical miles from San Francisco, is among the more low-profile ports in the region. It was taken over by SSA Marine, in July 2013, becoming one of the few municipal-owned ports whose cargo facilities are completely leased and operated by a private company.

It was also involved in one of the few less successful ventures for Bay Area ports in 2014: the failure of a new "marine highway" barge service operating between West Sacramento and the Stockton and Oakland ports to take off.

The project's underwriter, the Port of Stockton, had high hopes for the service, which it dubbed the M-580, a reference to the congested Interstate 580 that it paralleled. The barge service was expected to help take freight traffic off the I-580 by offering shippers an option to move cargo along the waterways between the ports of Oakland, Stockton and West Sacramento. It even received a $30 million grant from the US Department of Transportation, as well as $5 million from local sources.

But on Sept. 1, 2014, after just 15 months, the M-580 was downgraded from a weekly service to an 'as-needed' service due to financial difficulties.

"During this initial period, we learned that the time it takes to build sustainable volumes was longer than anticipated," Stockton Port Director Richard Aschieris said.

But the failed venture also stands as an example of Bay Area ports' willingness to cooperate with one another since they're typically not directly competing against each other.

"Each one of the port regions has kind of carved out its own little specialty," Marine Exchange Executive Director Lynn Korwatch said. "I think in a lot of ways, that sort of takes away the burden of having to compete. Instead, I find them very collaborative."