Pacific Maritime Magazine - Marine Business for the Operations Sector

Regional Report: Bay Area Boom


December 1, 2018

The Port of Stockton handles exclusively bulk and break bulk products, including shipping bagged rice to Japan, Taiwan, and Korea. Courtesy of Port of Stockton.

In recent years, ports in the Bay Area of California have been breaking records in cargo – a symptom of an improving economy. Port officials are saying that more housing and road projects – especially in the Silicon Valley area – are driving up the demand for more construction materials such as cement, steel and other products.

The frequent occurrence of mega ships carrying tens of thousands of TEUs at one time is also pushing cargo to record-breaking heights, prompting ports and its tenants to meet current and future cargo demands by investing millions of dollars in dredging, berth maintenance and terminal improvement projects to welcome more of these bigger vessels.

Here is a look at three Bay Area ports:

Port of Oakland

This year has been a busy one for this Northern California port, which recently adopted Growth with Care, a new strategic plan for handling what officials predict will be record cargo growth over the next five years, with a growth ranging between 2 percent and 3 percent.

"It emphasizes digestible growth that can be absorbed without disruption to operations or neighboring communities," said port Communications Director Michael Zampa.

So far, cargo volumes at Oakland are up 3.3 percent, with a rise in imported cargo driven in large part to strong US consumer spending and the booming Northern California/Nevada economy.

Zampa said it's too soon to know the full impact tariffs will have on cargo moving through Oakland, where the port posted record growth for imports in August, adding that about 10 percent of the port's imports/exports are subject to Chinese tariffs.

Meanwhile, tightened Chinese restrictions on waste products such as scrap paper prompted a modest decline in export volume.

"Oakland hopes to boost market share through new developments that bring logistics capability such as transloading and distribution inside the port footprint," Zampa said.

The port has been working on various projects this past year, including its Seaport Logistics Complex, which includes a warehouse, transload and distribution center on port property. Construction on that project is set for this spring, while work on the first 460,000-square-foot building to be developed and managed by CenterPoint Properties is expected to start in 2020.

"This is a transformative project within the Port of Oakland footprint," Zampa said. "It's the only facility of its kind in the US to be located next to port railyards and marine terminals – it will promote transloading of cargo within the port, saving time (and) money."

In November, the port opened Cool Port Oakland, a $91 million, 280,000-square-foot temperature controlled distribution facility operated by Lineage Logistics and Dreisbach Enterprises will annually handle more than 50,000 TEU of chilled/frozen beef, pork and poultry arriving mainly by rail.

That meat product will be put in 40-foot ocean containers before heading to marine terminals.

"This is a game changer for global trade and the local economy," said Port Maritime Director John Driscoll. "We'll connect US producers to Asian consumers and in the process create hundreds of jobs in our own backyard."

Oakland also finished its year-long effort to raise four ship-to-shore cranes by 27 feet at Oakland International Container Terminal, allowing the port's biggest terminal to accommodate megaships.

Meanwhile, TraPac is expected to finish a project to double its footprint at the port by year's end, bringing it from managing two vessel berths and 66 acres to four berths and 123 acres.

The port's second-largest terminal in October also launched night gates for Harbor truck drivers, making it the second terminal at the port to operate a second shift.

"This is a big step forward for TraPac and the port's customers," said Driscoll. "We want cargo to move as quickly as possible through the port and we're grateful that our terminal operators share that conviction."

Speaking of efforts in efficiency, the port also kicked off the Oakland Portal last spring, the nation's first online gateway allowing users a single access point to all Oakland marine terminals, including vessel schedules, live camera shots of marine terminal gates, cargo pickup appointment and fee payment systems.

The port is also furthering its environmental efforts with the introduction of its Seaport Air Quality 2020 and Beyond plan, which is under public review. The plan will be a blueprint that will guide the port to a path of zero emission operations in the future.

Port of Redwood City

For the first time in 23 years, the Port of Redwood City has a new executive director.

In July, Kristine A. Zortman stepped into the leadership role after longtime port veteran Mike Giari announced his retirement earlier this year.

Zortman, who previously served as vice president of the economic development nonprofit Civic San Diego and negotiated long-term commercial real estate leases for the Port of San Diego, said she was blessed to start at the Port of Redwood City at a time of great growth and excitement and praised her predecessor's efforts.

"He really positioned the port with a good foundation and the ability to be able to recognize new opportunities for growth," she said of Giari. "We had historical numbers over the past fiscal year with about $8.6 million in revenue, and that translated into about 2.3 million metric tons of cargo, which was about a 49 percent increase in cargo over the prior year."

The last record year for the port was in 2005, which generated 1.9 million metric tons of cargo.

The booming construction industry in developments in both the public and private sectors means a higher need for cement and other construction materials, major commodities for the Redwood City port.

"Over the past few months, we've actually been exceeding our averages on our tonnages, and if we can continue to grow and maybe even get to a 3 million mark in tonnage next year, that would be wonderful," she said.

Zortman said she wants to build upon the port's successes. Over the next several months, the port will be focused on initiating a strategic vision process.

"What that's going to allow us to do is be able to weather some of the economic downturns that I think historically the market has seen, especially in the construction industry, so that when or if there is an economic downturn in any one of our industries we're able to still continue to make the revenue and still contribute back to the region as an economic engine, Zortman said.

Meanwhile, the port is working on a number of projects, including an estimated $2 million dredging project that is expected to wrap up by year's end.

That project will complement the U.S. Army Corps of Engineers' Harbor maintenance dredging in the main San Francisco Bay channel.

Deepening its berths and wharves – paired with the Army Corps' channel dredging – will allow the port to accommodate larger ships, something the port expects to see more of as its cargo tonnage grows, Zortman said.

Also in the works is a possible feasibility study between the City of Redwood City, the port, the Water Emergency Transportation Authority and the San Mateo County Transportation Authority that will explore the possibility of a public ferry in the Redwood City area as early as 2025. The port hopes to enter into a Memorandum of Understanding with those agencies on that effort by the end of this year.

"(It) would be huge for South Bay, huge for all the employers, and I think it would really help to start to demonstrate alternative transportation modes and getting people off of freeways," Zortman said.

The port currently has about 9 acres for industrial land that could be used for a distribution center. It's also improving a lot of our outreach endeavors from new outreach materials to a new website to showcase the port's assets.

"We have a very good foundation that's already being established," Zortman said. "We have a wonderful staff here and a board that's really encouraging us to grow and to look at new opportunities, and some of those opportunities are going to be the win-win – the win on the intrinsic environmental stewardship side, the win on the economic impact to the community and then the win on just continuing to bring in new cargo diversity and hopefully eliminate additional impacts to congestion."

Port of Stockton

California's fourth busiest port has been basking in three years of record numbers.

Last year, the Port of Stockton handled 4.7 million metric tons and had about 268 ship calls, a record year officials attribute to the offering of a "24/7 gate for round-the-clock access to freight" and the rail services offered by UP and BNSF.

"We kind of keep topping ourselves, which is really wonderful for not only the port but for the area we operate in," said Jeff Wingfield, director of environmental and public affairs for the port.

"This year, things are slowing down a little bit right now, but for the most part, we're hoping to get to 5 million metric tons, and I think we're going to exceed last year's number of 268 (ship calls) just slightly as well."

Stockton port, which exclusively handles bulk and break bulk products, is seeing steady cargo numbers and a resurgence in cements, which was once the port's No. 1 commodity until 2009 when the economic turndown slowed domestic construction work to a crawl.

Meanwhile, tariffs are affecting the port's movement of steel, with volumes down more than 28 percent this year versus last year and almost 39 percent versus 2016, Wingfield said.

"We were running out of longshore workers two years ago, but for now the drop-off of steel is really impacting longshore labor in the hours," he said.

To stave off the impact of tariffs, Stockton port officials are marketing other cargoes and its asset as an inland port with 600 acres of land for potential development and 7 million square feet of existing warehouse space.

"We're getting a lot of interest from larger companies that need a lot of acreage on the west coast, Wingfield said. "The Port of Stockton is really one of the only ports situated to attract such business. We're very optimistic that we're going to keep heading up, especially with a lot of the infrastructure improvements that we're doing right now. We think those are going to facilitate efficiencies and attract additional business in the next few years."

Stockton is in the midst of $50 million in infrastructure and project investment, including dredging and berth maintenance.

As part of a CalTrans freeway expansion project, the main access point for the port has been relocated away from a neighboring community. Now the port is putting in all the other infrastructure, including a new road access to match up with the new freeway.

Strong US consumer spending and a booming Northern California/Nevada economy are credited for a 3.3-percent boost in cargo volumes at Oakland. Photo courtesy of the Port of Oakland.

"It's going to make getting trucks in and out of our port much more efficient," Wingfield said. "Before, it was a two-lane road that came through a neighborhood and now it's going to be four lanes coming right off of I-5 and I-99."

In the realm of sustainability, Stockton port is working to repower its cargo handling fleet and is partnering with the ports of Long Beach and Oakland to make 30 forklifts and other equipment into all zero emission equipment.

There is also a project by Dannar to demonstrate California's first mobile power stations, "a robust off-road battery-electric mobile platform" that will help the port to replace diesel equipment, according to Dannar.

The port will also test out two 30,000-pound battery-powered capacity forklifts with cargo-handling attachments, including a multi-use cargo truck bed and scissor-lift.

"It's a really exciting time and I'm really proud of the work we've been doing," Wingfield said.


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