OAKLAND — The Port of Oakland has begun to extricate itself from the short-term problem of the tremendous cargo backlog that built up during a months-long labor dispute, but the East Bay cargo hub, along with the other two major seaports in California, must now navigate long-term competitive challenges.
The labor strife not only slowed shipments through the enormous facility and its network of trains and trucks that transport goods throughout the country, it also created an opening for competitors to show that they could fill the void. As containers sat and goods spoiled during the port slowdown in California in January and February, the ports along the Gulf of Mexico and on the East Coast took advantage by stepping up to handle the cargo with greater efficiency.
The dockworkers stalemate, which ended in February with a new contract proposal, also caused shippers to compare and contrast options, and not just to get past the immediate crisis.
“There is a general perception that the risk factors for shipping cargo is greater on the West Coast than it is on the East Coast or Gulf Coast,” said Jeffrey Werling, executive director of the Interindustry Forecasting Project at the University of Maryland. “Retailers are diversifying. They don’t want everything coming into one port, or ports in one part of the country.”
Lowe’s, Home Depot and Walmart are among the U.S.-based merchants that are seeking a wider array of cargo hubs and distribution centers to deliver products.
“We did see an uptick in business” as a result of the West Coast port shutdown, added Bill Hensel, a spokesman for the Port of Houston Authority.
Not everyone agrees that business activity is headed for a permanent shift that would undermine Oakland and the other West Coast ports, however. Jock O’Connell, an economist and international trade adviser for Beacon Economics, said the impact of the winter slowdown could wind up being much less than anticipated.
“Time is money when you are moving goods,” O’Connell said. “And because of that, it often doesn’t pay to take the extra time to use alternative routes. Once shippers and cargo companies start looking seriously at the alternatives, they find out that those alternatives aren’t as attractive as they first thought.”
“There will be lingering challenges for the Port of Oakland,” added John Martin, president of Pennsylvania-based Martin Associates, which provides economic analysis for ports and other transportation systems. “But the Port of Oakland management is being proactive and aggressive in trying to regain its lost cargo business.”
But port officials face some daunting logistical challenges. West Coast ports, including Oakland, report an average ship production rate of 25 to 28 container movements per gang hour, while East Coast and Gulf Coast ports have a ship production rate that averages 35 to 42 container movements per gang hour, according to a 2014 study that Martin Associates prepared for the Pacific Maritime Association.
That means East Coast and Gulf Coast ports are anywhere from 25 percent to 68 percent more productive than the ports in Oakland and elsewhere on the West Coast.
Still, Oakland port officials point to a turnaround since the shutdown in volumes of loaded containers being handled at the transportation hub.
During January, the volume of loaded cargo handled by the Oakland seaport plummeted by 32 percent compared to the same month the year before. In February, loaded cargo volume nose-dived 36.7 percent compared to February 2014. In March, after the labor dispute was resolved, the volume of loaded cargo rose 6.1 percent compared with the same month in 2014.
“Over the last month, we have cleared away the backlog, and there are no ships sitting at anchor that are awaiting berth at the port,” said Mike Zampa, a spokesman for the Port of Oakland. “The terminals are at full operating capacity. Labor is reporting to work. Productivity is good.”
What’s more, the Oakland port has begun to recapture business that it had lost due to the labor disruptions on the West Coast, he said.
“We are doing everything we can to bring back the cargo visits that were diverted,” Zampa said.
And East Coast ports are starting to see their own backlogs. Truck drivers report waiting in mile-long lines and requiring eight hours to pick up loads at the major seaport in Virginia and the Newark, New Jersey, port suffers from a shortage of undercarriages to transport containers from that facility by truck.
“When West Coast ports operate efficiently, they provide the most economical way to move goods from factories in the Far East to markets in North America,” O’Connell said.
Oakland is an important gateway for regional markets, for nearly every type of retail and wholesale product imaginable, and the primary conduit for the agriculture centers in the Central Valley that have customers across the Pacific.
