OAKLAND: The Port of Oakland will likely spend at least $1.5 million redirecting shipping containers to other terminals after its second-largest terminal operator abruptly announced it was ceasing operations last month and filed for bankruptcy protection, port officials said Tueaday.
The port is asking its governing board to approve a $1.5 million transition assistance program that would go to participating terminals keeping night and weekend hours to accommodate the increased volume once the Outer Harbor terminal closes.
The operator of an adjacent terminal, TraPac, is in the final stages of taking over two berths at Outer Harbor that would also help take on the burden of global terminal operator Ports America’s sudden departure, according to the port.
While it will take Ports America until late in March to complete its wind-down of operations in Oakland, according to court filings the terminal will cease loading and unloading containers by Feb. 19. The transition comes after Ports America announced on Jan. 19 that it was halting its operations in Oakland to focus on other West Coast ports.
On Feb. 1, Outer Harbor LLC — a joint venture between a Ports America subsidiary and Terminal Investment LLC that ran the Oakland terminal — filed for Chapter 11 bankruptcy protection. In an affidavit filed in bankruptcy court, Outer Harbor chief financial officer Heather Stack said the company had been operating at a loss in Oakland for years.
Attempts to restructure the company’s 50-year lease, signed in 2009, were unsuccessful and the company was fighting the city of Oakland’s claim it owed $8.9 million in taxes, according to Stack.
But the tipping point came when the National Labor Relations Board demanded in an unfair labor practice proceeding that the company prove it had sufficient assets to cover its potential liability in the case, which could run into the millions of dollars. Outer Harbor LLC has assets of approximately $350 million and total liabilities of approximately $380 million, according to Stack.
The impending closure of the 200-acre terminal has left the port rushing to come up with a plan to accommodate all the cargo that comes through Outer Harbor. Even with the longer hours, the port will monitor efficiency at the terminals and take steps to make sure there is no cargo backup.
“We have three objectives with this plan,” port executive director Chris Lytle said in a statement. “We will find a home for all ships that come to Oakland, we will improve cargo-handling processes to move cargo efficiently, and we’ll meet the needs of shippers in Oakland.” Meanwhile, the port is considering how to fill the remaining space vacated by Ports America.
Outer Harbor terminal was home to the dramatic scene of the largest container ship to ever visit North America docking late last year, an event that drew hundreds of onlookers to the Bay shore. But in light of the operator’s departure, the port is considering uses for the land that may not even include container imports and exports.
