Oakland port official discusses actions to alleviate shipping problems for exporters

May 12, 2022

Over 98% of California’s walnut exports leave through the Port of Oakland, according to U.S. Census data. The port has primarily been a second port-of-call after the larger ports of Los Angeles and Long Beach, though a few carriers offer first port-of-call service into Oakland. The global supply chain crunch has been acutely felt at the Port of Oakland, ranging from vessel skips, equipment shortages, labor constraints and congestion.

On April 29, Stratamarkets spoke by phone with Andrew Hwang, Manager of Business Development and International Marketing for the Port of Oakland, about the current logistics situation and how the port is dealing with the global supply chain problems. Our conversation has been edited and condensed for clarity. 

The global supply chain continues to work through numerous bottlenecks. Which of those bottlenecks has been the most acute for the Port of Oakland? 

I wouldn’t classify it as a bottleneck, but one of the largest issues to work through here is skipping vessels. We are being impacted, particularly on the export side, with vessel skips, so customers are not able to get product to the markets they need to get to, and there is not enough vessel space to be able to book cargo where it needs to go.

How many steamship lines currently call on the port? 

There are about 22 steamship lines that service the port, and we regularly have 28 vessel calls per week, but we are currently missing 6 to 7 of our regularly scheduled vessel calls. These vessels have not been calling on the port for the past 6-8 months. 

Why are vessels skipping Oakland? 

They have made the decision to skip based on delays in Los Angeles and Long Beach and are trying to keep a semblance of a schedule, so they choose ports they will temporarily stop calling, such as Oakland, which is a second port of call.

Los Angeles and Long Beach, because of their position in the market, carriers try to protect that service as best they can. It’s the largest port complex in America…so carriers are trying to maintain a semblance of regular service. And I want to be very clear: I am not blaming [the ports of Los Angeles and Long Beach]. It’s just a function of what’s going on.

Even during normal times, shipping lines are regularly skipping calls because sometimes there’s a delay at one port, and it affects down-line port calls. Sometimes a vessel gets caught in a storm, so it will skip down-line port calls to keep its schedule. Port skips are within normal operations and are something that occurs regularly because that’s how you get a vessel back on schedule. The situation now is because delays are so much more acute (the steamship lines) are now making decisions to skip certain ports for longer periods of time just to try to keep vessels on schedule.

What about congestion at the Port of Oakland? 

We do have a little bit of congestion at the terminals. A lot of it is driven by the volume of containers coming in. Some of the delays were from warehouses here in California; lots of people called out sick in February and March during the Omicron surge, so that has backed up the terminals a bit, and the terminals are working to dig their way out, but if cargo isn’t going out the (Golden) Gate, cargo isn’t coming in.

The Port recently opened up a 25-acre “pop-up yard,” or temporary container yard, to alleviate truck traffic and improve the flow of loaded and empty containers through the port. How does the new pop-up yard work?

We’ve opened up a pop-up yard for empty positioning so carriers can put empties into the pop-up yard. So exporters can pull empties from the yard instead of going into the terminal but also stage loaded dry and reefer export containers. And when vessels skip, there’s a place to put containers for a day or two until the next cargo receiving window opens, which allows shippers to get more cargo out.

Is the new pop-up yard helping alleviate congestion?

We’ve seen some improvement. The pop-up yard opened up March 7 at the Howard Terminal, and it freed up a few hundred chassis. The numbers are not in yet, but I can tell over the past few weeks we have seen a large increase in empties going in, and what this does, it frees up chassis in the market, and chassis are crucial to keep the market moving. 

The terminals are still operating under fairly high utilization in terms of yard capacity, but I think our terminals are doing an exceptional job keeping cargo flowing. So there are a lot of benefits, and we have not calculated yet the expected increase in exports because the yard only opened up about six weeks ago and took a few weeks to get ramped up, so we’re closely watching this, and lots of this is predicated on ships calling and accepting export cargo.

How can the port attract more carriers? 

Attracting carriers is driven by many factors, some of which include the speed with which you are able to process vessels, market demand as well as the overall experience that users of the port have when they use it. Here in Oakland, we’ve traditionally been 50% import, 50% export, so in theory, containers that come in get loaded out with exports, and that’s been an attractive point for carriers. They don’t have to reposition empty containers. They get more empties back to load more cargo, but also, it’s the market. We have a large amount of reefers, which is high revenue for all parties involved, so carriers want to come here for that. 

And also, with the changes in domestic distribution, primarily due to COVID (traditionally, people went to the store to buy goods, but we’ve all got used to buying things online) it’s dramatically shifted how domestic distribution works. Our megaregion here in Northern California is a great location for steamship lines to come in and serve the market quickly, so goods can get to market faster. These are the things we talk about when we try to attract steamship lines to be able to reach Western states with two-day ground service. Also, if you can attract importers to open up warehouses, then shipping lines will follow, and we’ve seen some carriers, like Matson, Wan Hai and CMA CGM, list Oakland as a first port-of-call, which is very useful and popular with the shippers, so we are hoping to attract more first port-of-call service.

Are there enough workers at the port? 

There are now. To go back a bit, the first thing to reiterate is that the port has not shut down one day since COVID, so we 

have been at work. What had occurred was not enough skilled labor as we were getting into the cargo surge, so at one point, we had about 30 ships waiting to berth. So the [Pacific Maritime Association] and the [International Longshore and Warehouse Union] worked together and arrived at an agreement to elevate 300 casuals to permanent status, and then they hired another 950 causals. This was done and completed about a year ago, and training finished around Q3 of last year, so we are now averaging 30-50% more labor on every shift the last six months, and labor has been very consistent, and it’s part of the reason we are able to keep up with the ships coming in. 

The U.S. Congress recently passed the Ocean Shipping Reform Act, which would allow the Federal Maritime Commission more oversight of the steamship lines as well as a crackdown on rising shipping fees. If U.S. President Biden signs the bill, what do you expect might change? 

I think the federal agencies are doing everything they can to alleviate the situation, and we are ready to see what comes out of it, but I can’t tie specifics to anything directly to the port. 

Various entities in California have proposed establishing an inland port – a logistics and distribution hub inland from the coast. Is an inland port a viable option for shippers? 

When people talk about an inland port, there are ones that will work and ones that won’t, and it really depends on the market. Does it have the right business and the right location where the market is able to use it? So the idea of an inland port is great, and I think it’s necessary to address the global growth in trade, but it depends on location and customers it can serve.

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