Three years ago, American President Lines took delivery on five Gargantuan, high-speed container ships intended to set new standards for Pacific Ocean transportation of everything from auto parts to VCRs to sneakers.
For its first U.S. port of call on trips from Asia, the carrier had a choice between its hometown of Oakland, which was closer and had rail yards near the docks, and Los Angeles-Long Beach, where goods had to be trucked for miles over clogged freeways before they could be loaded onto trains. It chose Los Angeles-Long Beach.
A key reason was that Oakland’s channels and berths were too shallow to allow the largest ships to move freely if fully loaded.
“Oakland is the only port in the whole Pacific Rim trade region that does not have (the depth) to serve these ships,” said Gene Pentimonti, an APL vice president.
Once the mightiest container harbor on the West Coast, the Port of Oakland lately has slipped in stature and finds itself mired in controversies, notably a long-running battle with fishermen and environmentalists over the dredging of its waterways and a financial mess stemming from an ill-advised foray into real estate development.
Maritime industry officials say a quick turnaround is needed if Oakland is to preserve its status as a world-class port.
“Places like Tacoma are waiting in the wings,” said Leo Brien, president of the Pacific Merchant Shipping Assn., a trade group for ocean carriers.
Much is at stake. Its problems aside, Oakland’s port is still viewed as a dynamic piece of the Bay Area economy, creating thousands of jobs and directly or indirectly accounting for as much as $4 billion in economic benefits. It handles 90% of the container traffic in the Bay Area, making it the biggest wheel by far in a region with important ties to the Pacific Rim.
“The Bay Area plays an integral role in the shipping activity between the United States and the Far East,” said Michael S. McGill, executive director of the Bay Area Economic Forum in San Francisco.
Moreover, McGill said, if the ports of Los Angeles and Long Beach double their container cargo tonnage by 2020, as they expect, and the existing Southern California rail network is unable to handle the load, Oakland is the logical candidate to handle the spillover.
If Oakland’s port is to live up to this potential, maritime industry observers say, it must calm the many storms swirling around it.
For one thing, the port has been immersed in management upheaval. Earlier this year, the executive director and two top deputies, who had been instrumental in the port’s emphasis on real estate development, were fired, shortly before the port announced the first loss in its 64-year history.
The $17-million gush of red ink sprang largely from the port’s stalled Oakland Waterfront at Jack London Square development, an ambitious, $100-million office and retail project designed to revitalize the pier.
Moreover, the port is saddled with more than $300-million in long-term debt. It is also making $55 million in repairs from the 1989 earthquake, only about half of which is to be reimbursed by the federal and state governments.
In an effort to get back on course, the port has embarked on a back-to-basics strategy that puts the focus squarely on transportation, with real estate taking the back seat. The aim is to enable the port to compete more effectively.
Charles R. Roberts--the veteran head of the port’s engineering division who last month took over as executive director, the third in three years--said progress has been made. Since March, he said, the port has cut costs. Thanks in part to fee increases, the port expects to increase revenue 4% this year, to a record $103 million.
Key to boosting business, Roberts said, will be solving the dredging problem. As it is, most newer-generation container ships can enter Oakland’s harbor only at high tide and with partial loads, which means costly delays and lost revenue for the carriers.
“Seventy-five percent of the ships coming to Oakland have drafts greater than 35 feet,” said Roberts, 64. “If you don’t get this dredging done, these shipping lines will leave or cut tonnage.”
Already, the port estimates that as many as 4,000 jobs and $700 million in wages, taxes and local sales have been lost since 1988 because deep-draft ships--a measure of how low in the water a ship rides when fully loaded--have had to forgo carrying tons of cargo. Major carriers such as APL, Maersk and Matson have expressed disgruntlement.
Their frustration is ironic given the Port of Oakland’s pioneering support of the container trade in the 1960s.
Until then, Oakland’s port had paled beside San Francisco, which came of age during the Gold Rush and through World War II was twice the size of its East Bay rival.
But when the maritime industry began adopting container vessels in the 1960s, Oakland, alone among Bay Area ports, decided to gamble on the new ships, investing heavily in cranes and other equipment. By 1968, it had eclipsed San Francisco and become a West Coast powerhouse.
Oakland knew early on that it would have a depth problem.
Working with the U.S. Army Corps of Engineers, which controls dredging in the Bay Area, the port began planning in 1974 to deepen its 35-foot harbors. By then, shipping companies were anticipating the use of deep-draft vessels too big for the Panama Canal but well suited for Pacific Rim trade. At full capacity, the largest of these ships today has a draft of 40 to 41 feet and carries enough container cargo to fill a train 6.5 miles long.
Congress in 1986 authorized and funded a project to deepen Oakland’s channels to 42 feet, but the port has been stymied by legal challenges in its efforts to get the dredging done.
During the 1980s, Los Angeles-Long Beach and Seattle-Tacoma took market share at Oakland’s expense by promoting their special attributes--Los Angeles’ vast consumer market and Seattle’s closer proximity to Asia. Oakland fell to fourth from first place in volume of container tonnage among West Coast ports.
For years, the main hang-up for Oakland has been where to dump the estimated 7 million cubic yards of spoils that would be dredged to deepen the inner and outer harbors.
Disposal of materials dredged from the bay has been a hot-potato issue since the mid-1980s, when sediment that had been dumped over many decades at an approved site near Island began to mound and affect navigation. Broader environmental concerns have also been raised because much of the dumped mud contains toxic chemicals.
“The cumulative effect began taking a toll on the aquatic environment about five years ago,” said John Beuttler, executive director of the United Anglers of California, a recreational fishing group in Berkeley.
Beuttler and other fishermen theorize that the churned-up mud caused the bay’s food “web” to deteriorate. Without a food supply, halibut, salmon, striped bass and rockfish quit their traditional migrating patterns. As a result, Beuttler said, recreational fishing in the bay “has declined remarkably.”
In fact, it was concern over winter-run chinook salmon that brought the dredging situation to a head.
Last June, the National Marine Fisheries Service issued a draft opinion on a Navy dredging project indicating that it might threaten the survival of the remaining winter-run chinook salmon because it involved disposal of contaminated materials. The fish last year was placed on the federal endangered species list, after its numbers had declined during the previous two decades to about 200 from more than 100,000.
As a result of the service’s draft opinion, the Corps of Engineers chose to stop issuing permit renewals for some customers.
One was the Port of San Francisco, which has done no maintenance dredging since its permit expired in December, to the detriment of carriers. In February, a cargo ship drawing 24 feet ran aground at the port’s Pier 48; in June, it happened again to another ship carrying newsprint at Pier 29.
“I call the chinook the spotted owl of our bay right now,” said Veronica Sanchez, the San Francisco port’s director of government and public affairs.
The port’s “immediate need” is to dredge 500,000 cubic yards, Sanchez said. In the meantime, maintenance dredging at the Port of Oakland is continuing.
Large projects--such as the harbor deepening, which will require disposal of some highly contaminated materials--are being closely scrutinized by the National Marine Fisheries Service and other agencies and will be allowed to proceed only if upland or ocean sites can be found, said Jim Lecky, chief of the protected species division of the National Marine Fisheries Service.
Lt. Col. Stanley Phernambu, district commander of the San Francisco Corps of Engineers, said he personally doubts that dredging is the main reason for the decline in the salmon population.
Rather, he blames “a combination of factors, including the drought, decreased freshwater flows from the Delta, pollution and overfishing.”
In the long run, the Port of Oakland’s hopes are riding on a long-term strategy for managing the bay’s dredging needs over the next 50 years.
The port is one of 32 entities--including the Corps of Engineers, the Environmental Protection Agency, the Sierra Club and others--participating in a $16-million study of other ocean, bay and upland dumping sites. The group is not expected to make its recommendations until 1994.
One suggestion is that dredge materials be used for wetland restoration, said Alan Pendleton, executive director of the Bay Conservation and Development Commission, which manages coastal issues for San Francisco.
Depending on which sites are selected, the Port of Oakland’s costs for disposing of dredge materials could skyrocket at a time when the port is under pressure to reduce expenses. But without the dredging, port officials say, they stand to lose millions of dollars in business.
In the meantime, the obvious need to solve the dredging problems has created some curious alliances.
“We actually agree with the ports,” said Barry Nelson, executive director of Save San Francisco Bay Assn. and an opponent of dumping at Alcatraz. “Without dredging, in a very few years there would be no ports.”
Down at the Docks
Once the largest handler of container cargo on the West Coast, the Port of Oakland has slipped to fourth place. It handled 14.7 percent of the 5.2 million “revenue units” of cargo coming into West Coast ports in 1990. A revenue unit is roughly 17 tons of cargo.
Port of Oakland
The Port of Oakland, established in 1927, occupies 19 miles of waterfront on the eastern shore of San Francisco Bay. In addition to maritime operations, the port has jurisdiction over Oakland International Airport and about 648 acres of real estate with a business park, marinas, public parks and office and retail space. It is governed by a seven-member Board of Port Commissioners, nominated by the mayor of Oakland and appointed by the City Council.
The port has:
640 acres of terminal facilities
28 rail-mounted container cranes
$1.4 billion annually in wages, tax revenue and transportation industry sales
12.7 million tons of container cargo, up from 4.6 million tons in 1972. However, the port’s share of the West Coast market has fallen to 14.7% from 37% in 1972.
Deepening channels to 42 feet from the current 35 feet would provide by the year 2000:
An additional 21,700 jobs
An additional $2.2 billion annually in economic benefits
Source: Port of Oakland