USA: Port of Oakland Creates New ‘Mega Terminal’

Recently the Oakland Board of Port Commissioners unanimously approved a litigation settlement agreement with SSA Terminals, LLC and SSA Terminals (Oakland), LLC (collectively, “SSAT”), one of the Port’s major long-term seaport tenants. The settlement involves four of the Port’s seven marine terminals, and will create operationally the 3rd largest terminal on the U.S. West Coast. In terms of size and operational efficiencies, this new “mega-terminal” will be more in line with competing terminals, allowing the Port to sustain and attract more maritime cargo, which currently supports approximately 40% of the 73,000 jobs the Port generates annually in the region.

“We reached this litigation settlement to protect the Port’s long-term viability as a job-creating economic engine for this region,” stated Port Board President Cestra “Ces” Butner.

The four terminals involved in the agreement are located along the Inner and Middle Harbors: Howard Terminal (Berths 67-68); Global Gateway Central terminal (GGC; Berths 60-63); Oakland International Container Terminal (OICT; Berths 57-59); and Total Terminals International terminal (TTI; Berths 55-56). Under the settlement, SSAT will lease Berths 57-59 and Berths 60-63 terminals through 2022 at current rates and conditions; terminate its lease for Howard Terminal effective September 30, 2013; and dismiss its lawsuits against the Port. Additionally and independent of the settlement agreement, the TTI lease will be assigned to SSAT through 2016, with one option to extend to 2022.

The settlement involves short-term revenue loss in exchange for longer term revenue growth and stability. Prior to this agreement, the Port was facing the expiration of all four terminal leases along its middle and inner harbors in 2016-2017. Further, those leases all had very short renewal notification periods, leaving the Port vulnerable in the event one of the operators decided not to renew its lease. The settlement and the independent assignment of the TTI terminal lease to SSAT create a 350-acre mega-terminal, which is far more optimal than several smaller terminals in today’s competitive maritime market.

The Board carefully considered over many months how to move forward relative to a potential settlement with SSAT and a reconfiguration of the marine terminals. The Port formed an Ad-hoc Committee of Commissioners Alan Yee, Ces Butner, and Bryan Parker to study and evaluate the alternatives available to the Port for settlement. These Commissioners and staff dedicated countless hours to this important endeavor. Given the realities of the Port’s current market position and growing competition in the maritime industry, this agreement provides the Port with important competitive benefits and future opportunities that will facilitate the efficient flow of cargo through these terminals.

Commission President Butner added: “This is a fair deal and creates a lease in line with current market realities. This agreement, along with other transformative projects like the City/Port Oakland Army Base redevelopment, is key to long-term economic growth in and around the Port because it will make us a more competitive gateway.”

[mappress]
Port of Oakland, July 22, 2013