When Will Oakland’s Ship Come In?
Jock O’Connell
When CMA CGM’s Benjamin Franklin tied up at the Port of Oakland on the last day of 2015, it seemed to herald a new era for Northern California’s principal maritime gateway. At the time, the 1,300-foot-long vessel, with a capacity of 18,000 TEUs, was the largest container ship to ever call at a North American port. As the port’s PR department proclaimed, the ship’s arrival “symbolically opened the Trans-Pacific trade route between Asia and North America to megaships.”
Although the Franklin did make a second visit to Oakland a few weeks later, it has never returned. Nor has the port enjoyed regular service from similarly large vessels. Far from expanding its role in America’s transpacific container trade, Oakland’s standing has slipped. Just in the years since the Franklin last called, as Exhibit A reveals, overall container volumes at the port have actually declined, and Oakland has been overtaken by the Port of Virginia and Port Houston as gateways for the nation’s East Asia container trade.
Unfortunately for the Port of Oakland, the period since 2016 has not been entirely anomalous. As Exhibit B graphically demonstrates, growth in the numbers of loaded and empty containers shipped through Oakland has been underwhelming for most of the past couple of decades.
At the turn of the century in 2001, Oakland was the nation’s fourth busiest container port, trailing only the Ports of Los Angeles and Long Beach on the West Coast and the Port of New York/New Jersey on the East Coast. Since then, it has been surpassed by the Ports of Savannah, Charleston, Virginia on the Atlantic Coast and by Port Houston on the Gulf Coast. It also trails the volume of container traffic moving through the Northwest Seaport Alliance Ports of Tacoma and Seattle in Washington State.
If anything, the goal of growing or at least maintaining market share has been as elusive as meeting periodic forecasts for the port’s container growth. As a senior port official has publicly conceded: “…actual volumes have consistently underperformed all previous forecasts”.
It’s not just that consultants hired to construct cargo forecasts tend to be a chronically optimistic and amiable bunch who are reluctant to upset their clients with an outlook that essentially says: Your port hasn’t grown in twenty years, and we can’t see any reason to predict that anything will much change. So instead, Oakland has had forecasts, such as one produced just prior to the Great Recession, that anticipated that the port would be handling 5,087,000 loaded and empty TEUs by 2020. As the recession wound down, a revised forecast was commissioned that pared those numbers back to 3,427,000 TEUs. For those keeping score at home, the port actually handled 2,461,889 TEUs in 2020.
As the nation recovered from the Great Recession in 2010, Oakland was still the nation’s fifth busiest container port. However, between then and 2022, total container traffic through Oakland edged up by a paltry 0.3%. Meanwhile, its chief competitors all posted substantial gains, as Exhibit C reveals. Only the Northwest Seaport Alliance Ports of Tacoma and Seattle fared worse than Oakland, with a 5.1% fall-off in container traffic between 2010 and last year, according to data from NWSA and the American Association of Port Authorities.
Oakland’s very latest numbers paint an even more discouraging picture of relative decline. Through the first- half of this year, total container traffic (1,012,154 TEUs) was not simply down by 19.3% or 242,831 TEUs from the first six months of pre-pandemic 2019, it was also the lowest volume of containers to transit the port in the first- half of any year since 2009. Inbound loads in the month of June (66,295 TEUs) were not merely down by 18.0% from June 2019, they were the fewest in any June since 2009. Outbound loads (54,138) in June were not just off by 27.7% from four years earlier, they were fewest outbound loads recorded by the port in any June in this century. In the first six months of this year, inbound loads at Oakland fell by 17.3% from the same period in 2019, while outbound loads plunged by 22.5%. The port -- once distinguished for handling more containerized exports than imports – has been seeing its outbound loaded TEU trade diminishing, as Exhibits D and E indicate. Comparing traffic last year with 2010 shows that outbound loads from Oakland were down 20.4%, while inbound loads rose by 23.5%. Worth emphasizing is that outbound loads last year (760,940) almost precisely totaled the 758,958 laden TEUs that sailed from the port in 2001.
Not surprisingly, there has been a clear reversal in the ratio of outbound to inbound loads at the port.
Where does the port go from here? How does it escape devolving into a niche port serving the considerable but still limited international shipping needs of the Bay Area and adjacent areas of Northern California and Nevada? Forecasts ultimately rely on fairly broad economic and demographic trends. But the population and economic growth outlooks for the region are fast being revised downward, and an unprecedented series of winter storms may only have forestalled the full impact of a prolonged drought on production agriculture in the Central Valley.
Oakland’s fundamental problem is its perilous position in the routes charted by transpacific shipping. It is not a first-call port, although it aspires to become one. At least until the Great Disruption brought on by the COVID-19 pandemic, ships steaming eastbound across the Pacific normally called first at one of the big San Pedro Bay ports in Southern California, where they would disgorge the majority of their containers. They would then journey up the coast to Oakland, where far fewer TEUs would be discharged, before sailing back across the Pacific. As the last port-of-call, Oakland did benefit from exporters eager to expedite their shipments, often of perishable agricultural commodities, to the markets of East Asia. For many years, that enabled Oakland to boast of being the only major U.S. seaport to export more than it imported. Way back in 2001, 60.9% of the 1,245,347 loaded TEUs that passed through the port were outbound. By 2018, however, inbound loads had gained the upper hand. Last year, 56.6% of all loaded TEUs were inbound.
Global trade dynamics being what they currently are, the Port of Oakland risks slipping into the diminished status of a regional port, one largely serving the import and export needs of shippers in the San Francisco Customs District (SFCD) that encompasses Northern California down to Fresno and parts of norther Nevada including Reno. It is worth remembering that the Port of Oakland isn’t the SFCD’s primary international trade gateway. That distinction belongs to San Francisco International Airport. Indeed, what remains of the region’s goods-producing industries is much more dependent on air freight than marine containers to intersect with the global economy. Last year, 58.7% of the SFCD’s exports and 40.2% of its imports traveled by air, while cargo moving in containers across the docks at Oakland accounted for 29.0% of exports and 36.2% of imports.
A much too facile but widely touted bromide to solve Oakland’s doldrums calls for the port to attract more first- call service. With more and more discretionary cargo being sent to ports on the East and Gulf Coasts, that’s going to be a tough sell. Even if there were shipping lines that could be persuaded a profit could be made by sailing one or two vessel strings directly to Oakland, would that really be enough to much alter the reality that Oakland will continue to remain the stepchild of the much bigger Southern California ports, which continue to aggressively vie with Oakland for the agricultural export trade out of the Central Valley.
And, if ocean carriers cannot be found to offer first-call service, then what?
Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.
