U.S. West Coast ports may have much to gain by COSCO/OOCL deal

Ocean cargo industry analysts were not surprised by news of Cosco Shipping Holdings Co.’s $6.3 billion offer to buy Orient Overseas International Ltd. The talk of such a deal has been circulating for weeks. But the implications for U.S. West Coast ports may be significant.

The Ports of Los Angeles and Long Beach, for example, stand to gain much more volume.

The announcement comes at a time when OOCL’s Long Beach operation is undergoing a major re-development that will see the existing one-berth Long Beach Container Terminal at Pier F closed and the three-berth Middle Harbor Redevelopment Project replace it. Phase I of this project went live in April 2016 and has since been in full operation; Phase II is expected to be operational at the end of 2017.

Cosco, meanwhile, has two terminals in LA/LB.  This will be a third, and by 2020 these three terminals will account for nearly 30% of the capacity of the San Pedro Bay ports. Analysts note that while the capacity in LA/LB remains physically fragmented, the ownership is at least consolidating.

Things are going well for all three of California’s ocean cargo gateways now.

The Port of Long Beach moved enough containers last month to make it the second-best June ever, wrapping up a quarter when cargo volume rose by more than 8 percent.

Measured by industry-standard, twenty-foot equivalent units (TEUs), cargo climbed 9.2 percent in June compared to the same month last year, to 658,727 TEUs. During the year’s second quarter — April through June — volumes increased 8.3 percent, to almost 1.9 million TEUs.

Through the first half of 2017, container throughput has grown 5.1 percent compared to 2016. Dockworkers have moved almost 3.5 million TEUs this calendar year.

For June, imports grew 7 percent to 335,328 TEUs. Exports declined 7.7 percent, to 118,304 containers. Empty containers rose 26.8 percent, to 205,095 TEUs.

Throughput statistic were not available yet for the Port of Los Angeles, but spokesmen told LM that he expected “decent numbers” when data is made public later this week.

At the Port of Oakland, communication director Mike Zampa told LM that he does not foresee material changes to volume or operations at this time.

“This is still a new development, but in line with the consolidation trend that’s reshaping the industry,” he added.

Last month was a record-setter at Oakland. Indeed, it handled the equivalent of 80,253 full 20-foot import containers in June.  That broke the previous all-time record for the month of 78,326 containers set in June 2006. 

The port said last month’s import volume increased 5.1 percent over the same period a year ago.  The increase could be a good sign as West Coast ports including Oakland prepare for peak shipping season.

“As we near autumn, retailers begin stocking up for the holidays,” said Port of Oakland Maritime Director John Driscoll.  “Healthy volumes now might be a preview of what we can expect for peak season.”

According to port data, total cargo volume moving through Oakland increased 5.1 percent last month compared to June 2016.  Total volume includes imports, exports and empty containers.  Export volume rose 2.4 percent.