West Coast business up for Ports America; company poised to make major investment in OaklandBy Peter A. Buxbaum, AJOT“Business is flat” is not the kind of news any company wants to report, although in these times it could be a lot worse. Ports America is reporting a flat business trajectory for 2009 and projects the same for 2010, but the story is not without its upbeat aspects. Business is up at west coast ports, expansions proceed apace at several others, and the company won a concession to operate a major new Oakland gateway which, the company believes, will have a major impact on how incoming intermodal traffic will be handled in coming decades. Ports America is the largest independent U.S. terminal operator and port services provider, with operations in 50 ports and, once Oakland comes online, 98 terminals, on the U.S. Atlantic, Gulf, and Pacific coasts as well as in Mexico and Chile. Ports America operates in four main segments: containers; automobiles and ro/ro cargo; general cargo, such as breakbulk steel, project cargoes, and timbers; and cruise line stevedoring. The group handles over 12 million TEU, 2 million vehicles, 3 million tons of general cargo, and one million cruise ship passengers, and has annual revenues of $1.6 billion. “We have had some pickup on the west coast where we have the majority of our business,” said Peter Stone, the company’s chief commercial officer. “Business is ahead of our forecasts and slightly ahead of trends in the ports themselves, but basically business remains flat. We take the position that 2010 will be the same as 2009, but we hope to be pleasantly surprised.” A big win for Ports America, with important potential future implications, was the award in March of a 50-year concession to upgrade and operate five container berths covering 175 acres in the Port of Oakland. The entity which won the contract through competitive bidding, Ports America Outer Harbor LLC, is a partnership between Ports America and Terminal Investments Limited, an affiliate of Mediterranean Shipping Company. “The terminal is being built as gateway for intermodal cargo,” said Stone. “What we see is that southern California, which is now the predominant location for the inland movement of cargo, will become more focused on southern California cargo.” In other words, the population of southern California will eventually grow to the point where capacity in the ports of Los Angeles and Long Beach to handle import cargo headed for the Midwest and Texas will be strained. When that happens, importers and steamship lines will be looking for another west coast gateway through which to move imports, and that gateway, Ports America is betting, will be Oakland. “There is still plenty of capacity in terminals and on rails at the ports of Los Angeles and Long Beach,” Stone commented. “but a few years ago there was tremendous cargo growth in southern California and and you saw some of that cargo shift to Tacoma.” The Oakland facility is being designed as an intermodal gateway with adjacent rail facility and transloading facilities, said Stone. “This will offer the kind of flexibility to customers that can’t be found anywhere else,” he added. “Incoming boxes can be loaded on trains or transloaded to domestic containers and then loaded on rail.” The latter practice s a growing trend, Stone explained, because it can reduce costs, especially for time-sensitive or high-value products, and for importers, such as Wal-Mart, which operate their own distribution networks. Three ocean containers can be consolidated into two domestic containers. The popularity of the southern California ports as a gateway is explained at least in part by their access to on-dock rail facilities and their connection to extensive rail networks. “At this point Oakland has common user rail terminal in the middle of the port,” said Stone. “That means containers have to be drayed out of the gate before being loaded on trains.” One of the improvements Ports America will be making will be t