On August 24th, MOL (Mitsui O.S.K. Lines, Inc.) sent out a notice to their customers stating that the G-6 ocean carrier alliance “has decided to omit Oakland on the SC1 service for the following three vessels due to severe delays to vessels being experienced in Oakland.” The change impacted sailings on OOCL (Orient Overseas Container Line) and APL (American President Line) ships. The temporary move to bypass Oakland by some carriers has been forcing Northern California shippers to pick up and deliver their containers at the Ports of Los Angeles and Long Beach rather than at the Port of Oakland.  While the service problems in Oakland have subsided and the backup of ships at anchor has ended, some Northern California shippers may continue trucking to Los Angeles and Long Beach and avoid Oakland, even though Oakland is closer. Port of LB & LA Impact Several ocean carrier representatives and a Northern California freight forwarder told AJOT that substantial diversion of container volume from Oakland to Southern California is occurring. They say the effect of the diversions contributes to the rise in back to back cargo increases being reported by the Port of Long Beach for July and August.  On September 9th, the Port of Long Beach reported that in August “not only did imports climb to 358,262 TEUs, or a 19.1% increase over last year, but exports grew 9.4% to 138,765 TEUs. Empty containers, meanwhile, rose 42.1% to 206,625 TEUs.” Similarly, on September 11th, the Port of Los Angeles reported, “August 2015 containerized cargo volumes at the Port of Los Angeles increased 3.8% compared to the same period last year. The Port handled a total of 786,677 TEUs in August 2015. It was the strongest August performance since 2006.”  Port of Oakland Making Improvements Chris Lytle, Port of Oakland executive director, told agricultural exporters in June that the Port was making every effort to end delays and bring port operations back to normal. He said a new equipment center in the San Joaquin Valley would help truckers and shippers pick up chassis and containers without making the longer drive to Oakland. A Port of Oakland official told AJOT that he is hopeful that the Port has weathered the most challenging problems that it has faced in 2015. He says that terminals have hired more labor and are acquiring more chassis to alleviate delays in pickups and deliveries. He noted that there is a limit to what the Port can do as a landlord for terminal operators, but believes container freight operations will soon return to normal.  A San Joaquin Valley (SJV) trucking executive told AJOT he agreed with the Port of Oakland assessment, “I am hopeful that with some changes such as more longshore labor, Saturday gates, better equipment and more investment in a container yard, that we will see improvements at Oakland.” “On the other hand,” the executive added, “we are seeing more ocean carriers dropping their containers at the Ports of Los Angeles and Long Beach and avoiding the Port of Oakland. This is because the ocean carriers cannot afford to wait for Oakland to fix itself. They have a global view and Oakland is a speck on that global view.”  San Joaquin Valley Shippers Going South? Nevertheless, the Port of Oakland is striving hard to restore the port’s historic reach into the San Joaquin Valley, but it is an uphill battle. One local trucking executive said problems at Oakland had caused some shippers to permanently shift trucking containers from Oakland to Los Angeles and Long Beach. Congestion costs at the Port of Oakland are so high that it is cheaper to truck containers to and from the two Southern California ports, the executive said. A Northern Californian freight forwarder reinforced the point when he related to AJOT that he was aware of 900 containers that usually ship through Oakland being recently diverted to the two Southern California ports. There is a domino effect to the process. Undoubtedly the diversion will increase truck traffic on California’s I-5 freeway, which links the San Joaquin Valley to the Ports of Los Angeles and Long Beach. Diversions to Southern California will also impact SJV agricultural exporters and importers with distribution centers who serve Northern California customers. By the Numbers According to projections collectively assembled by the University of California, Davis, the Port of Oakland and California freight forwarders; there were approximately 6.6 million metric tons of agricultural exports trucked from the San Joaquin Valley (SJV) in 2013 via the Ports of Oakland, Long Beach/Los Angeles (LB/LA). Forwarders say the Port of Oakland receives about 66% of SJV exports and the Southern California ports about 34% of exports. This means that Oakland accounts for about 4.35 million metric tons. Assuming each containerized truckload contains 24 metric tons of freight, this means Oakland handles about 181,500 forty-foot containers per year from the San Joaquin Valley. But importers utilizing distribution centers in the San Joaquin Valley add an estimated 1,600 truckloads per day to that tally.  Distribution centers sort imports and then transload them into trucks for delivery to end users in Northern California. It is estimated that 1,600 containerized truckloads per day are imported from the Port of Oakland into the San Joaquin Valley, according to the Port of Stockton. Assuming these truckloads are shipped on a five day per week basis, the annual total of containerized imports would be around 5 x 52 x 1,600 = 416,000 containers per year, based on the Port of Stockton assumptions. For these two groups of shippers, trucking to Southern California increases the distances containerized truckloads will have to travel.  For example, the San Joaquin Valley city of Stockton, California is located 75 miles from the Port of Oakland and 363 miles from the Port of Long Beach, and centrally located Fresno is 176 miles from the Port of Oakland and 244 mile from the Port of Long Beach. Renewal of Stockton-Oakland Tug/Barge? There have been renewed talks about re-establishing the Stockton to Oakland M580 tug/barge service which would allow San Joaquin Valley importers and exporters to pick up and deliver their containers at the Port of Stockton and avoid the congestion of driving to the Port of Oakland. Many shippers who were skeptical about the tug/barge service in the past are now more enthusiastic.  However, the SJV trucking executive is not optimistic about the benefits of a revived M580 tug/barge because of the added cost of loading and unloading containers at both Stockton and Oakland. The executive believes this will continue to make the tug/barge service costly compared to going to Oakland by truck.