The Port of Oakland said coronavirus-induced business declines forced it to cut back its spending plans.
Port commissioners last week approved a fiscal year 2021 budget with 15.84% less in operating and capital expenditures than the previous year. The California port’s 2021 fiscal year began Wednesday.
“This budget is based on neither unsubstantiated hope nor on speculation of any worst-case scenario,” said Port of Oakland Executive Director Danny Wan. “It is based on best estimates of how our business may recover, assuming that our communities and country make slow but steady progress in containing the COVID-19 virus.”
The port budget projects $432.5 million in operating and capital expenditures and debt service payments during the 2021 fiscal year. That’s down from last year’s $513.6 million budget.
The port expects the economic impact of COVID-19 to continue depressing revenue in FY 2021. Oakland International Airport passenger volume plummeted by as much as 96% this spring, the port said, predicting that recovery in the aviation sector could take two to three years.
The maritime business could recover faster, the port said, but Oakland’s year-over-year total cargo volume is off 7.8% so far this calendar year.
May total cargo volume was down 16.8% year-over-year.
“Since March, the port has seen indications of more significant cargo declines, so the May results are not unexpected,” Delphine Prevost, the port’s acting maritime director, said last month. “Ocean carriers have been reducing the number of vessels in service in anticipation of expected declines in import demand. It’s created challenges for exporters who are seeing less predictable vessel schedules and facing issues with finding capacity for their exports.”
The port said its new budget would protect cash reserves, ensuring adequate revenue to pay down debt and maintain full operations at its airport, seaport and commercial real estate holdings.
The FY 2021 budget does include $19.1 million of federal coronavirus relief funding. An additional $25.5 million will be used in 2022 and 2023.
Andrew Hwang, the port’s business development manager, said in April that he expected links in supply chains would be remolded even after coronavirus-caused stay-at-home orders were lifted.
“We’ll be facing a new normal,” Hwang said. “Distribution patterns will change. … It won’t be like it was.”