Oakland signing new lease with biggest tenant

Port expected to give final approval to new SSA Terminal deal for Oakland International Container Terminal and Matson Terminal.    The Port of Oakland’s Board of Commissioners is scheduled to approve new leases for its biggest tenant, SSA Terminals, at a meeting next week.
    SSA leases the Oakland International Container Terminal (OICT), the port’s largest facility, which handles about 60 percent of the port’s traffic. It also operates the adjacent Matson Terminal, which is used exclusively by Matson.
    OICT has grown rapidly in recent years. When the port’s Outer Harbor Terminal, a joint venture between Ports America and MSC’s Terminal Investment Ltd., closed in 2016, an estimated 85 percent to 90 percent of that  business went to OICT.
   Edward DeNike, the president of SSA Containers, said OICT grew about 60 percent as a result of cargo shifting to OICT and that volumes continue to grow.
   “We are pretty excited about Port of Oakland. That terminal, we feel, is the finest in the country,” said DeNike. He had praise for both labor and management.
   “Oakland port is the most productive port on the coast with respect to productivity on the ship and the dock,” he said. “Ships get in and leave quickly.”
   He said Local 10 of the International Longshore and Warehouse Union, which represents the longshoremen in the port as well as the two locals that represent clerks and foremen, are “as cooperative as they have even been.”
   And he said that “the port authority is tuned in as much as any port authority in trying to build the port up and get additional volume.” He noted the port is offering incentives in an attempt to attract carriers to make Oakland their first port of call.
    SSA’s leases on the two terminals had been due to expire in 2022, but the new leases will run to 2027 and include an additional, automatic five-year extension to June 30, 2032. In 2032, there will be an option to extend the leases to 2042, if both SSA and the port agree at that time.
   The board approved the new leases on the first reading of an ordinance on May 24; the second reading of the ordinance is on June 14.
   There also will be some changes in footprints of the two terminals — SSA will be expanded by 19 acres to 290 acres by taking some space that is currently part of the Matson Terminal, while the Matson terminal will take 14 acres from an adjacent piece of land called the “roundhouse property,” and shrink its area by five acres.
   SSA will pay both fixed and variable rent on the facility. Those payments will gradually ramp up over time, but the port said, “Based on current assumptions, fixed and variable rent would increase over time, averaging $71.6 million and $26.3 million per year, respectively.”
   SSA will be obligated to buy and put into service three new gantry cranes at OICT by the end of 2020, but its schedule for paying the port for its expense in raising four cranes in 2017-18 will be extended five years to 2027. The port and SSA also will split the cost of removing port-owned cranes if that is necessitated by the new crane purchase.
   SSA also will undertake environmental initiatives to improve air quality, and the Bay Ara Air Quality Management District’s Mobile Source Committee last month approved a $5 million grant to retrofit 13 rubber tire gantry cranes at OICT with hybrid electric technology to reduce emissions.