Oakland appeals for help

Facing a financial shortfall, the Port of Oakland has asked the State Lands Commission to support its “financial stabilisation efforts.”

Port of Oakland Executive Director Danny Wan made what the port is calling a “plea for help” at a video conference set up by the State Lands Commission to assess the impacts of COVID-19 in California.

“The Port of Oakland is operational in these unprecedented, challenging times and has stepped up for the state’s emergency response,” Wan told the State Lands Commission. “But we will need to adapt our business model to new realities and ask the Commission to continue to work with us to find creative, workable solutions to stabilise our finances.”

It is important to note that the Port of Oakland operates Oakland International Airport, where passenger traffic has dropped 95%, as well as the seaport. It also handles cruise ships, and last month berthed the vessel Grand Princess to discharge passengers, some with COVID-19.

“Our staff, tenants and customers have been at the forefront of the COVID-19 crisis from the outset,” Mr. Wan said. “While our staff resources have been strained to their full limits and beyond, we are all completely dedicated to providing essential governmental functions and essential business services on behalf of our first responders and residents.”

The Port of Oakland receives no tax revenue and expects to report steep financial losses in fiscal years 2020 and 2021. It has stopped discretionary spending and suspended hiring and travel. “We can no longer expect any semblance of business as usual in our operations,” the Executive Director declared.

The Port did not state exactly what assistance is seeking from the State Lands Commission, but Wan asked it to "partner with us in in a manner that is consistent both with this new reality and with the principles set forth with the Tidelands Trust.”

In late April the Port of Oakland said about 10% of scheduled calls in May and June had been cancelled, and it was expecting a drop in container volume of between 5% and 15% as a result.

While demand for Oakland’s traditional exports remain strong “voyage cancelations could place some markets beyond reach", the Port said. Of even greater concern is how the Coronavirus might have a long term impact that reshapes shipping services to the detriment of the port. These include shipping lines consolidating “more cargo on bigger ships while reducing the frequency of voyages”, and changes to supply chains as online purchasing increases. “For example, the online purchasing explosion prompted by shelter-in-place orders may hasten distribution centre reconfiguration or consolidation. Distribution hubs could be relocated to more central locations to serve population centres from fewer outlets,” the port said.

“We’ll be facing a new normal,” said Port of Oakland Business Development Manager Andrew Hwang. “Distribution patterns will change…it won’t be like it was.”