Port of Oakland Challenges: Competition and Labor Relations

Despite funding victories, challenges remain
Andrew Ross, San Francisco Chronicle, July 10, 2012

U.S. Secretary of Transportation Ray LaHood toured the Oakland Army Base this week, bringing news of a $15 million grant for the $1 billion redevelopment project scheduled to break ground next year. An $80 million rail yard expansion at the former Oakland Army Base is the first phase of the redevelopment project to transform the base into a state-of-the-art logistics center managing cargo flow at the Port.

The redevelopment project has been in the works for 15 years. Late last month, the Oakland City Council managed to save the $242 million in funding the state had threatened to cut off. A regional tax measure would provide an additional $275 million for further infrastructure improvements, including an overpass to separate rail and truck traffic near the port, if voters give their approval on November's ballot.

In addition to its money woes, the Port needs the cooperation of the Service Employees International Union Local 1021. Union members rejected a negotiated contract offer last month and there could be a strike at any time. Like many labor-management disputes, this one revolves around increased health and pension contributions, in part to help fill a huge unfunded pension liability.

Labor disputes could shift business through the new Panama Canal -- scheduled to open in 2014 -- and to east coast ports. The canal's business plan "explicitly assumes that a lot of the trade between Asia and America's east and Gulf coasts will be diverted from California's ports to the canal," the Economist magazine reported in January. The Oakland Army Base rail yard project is slated to begin during the fall of 2013 and be completed in 2015.

Oakland has its advantages, however. It can handle many of the larger containers that other U.S. ports cannot, including the massive, 1,200-foot-long MSC Fabiola, which recently passed through the Port in March. Also, the Port's main business is exports, including food and wine. It's often called "the last port of call leaving America for the Far East," said Jock O'Connell, an international trade analyst at Beacon Economics.

Read the complete article here.