Oakland Benefits From Investments as COVID-19 Reduces Total Volumes

(file photo)

By The Maritime Executive 06-11-2020 02:55:51

Ports around the world are experiencing strong declines in volumes resulting from the financial effects of the pandemic on global trade. However, within the decreasing numbers, some ports have that invested to build facilities for specific trades have been able to maintain volumes reducing some of the pressure on overall results. 

The Port of Oakland, California is one such example of a port that has benefited by developing its trade in “cool cargo.” 

As expected, Oakland experienced a significant decline in total volumes in May 2020 and year to date. Citing lower consumer demand in domestic and foreign markets, driven by coronavirus pandemic uncertainty, Oakland experienced a 12.7 decline in loaded container volume in May 2020 versus a year ago, with import volume down nearly 15 percent and loaded exports down nearly 11 percent. The return of empty containers to Asia decreased by 28 percent and as a result, Oakland’s total cargo volume declined 16.8 percent in May 2020. 

“Since March, the Port has seen indications of more significant cargo declines, so the May results are not unexpected,” said Port of Oakland Acting Maritime Director Delphine Prevost. “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.” 

While overall the port is reporting a nearly eight percent decrease in cargo traffic so far in 2020, Oakland however is experiencing strong growth in meat exports to Asia. Oakland and its business partners invested millions on facilities that handle refrigerated shipments. Port officials believe that these investments have helped them to create a strong trade in the sector offsetting some of the general declines in exports. 

During the first quarter of 2020, meat exports from the Port of Oakland increased by 26 percent compared to the year earlier. Shipments of beef, pork, and poultry now account for 10 percent of the port’s total export volume.  

Over the past three years, the Port of Oakland reports that its meat export volumes increased by over 50 percent driven by growth from China, Taiwan, Australia, South Korea, and Japan. 

According to the port, the desire for high-quality U.S. products, especially farm goods, is being driven by the growth in middle-class economies continue throughout Asia. Recently, China had experienced a pork shortage which U.S. exports could help to fill as the first elements of the U.S.-China trade deal went into effect. 

The decision to invest in growing the meat export business was made in part because of the port’s proximity to California’s Central Valley growers and rail connections to Midwest producers. Oakland’s position as the final U.S. port on the schedule before ships depart to Asia permits exporters to extend the shelf life of perishable cargos. 

While blanked sailing and lower volumes will likely continue to have an impact on global trade, the Port of Oakland reports that the coronavirus impact on U.S. meat production has not been as severe as originally anticipated. While the port executives remain cautious, they also believe that their investment to build the cool cargo trade helped to lessen the impact of the downturn and positions the port for future growth.