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The many industries that make up the world of freight have undergone tremendous change over the past several decades. Each week, FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.

In this week’s edition, from the May 2002 issue of American Shipper (virtual page 90), FreightWaves Flashback looks back at the Port of Oakland’s master plan to compete with Los Angeles and Long Beach.

By Philip Damas

Having a strong niche market niche isn’t always enough.

The Port of Oakland has a strong position in the northern California market, but it has missed out on much of the growth of its neighboring ports in capturing discretionary container cargo that moves by rail inland via U.S. West Coast ports.

But Oakland is investing in new marine and intermodal facilities and believes it will soon have the right tools to broaden its market.

In March, the Burlington Northern and Santa Fe Railway Co. and the Port of Oakland opened a $38 million terminal intermodal container transfer facility. BNSF operates the new Oakland International Gateway terminal. The first train left the new intermodal terminal for Chicago on March 10.

The 85-acre, near-dock facility can initially accommodate 250,000 containers a year and can be expanded to meet future growth, the port said.

In recent years, Oakland has lost market share among the U.S. West Coast ports and now handles about 11.5% of containers that cross West Coast docks.

For users of BNSF, the new rail terminal means that containers no longer have to be drayed 12 miles to the railroad’s former rail terminal in Richmond, located outside Oakland.

“The intermodal terminal is located adjacent to the maritime terminals,” said Clement Chin, senior manager of marketing and business development at the Port of Oakland. The distance between the rail terminal and the farthest marine terminal is 1.5 miles.

“You eliminate a lot of the unreliability and cost,” Chin said. BNSF can also provide service to other third parties for this facility.

Only about 10% of the Port of Oakland’s total container traffic comes or leaves by rail, as compared to 50% in the ports of Los Angeles and Long Beach.

“We’re trying to diversify our business and go after discretionary cargo,” Chin said. The port intends to increase its intermodal volume from 10% of total containers to 30% over the next two to three years.

When the Union Pacific acquired Southern Pacific in the mid-1990s, the Port of Oakland found it was served directly by only one major railroad. However, BNSF obtained rights to serve the port directly, and its near-dock intermodal terminal brings more rail competition back to Oakland.

“It gives us both rail carriers directly located at the port,” Chin said. “It gives more competition, more service options.”

The port also has transload facilities, where import containers are de-consolidated and their contents reloaded into 53-foot domestic containers.

Although the port still has no on-dock rail terminal, Chin said on-dock rail “is not a panacea.”

“You need a lot of space,” he said. “Having on-dock facilities at each terminal would take so much space.” Chin believes that a common user, “very near dock” rail facility can be more efficient.

Unlike Los Angeles and Long Beach, Oakland is primarily an export port, and northern California exports represent a major portion of the port’s business. However, as with other U.S. ports, the Port of Oakland has seen containerized exports decrease last year.

In 2001, full outbound containers at the Port of Oakland were 758,958 TEUs, down from 818,521 TEUs in 2000. Full import boxes totaled 486,389 TEUs, down from 503,858 TEUs. Total port throughput, including empty containers, decreased 7.5%, to 1.6 million TEUs, from 1.8 million TEUs in 2000.

Ocean carriers that target Californian export cargo tend to call at Oakland after Los Angeles or Long Beach to provide faster westbound transit times to Asia.

Oakland port executives have mixed feelings when they watch the huge marine terminal developments of the ports of Los Angeles and Long Beach.

While Oakland doesn’t have the space to develop 300-acre terminals, the port has its northern Californian market niche and has implemented its own infrastructure programs.

Under its “Vision 2000” plan, the port has moved forward with the development of multi-berth terminals, which carriers require because of their cooperation within global alliances, Chin said. Previously, single-berth facilities were sufficient.

The port recently estimated that carrier alliances account for more than 76% of its cargo activity.

A new three-berth, 150-acre terminal, leased to SSA Terminals, is scheduled to open by August. Last year, the Port of Oakland also opened a two-berth, 90-acre terminal, leased to Hanjin, on the former site of the Navy Fleet and Industrial Supply Center.

The port has also approved the dredging of the berths and channels to 50 feet from 42 feet. Dredging the inner harbor is expected to be completed in 2005.

The construction of the Hanjin and SSA Terminals will add about 1 million TEUs to the port’s annual handling capacity.

The port’s intermodal terminal operated by BNSF will also take more than 20,000 truck moves a year off Interstate 80.

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