OOCL's terminal expansion moves ahead in Long Beach

PUBLISHED : Wednesday, 25 January, 2012, 12:00am
UPDATED : Wednesday, 25 January, 2012, 12:00am


Orient Overseas Container Line (OOCL) has secured a key vote from harbour commissioners in the port of Long Beach for its US$4.6 billion, 40-year lease on a new container terminal at the west coast US port.

The deal was approved by commissioners on the finance and administration committee in a meeting in Long Beach on Monday afternoon. A spokesman for the port said there was general support during the meeting before three commissioners voted in favour.

A fourth commissioner, representing dockworker unions, did not vote, saying there could be a clash of interest. The proposal, which would be the largest port lease deal in United States history, is expected to go to a full vote on February 6.

The spokesman said that if it was approved, executives from OOCL and the port would sign the formal lease agreement later next month. Monday's vote came after the Tung family-controlled shipping company and port executives agreed in principle last Thursday to sign the lease, after 12 months of talks.

Under the plan, the port would spend US$1.2 billion to merge two existing container terminals into a 122 hectare terminal complex capable of handling 3 million teu (20-foot equivalent units) a year.

OOCL already operates one of the terminals, the Long Beach Container Terminal. The second one, California United Terminals, was operated by South Korea's Hyundai Merchant Marine until late 2010 when it moved to Los Angeles. The capacity of the new complex, which includes the construction of 1.4 kilometres of new wharves, rail facilities and 37 container-storage areas, would be equivalent to half the 6.1 million teu handled by Long Beach in 2011 last year.

Chris Lytle, executive director at the Long Beach port, said if the planned terminal were an independent port, it would be the US's fourth largest behind Los Angeles, Long Beach and New York-New Jersey.

OOCL will also spend US$500 million to equip the new terminal with modern, less-polluting cargo-handling and port equipment. That would include replacing diesel-powered cranes with electric ones. The facility plans to have shore-side power to enable ships to plug in to the local grid and turn off their engines while berthed.

The port spokesman said construction of the enlarged facility was already under way with an initial US$123 million contract that started last year.

'We are close to awarding the second phase,' he said. 'We hope to have the whole facility finished in eight years.'

Anthony Otto, president of Long Beach Container Terminal, said OOCL would approach other container lines, including its partners in the Grand Alliance shipping group, to share the complex.

Speaking last week, Otto did not rule out the possibility that OOCL might seek a second shareholder in its terminal.

OOCL has extensive logistics operations from Long Beach, using the US rail network to send and receive containerised cargo to and from Midwest cities as far as Chicago.

Shipping sources said the investment at Long Beach also showed its commitment to the west coast port despite the expansion of the Panama Canal, which will allow larger container ships from the Pacific to access ports on the US east coast from around 2014.

The deal has been welcomed by the local business and maritime community after a year which saw container volumes through Long Beach slide by 3.2 per cent. The port handled 6.06 million teu last year, down from 6.26 million teu in 2010.


Total revenues, in US dollars, reported by Orient Overseas Container Line last year despite a 5.6 per cent rise in volumes