Bill Mongelluzzo, Associate Editor | Jan 19, 2012 6:53PM EST
The Port of Long Beach and Orient Overseas Container Line signed a 40-year, $4.6 billion tentative agreement that will make the shipping line the primary tenant on a planned terminal that will sharply scale up capacity at the country's second largest port.
OOCL and its terminal operating sister company, Long Beach Container Terminal, will pay the port to lease Middle Harbor container terminal. At full build-out in 2021, the terminal will have an annual capacity of 3.1 million 20-foot equivalent units.
Port of Long Beach Executive Director Chris Lytle said the facility will boast the highly-automated operations, deep water and excellent on-dock intermodal rail capacity that are needed to compete in today's market.
“This is an extremely competitive business. It’s time to be bold,” Lytle told the Southern California maritime community in the annual state-of-the port address in Long Beach.
If the OOCL terminal were a stand-alone port, the terminal would rank as the fourth largest in the U.S. behind Los Angeles, Long Beach and New York-New Jersey, Lytle said. He said the 305-acre Middle Harbor Project will be built in phases, with the first phase scheduled for completion in 2016.
OOCL has called in Long Beach since 1969. Although the Hong Kong-based line will generate a large portion of the throughput through organic growth, OOCL would be hard-pressed to fill the terminal on its own.
Long Beach Container Terminal will look to OOCL’s partners in the Grand Alliance as well as to third-party business, or possibly an additional partner, to fully utilize the facility, said Anthony Otto, LBCT president.
The Middle Harbor terminal will be one of the most highly-automated and environmentally-friendly terminals in country and will be the model for other terminal expansion projects in Long Beach, Lytle said. It will handle twice the container volume, yet generate half the pollution that was produced by the two facilities it will combine.
The decision by California United Terminal and Hyundai Merchant Marine in December 2010 to move to neighboring Los Angeles was both positive and negative for Long Beach. It will allow Long Beach to build the first half of the new terminal on the vacant CUT site without interfering with OOCL’s operations.
When the first phase is completed, OOCL will occupy that portion of the terminal while the LBCT segment is built out. The entire project will take nine years to complete.
But Hyundai’s move to Los Angeles cost Long Beach about 10 percent of its business, and the port experienced a decline of 3.2 percent in container volume in 2011. However, Long Beach’s remaining tenants increased their volume by 8 percent last year, Lytle said.
-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com. Follow him on Twitter @billmongelluzzo.
