The Port of San Francisco and the Port of Oakland are turning up the heat on one anotherin the competition for container shipping lines calling northern California.
San Francisco, which is losing its largest tenant next month, is desperate to fill the void. Oakland, looking to press its advantage and recent success, is eyeing two Asian shipping lines - Evergreen Marine Corp. of Taiwan and China Ocean Shipping Co. (Cosco) of China - that call San Francisco."We talk to their customers, and they talk to our customers," said Michael Huerta, executive director of the Port of San Francisco. "Any carrier in contract negotiations has to be very careful about knowing what all ports have to offer."
The two ports have always kept their relationship genteel, avoiding the hostility and mud-slinging commonly exhibited in other port rivalries. Indeed, a type of gentlemen's agreement exists between the two ports not to initiate discussions with one another's tenants.
Nevertheless, port officials on both sides of the San Francisco Bay say that understanding doesn't keep them from answering knocks on their door. Both ports are currently talking to ship lines about switching from the neighboring port.
Officials at Oakland, the country's fourth-largest containerport, believe there is no contest. Oakland has three rail carriers and nine container terminal facilities, they point out, while San Francisco has only one rail carrier and two major facilities.
''San Francisco is stuck in a fiscal situation where it can't operate in a modern intermodal system," said Charles Roberts, executive director of the Port of Oakland. "They are making a gallant effort, but they are not something we worry about too much competitively."
Oakland would love to have Evergreen and Cosco, two major lines currently tied to San Francisco by contract. Each of their contracts carries a stiff penalty clause for leaving the port before the term is up. Evergreen's pact expires in 1995. Cosco's ends in 1993, making it a more immediate candidate for Oakland.
''They (Cosco) have expressed some serious interest recently," said William Stevens, Oakland's director of maritime.
Cosco has the opportunity to move a lot of low-value imports, Oakland officials noted. However, the truck haul from San Francisco to rail connections on the opposite side of the bay adds to transport costs and cuts into the carrier's margin, they said. An Oakland call would cure the problem, according to that port's officials.
Another motivating factor is that Cosco has plans to add bigger ships to its services over the next two years, which would require more cranes and yard space, Oakland officials suggested.
San Francisco officials counter that bigger ships work in their favor, not Oakland's. San Francisco has a 40-foot shipping channel for its container terminals. Oakland has a depth of 35-feet, which already prevents some of the larger containerships from coming in at low tide.
Even after a hard-fought dredging battle, Oakland will only be able to dig itself down to a depth of 38-feet this fall.
In addition, San Francisco offers a different rate schedule that helps offset the costs of drayage (trucking cargo short distances) to various rail ramps and is planning to establish an intermodal yard with double-stack capability to service its terminals, port officials noted.
Already the port can bring in two low-cube containers stacked one atop another.
San Francisco has suffered a major setback. Nedlloyd Lines, a Dutch carrier, recently announced that it would end its Asia-Central/South America transshipment operation through the port. The carrier said it will be more cost-effective to establish a direct service between the two continents instead. The move means San Francisco could lose as much as $3 million in yearly revenue.
''There's no question our position is not as good as we'd like it to be - in fact, it's not good at all," Mr. Huerta conceded.
But San Francisco plans to use its experience with the Nedlloyd operation to convince its present tenants to expand their operations at the port, Mr. Huerta said.
In addition, the port's experience with the complicated container transfers of Nedlloyd's operation could draw interest from ship lines using Oakland as well.
Mr. Huerta and other port officials confirmed that some discussions have already been conducted with Hanjin Shipping Co., which currently operates at Oakland under a short-term lease arrangement.
San Francisco will also have a prime facility available with Nedlloyd's cessation of its transshipment operation at the Pier 80 terminal, San Francisco officials noted. The port has already initiated a $7 million upgrade at the facility.
Mr. Huerta said he aims to make up for the loss of Nedlloyd by next summer.
TOP TENANT LINES
Jan-June, thousands of import/export TEUs
American President Lines 78
Maersk Line 51
Sea-Land Service Inc. 28
Mitsui O.S.K. Lines 17
Nedlloyd Lines 48
Evergreeen Marine Corp. 16
China Ocean Shipping Co. 12
Zim-American Israeli Shipping Co. 1