West Coast ports have access to millions of square feet of warehouse and distribution space, but those hubs can be as far as 50 miles from the ports. Oakland is preparing for the eventual development of 2 million square feet of logistics space right in its backyard.
“It will be transformative,” said Mark Erickson, senior maritime projects administrator at the Port of Oakland. The $1 billion project to develop the former Oakland Army Base into a hub for transloading and distribution activities will change how business is done at the port, he said.
The port has been preparing for development of a logistics hub since the Oakland Army Base was closed more than a decade ago and the property was turned over to the port and the city. Each entity controls about half of the 400-acre site, but they are working cooperatively to develop the property.
The redevelopment project reached a milestone on July 9 when U.S. Transportation Secretary Ray LaHood presented a $15 million TIGER grant for a rail access project. The Transportation Investment Generating Economic Recovery money will help the port to launch construction of an intermodal terminal and new rail lines at the former Army base.
Like other West Coast gateways, Oakland relies on rail — BNSF Railway and Union Pacific Railroad serve the port — to move a significant amount of cargo in both directions. The rail project will extend rail service to the Army base property.
Construction on the rail access project will begin in 2013 and will be completed within three years. Improved rail access is key to attracting logistics operators.
When completed, the project will allow trains with up to 200 cars to access the logistics hub. Railroads work most efficiently when they are able to pull an entire unit train of at least 100 railcars into a facility. In many ports, on-dock railyards tend to be small, so unit trains must be broken up to be worked.
The Army base redevelopment site can accommodate four 8,000-foot trains, Erickson said. UP and BNSF have intermodal yards nearby, so the project will create possibilities for manifest, bulk, carload and refrigerated operations.
About 40 percent of the total value of exports moving through Oakland is agricultural products originating in California’s Central Valley and as far away as the Midwest. Agricultural exporters in the Midwest often experience difficulty securing empty marine containers.
The rail project will allow those exporters to move grain and other products in hopper cars to Oakland for transloading into containers. The port has a near balance of imports and exports, so exporters should have an adequate supply of empty containers, Erickson said.
The completed facility could handle a variety of export products, including identity-preserved grains for human consumption, animal feed grains, lumber products, minerals and other raw materials. There is a “tremendous appetite” in Asia for those commodities, Erickson said. The project also could attract refrigerated cargoes, some of which could require construction of cold storage warehouses.
Oakland has a natural advantage when it comes to exports. The normal port rotation in Pacific Southwest liner services is Los Angeles-Long Beach inbound and Oakland outbound, so transit times from Oakland for exports to Asia are shorter than from Southern California. Oakland also has an overweight corridor that allows shippers of heavy commodities such as agricultural products to fill containers beyond the weight allowed on most roadways.
Although Oakland isn’t a major import distribution load center, Erickson said there is a solid base of regional distribution facilities in the San Francisco Bay Area. Retailers can build off of those operations by establishing transloading operations where cargo is transferred from 40-foot marine containers to 53-foot domestic containers.
A half-dozen warehouse and trucking companies now operate at the former Army base. In June, Prologis and California Capital and Investment Group signed a lease deposition and development agreement to develop about 1 million square feet of warehouse space on the city-owned portion of the site.