LONG BEACH, CA-The $4.6 billion lease deal by Orient Overseas Container Line at the Port of Long Beach has gained a positive recommendation by a committee of the city’s Board of Harbor Commissioners. Now, the board will have a final review of the 40-year lease of a revamped Middle Harbor, likely at its Feb. 6 meeting, and the deal will likely go into effect in late March.
Port executive director J. Christopher Lytle tells GlobeSt.com that the process is just a civic formality. He says the board will likely allow him to sign an ordinance for the deal, the largest of its kind for any US seaport, by mid-February, followed by a mandatory 30-day waiting period. “The OOCL people have really made a huge commitment to our port,” Lytle says. “They are confident this is going to remain a premier gateway for Asian cargo. This is a vote of confidence.”
The lease sprung out of a damaging move by former tenant California United Terminals to move out of the area it shared with OOCL at the port’s Middle Harbor. The port had planned its $1.2 billion redevelopment of the 300-acre Middle Harbor, and Cal notified the port that it would instead move to the Port of Los Angeles.
“In the short term early last year, it was bad, we lost 10% of our business,” Lytle says. “However, it also turned out to be a good thing. We negotiated for this lease for OOCL to take the whole Middle Harbor, and they can move back and forth while improvements are made.” The redevelopment will combine Pier F and E into one terminal.
It will take about eight years to finish the redevelopment, he says. During that time, the OOCL lease will likely generate more than 14,000 permanent jobs. Also the redevelopment will bring state-of-the-art and environmentally sustainable improvements to the Middle Harbor, Lytle says.
The Long Beach port handles about $155 billion in trade each year, second in the United States only to its nearby rival the Port of Los Angeles. While Long Beach is only doing about half the growth it saw before the recession (now about 5% per year), and the Panama Canal widening may send more goods to the East Coast by 2014, Lytle says his port will continue to be a shipping powerhouse.
“Shippers are smart, they try to find the best value to get their products to market,” he says. “Deep-water ships that service the Asia-Europe trade are challenged right now, so they’re looking for more transpacific trading. We can handle those ships better than the East Coast, which doesn’t have many deep-water ports. We’re also able to get product across the country quicker from our port to rail to the country. I think we’ll also see more export growth. We will continue to invest in infrastructure to make sure we’re on the leading edge.”
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