Port of Oakland aims to increase U.S. meat exports with new intermodal facility

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   The Port of Oakland is already somewhat unique in comparison to most seaports across North America in that it exports more containerized goods than it imports. But by this time next year, Oakland could become even more of an export powerhouse thanks to a new intermodal transloading facility currently under construction at the San Francisco Bay area port.
   That export facility is Cool Port Oakland, a $90 million, 280,000-square-foot distribution center currently being built on 25 acres of Port of Oakland property.
   The idea behind Cool Port consists of bringing large quantities of chilled or frozen beef and pork to Oakland via rail from the midwestern United States, after which the product would be transferred in a temperature-controlled setting from the rail cars to shipping containers, then moved across the street to outbound ocean vessels, John Driscoll, maritime director at the Port of Oakland, explained in an exclusive interview with American Shipper.
   The products would be exported overseas to satisfy growing demand in Asian countries—primarily China—for premium U.S. meat. Proximity to the docks means cargo could be quickly transferred from rail to ship with minimal cost.
   The design calls for the construction of a 275,000-square-foot, temperature-controlled logistics and distribution facility containing rooms that can provide cooling or freezing conditions, including additional holding capacity for up to 20,000 pallets of perishable food products.
   In addition, Cool Port is designed to house 36 refrigerated rail cars that would be staged within the cold storage facility for loading and unloading perishables.
   “It’s putting the port on the map relative to refrigerated commodities,” said Driscoll. “We’ve always been a targeted port for customers, but it’s really going to help take us to that next level to be able to handle that type of volume in an efficient, effective manner. We actually get less revenue from the land, but then we get additional volumes from the dock, and that’s where we make our money—loaded boxes from the dock.”

“[Cool Port Oakland is]
putting the port
on the map relative
to refrigerated commodities…
it’s really going to
help take us to that
next level to be able
to handle that type
of volume in an efficient,
effective manner.”
John Driscoll,
maritime director,
Port of Oakland

   “This is a very special facility,” Port of Oakland Executive Director Chris Lytle added during the same interview. “This really meets our need for the transfer of cargo, as opposed to just another facility to put frozen product on racks in a big high-rise facility. This is designed for purpose, built for high speed, high velocity transloading, and that’s what we need here; that’s what the market’s asking for.”

Port of Oakland executives Chris Lytle
(left) and John Driscoll, seen here
looking at a map of the Port of Oakland.

Purpose Specific. The final piece of approval needed for the Cool Port project’s completion came in September, when the Oakland port’s board of commissioners approved construction of a $14 million, two-mile-long rail spur. When complete, the rail spur’s at-grade rail crossing would connect Union Pacific Railroad (UP) tracks with the Cool Port facility. Union Pacific is also building a portion of the spur on its property.
   “Both UP and the BN (Burlington Northern) will be supporting this facility from a rail infrastructure standpoint,” Driscoll confirmed.
   The port is paying about 45 percent of the cost for the spur, with the Cool Port developers responsible for the balance, according to Port of Oakland officials. There’s also a $5 million state grant that will help pay part of the cost.

“This is designed for purpose,
built for high speed, high
velocity transloading, and that’s
what we need here. That’s
what the market’s asking for.”
Chris Lytle,
executive director,
Port of Oakland

   The developers of the planned intermodal transload and consolidation facility for perishables is the Southern California-headquartered global port warehousing, logistics and cold storage provider Lineage Logistics and its minority partner, Oakland-based cold storage provider Dreisbach Enterprises.
“Dreisbach, they’re the ones who really know how to operate these refrigerated warehouses. They’re the operator,” Driscoll said. “They’re the experts and are really looked at as a high quality company.”
   The Cool Port acreage is situated adjacent to the port’s Joint Intermodal Terminal (JIT), which is centrally located within the port complex. The facility is expected to service 9,000 railcars annually when operational, while an additional 9,000 containers are projected to move via truck. Total twenty-foot equivalent unit (TEU) volume, based on this container throughput is projected at 54,000 TEUs, according to Dreisbach data.

Class III railroad Oakland Global
Rail Enterprise (OGRE) supplies the
blue and yellow railcars that serve
portions of the Port of Oakland.

   “It’ll be able to handle 36 railcars simultaneously,” Driscoll said of the facility’s horseshoe-shaped design. “There will be four tracks in the center of this building. You’ll be able to transload, and they’re looking currently to do at least one trainload of 36 railcars per day. They can do more than that. They’ll probably be able to do two [trainloads] once they really get it going.”
   “The real purpose here that makes this different is this quick transload from rail to truck and to 40-foot container,” Lytle explained. “That’s what makes this facility unique, as opposed to just another big rectangle with high ceilings where a bunch of pallets are stacked.”

Construction of the $90 million
Cool Port Oakland perishable
goods export facility began
earlier this year and is expected
to be complete by August 2018.

   Major construction has been underway since earlier this year, and the facility is expected to be complete and operating by the third quarter of 2018, according to port officials.
   “This is a year-and-a-half type of construction project,” Driscoll explained.
   Importantly, the port says the facility will provide electrical plug-ins for most containers, solar or fuel cell technology for power generation, natural gas power for yard trucks, and the use of natural refrigerants to reduce releases of the potential environmental threat hydro chlorofluorocarbon, an ozone-depleting compound.
   In addition, Dreisbach says that since the facility would be located within the port, it’s projected that customers will see a reduction in import and export costs and increased container capacity, since shipping containers won’t be traveling over highways.
   The concept for the project originated when the port decided to repurpose some land that it thought it could get more use out of, and sent out a request for proposals nearly four years ago. The Dreisbach/Linear Logistics concept for the Cool Port export facility almost immediately won over port officials.
   “The vision for Cool Port arose from the port’s historical position as one of the nation’s leading agricultural export gateways and also its status as the last port of call on the West Coast before ships return to Asia. This increases the shelf life of farm goods,” port spokesman Michael Zampa explained.

“The vision for Cool Port arose from the port’s historical
position as one of the nation’s leading agricultural
export gateways and also its status as the last
port of call on the West Coast before ships return to Asia.
This increases the shelf life of farm goods.”
Michael Zampa, spokesman, Port of Oakland

Meat Market. Oakland, which is the fourth busiest port on the West Coast after those in Los Angeles and Long Beach, as well as the Seattle-Tacoma port complex, is already a leading U.S. gateway to Asia for agricultural products, including meat. The port has a few reefer tenants already, including a small Unicold Corp. refrigerated warehouse that predominately does business to Guam and Hawaii; and PCC Logistics, which also has a small refrigerated facility at the port.
   “Oakland has long been a refrigerated export market,” Driscoll said. “We’re very, very focused on going after this particular market, because all of our customers were saying that we need to have additional capacity to handle through Oakland.”
   “And plus, that’s a market that’s growing extremely quickly from Asia, with the questionable food sources from places like China and so on. U.S. beef and pork are really highly sought after and more and more so as we go forward,” Lytle added. “You can see that the market is starting to build and build and build, and the potential is huge.”
   Port officials say the increase in shipments of beef and pork pushed through the port from the U.S. Midwest due to Cool Port are expected to have a significant impact once the facility is up and running. Areas from which perishables are expected to arrive for export include Nebraska, Iowa, South Dakota and even a small amount from California, where the grass-fed beef industry is growing.
   “Wherever there’s cattle, poultry, pork that are being raised,” that’s where the goods will come in from, Driscoll said.
   The project’s $90 million cost is primarily funded through Cool Port Oakland, LLC, the operating partnership between Lineage Logistics and Dreisbach Enterprises. The Port of Oakland is overseeing construction of the 2-mile-long rail spur, and is sharing rail costs along with the developers.
   “Private developers finance the construction,” Zampa said. “The port has contributed through infrastructure improvements including the rail spur.”
   One of the reasons the port is betting on the perishables export facility is that Oakland sits in Northern California, a region where growers of perishable goods have helped the port boost exports to the point where as the middle class grows in China, South Korea and elsewhere in Asia, demand for certain American goods grown in the region increases, as well.
   In 2016, the Port of Oakland handled 1.83 million TEUs of containerized cargo, with exports making up a little more than half—52 percent to be precise—of the port’s total loaded container volume, and imports making up the remaining portion. Oakland’s containerized export volume jumped 10.5 percent year-over-year in 2016, according to port statistics.
   The exports-to-imports ratio makes Oakland an anomaly.
   By comparison, the largest port in the country, Los Angeles, said that in 2016, loaded exports made up about 21 percent of its total throughput of 8.8 million TEUs. Other major ports, such as Long Beach and New York-New Jersey also count a similar percentage of exports.
   But those ports don’t have the proximity to Asia that Oakland does, nor the relatively close by agricultural industry.
   Edible nuts, such as almonds, pistachios and walnuts, were the Port of Oakland’s main exports through the first three quarters of 2017, according to port data, followed by fresh and chilled beef; fresh, frozen and chilled pork; wine from the Napa and Sonoma valleys; and passenger vehicles. Also in the top 10 were rice, citrus fruit and scrap metal.
   The products are primarily going to countries in Asia where the middle class is expanding. The port’s top four trading partners are, and for years have been, China, Japan, South Korea and Taiwan, statistics show.
   “Japan is one of the largest market consumers of U.S. proteins and [South] Korea is a close second,” Driscoll said. “The big volume is to Asia, but it can go to Europe, it can go to wherever.”

Import Alley-Oop. At some point, in addition to exports, the facility could also be used for goods imports, Lytle and Driscoll told American Shipper.
   “The initial focus is on the proteins. That’s kind of the slam dunk. But they’re also looking at the potential of this for inbound,” Driscoll revealed of the developers. “They’ve targeted a lot of different commodities.”
   Lytle said that the possible imports that could be handled by the Cool Port facility at an undetermined point in the future include shellfish and other types of seafood coming in from southeast Asia.
   Lytle has publicly said on multiple occasions that he wants to increase rail business at the port, in part to take more trucks off the road, thereby reducing freeway congestion and diesel emissions.
   Both Class I railroads serving the port, Union Pacific and Burlington Northern Santa Fe (BNSF), each operate at far less than capacity due to trucks more efficiently serving the Northern California region, but Cool Port and other recent investments focusing on rail infrastructure are aimed at changing that.
   In mid-2016, the port completed a $100 million rail storage yard with 41,000 feet of tracks situated in the port’s Outer Harbor Intermodal Terminal area. The new tracks were designed as part of a plan to enhance the port’s intermodal capabilities, as well as attract more discretionary cargo from outside the region.
   And now, with construction on the Cool Port project in full swing, the Port of Oakland has a chance for a multiple-win situation in which it manages to move more traffic from trucks to rail, while also helping regional growers sustain a living and helping satisfy consumers in Asia craving a literal taste of America.
   “You can’t have that cargo load up a week before it even leaves to go to Asia with perishable product,” Lytle said. “This is the natural place for that market.”
   “It’s not going to add to some of the congestion of California highways,” Driscoll said. “To us, that’s a real benefit. To us, and our community.”
   “We think from a business standpoint, higher and better use [of port property] is something like this that really creates jobs,” Lytle added. “It creates more cargo across the docks, ultimately. This thing really needs to be here.”


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