The purchase of OOCL was reviewed by the Committee on Foreign Investment in the United States (CFIUS). COSCO and the parent company of OOCL, Orient Overseas (International) Ltd. (OOIL), said in July that they had entered into an agreement with the U.S. Department of Homeland Security and Department of Justice to sell LBCT to a “suitable, unrelated third party” acceptable to the U.S. government. COSCO is acquiring 75 perent of OOCL/OOIL.
The Port of Long Beach lnotes that the "Middle Harbor Redevelopment Program" where LBCT is located will cost the port a total of about $1.5 billion and is being built in three phases. Construction began in 2011 and phase one "went live" in late 2015. Phase one and Phase two, encompassing about two thirds of the terminal area, has been completed at a cost of $1.023 billion and Lee Peterson, a spokesman for the port said "we are in the midst of the third and final phase" is estimated to cost a $469.5 million, and comprises about 100 additional acres. The entire project is scheduled to be completed by the end of 2020.
"Our $1.5 billion is for the wharf, container yard, rail yard, truck gates, dredging, and also rail for the stacks. It also includes the buildings," said Peterson. "LBCT has said it is spending at least $600 million on the cranes, vehicles and other equipment."
More than a decade ago in 2007, it was reported that Deutsche Bank paid more than $2 billion to acquire the 454-acre Maher Terminals in Elizabeth, N.J., which is not automated. However, it also was widely believed that Deutsche Bank overpaid for the Maher Terminal, the largest in the Port of New York and New Jersey, and it was eventually sold to Macquarie in 2016.
One consultant cautioned against trying to compare the two deals. He noted that Maher terminal was sold during the height of a boom in infrastructure investment before the 2008 financial crisis, while COSCO and OOCL are being forced to sell LBCT by the U.S. government.
LBCT is leases the Port of Long Beach’s 311-acre Middle Harbor terminal. It is redeveloping the facility into what the port calls “the world’s greenest container shipping terminal” using electric and zero-emissions equipment.
Construction began in 2011 and the cost was estimated at about $1.5 billion. When completed, LBCT will have annual capacity to handle 3.3 million TEUs and have an on-dock rail yard able to handle 1.1 million TEUs or about 24 trains a week.
Until the sale of LBCT is completed COSCO said in July that it would be transferred into a trust overseen by a sole U.S. citizen and a “security officer” responsible for compliance with a “National Security Agreement and matters relating to the security of the LB Terminal business.”
The terminal is being sold at a time when business is booming for California ports. Volumes rose in the second half of this year, in part because of the strong U.S. economy, but also because importers of goods from China were racing to bring products into the country before tariffs were imposed or raised. U.S. exporters have been hurt by Chinese tariffs, however.
“Last month’s performance pushed 2018’s total TEU count to 7,349,377, making it virtually certain the port will eclipse its record of 7,544,507 TEUs set last year. For the year to date, volumes have risen 7.3 percent,” the port said.
Long Beach noted imports continued to outpace goods shipped overseas. Inbound cargo hit 319,877 TEUs, an increase of 0.2 percent, while exports shrank 8.4 percent to 115,774 TEUs. Empties returned to Asia swelled 11.4 percent to 186,183 TEUs.
Port of Long Beach Executive Director Mario Cordero said, “American retailers are stocking up on goods made in China to avoid anticipated higher tariffs. You’re seeing the opposite effect on the other side of the ocean. Chinese businesses seem to be already looking to other countries for goods and raw materials, meaning there’s less demand for American exports and more empty containers are being shipped.”
The Port of Los Angeles also has seen strong volumes, saying it is on track to handle more than 9 million TEUs once again this year. In the first 11 months of 2018, overall volumes were 8,555,490 TEUs, nearly the same volumes compared to 2017, when the port set an all-time annual cargo record.
Port of Los Angeles terminals handled 422,793 TEUs in November, 8.8 percent fewer than in the same month last year. Exports fell 14.3 percent to 152,527 TEUs, while empty containers decreased 9.1 percent to 257,011 TEUs.
The Port of Oakland handled 219,123 TEUs in November, compared with 186,069 TEUS in November 2017.
The Port of Oakland had its busiest November ever for imports in 2018, shattering an 11-year-old record. The port said Friday that it handled the equivalent of 83,364 loaded 20-foot import containers last month. That beat the old November record of 76,902 containers set in 2007. November imports were up 15 percent over the same period in 2017.
The port attributed the increase in cargo volume to continued strong U.S. consumer spending. It added that “importers are rushing cargo into the U.S. in case new tariffs are imposed next year in the ongoing trade war with China.”
Steven Trombley, the managing director of Pier 400 said the terminal's operations team worked closely with customers "to optimize their peak season needs to ensure the port productivity and yard, rail and gate capacity meet and exceed customer expectations.”
The record was set as the terminal worked the 15,500 TEU Eleonora Maersk, which normally sails in an Asia/Europe service.
But Maersk decided to deploy the Eleonora Maersk and a sister ship, Eugen Maersk into the Transpacific TP-6 string during peak season in response to the strong North American market container volumes.
The new record breaks the previous record of container handling at APM Terminals Pier 400 Los Angeles which was on the Maersk Evora at 24,846 TEUs in October 2017.