Dive Brief:
- After four years of strong growth in perishable exports (fruit and vegetables), the Port of Oakland is preparing to handle more temperature-controlled cargo with the opening of its "Cool Port" in August of 2018.
- The facility will be a temperature-controlled "transload and distribution facility," connecting rail, truck and shipping networks to move an estimated throughput of 54,000 TEUs each year.
- The $90 million investment is consistent with what the Port of Oakland sees as a competitive advantage. As the last gateway out of the U.S to Asia on most routes, and located in one of the top agricultural export states, Oakland has always been "well-positioned" to deliver perishables to market quickly. According to the port, "farm goods account for 40-50% of the port's total exports."
Dive Insight:
The port's investments are responding to a rising demand for handling temperature-controlled exports, John Driscoll, Maritime Director at the Port of Oakland, told Supply Chain Dive in an interview.
Three factors drive this demand:
- Purchasing power is growing in Asia. As the middle class grows in countries like China and India, so does the spending power to afford higher-value products.
- US producers are exporting more. "The U.S. farmer is getting more efficient and competing more effectively on the world stage," Driscoll said.
- Breakbulk is turning to containers. Over the past 20 years or so, the industry has been shipping agricultural products in containers, rather than the belly of ships, which drives some shifts in how throughput is handled.
Ports, meanwhile, are stuck in the fray of change, and looking to adapt accordingly.
Driscoll talked about two ways changes in the ocean shipping industry were affecting how Oakland expects ot handle products.
The launch of the Ocean Network Express (ONE) integrated three carriers who were already major exporters of refrigerated products, due to the Asian markets they primarily serve. Already well positioned to compete in this market, now integrated, the carriers have begun to "align" their services to boost efficiency.
At Oakland, ONE not only maintained its refrigerated services, but is also growing the size of the vessel on one service — to 16,000 TEUs from 10,000 or 12,000 — to Driscoll's knowledge.
The growing ship size benefits cold chain exporters. "Virtually all container carriers have refrigerated (capability)" already, Driscoll said. But, "the newer vessels have some incredible percentages of their vessels that are refrigerated/reefer capable."
Over the past decades, the industry as a whole has been investing in larger ships, forcing ports and terminals to invest in new facilities and equipment to handle ever-growing TEUs upon each vessel's arrival at berth. Increased options to ship perishable goods are notable side effects.
The increased size of ships even led to the expansion of the Panama Canal, opening a race for handling capacity in the East Coast.
The Port of Savannah, for example, partnered with the Department of Agriculture in 2014 to expand refrigerated capacity at those ports. In 2016, the same port announced a plan to use infrastructure investments to expand its reach to the Midwest through Chicago, a region that also ships through Oakland.
"We don't have a corner on the market," Driscoll said. "The cargo flows to where it's the most efficient from the shipper standpoint ... we compete with basically all ports that have that capability."
What is best for the shipper can be measured in various ways: from time-to-market, to handling capacity, to turn times or even services available at the port. A new facility, with rail, truck and ocean connections will help Oakland boost many of those metrics.
But Driscoll said, in the perishable market, time-to-market is even more important. "We're positioned in the supply chain to where that shortens the window of time," Driscoll said, in turn helping shippers keep products fresh, longer, and boost market reach.
