Dire fiscal straits at Oakland’s port
State help sought — bulk of income from airport
The Port of Oakland is facing a severe financial crisis — but it’s not so much because the port is missing its ships. It’s the airplanes.
Port officials are expecting that, because of the coronavirus pandemic, air passenger counts will be down 95% in April from a year ago — and the Oakland airport accounts for more than half the port’s income.
The pandemic has weakened international trade, decimated travel and shuttered local businesses. For the port, that has created a dire situation.
Executive Director Danny Wan told the State Lands Commission, which regulates the use of land at the port, in a meeting held by videoconference Wednesday that the port was coming to grips with a severe revenue shortfall. He asked the state agency to help the port get more federal funding and consider flexibility with land use, as traditional avenues for income steeply decline. The Port of Oakland disclosed in April that it was expecting to receive $44 million of federal relief under the Cares Act.
“The Port of Oakland is operational in these unprecedented, challenging times and has stepped up for the state’s emergency response,” Wan said in the meeting. “But we will need to adapt our business model to new realities and ask the commission to continue to work with us to find creative, workable solutions to stabilize our finances.”
The Port of Oakland reported $397 million in revenue last year. It directly employs more than 500 people and supports more than 84,000 jobs in the Bay Area. It’s classified as an essential operation under shelterinplace orders that Alameda County has extended,
along with other Bay Area jurisdictions, through the end of May.
The port has three main lines of business: the seaport, the airport and commercial real estate. The first two account for the majority of the port’s income, with the airport bringing in a little over half, and the seaport around 40%. Its commercial real estate revenue, including rents from tenants in Jack London Square, accounts for 10%.
In March, Oakland International Airport saw passenger travel decline by almost 59% to 451,000 compared with March 2019. Port officials did not have exact figures for April but said they are expecting passenger counts to decline by 95% year over year; federal, state and local governments have warned against any nonessential travel. In 2019, the airport served 13.6 million passengers and moved 1.3 billion pounds of air cargo.
The seaport, a hub of maritime international trade for the region, sees threequarters of its business with Asia. It saw overall import and export volume decline by 11% in March compared with 2019. The port is expecting further decreases in the summer: The arrivals of approximately 20 container ships have been canceled for May and June, the port said.
Port officials said a decline in consumer spending has affected global trade, and there are fewer goods to load on ships running between Asia’s manufacturing centers and U.S. ports.
The port had projected revenue this year would be flat at around $398 million. With its largest sources of income falling, the port expects to report steep financial losses well into its 2021 fiscal year.
Relief may come through a loosening of land use rules, if the state commission agrees. The port oversees approximately 837 acres, including 20 miles of waterfront around Jack London Square. Some of the commercial real estate properties on the site include warehouses, parking lots, hotels, offices, shops, restaurants and public parks.
In March, an empty pier at the port was the docking site for the Grand Princess cruise ship, which had more than 100 coronavirus cases. The ship and passengers have since departed.
Some longshoremen at the SSA Marine terminal called for more extensive equipment cleaning last month and threatened to refuse to work.