Port of Oakland, Outer Harbor agree to cancel 50-year lease agreement

The Port of Oakland said late Friday it agreed to terminate its 50-year lease with bankrupt terminal operator Outer Harbor Terminal LLC, whose January filing and decision to close its Oakland operations forced the country's fifth-largest port to reposition 30 percent of its cargo.

Under the agreement, which is contingent upon approval by a federal bankruptcy court reviewing Outer Harbor's application, the operator will close on April 29, a bit less than a month after it ceases vessel and cargo services at Oakland on March 31. It will pay the port $6 million to cover rent for this month and next, as well as $5.1 million for cleanup and repair costs. In return, Outer Harbor will be let out of its lease, which was to run until 2059. The port said it will provide free rent in April to ensure the terminal remains open until the shutdown.

In a statement, port officials said they agreed to terminate the lease to focus on service to customers in the wake of the terminal closure. "We're not pleased to see a terminal close, but this agreement helps ensure a smooth transition for our customers," said Port of Oakland Maritime Director John Driscoll. "All of our attention now is on efficiently migrating their cargo to the other terminals in Oakland." Outer Harbor is one of five privately operated terminals at the port.

Two weeks ago, the port announced a "continuity plan" calling for ships that use Outer Harbor to relocate to berths at two adjacent terminals. It said those terminals would add labor when and where it is necessary, and would keep gates open nights and weekends to accommodate additional cargo.

The two terminals will lease additional acreage from the Port to accommodate increased container volume. The Port will provide $1.5 million to help participating terminals open up night and weekend gates. Customers won't be assessed fees for extended gate hours. Terminals must agree to get drivers in and out of the facilities within 75 minutes, the port said.

Each night, Oakland International Container Terminal will transport an undetermined number of import containers out of its facility, the port said. The boxes will be available at a nearby location for immediate pickup by truckers, the port said. By Feb. 23, a container depot will open in the state's Central Valley agricultural heartland to allow cargo owners to pick up or drop off containers without making long drives to the port.