The Port of Oakland is slashing its capital improvement budget and curbing its discretionary spending and use of contractors, as the organization projects a financial loss for fiscal year 2021 due to the impact of coronavirus shutdowns on trade and travel.
The plan is part of a set of austerity measures announced today to address the financial impact of the pandemic. The port already anticipates reduced operating income for fiscal year 2020, citing a 95% reduction in airport passenger traffic, coupled with a milder downturn in seaport cargo volume.
Loaded container volume at the port actually edged up in April, but its long term outlook calls a cargo decline in May and June “likely” as ships continue to cancel visits. Those dour results would be significant because the port loads and discharges more than 99% of the containerized goods moving through Northern California, making it the eighth busiest container port in the U.S., ranked by cargo volume.
While businesses worldwide are seeing comparable impacts during the recession, the port does not receive tax funds, so it must finance operations solely from the revenue it generates despite seeing “a hole in the budget,” Port of Oakland Executive Director Danny Wan said in a video release. “Many businesses facing that kind of drop-off in activity would probably close down, but we can’t, we have to keep operating because we’re considered essential infrastructure,” Wan said. “So, we’re looking at what else we must do.”
Wan did not offer a timetable for business recovery, and said if conditions worsen, further cost-cutting measures would follow. However, he said that the facility’s airport and seaport operations have both continued uninterrupted throughout the pandemic, despite shelter-in-place restrictions.
“We’ve taken a three-phase approach to combatting coronavirus,” Wan said. “First, we minimized the exposure of staff and the public to the coronavirus, then we assessed the impact on our operations and now, we’re ready for phase three where we implement solutions to ensure financial sustainability.”