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Time to Bulk Up Port of Sacramento ready for more business in container traffic

Published in the San Francisco Chronicle on 08/19/05

Time to bulk up
Port of Sacramento ready for more business in container traffic
- George Raine, Chronicle Staff Writer
Friday, August 19, 2005

West Sacramento -- Since 1963, bulk cargo ships have sailed up and down the 43-mile- long man-made channel of the Port of Sacramento, many of them arriving with fertilizer and cement and departing with rice and wood chips. It's a port rich in history, but these days, light on business, because only 60 to 70 ships a year now visit here.

But change is just around the bend at the Port of Sacramento.

There's undeveloped port-owned land that can potentially be sold for as much as $100 million. The governing board is in transition. And, together with the Port of Oakland, there's an idea taking shape to use barges to move cargo containers down the channel to San Francisco Bay, bringing new business to this struggling inland port.

The Port of Sacramento, which has annual revenue of around $10 million, could use a boost. It has lost $5.5 million in the past five years and is on track to lose $1.7 million this fiscal year, said Andrew Belknap, a management consultant brought in as the port's interim chief executive officer.

The port is in a "market trough,'' said John Sulpizio, the facility's director.

The Port of Sacramento does not generally handle containers, which play such an important part in the shipping industry. Instead, it specializes in bulk commodities.

But the volume of cargo shipped in and out of Sacramento has been shrinking and is below 800,000 tons annually. That's one-fourth of what the port handled in early 1980s, said West Sacramento Director of Redevelopment Val Toppenberg.

By comparison, the Port of Oakland handled more than 12.6 million tons in 2003, according to the American Association of Port Authorities.

To take one example, the Port of Sacramento sent millions of dollars in wood chips through the years to a major Japanese customer, the Daio Paper Co. But Daio stopped importing wood chips from California because of prices, availability, cost of transportation and more-competitive alternative supplies, Sulpizio said.

For 36 years, Cargill, the food and agricultural products company, leased a building here -- at its highest rate for $500,000 per year -- and bought and exported regional wheat. Cargill pulled out in 2002 when the wheat market declined.

Other reasons for the port's losses include a high debt service obligation and a decline in port prices as the Port of Stockton cut costs for rice shippers.

On the upside, there are projections for an increase in the import of building materials in general and cement in particular, to satisfy demand. It's even expected that cement imports here will eventually surpass rice exports -- 213,423 tons in 2004.

The 30-foot-deep Corps of Engineers-built channel of the Port of Sacramento begins at a quiet, graceful bend in the Sacramento River. There's a lock where channel and river meet, the only lock in California, Sulpizio said.

From there, the man-made portion flows 43 miles, parallel to the Sacramento River, to a point just beyond Rio Vista, where it joins the natural waterways of Suisun Bay and the Carquinez Strait, out to the Golden Gate -- 80 nautical miles in all.

The first ship to use the port, on June 29, 1963, carried 5,000 tons of bagged rice, bound for Okinawa. This week, the Danny Boy, a Greek-owned ship making its maiden voyage and with Sacramento as its first port of call, was being loaded with 22,000 tons of bulk rice, being shipped to Jordan by the Connell Rice & Sugar Co. of Colusa. It departs on Saturday.

The other day, Sulpizio virtually glowed as he stood before the Danny Boy, not a scratch on it.

"The focus in our industry has been on mega (container) ships, but here is a brand-new vessel in a new class that tells you that there are ports all over the world that can't accommodate those mega- ships, and there is a whole different tier of trade that exists and is worthy of investment,'' Sulpizio said.

The barge proposal, meantime, would give the Port of Oakland a hub to transport commodities from the Central Valley. Trucks would be unloaded at West Sacramento instead of continuing to Oakland, reducing diesel traffic on Interstates 80 and 580 headed to the Bay Area.

Reducing toxic emissions from trucks, said Wilson Lacy, director of maritime at the Port of Oakland, is "exactly the reason, the main reason'' for pushing the concept of a fleet of barges.

It's a high-priority subject at the Port of Oakland, which set aside $8.9 million for air quality mitigation to settle a lawsuit and head off a threatened suit from West Oakland residents who complained about harmful effects of truck, rail and ship exhaust in 1997.

Early stages

The barge idea is still in a nascent, talking stage and hasn't been presented to the boards of either of the ports. But Lacy and Sulpizio, the port director in Sacramento, are enthusiastic. So is the International Longshore and Warehouse Union, and environmental officials are curious.

"There would probably be (a regulatory) requirement for an analysis of the trade-off regarding emissions, what kind of barges are used and how clean they are and how many trucks are taken off the highway,'' said Terry Lee, a spokeswoman for the Bay Area Air Quality Management District. "At least it shows creative thinking,'' she said.

"Oakland is going to need an escape valve, and that can be Sacramento,'' said Agustin Ramirez, an ILWU organizer in the Sacramento Valley. "And if you take 10 gallons of diesel off I-80, that's diesel that isn't carried east by the wind into the valley.''

The thinking about barges, Lacy said, is to use the "rolo'' type for loading and unloading -- a maritime word for a "roll on, roll off'' barge --

rather than cranes. Rolos are considerably less expensive to operate, Ramirez said.

"It's an innovative partnership," Sulpizio said of doing a barge business with Oakland, "where your No. 1 aim is to make better use of a transportation system.''

Many ports in California that don't handle containers because their channels are not deep enough, such as Stockton's, earn a significant portion of their revenue through real estate transactions, often not related to maritime.

That's not the case here now, although some 300 undeveloped acres across the channel belonging to the port might go on the market in the future. Depending on how the land is used, a sale could raise from $40 million to $100 million, according to an estimate made for the port.

Disputed jurisdiction

Before the port sorts out its potential sale options or develops the idea of barges, it must resolve a thorny management issue.

The port is governed by the seven-member Sacramento-Yolo Port District Commission, but only two of the seven represent West Sacramento, where it is located. For years, West Sacramento, now a community of 40,000 people, did not have a voice on the board, in part because the city -- in Yolo County, across the Sacramento River from the state capital -- wasn't incorporated until 1987.

Today, two commission members are from the city of Sacramento, two are from Sacramento County, one is from Yolo County and two are from West Sacramento. "The history is not a good working relationship,'' said Belknap, because of competing jurisdictional interests. "It's getting better,'' he said.

West Sacramento ultimately proposed, and Sacramento and Sacramento County and Yolo County have agreed in principle, that West Sacramento should hold the majority on the commission in the future, because its fortunes are most directly tied to the port's ups and downs. However, Sacramento and Sacramento County want to be compensated because their taxpayers financed $13.6 million in port bonds in 1947 and 1961 (the federal share was $40 million). That will come via the land sale, with specifics yet to be sorted out.

"The future of the port is dependent on West Sacramento having majority say in governance of the port so they can feel comfortable approving major projects,'' said Toby Ross, city manager.

A final commission vote on shifting majority power to West Sacramento is scheduled Sept. 12.

Meanwhile, the port is also looking for a partner -- an entity with experience running marine terminals -- that can operate the port. The Port of Oakland says that it's interested.

E-mail George Raine at graine@sfchronicle.com.
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©2005 San Francisco Chronicle

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