journal of commerce special report on u.s. gulf ports

50 THE JOURNAL OF COMMERCE www.joc.com MARCH 22.2010

U.S

. g

Ulf

SPEC

IAL

REP

ORT

COunTIng On A ThIRd COAST Gulf ports have their eyes on the Panama Canal and on inland distribution as they invest in capacity

By Peter T. Leach

www.joc.com THE JOURNAL OF COMMERCE 51

COmIng Off A yEAR with container and breakbulk volume flat at best, Gulf container ports from Tampa to Texas are positioning themselves for future opportunities. They believe the time will come when their coast becomes the nation’s true third coast, with gateways as strong as ports on the East and West coasts and transportation networks fan-ning out from docks to inland distribution centers and consumer markets.

Port directors at the major Gulf ports expect the growth in container volume to come from the Sun Belt’s ongoing population increase and from the stra-tegic positioning they hold as gateways for trade with the Midwest. Several ports insist they have the figures to back up their optimism.

COunTIng On A ThIRd COAST Gulf ports have their eyes on the Panama Canal and on inland distribution as they invest in capacity


U.S

. g

Ulf

SPEC

IAL

REP

ORT

But port officials also acknowledge some growth in their container trade is coming at the expense of their breakbulk business as growing amounts of breakbulk cargo get stuffed into containers.

Investment on the docks and in highway and rail networks, particularly out of Texas, is putting some financial muscle behind the belief that distribution patterns may shift in the Gulf’s direction.

Some Gulf ports are laying the ground-work for future growth by expanding terminals and dredging deeper harbors in anticipation of the opening of the Panama Canal’s third set of locks, which will open the door for much bigger ships coming from Asia. Other ports see the growth of the north-south trade with Central and South America as the key to their volume growth. Ocean carriers, however, are waiting to see which way the trade winds blow before they commit to new Gulf services.

Houston, which managed a small growth in container traffic last year, is pinning plans for future growth on both north-south and east-west trade lanes. The Houston Port Authority is speeding up preparations for the opening of the new Panama Canal locks in 2014.

Mobile, Ala., and New Orleans see their growth coming in trade to and from points in the Midwest. Both ports are in the midst of expansion programs aimed at capturing feeder traffic coming from Caribbean hubs where the big post-Panamax ships will transship containers from Asia after the new canal locks open in 2014.

Tampa, Fla., which bills itself as the closest U.S. Gulf port to the Panama Canal, expects trade between Florida and Latin America to fuel much of its growth. Smaller ports such as Gulfport, Miss., and Browns-ville, Texas, expect growth to come from the expansion of existing container ser-vices that call at their ports and from some new loops that may start up.

Houston, the Gulf’s biggest container port, is taking a new approach to planning. It is hiring an economist and a supporting staff to forecast the temper of the trades that will fuel the port’s growth. “Ports have been very good at explaining what happened, but we’re not nearly as good at explaining what will happen,” said Alex Dreyer, who took over as executive director of the Port of Houston Authority last fall.

Dreyer, who does not have a background in port or maritime business, said he wants to better understand the economic factors driving the port’s performance before com-mitting the millions of dollars required to

300

600

900

1,200

1,500Total

Exports

Imports

20112010200920082007

■ Imports ■ Exports ■ Total

Estimates

Source: PIERS Global Intelligence Solutions, a sister company of The Journal of Commerce, www.piers.com

gROWTh In ThE guLf: hOuSTOn

n Container volume, in thousands of TEUs, at the Gulf’s largest container port.


U.S

. g

Ulf

SPEC

IAL

REP

ORT

expand capacity to meet future demand. “In bull markets, most ports were scrambling to stay ahead of the crest in the wave,” he said. “When we see a downturn, we say, ‘Gee, why didn’t we see that coming?’ ”

The port authority, which is projecting a 5 to 6 percent increase in its volume for the year, will complete 45 percent of the ongoing expansion of its Bayport container terminal by the end of the summer, when it will have 3 ½ wharves operating out of the seven planned.

Dreyer said 15 to 16 percent of the port’s container traffic now comes from Asia, while some of the canal authority’s projec-tions suggest 30 to 35 percent of Houston’s container traffic will come from Asia after the expansion.

“If that’s true, that’s healthy growth in five to 10 years. That tells me Bayport is going to be done soon enough,” he said.

The Tampa Port Authority is expanding its new container terminal in anticipation of continuing population and container growth after reporting a 10 increase in box volume in 2009.

“If you look at the Gulf, Houston has a market of 10 million people on the west side of the Gulf, and Tampa has a market of 8 mil-lion people in the local market. It’s a natural second Gulf call,” said Richard Wainio, the Tampa Port Authority’s CEO. “Maybe you would add Mobile in between. We think the Gulf will generally emerge as a more significant coast in the future as its popula-tion grows.”

The port is adding 40 acres to the con-tainer yards at its 4-year-old terminal, and expanding the berth length and gantry rails from 1,800 to 2,700 feet, which will bring its

“WE ThInk ThE guLf WILL

gEnERALLy EmERgE AS A mORE SIgnIfICAnT COAST

In ThE fuTuRE AS ITS POPuLATIOn

gROWS.”

50

100

150

200

250

300Total

Exports

Imports

20112010200920082007


Estimates


gROWTh In ThE guLf: nEWORLEAnS

n Container volume, in thousands of TEUs at the Gulf’s second-largest container port.


U.S

. g

Ulf

SPEC

IAL

REP

ORT

annual capacity to 250,000 TEUs this year.“More importantly, we have another 120

acres ready to go,” Wainio said. The port authority has a $125 million multiphase expansion plan to increase the terminal fourfold in a couple of years, depending on the growth of the market. “We have three cranes now and can add more capacity very quickly to bring it to anywhere from 750,000 to 1 million TEUs,” he said.

Terminal expansion is one part of Tampa’s effort to capture more container trade. The state and the federal govern-ments are spending $500 million on what they call the I-4 Connector, which will be completed in 2012, ahead of the big growth in the box business. The 1.5-mile connector will run straight from Hooker’s Point onto the elevated connector with a dedicated truck lane to I-4 and I-75, which will allow trucks from the terminal to cross the city in a matter of minutes with containers bound for the distribution centers springing up on the I-4 corridor.

“We are geographically well centered to serve the Central Florida market,” Wainio said. “Florida is a strong inbound truck market. We expect to provide those truck-ers who now head back north empty with cargoes that we import.”

The Port of Mobile, hard hit by the plunge in its key metallurgical coal exports last year, is seeing a sharp pickup in those exports as global demand rises at steel plants that use it to make the coke that stokes their furnaces.

“Coal has flipped around. Our exports are growing very rapidly,” said James Lyons, executive director of the Alabama State Port Authority. “The issue is getting coal down here. I’ve got four ships waiting for berth. The rapid rise in demand overtook the transporta-tion system by both barge and rail coming in here. We are working to de-bottleneck it.”

The picture is also strong for Mobile’s steel trade, another staple of the port’s breakbulk business.

Lyons said export orders for steel are picking up in the Far East, and for pipe in the Middle East. On the steel import side, Mobile just handled its first slab steel import at the new steel terminal it built for the huge new ThyssenKrupp plant, located 40 miles from the port, that is expected to open this summer.

“They will start segments as they go through the year. It will increase slab imports and coil exports through here and coil imports for the stainless steel mill. We expect steel to pick up beginning in June,

50

100

150

200Total

Exports

Imports

20112010200920082007


Estimates


gROWTh In ThE guLf: guLfPORT

n Container volume, in thousands of TEUs, at the Gulf’s third-largest container port.


U.S

. g

Ulf

SPEC

IAL

REP

ORT

A Subsidiary of International Shipholding Corporation

• Very competitive alternative rail-ferry service to and from points in the eastern United States, Canada and southern Mexico.

• Fast transit

• Multi-vessel sailings every four days

• Ability to carry all types of railcars

• Available cross dock and trans-load services

• through rapid turnaround

• Single bill of lading and invoicing

of the highest customer retention rates in the industry and for a cost-cutting quote, contact us at 877-606-2477.

CG RAILWAY:TRACKS ACROSS THE GULF.

WWW.CGRAILWAY.COM11 North water Street, Suite 18290Mobile, Alabama 36602

when we’ll get into a steep upward curve coming in and out,” Lyons said.

Mobile’s container volume was about flat last year compared to 2008, when its new Mobile Container Terminal opened. Volume is expected to grow this year as the economic recovery continues. “The carriers that come in here have all they can handle because they have been pretty disciplined about cut-ting capacity and not adding back services,” Lyons said. He expects to add at least one new service this year, and possibly two — one from Asia and the other from Europe.

The port is also talking to another car-rier about the possibility of adding a second service to Central America.

The port’s new turning basin that will be completed this summer will enable Mobile to handle post-Panamax ships that can’t turn in the current harbor without using tugs. That will complete the facilities the port has been building for the last few years in antici-pation of the larger ships that will use the Panama Canal’s new locks. “We think that’s going to make the U.S. Gulf ports, Houston

and Mobile much more competitive for Far East cargoes,” Lyons said. “Our focus is to try to get more Far East imports of consumer products in here for our distribution centers that are growing in our areas.”

New Orleans’s container volume, which grew from August through October on the back of stronger exports, slumped toward

year-end, but spiked again in the new year. “We attribute it to the weak dollar,” said Gary LaGrange, president and CEO of the Port of New Orleans

The port is handling increasing exports of chemicals in containers to Europe and South America. “Lots of agricultural indus-trial products are going out worldwide

20

40

60

80

100Total

Exports

Imports

20112010200920082007


Estimates


gROWTh In ThE guLf: mObILE

n Container volume, in thousands of TEUs, at the Gulf’s fourth-largest container port.


— phosphates to Brazil, India and some of the LDCs that are growing their own food products and not relying so much on the U.S.,” LaGrange said.

But those exports have taken their toll on some of the port’s other business. “To our chagrin, some of the increase in con-tainer volume has been at the cost of the breakbulk industry,” he said. “We’re seeing a small transition of breakbulk cargo more and more into containers, which are benefit-ting at the expense of breakbulk — less than 10 percent, but worth monitoring.”

The port expects container volume this year to increase, especially as its business grows with the BRIC countries — Brazil, Russia, India and China.

“The bottom line as you read the tea leaves is that the future looks really robust if you’re doing any business with the BRICs, especially on the export side, any time in the near future,” LaGrange said. “We are seeing that in the container export trend numbers. We have a wealth of cargo that goes to Brazil and by container into Antwerp


U.S

. g

Ulf

SPEC

IAL

REP

ORT

for transshipping to India and China.”The port’s plan for the second and third

stages of expansion of its Napoleon Avenue Container Terminals will give is enough capacity through 2028 to be “the container port for the Lower Mississippi River,” he said. Those expansion pans will enable it to increase capacity to 1.2 million TEUs from the current 440,000 TEUs.

The Port of Gulfport, which is still repair-ing and reconstructing facilities damaged by Hurricane Katrina in 2005, has benefitted from the loyalty of its four major customers, Dole, Chiquita, Crowley and DuPont, which operate in the north-south trade lane, which has been somewhat insulated from the sharp downturn in global trade.

“We’re lucky to have loyal customers,” said Don Allee, Gulfport’s executive director and CEO. “One of our basic inbound com-modities is green fruit. People like to eat bananas and other seasonal fruit even dur-ing the downturn. We also have inbound garments from Central America.”

Allee is optimistic about the port’s growth potential. “The population growth

in our hinterland and access to the Middle West will fuel our growth. The north-south axis will further propel it,” he said.

To meet that growth, the port is spend-ing $40 million to expand its west container terminal onto 60 acres, which is about 70 percent complete. Longer term, it is investing $570 million to build its capacity up to 700,000 TEUs, a project that will take

up to seven years. The port has installed mobile harbor cranes at its Gottwald site to help the facility through this period of growth and restoration.

At the southernmost tip of Texas, the Port of Brownsville is focused less on inter-national container trade than on short-sea operations. Brownsville is seeing strong demand for the single container service that

YOUR RO-RO PORT OF CHOICEThree Ro-Ro Terminals 35 Acres

& 200,000 sq. ft. of Warehouse Space

Gulf Coast Hub for Wallenius Wilhelmsen Logistics,“K” Line Ro-Ro, & Hoegh Autoliners

Competitive Trucking & Rail Rates

No Intermodal Congestion

P.O. Box 328 • Galveston, TX 77553Phone: 409-766-6112 • Fax: 409-766-6171Website: www.portofgalveston.comContact: Capt. John G. Peterlin IIISr. Director of Marketing & AdministrationEmail: [email protected]

10

20

30

40

50

60Total

Exports

Imports

20112010200920082007


Estimates


gROWTh In ThE guLf: fREEPORT, TExAS

n Container volume, in thousands of TEUs, at the Gulf’s fifth-largest container port.


began operating in December 2008, just as the world plunged into recession.

Seabridge operates a container-on-barge service, which shuttles from Brownsville to Port Manatee on the west coast of Florida every 10 days with loads of tiles and commodities such as juice con-centrate. Demand for space is so strong the carrier is considering adding a second tug-barge loop so it can run a service every five days, said Eduardo Campirano, Browns-ville’s port director and CEO.

He said Seabridge also is exploring the possibility of starting a container-on-barge service to Progreso, a largely cruise port near Merida on Mexico’s Yucatan Peninsula.

“The challenge is, what do we bring back?” Campirano said. “We’re looking at stopping in Veracruz to pick up boxes there and bring them back, unloading here and putting some on Seabridge to Port Mana-tee. That has promise, but until something concrete materializes, we’ll continue to look at it.” JOC

Contact Peter T. Leach at [email protected].

Houston New Orleans Baltimore St. Petersburg


U.S

. g

Ulf

SPEC

IAL

REP

ORT

WhILE mAny SuPPORTERS of marine high-ways are looking to the East and West coasts to support the strategy, the Gulf of Mexico is providing support for the system to take root. After all, oceango-ing vessels will never lure cargo from the roads by matching the speed of trucks, but the choices in the Gulf region are between moving goods along the perimeter or mov-ing them in a straight line across it.

The time-distance calculation is proving profitable for SeaBridge Freight, which began tug-and-barge service between Brownsville, Texas, and Port Manatee, Fla., in December 2008. SeaBridge offers four-day service between the two ports, comparable to what it takes a truck to cover the same distance.

SeaBridge Freight President Hank Hoff-man is a former trucking executive who says one of his biggest challenges is to make shippers aware of water transportation as an alternative.

“The vast majority of shippers and traffic managers out there have the wrong impres-sion of barge transportation,” Hoffman said. “As soon as they hear ‘barge,’ they think, ‘Oh,

To order, call Alli McEntyre, 225-784-0177

Get a Copy of Your Company’s Journal

of Commerce Article

Was your company featured in this week’s Journal of Commerce? We offer complete, magazine-quality reprints of the article your compa-ny appeared in. This is a fantastic tool for your sales, marketing or public relations campaign to show-case your company’s high-profile exposure — don’t miss out!

To order, call Alli McEntyre,

225-784-0177 oo oorder alllllli McEntyre,

22225-5-7878 01017777

r, caEntyre

REPRINTS

ToTTTTTTToAlToTAlA

nAvIgATIng ThE STRAIghT LInES

By R.G. Edmonson

Some operators find the Gulf offers an ideal

short-sea solution


it’s really slow. It’s going cost all kinds of time to market. It’s for bulk products.’

“When we tell them what our transit time is from Port Manatee to Brownsville, they’re really surprised. We’re competitive with trucks,” said Hoffman, who is sched-uled to speak at The Journal of Commerce’s 7th Annual North American Marine High-ways and Logistics Conference April 6-7 in Baltimore.

Hoffman sees SeaBridge Freight as more ally than adversary to land transpor-tation. “Since Day One, we’ve said we are not competing with trucking companies or the railroads. We’re trying to position ourselves to be their best friends. We want to be a low-cost form of capacity that will complement their entire logistics solutions.

“If you have customers in Texas or Mex-ico, Florida or Georgia, and they’re looking for the best way to get cargo moved from one side of the pond to the other, we believe they’re going choose the best combination of truck, rail or barge to get their cargo from point A to point B,” Hoffman said.

SeaBridge Freight operates an east-west route, but another operator has established a thriving north-south business across the Gulf. CG Railway, a subsidiary of International Shipholding, moves about 16,000 railcars a year between connecting railroads at the ports of Mobile, Ala., and Coatzacoalcos, Mexico, says Kevin Wild, senior vice president.

CG began operations in January 2001, with the Singapore-flagged Bali Sea and Banda Sea, two semi-submersible barge carriers that were converted to double-deck railcar ferries. They operate on a four-day schedule between the two ports. Wild said it’s an alternative to routing cars through Laredo, Texas, the princi-pal land crossing on the Mexican border. “The major crossing is at Laredo. We saw that the NAFTA trade was growing, and con-gestion would follow,” he said. “We thought if we could get a marine solution that could serve the eastern U.S. and southern Mexico, we would have a nice niche market.

“We’re marketing directly to the ship-per,” Wild said. It wasn’t an easy sell at the start. Customers had already factored border delays into their transit times. “It was difficult to get people to make the initial shift, espe-cially to such a unique concept and operation. We went into it knowing we had to prove to them that we were going to be there.”

Other operators talked about providing cross-Gulf rail service, but none had delivered on the promises, Wild said. “We knew we had to be consistent in our four-day transit. Year

One, we didn’t move a whole lot of cars, but we did the sailings we advertised so everyone understood we were in this for the long haul.”

Wild believes water and rail are as envi-ronmentally friendly as transportation can get. “You’ve got to prove that you’re price-competitive, and you’ve got to prove it’s a safe and efficient transportation,” he said. What’s

important is to show customers the ferry is going to save them supply chain and inventory costs. “You can’t say you’re going to get people to transfer modes strictly because you’re more environmentally friendly, but it’s going to be value-added.” JOC

Contact R.G. Edmonson at [email protected].

Deepwater berths with immediate access to two major interstates, links to five Class 1 railroads, 15,000 miles of inland waterways,

service from 65 truck lines, and twice-weekly rail ferry service to Mexico. Add to that ultra-modern logistics. Please, remain calm. asdd.com

journal of commerce special report on u.s. gulf ports

Documents

ports growth

gulf container ports

coast gulf ports

container trade

volume growth

major gulf ports

future growth

smaller ports