October 2014 Port Bureau News

Port Bureau October 2014

Greater Houston Port Bureau

News

Foreign Trade Statistics Port of Houston shows moderate growth, strong performance in steel and LPGs

David Grzebinski, President/CEO Kirby Corporation Speaker at Port Bureau’s September Commerce Club

Global AIS on Space Station Port Bureau and collaborators receive $500,000 research grant

www.txgulf.org

Port Bureau

News

10

14

26

4TotalGermany Trade: $4,419,629,616 Netherlands 7 Total Trade: $3,864,353,327

Trade Balance: -$2,593,585,846 China 3 Total Trade: $5,001,861,757

Trade Balance: $2,032,121,189

1

Mexico Total Trade: $ 12,255,244,024 Trade Balance: -$4,354,121,586

Venezuela 9 Total Trade: $2,610,886,527

Trade Balance: -$737,656,055

Belgium 10Total Trade: $2,509,558,841

8

Trade Balance: $1,108,194,077

South Korea Total Trade: $3,859,541,197 Trade Balance: -$701,237,313

Trade Balance: $1,226,892,723

Colombia 6 Total Trade: $4,046,855,624

Saudi Arabia 5 Total Trade: $4,112,436,403

Trade Balance: $1,039,037,302

Trade Balance: -$1,598,041,121

India Total Trade: Trade Balance:

2

Brazil Total Trade: $7,153,100,119 Trade Balance: $3,088,655,051

3 Captain’s Corner Bull Riding

4 Port Watch

Steel, Infrastructure, and Crude

6 P3 Out, 2M and Ocean 3 In

Publisher/President CAPT Bill Diehl, USCG (Ret.), P.E. Editor Christine Schlenker Copy Editors Emily Mitchell Judith Schultz Art Director Christine Schlenker For information about the Port Bureau:

Phone: (713) 678-4300 Email: info@txgulf.org

10 JAMSS America,

Inc. Wins Research Grant 14 Foreign Trade Statistics 20 U.S. ExportImport Bank Extended Until June 2015

Writers Dave Cooley Matt Logan Emily Mitchell Christine Schlenker Judith Schultz Patrick Seeba Front Cover Photo courtesy of Lou Vest

Photographers Christine Schlenker Patrick Seeba For information about the Port Bureau News stories or advertising:

Port Bureau Staff Jeannie Angeli Al Cusick Megan Essenmacher Cristina Gomez Janette Molina

Printing Company DiPuma Printing and Promotional Products www.dipuma.com

Email: editor@txgulf.org

2 | October 2014 www.txgulf.org

26 Port of Houston

Centennial Celebrations

32 Port Bureau

Member Update

34 Commerce Club David Grzebinski, Kirby Corporation A Publication of the Greater Houston Port Bureau The Port Bureau News magazine is a monthly publication of the Greater Houston Port Bureau, a member-driven nonprofit dedicated to promoting the maritime community, providing vessel movement information and offering members premier networking and advertising opportunities to drive business.

The magazine is distributed to over 6,500 professionals in the Houston maritime community via U.S. mail and email. Advertising is available for members.

Captain's Corner Bull Riding A

s Breakbulk Americas 2014 was taking over Houston for the first week of October, I couldn’t help but think that it’s a perfect time to show off our great port to our interstate and international visitors. Port Bureau member Texas Terminals kicked off the networking with some Texas hospitality – a barbecue party complete with a mechanical bull. Yours truly gave it a shot, and I quickly learned that I could never make a living bull riding.

From the number of people who came to Houston for Breakbulk and other conferences, as well as the amount of capital investment pouring into the area, it’s evident that Houston and the rest of Texas are doing well, and it’s showing in our demand for labor. The U.S. Bureau of Labor Statistics (BLS) reported on October 1 that through August 2014, the Houston area gained 107,400 employees over the past year – up 3.9% from August 2013. Houston area unemployment is at 5.4%, almost a percent lower than the national average of 6.1%.

But another BLS report shows a side that’s not as cheerful. Veterans of the Gulf War II era (9/11 to the present) face a staggering 8.1% unemployment

nationally. While it’s fortunately down from the whopping 10% last year, there’s still a long way CAPT Bill Diehl, to go until veterans face the same USCG (Ret.) employment levels as lifelong civilians.

The maritime industry in Houston is poised to help employ veterans for the mutual benefit of veterans and companies. Veterans tend to transition to maritime jobs easily, as they are experienced in what it takes to work a demanding job that can require working away from home for days or weeks at a time. Add in their understanding of the importance of following a chain of command, working seamlessly in a group, and adhering to strict safety protocols, and you find a stable and trainable workforce.

The Port of Houston Authority teamed up with the American Maritime Partnership for a successful Military to Maritime career fair in early September, featuring 50 exhibitors ready to hire and 400 veterans ready to work. Some of the attendees said they had no idea this was a career path available to them until they were invited to the career fair. We can work together as a community to show veterans that this is a great place to work. If you’re a Port Bureau member and you’re hosting a career fair that welcomes veterans, let us know and we’ll help spread the word.

The Houston Ship Channel is certainly the economic engine of Texas, but the people in this great area are the fuel that makes it run. I think we as a community can show veterans that getting a job here isn’t as hard as riding a bull, and we can help connect them with the jobs this industry is eager to fill. ò

The shortest bull riding career in history.

Greater Houston Port Bureau | 3

© Christine Schlenker

PORT WATCH

Steel, Infrastructure, and Crude Tom Marian, Buffalo Marine Service

I

n Guns, Germs, and Steel, author Jared Diamond In terms of total vessel arrival numbers, although posits that Eurasian civilizations were more sucJuly was a superb month, August unseated April as the cessful in hegemonic activity because they leveraged busiest month of the year. Granted, not every port saw their environmental advantages. Today, the descendants a monthly increase, but a few posted monthly highs of those people who once dominated world trade and and all but three tallied commendable gains. The Port territorial expansion are once again benefiting from of Texas City was one of the ports that chalked up a the environmental advantages that abound in the remonthly record with its 7% monthly increase. Yet, it region – abundant energy, robust demand for materials mains 6% off of 2013’s pace. This is primarily attributto tap and process able to Texas City’s Texas Ports Deepdraft Vessel Arrivals that energy, and an bulk liquid portfolio August 2014 Year-to-Date Percent Change efficient means to which was historiBROWNSVILLE, -11.5% move refined enercally dominated by CORPUS CHRISTI, 19.5% gy products. This has been crude imports. While a consistent theme over there still remains a FREEPORT, 18.6% the past few years for the Lone need to import the GALVESTON, 15.9% Star State’s ports and, thanks more sour crudes HOUSTON, 0.2% to shale gas crude, steel pipe from Mexico and Venezuela for its refineries, PORT LAVACA, 4.2% and drilling equipment imports a larger percentage of domestic crude is supSABINE, -0.2% continue to be offloaded at plied via pipeline and rail. The port has been TEXAS CITY, -6.1% port-of-entry docks in record retooling several of its terminals to export GRAND TOTAL, 3.5% distillates and over the last few weeks ethanol numbers. exports have been on a dramatic rise after a 4 | October 2014 www.txgulf.org

port watch

Port of Houston Deepdraft Vessel Arrivals 2000

1500

August 2014 vs. August 2013 Aug. 2014 YTD (Total: 5,533)

August. Thus, 11,426 tow transits were documented which bumped up the year-to-date number by 2%. While a sizeable number of tows were bound for Houston, many others were destined for the Mississippi River.

The Port of Houston continued to benefit from the torrid traffic of tows but was Aug. 2013 YTD (Total: 5,520) off by just shy of 2% in terms of bluewater 500 vessel arrivals. As previously indicated, this de minimis drop was more than offset by the growing tonnage of the vessels calling upon 0 the port. As such, steel pipe and oil exploration equipment continued to move at record numbers onto rail and truck from the ships carrying this cargo. Mind you, bulk vessel movements were down 20% for the month several week hiatus. Texas City has also seen a 15% inbut remained 27% above 2013’s year-to-date crease in the number of barges. figures. General cargo was off by over 5% for the year but had a healthy 12% rise for the month. Containers, Corpus Christi also saw a record month for the year with a 11% monthly gain, boosting its year-to-date in terms of raw numbers, were up far more than the year-to-date 4% vessel count rise. LPG vessel moveperformance by nearly 20%. The driver – as always – is ments remain in positive territory for the year by 3% the Eagle Ford and Permian Basin crude. Freeport had occupied the top spot for year-to-date improvement on but faltered by over 14% from July to August. Chemical tankers will not see the same level of activity this year a percentage basis but lost its title to Corpus Christi. compared to 2013 given that the number of carriers Nevertheless, the state’s top banana importer was still are off by 22% after a flat monthly performance. Noneup 8% for the month and nearly 19% for the year. A theless, a record number of terminal expansions will sizeable portion of the gain was a substantial influx of undoubtedly usher in years of sizeable future gains. Car aggregates for infrastructure construction throughout carriers held steady for the month but are 12% below the region. Brownsville’s role in the energy sector remains below 2013’s numbers but the port saw one addi- last year, reflecting a bit of a pause after a record year of tional vessel in August as compared to July. The Port of car sales. Finally, tank vessels continue to improve for both the month and the year in terms of total moveGalveston rounded out the gainer list with the month’s best gain (18.6%), which added to its double-digit year- ments, demonstrating that the export of distillates has offset the decrease in the flow of foreign crude into the to-date improvement of 16%. Molten sulfur transshipments to Florida and increased jack-up rig repair activ- hemisphere’s largest petrochemical port. ity contributed to Galveston’s August totals.

There you have it! The steel pipes that funnel the shale-borne crude and associated gases to the surface Only one port saw both a decline for the month of the roads, that have been recently built across vast and the year – Sabine – to the tune of 7% and 0.2%, basins, which facilitate the transport of these natural respectively. The primary reason for fewer arrivals is due to a reduced amount of crude exports; however, the resources to refineries situated on waterways, which acmovement of tank barges to and from its many refiner- commodate ships from around the world, have created ies has been extraordinary as chemicals and various pe- an environment that encourages more of the same… troleum cargoes are shuttled throughout the intracoast- over and over again! ò al waterway. This is also reflected in the record number of tows that have crossed the Houston Ship Channel in 1000

Greater Houston Port Bureau | 5

Š Kees Torn

P3 Out, 2M and Ocean 3 In Matt Logan, GHPB

New Shipping Alliances

T

he P3 shipping conglomerate of CMA-CGM, Maersk, and Mediterranean Shipping Co. (MSC) was denied regulatory approval from the Chinese government in June 2014. In its reasoning for the decision, China cited the fact that the P3 agreement would have discouraged competition due to the overwhelming market share P3 would have enjoyed. However, many inside CMA-CGM, Maersk, and MSC felt that China rejected the alliance because no Chinese shipper was involved.

Shipping companies started forming alliances when technological advances and larger ships caused supply to outpace demand in the container shipping industry.

Companies participating in these alliances assert that they will still compete with each other on sales, pricing, services, and marketing, and will only share capacity along certain shipping routes to increase efficiency. The first alliance to form was the CKYH in 2002 between Costco Container Line, Kawasaki Kisen Kaisha, Yang Ming Marine Transport, and Hanjin Shipping. Next came the G6 alliance between APL, Hapag-Lloyd,

Hyundai Merchant Marine, MOL, NYK Line and OOCL in 2011. The P3 Network emerged as the next major alliance until the unexpected denial from China.

While the P3 Network was crushed, two smaller alliances formed from the P3 pieces.

2M

Following the P3 dissolution, Maersk and MSC immediately formed a smaller two-company alliance, now referred to as the 2M. The alliance will operate in the trans-Atlantic, trans-Pacific, and Europe-Asia routes, and account for just under 30% of global container capacity. Maersk will contribute 55% of the shared capacity, or about 110 vessels, with MSC contributing the remaining 45%, which comes to approximately 75 ships.

2M was found to be in compliance with European Commission-Maritime Affairs regulations when the alliance’s self-assessment found it to contain less than 30% market share, and can therefore go into immediate operation. European Union (EU) regulators can still come back at any time if they have questions as

6 | October 2014 www.txgulf.org

Greater Houston Port Bureau | 7

shipping alliances to whether the alliance, referred to as a vessel service agreement or VSA under EU law, violates EU laws.

If EU regulators suspect 2M not to be in compliance, EU officials will issue formal questions regarding

the alliance. 2M officials will then have the chance to respond to the regulators’ questions, after which EU regulators will decide if they are satisfied with 2M’s response or dissolve the alliance and assess any necessary fines. 2M hopes to gain approval from the U.S. Federal Maritime Commission on October 11 and met with China’s Ministry of Commerce on September 19 in hopes of preventing what happened to the P3 Network.

Ocean 3

If China’s main problem with P3 was that it did not contain a Chinese Shipper, they did not have to wait long for a resolution. Mere days after two of the three companies in the failed P3 announced an alliance, the remaining company, CMACGM, forged an alliance, dubbed the Ocean 3, with China Shipping and United Arab Shipping. Ocean 3 will operate on the Asia-Europe, Asia-Mediterranean, AsiaU.S. East Coast, and transPacific trade routes, with no more than 20% market share on each route.

8 | October 2014 www.txgulf.org

Ocean 3 still needs U.S. and EU regulatory approval, but members do not anticipate any problems. The U.S. Federal Maritime Commission approved the P3 network, so an alliance with smaller market share should meet their requirements.

EU laws permit immediate operation after a self-assessment finds the alliance is in accordance with EU laws

shipping alliances (under 30% market share in this case). Chinese approval is highly probable because the alliance’s market share is less than 30%, and far fewer questions are expected with the admission of China Shipping to the alliance.

Ocean 3 hopes to be operational by December 2014.

Long Term

Port of Houston Authority

Houston: America’s Distribution Center www.portof houston.com/map

© Je T.

It is still uncertain if these shipping alliances will solve the current supply surplus shippers face in the long run. Also uncertain is exactly how the interaction between the companies in the alliances will work and how the companies will share vessels without colluding on price. Many are worried that alliance structures will drown out smaller companies and limit consumers’ choices. If any of this happens, there is still the possibility EU regulators can raise questions about the alliances and possibly disband them. This would dramatically shake up the industry and send shippers scrambling to find new cost-cutting measures. As for now, the alliances will proceed and time will tell how the shipping industry will respond. ò

Greater Houston Port Bureau | 9

glass project

JAMSS America, Inc. Wins Research Grant

Space-based Technology to Benefit Maritime Industry

© nasa.gov

JAMSS America, Inc. Official Press Release HOUSTON, TX – September 30, 2014 – Through a recent grant to JAMSS America, Inc. ( JAI), the International Space Station (ISS) U.S. National Laboratory will serve as a technology testbed for studying and improving maritime operations conducted on earth. The grant was awarded by The Center for the Advancement of Science in Space (CASIS), an organization selected

by NASA to maximize use of the space station.

“The benefits of using the space station as a means to observe and track ocean-faring vessels are 10 | October 2014

significant,” stated Rob Carlson, JAI President. “It provides an unparalleled vantage point in low-earth orbit, as well as a stable and sustainable platform from which to investigate ways for optimizing the acquisition, processing and use of proven Automatic Identification System technology.”

“Through this study, we will be able to assist government and industry by providing valuable and timely maritime information,” added Carlson. Data can be used to improve port operations, decrease illegal fishing

www.txgulf.org

glass project and unauthorized dumping, and lessen environmental impacts of shipping through fuel efficiency and decreased green-house gas emissions.

AIS is a maritime navigation communications system required by law for vessel identification and positioning of certain prescribed ships. “While AIS tracking technology is not new, using the space station for acquiring and applying information on a global, extended-range scale, versus current-day local applications, is a true breakthrough,” stated Captain William Diehl, President of the Greater Houston Port Bureau.

“Having access to this real-time data will help us improve the efficiency and economic vibrancy of our ports, reducing transportation, warehousing and harbor expenses.”

CASIS, the grant administrator, provides seed money to companies interested in conducting promising research onboard the ISS National Laboratory to enhance life on earth. JAI’s winning grant, entitled Global AIS on Space Station, or GLASS, is valued at more than $500,000 for the two-year study. The

company is collaborating with experts from the University of Hawai’i, the Greater Houston Port Bureau, Mare Liberum L.P., Shine Micro, Inc. and Flexitech, LLC. For more information regarding this initiative and its terrestrial applications, visit http://www.jamssamerica.com/GLASS.

About JAMSS America, Inc.

JAMSS America, Inc. ( JAI) is a specialty engineering and business services company with extensive experience working on human space programs. Headquartered near the Johnson Space Center in Houston, Texas, JAI has been involved in the International Space Station program since 1998, working with JAXA (the Japanese space agency), NASA and various companies in the U.S. and Japan. The company’s areas of expertise include ISS program support and operations management; spaceflight training and operations; systems and payload safety; as well as international coordination and business creation. JAI has been collaborating on AISrelated maritime projects since 2012. For more information visit www.jamssamerica.com.

Greater Houston Port Bureau | 11

glass project

About University of Hawai’i The University of Hawai’i (UH), established in 1907, is a land-grant, sea-grant and space-grant university, with the mission of serving the public by creating, preserving and transmitting knowledge in a multicultural environment and improving quality of life for present and future generations. Researchers at UH are focused on projects in areas that present significant homeland security challenges, including open-ocean AIS ship tracking that delivers revolutionary advances in maritime domain security capabilities. For more information visit www.hawaii.edu.

About Mare Liberum, L.P.

Mare Liberum Consulting L.P. (ML) develops software for commercial applications requiring sophisticated data collection, processing, distribution and display capabilities. ML developed and maintains the patented HarborlightsTM system, which is used by the Port of Houston and other Texas ports for tracking and scheduling of all ships visiting the ports. HarborlightsTM uses AIS data to provide real-time ship positioning information and has demonstrated its ability to enhance port operations efficiency, safety and security. HarborlightsTM is also able to simultaneously acquire, process and display ground and space-based AIS information, further enhancing its utility for global maritime applications. For more information visit www.mareliberum.co.

and specialized AIS sensors for unmanned vessels and aircraft. For more information visit www.shinemicro. com.

About Flexitech, LLC

Flexitech is an established radio communications, RF systems and electronics consulting group that offers design, test and program management services. Over the past 15 years it has provided key technical input to critical commercial communications programs for terrestrial and space applications including satellites, earth stations, commercial RF systems and consumer electronics products. For more information visit www. flexitech.net. ò

For more information, please contact: Media Contact: Kimberly Campbell 281.853.4004

campbell@qbsmarketing.com

About Shine Micro, Inc.

Shine Micro, Inc. is a world leader for stateof-the-art AIS technology. Company CEO and founder, Mark Johnson, is the developer and patent holder for Class B - AIS Technology Protocol.

Since 2003 Shine Micro has produced innovative AIS products which have been consistently praised for their rugged quality, extreme sensitivity and long-range reception as well as low-power consumption. Commercial and military product lines include AIS-based stations for commercial and military maritime applications, AIS receivers and calibrated AIS test equipment for manned aircraft maritime domain awareness applications, AIS for aids to navigation for coastal and inland waterways, 12 | October 2014

www.txgulf.org

Technical Contact: Rob Carlson 281.461.3700

carlson@jamssamerica.com

Texas Gulf Coast Gateway to the Midwest, Southwest and the Greater Galveston/Houston Region

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Greater Houston Port Bureau | 13

trade statistics

Foreign Trade Statistics

Port of Houston shows moderate growth; Strong performance in steel and LPGs Christine Schlenker, GHPB

Port Rankings The Port of Houston’s total waterborne trade (exports plus imports) continues to increase moderately through the first seven months of 2014 compared to the same period in 2013 in both foreign tonnage and cargo value, at 2.9% and 1.8%, respectively. This is below the total increase for all 191 foreign-trading U.S. marine ports combined, which increased by 4.2% in tonnage and 2.2% in cargo value. Houston still reigns supreme as the largest U.S. port by foreign tonnage, coming in at 11.5% of total U.S. foreign trade and well ahead of runner-up New Orleans at 7.3%. Ranking the U.S. ports by cargo value places Houston in second place with 9.6% of the market share, behind Los Angeles at 16.4%.

Two other Texas ports made a top ten by tonnage appearance: Port Arthur and Corpus Christi. Freeport and Galveston saw great gains in foreign tonnage and

value compared to 2013 year-to-date. Only two Texas ports experienced declines in foreign tonnage, with Beaumont falling 12.7% and Texas City down 2.6%.

Economic Indicators

Shale play development is the prime driver for the changes Houston and the rest of the Gulf Region have seen over the past few years, and Texas businesses and employees are reaping the benefits. The Texas Comptroller’s office reported a 29.7% increase in the value of non-residential construction contracts in Texas between August 2013 and August 2014. Houston ranked 5th in the U.S. for $1 million-plus house sales through August 2014, with Dallas coming in at 11th and Austin at 20th, according to a Coldwell Banker report. Unemployment in Texas is at 5.5% and even is lower for the Houston metropolitan area at 5.4%, compared to 6.1% for the U.S., based on Bureau of Labor Statistics estimates.

Total Waterborne Trade by Tonnage January-July 2014 Mobile, AL 2.5% Corpus Christi, TX 3.2%

All Other Seaports 47.8%

Long Beach, CA 3.6%

Houston, TX 11.5%

Newark, NJ 4.2%

Port Arthur, TX 4.4% Gramercy, LA 4.8% Norfolk-Newport News, VA 5.1%

14 | October 2014

Los Angeles, CA 5.5%

New Orleans, LA 7.3%

www.txgulf.org

Tonnage (million metric tons) Port MMT Houston, TX 86.0 New Orleans, LA 54.6 Los Angeles, CA 41.1 Norfolk-Newport News, VA 38.0 Gramercy, LA 36.2 Port Arthur, TX 33.2 Newark, NJ 31.3 Long Beach, CA 27.0 Corpus Christi, TX 24.0 Mobile, AL 18.6 All Other Seaports 356.4

Source: GHPB analysis of U.S. Census Bureau data

trade statistics

Houston Port Arthur Corpus Christi Texas City Beaumont Freeport Galveston Port Lavaca Brownsville

1 6 9 16 18 22 33 38 77

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Texas Ports - Ranking by Tonnage

$ $ $ $ $ $ $ $ $

98,351 21,029 15,388 10,687 7,511 5,889 5,289 779.5 550.8

1.8% 3.6% 5.6% -0.3% -9.3% 54.0% 23.5% -5.0% 47.7%

86,027 33,193 24,036 13,456 10,679 9,723 5,801 3,900 887.7

2.9% 9.8% 7.3% -2.6% -12.7% 64.1% 66.0% 7.5% 23.5%

Source: GHPB analysis of U.S. Census Bureau data

Greater Houston Port Bureau | 15

Trade Statistics

Houston Total Trade

Houston Imports

Houston waterborne exports through July 2014 totaled $54.1 billion, exceeding imports of $44.2 billion, leading to a $9.9 billion trade surplus. This is up from a $7.9 billion trade surplus January through July 2013.

Total July 2014 year-to-date U.S. waterborne exports came in at $350.5 billion and imports were $672.6 billion, resulting in a trade deficit of $322.1 billion.

Oilfield exploration and local construction has led to the highest level of imports of steel and iron products in over a decade, up an impressive 30.9% from this time last year. That equates to 5.5 million metric tons (MMT) from January to July 2014, compared to 4.2 MMT through July 2013 year-to-date. Crude oil and non-crude oil products (such as fuel oil) imports to Houston have continued a downward slide of 8.7% and 28.5%, respectively, by cargo value year-over-year as domestic production surges. Houston’s seventh-ranked import, vegetable extracts, saps, etc., is almost entirely driven by guar gum used in frac fluid. In 2012, these imports skyrocketed to 194 thousand metric tons at $11,455 per ton, which proved to be detrimental to oilfield services companies and unsustainable for the market to bear. Between July 2012 year-to-date and July 2013 year-to-date, tonnage dropped by 29% and

Houston Exports

Houston’s petroleum gas exports are booming, increasing 122.7% year-over-year by value and 57.8% by tonnage. Taps, cocks, and valves used for tanks and pipes increased by value and tonnage for both imports and exports. By tonnage, the increases are 8.0% for imports and 17.7% for exports.

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trade statistics

13,902,414,338 4,573,409,489 2,115,416,310 1,851,361,654 1,782,698,171 1,300,745,140 970,550,066 780,818,683 748,553,931 737,300,407

-3.2% 122.7% 3.7% -10.5% -7.2% -7.2% 29.9% -5.1% -3.5% 31.6%

15,289.9 6,665.7 131.7 1,262.4 1,057.7 1,165.4 21.3 2,498.8 31.9 42.2

-4.2% 57.8% -11.3% -16.9% -13.6% 0.6% 17.8% -0.4% -19.3% 152.2%

al u

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($ U

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Ve s Pe sel rc Va en lu tC e ha ng Ve e (th ss ou el T sa on nd n Ve m age et ss ric Pe el T to rc on ns e n na ) t C ge ha ng e

Source: GHPB analysis of U.S. Census Bureau data

fH ou Ju sto ly n 20 Im 14 po YT rts D -

Crude oil Petroleum oils other than crude oil Seamless iron & steel tubes, pipes, etc.

Cars & motor vehicles for transporting people Iron & steel tubes, pipes, etc.

Cyclic hydrocarbons Vegetable extracts, saps, agar, etc.

Taps, cocks, & valves for pipes, tanks, etc.

Hot-rolled iron & steel products Acyclic alcohols & derivatives

S) Ve s Pe sel rc Va e n lu tC e ha ng Ve e (th ss ou el T sa on nd n Ve m age et ss ric e Pe l T to rc on ns e n na ) t C ge ha ng e

e al u se lV Ve s

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Houston Imports

1 2 3 4 5 6 7 8 9 10

($ U

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Petroleum oils other than crude oil Petroleum gases & other gaseous hydrocarbons Part for heavy machinery Cyclic hydrocarbons Polyethylene Ethers; ether alcohols, alcohol peroxides, etc.

Taps, cocks, & valves for pipes, tanks, etc.

Wheat Pumps for liquids Air & vacuum pumps, compressors, etc.

se lV

1 2 3 4 5 6 7 8 9 10

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Houston Exports

$ $ $ $ $ $ $ $ $ $

14,722,030,445 3,668,261,220 2,221,527,045 1,478,065,765 1,328,156,204 1,187,046,935 572,381,869 550,943,019 479,509,006 433,211,261

-8.7% -28.5% 11.4% 1.3% 17.4% 13.5% -44.8% 24.2% 197.9% -13.7%

20,345.4 4,542.0 1,274.5 76.3 1,450.9 1,301.1 182.4 53.7 747.4 876.4

-6.4% -27.6% 15.1% -3.0% 16.9% 7.4% 32.0% 8.0% 210.5% -26.2%

Source: GHPB analysis of U.S. Census Bureau data

Greater Houston Port Bureau | 17

trade statistics price per ton dropped by 34.5%. Now in 2014, the price has retreated to $3,132 per ton, so although tonnage has increased to near-2012 year-to-date values, total cargo value has decreased over 44%.

Houston Foreign Trading Partners

Details of the Port of Houston’s top ten trading partners can be found in the graph below. Houston

increased trade by 6.3% with its long-standing top trade partner, Mexico. However, this was a result of a 20% increase in imports and a 14.4% decrease in exports, further widening the trade deficit with Mexico.

Brazil is currently Houston’s largest export market, accounting for 9.5% of exports. Colombia fell three places from last year as total trade with Houston dropped 4.1%. India made an appearance at tenth place last

Houston’s Top 10 Trading Partners

4 Netherlands 7 Total Trade: $3,864,353,327

Tra

Trade Balance: $2,032,121,189

Mexico 1 Total Trade: $ 12,255,244,024 Trade Balance: -$4,354,121,586

Venezuela 9 Total Trade: $2,610,886,527

10

Tr

Trade Balance: $1,226,892,723

Colombia 6 Total Trade: $4,046,855,624 Trade Balance: $1,039,037,302

Saudi Ar 5 Total Trad

Trade Balanc

Brazil 2 Total Trade: $7,153,100,119

Trade Balance: $3,088,655,05

18 | October 2014

www.txgulf.org

trade statistics year, but fell to thirteenth in 2014 and was replaced by Belgium. Exports to China jumped 48.8% compared to last year and imports increased by 23.1%, leading to a three-position increased in total trade ranking and a 17.9% decrease in Houston’s trade deficit with China.ò

Port Bureau analysts are available for grant writing, research, and reports.

Please email info@txgulf.org for more information about Port Bureau services.

4TotalGermany Trade: $4,419,629,616

ade Balance: -$2,593,585,846 China 3 Total Trade: $5,001,861,757 Trade Balance: -$737,656,055

Belgium 0Total Trade: $2,509,558,841

rade Balance: $1,108,194,077

rabia de: $4,112,436,403 ce: -$1,598,041,121

8

South Korea Total Trade: $3,859,541,197 Trade Balance: -$701,237,313

India Total Trade: Trade Balance:

9 51 Source: GHPB analysis of U.S. Census Bureau data Greater Houston Port Bureau | 19

export-import bank

U.S. Export-Import Bank Extended Until June 2015 Reauthorization Still Looms…

Small victory for the Bank, but a larger battle is on the horizon.

Matt Logan, GHPB

Bank Extended On September 19, 2014, President Obama signed a bill extending authorization for the U.S. Export-Import (Ex-Im) Bank until June 30, 2015. The extension, which was grouped in with the U.S. FY2015 Stop-Gap Spending Bill, passed the House of Representatives on September 17 and the Senate on September 18.

The Ex-Im Bank was founded in 1934. Although it still keeps its original name, the Bank’s focus today is to aid U.S. exporters in the form of loans, guarantees, and insurance. There is a group of lawmakers who want to get rid of the Ex-Im Bank and refer to it as “corporate welfare.” Ex-Im Bank Chief of Staff Scott Schloegel responded to this in a recent conference call, stating:

“Welfare is when you give something out and get nothing in return. The Ex-Im Bank charges fees for its services and returns an actual profit to the U.S. Treasury. Now you tell me how that is welfare?”

In 2013, the Ex-Im Bank returned just over $1 billion to the U.S. Treasury.

While the extension is good news, a larger battle looms. For U.S. exporters and the U.S. economy to reap the full benefits the Ex-Im Bank has to offer, a full reauthorization for 5 years is needed. A 5-year extension will put customers of U.S. exporters at ease because they will know the companies will be able to provide goods for an extended period of time. Not only are customers of U.S. exporters aware of the uncertainty of the Bank’s future, competitors are aware of the situation and are using it against companies exporting from the U.S.

Right: FirmGreen CEO Steve Wilburn accepts the Renewable Energy Exporter of the Year award from ExIm Bank Chairman Fred Hochberg and Craig O’Connor. Photo courtesy of Export-Import Bank. April 4, 2013.

20 | October 2014

www.txgulf.org

export-import bank

Case Study: FirmGreen FirmGreen is a company based out of Newport Beach, California, which develops and implements clean energy technologies.

The company operates throughout the U.S. and Puerto Rico, and uses the Ex-Im Bank to finance a $15 million biogas project in Brazil. The project turns dirty landfill gas into clean pipeline grade natural gas and food grade CO2. The Brazil project is also responsible for directly creating 165 jobs in the United States.

Imagine how far that $57 million contract would have gone in creating American jobs and spurring the U.S. economy.

Recently, FirmGreen lost out on a $57 million renewable energy project in the Philippines, a project to which they were labeled as the preferred supplier.

Why? As FirmGreen CEO Steve Wilburn puts it: “Just before the deal was to be closed, the Korean Ex-Im Bank reached out to our client in the Philippines and informed them the future of the U.S. Export- Import Bank was in jeopardy after 2015, and that the Korean Export Import Bank would be around forever and could guarantee supply from the Korean-based company.

This is the reason we were given as to why FirmGreen was not awarded the contract.�

Greater Houston Port Bureau | 21

export-import bank While this situation may seem distant and to have little impact on the Houston region, it is not. Seventy percent of the products used for FirmGreen’s Brazil project move through the Port of Houston. Without FirmGreen’s support from the Ex-Im Bank, much of this cargo will disappear.

Case Study: Fritz-Pak

In 2013, the Ex-Im Bank supported over $4 billion in Texas exports and 205 Texas small businesses.

One of these Texas small businesses is Fritz-Pak based out of Mesquite, Texas. Fritz-Pak sells concrete admixtures that ensure concrete dries at its optimal rate in any condition. Gabriel Ojeda, founder and president of Fritz-Pak, credits the Ex-Im Bank with the company’s success.

Gabriel Ojeda, like many American entrepreneurs, saw an opportunity and put his livelihood on the line to start his company in 1998. Through his hard work and dedication, Ojeda was able to triple Fritz-Pak’s revenue between 1998 and 2007. Then the recession hit.

22 | October 2014

The U.S. concrete industry fell 40% from 2007 to 2009.

Ojeda’s son actually came up with the idea of marketing the company internationally to stay afloat. However, Fritz-Pak was unable to find a commercial bank who would insure its foreign accounts receivable, a necessity for international expansion. Ojeda was introduced to the Ex-Im Bank and finally was able to secure the necessary insurance. In five years, the company grew its international sales from 15% to 35% of its revenue.

Fritz-Pak now has trading partners in over 30 countries, and their products were used in the construction of the Sochi Winter Olympic Games. Mr. Ojeda best sums up his company: “In an age where everything seems to be made some place else, we’re thriving here in the U.S.A., in Texas, and it’s largely due to the services provided by the Ex-Im Bank.”

Full Reauthorization Needed

The reality of the situation is that there are hundreds of thousands of businesses in sixty major

www.txgulf.org

Greater Houston Port Bureau | 23

export-import bank countries throughout the world who benefit from organizations like the Ex-Im Bank. Asking U.S. exporters to compete in this environment without an asset like the Ex-Im Bank would not only result in lost contracts and ripple effects up the supply-chain, but the closure of some small businesses and the potential loss of hundreds of thousands of jobs as well. The U.S. Export-Import Bank has been around for over 80 years and it is vital that Congress reauthorizes it for at least 5 more years.

Ed. Note: To learn more, see Matt Logan’s previous ExIm Bank article in the July 2014 edition of the Port Bureau News.

For more information, contact Matt Logan at mlogan@txgulf.org or (713) 670-1267.

BARGING AHEAD ever so politely.

B

Buffalo Marine Service, Inc.

24 | October 2014

www.txgulf.org

www.BuffaloMarine.com

Sea & Shore

Ship & Store

www.odfjell.com

The Odfjell Group is a leading participant in the global market of seaborne transportation and storage of chemicals and other specialty bulk liquids. The Odfjell Tankers fleet of about 90 ships, trades globally and regionally. The Odfjell tank terminal division of 12 partially owned tank terminals is in a network with 12 other tank terminals partly owned by related parties. The terminals are all strategically located around the world, and with Odfjell Group headquarters in Bergen, Norway, the Company has more than 20 offices world wide.Odfjell has about 3,500 employees and annual gross revenue of about $1.2 billion.

Greater Houston Port Bureau | 25

Centennial events

Port of Houston Centennial Celebrations Ramp Up as Anniversary Nears

September Featured Centennial Family Festival, Maritime & Logistics Youth Expo, and Opening of Art Exhibit

Safety first at the Centennial Family Festival. Right: USCG helicopter demonstrates search and rescue operations. Left: A PHA fireboat puts out a simulated fire on the Houston Pilots’ Yellow Rose.

Photo credits: Patrick Seeba, GHPB. September 6, 2014.

Christine Schlenker & Judith Schultz, GHPB

T

he Port of Houston Authority and Promote Houston Ship Channel 2014, Inc., welcomed students and area guests on September 6, 2014, at the Bayport Cruise Terminal for a two-part education and entertainment event. Three dozen port companies, half of whom are Port Bureau members, generously donated their sunny Saturday and expensive assets to make the event a success and to bring greater awareness of the maritime industry to the Houston metropolitan area.

In the morning, 300 local high school students and Sea Scouts had the opportunity to learn more about working in the maritime industry at the Maritime & Logistics Youth Expo. Exhibitions of tugs, equipment, and Coast Guard operations fostered student enthusiasm while demonstrating the importance of proper safety protocols. Many of the students hailed from the local maritime academies and they are looking for 26 | October 2014

internships to reinforce their academic learning with real world experience.

The afternoon Centennial Family Festival, part of the Houston Ship Channel Centennial celebrations, opened the Cruise Terminal to 3,000 community members and families to explore the port hidden in their own backyards. The outdoor festival and maritime exhibition featured demonstrations, hands-on fun, and plenty of food in the galley.

Framed by Bayport’s container cranes unloading containers to the east, the Houston Ship Channel waters open to north, and the Cruise Terminal building shadowing from south, the festival was spread out on a backdrop of maritime movements. A variety of vessels, including PHA’s M/V Sam Houston and the USCGC VIGILANT, were docked at the terminal, providing attendees with a close-up view and even an opportunity to go aboard to learn more about vessel operations. The

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Centennial events

Below: The Coast Guard cutter VIGILANT. Photo credit: Patrick Seeba. September 6, 2014.

Coast Guard demonstrated helicopter search and rescue operations, and two PHA fireboats extinguished a simulated fire on the Houston Pilots’ boat Yellow Rose.

To show off the impressive horsepower of pushboats working the Houston Ship Channel, Kirby Inland Marine and Buffalo Marine Services played “push-of-war” in front of a cheering crowd.

A few weeks later on September 23, the Houston Arts Alliance, in cooperation with the Houston Public Library, hosted the opening reception for Stories of a Workforce: Celebrating the Centennial of the Houston Ship Channel at the beautifully-restored Julia B. Ideson Building in downtown Houston. Top local officials, including Port Commission Chairman Janiece Longoria, Harris County Judge Ed Emmett, and Houston Mayor Annise Parker, joined over 200 attendees to honor the men and women who work at the port. Displays include a photo essay by photography extraordinaire

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www.txgulf.org

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Centennial events and friend of the Port Bureau Capt. Lou Vest of the Houston Pilots, and a hands-on exhibit of safety equipment used by the workers on docks and vessels. The exhibit will remain open through January 31, 2015, and will feature several special events, including a lecture by Capt. Vest on October 15, a kids’ day on October 18, and multiple performances of “On This Muddy Water”: Voices from the Houston Ship Channel by the Houston Grand Opera.

More Centennial celebration events are coming in the next month. On November 10, 2014, the Promote Houston Ship Channel Centennial 2014 board will commemorate the 100-year anniversary with a re-dedication ceremony of the channel. That evening at 9:00 PM, Houston PBS Channel 8 will air Houston Ship Channel: Deep Water Centennial, an hour-long documentary produced by the Texas Foundation for the Arts. This documentary will explore the history of the ship channel and its current operations, scenes from the water with the Houston Pilots, and an interview with Port Bureau president Bill Diehl. To learn more, visit: promotehoustonshipchannel2014.org/events. ò

Above: The opening reception of Stories of a Workforce at the Julia B. Ideson Building. Photo courtesy of www.AlexandersPortraits.com.

Get Money to Replace Your drayage truck— and Clear the Air! consiga Dinero para Reemplazar Su camión de carga

¡y aclare el Aire!

Grant funding is limited to certain Texas counties–visit website for details.

TERP website: www.terpgrants.org Phone: 800-919-TERP (-8377)

30 | October 2014

www.txgulf.org

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The maritime industry is constantly changing. Management faces new realities and effective leadership requires a comprehensive understanding of the overall context.

CPE CERTIFIED PORT EXECUTIVE TM provides professional education related to the transportation system, and the operation of ports, vessels, and marine terminals.

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The course covers rapidly changing regulations and requirements that affect ports, marine facilities intermodal transportation providers, vessels and a diverse range of service providers.

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THE PROGRAM THAT BENEFITS YOU ALSO BENEFITS Partners with the Greater Houston Port Bureau YOUR WHOLE ORGANIZATION Greater Houston Port Bureau | 31

NEW MEMBERS

PORT BUREAU MEMBER UPDATE The Port Bureau has welcomed these new members since August 2014: Capstone Associated Services........www.capstoneassociated.com Galloway, Johnson, Tompkins, Burr & Smith..... www.gjtbs.com LNG America.......................................... www.lngamerica.com Palletized Trucking..................... www.palletized-trucking.com Raba Kistner Consultants................................... www.rkci.com Port Bureau Members receive benefits including: • Business referral development • Complimentary print copies of the monthly news magazine • Monthly vessel movement and statistical reports • A full-page profile in our member directory • Company logo and listing on the Port Bureau website • First notice/members-only email updates • Commerce Club luncheon discounts • Access to members-only premium services such as the Harborlights real-time vessel tracking system and daily/weekly vessel reports

Interested in joining 190+ Port Bureau member companies?

Email info@txgulf.org or call (713) 678-4300 for more information.

32 | October 2014

www.txgulf.org

The 6 Annual Captain’s Cup Golf Tournament th

November 3, 2014 • 4-Man Shamble

Lunch SponSor:

Dinner Bar:

Beverage Carts:

Closest to Pin:

longest Drive:

PraCtiCe ranges:

Putting greens:

Hole in one:

in-KinD sPonsors: US Trust Bank Wells Fargo

Hole sPonsors: Alliant Amegy Bank BB&T Blank Rome LLP Briggs & Veselka Co. Buffalo Marine Service Citibank CLM Towing, LLC

Coating Systems Danner’s Inc. Frost Bank Galtex Pilots Houston Mooring Co. Houston Pilots Laborde McCarthy Building

Sponsorship Opportunities are still available!

Port of Houston Authority PTRA Rio Marine Suderman & Young Towing Team Services Texas Mooring

Contact the Greater Houston Port Bureau for more details: 713.678.4300 or golf-info@txgulf.org

Greater Houston Port Bureau | 33

coMMERCE cLUB

September 2014 Commerce Club David Grzebinski, President/CEO Kirby Corporation Judith Schultz, GHPB

Shale Oil Boom Energizes Kirby Corp.’s Investment in Staff, Safety

D

avid Grzebinski, president and CEO of Houston’s Kirby Corporation, stressed investment in staff, training, and safety in his comments to attendees at the Greater Houston Port Bureau’s Commerce Club luncheon on September 11, 2014, at Brady’s Landing.

The presentation kicked off with a snapshot of the Kirby Corporation, headquartered in Houston, TX, and employing a staff of over 4,600. Of these, 2,300 are mariners and 1,000 are Houston-based employees.

Kirby is chiefly comprised of two divisions -- marine transportation (73% of YTD revenue) and diesel engine services (27% of YTD revenue). The marine transportation division, Kirby Inland Marine, is the nation’s largest inland and costal tank barge operator.

Kirby has invested over $1 billion in marine fleet capital expenditures and another $1 billion in marine company acquisitions/consolidations in the last five years.

Rapidly turning his attention to current opportunities, Grzebinski focused on the investment generated by shale liquids production. “There is an unprecedented amount of investment driven by the feedstock advantage from shale plays,” said Grzebinski, his excitement contagious as slide after slide enumerated various expansion projects, either announced or in the works. He projects ethylene capacity could expand by as much as 51% in the U.S., and referenced listeners to GHPB analyst Emily Mitchell’s August 2014 ethane investment report in the Port Bureau News.

Increased production has created new transportation needs in trucking, rail, barge, and shipping – a 34 | October 2014

circumstance that ups Kirby’s already strong position as the leader in U.S. barge transport.

“Transportation makes it way to water,” said Grzebinski, “and Houston is the epicenter.”

His “Typical Houston Day” slide of vessel traffic depicting an average of 800 movements, inclusive of all vessel types and ships-in-port, quietly underscored his statement. (For a comprehensive vessel arrival forecast, see GHPB analyst Dave Cooley’s study in the September 2014 Port Bureau News.)

In response, Kirby has been adding people, investing in training, and keeping safety a top priority. Kirby has been training an estimated 1,800 people per year in their 34,000 square foot training facility on Carpenter’s Bayou. It features a barge built specifically for training, a wheelhouse simulator, and a dorm/galley that houses and feeds over 700 employees monthly. The facility provides USCG-approved training and licensing for deckhands, tankermen (PIC), wheelmen, and engineers.

“We are double-stacking them in the dorm,” explained Grzebinski, who expects no slowdown in new hires or training in the near future. “I only see job opportunity growing.”

A continued strong emphasis on safety has Kirby involved in best-practice sharing with other groups and highly committed to dedicating resources to achieve safety objectives. Safety procedures and priorities are an integral part of the training program at Kirby’s facilities. Kirby Corporation was the first winner of the Department of Transportation’s Benkert Award, the highest award given for safety and environmental

www.txgulf.org

cOMMERCE clUB protection.

A Q & A followed Grzebinski’s remarks, involving his thoughts on significant events as well as education and training of staff.

“Crude oil and condensates. I thought it would go to pipeline,” responded Grzebinski when asked which development has been his biggest surprise. “If we’d known the volume that would go to rail and water, we may have built equipment sooner!” Grzebinski indicated doubt as to possible pipeline expansion projects, noting that shale play decline curves might inhibit investors.

Grzebinski expressed his final thoughts of the morning when asked about industry/education partnerships. “We partner with maritime academies

and have started getting involved with vocational schools,” replied Grzebinski. “We are always looking for good people.”

The Military to Maritime career fair hosted by the Port of Houston Authority and the American Maritime Partnership on September 3, 2014, figured positively in his expectations due to the veteran’s inherent “command structure experience.”

“It’s a good time to get a job, if you want one,” concluded Grzebinski. ò

Ed. Note: For more on David Grzebinski, see “From Engineer to Executive, Spotlight on David Grzebinski” by Christine Schlenker in the August 2014 edition of the Port Bureau News.

Commerce Club Sponsors: Premier Table Sponsor:

Premier Table Sponsor:

Greater Houston Port Bureau | 35

Advertising Directory Bank of Texas..................................27............... www.bankoftexas.com Blades International............................ 22....................... www.bladesintl.com Blank Rome LLP................................... 8............................... www.brlpc.com Briggs Equipment................................ 16........... www.briggsequipment.com Buffalo Marine Service........................ 24................ www.buffalomarine.com Cargoways..................................... 29....... www.cargowayslogistics.net Certified Port Executive....................31................ www.macdonnell.com Cheetah Chassis............................... 7............ www.cheetahchassis.com Clark Freight....................................... 12.................... www.clarkfreight.com Gulf Winds International...................... 21................................www.gwii.com HDR Engineering Inc........................... 25............................ www.hdrinc.com Houston Pilots..................................... 16............... www.houston-pilots.com McCarthy Building Companies, Inc...... 18........................www.mccarthy.com Odfjell Holdings (US) Inc..................... 28.............................www.odfjell.com Port of Galveston.............................13.......... www.portofgalveston.com Port of Houston Authority.................... 9............................... www.poha.com Richardson Companies........................ 15.....www.richardsoncompanies.com Shrader Engineering........................... 23............................ www.shrader.net Texas Emissions Reduction Plan.......... 30....................... www.terpgrants.org Trustmark National Bank..................... 28.......................www.trustmark.com Vopak.................................................. 12.............................www.vopak.com Whitney National Bank....................... 23.......................... www.whitney.com Wortham Insurance............................. 16......... www.worthaminsurance.com

Greater Houston Port Bureau www.txgulf.org info@txgulf.org 111 East Loop North Houston, TX 77029 T. +713-678-4300 F. +713-678-4839

Houston Ship Channel Security District 5th Annual Luncheon You’re invited to join the Houston Ship Channel Security District for its 5th Annual Luncheon.

This year’s keynote speaker is Vice Admiral Peter Neffenger, the Vice Commandant of the US Coast Guard. Learn more about the HSCSD while you meet and share best practices with other members. Representatives from US Coast Guard Sector Houston-Galveston and local law enforcement will be on hand with helicopter and response boat displays and to answer your questions about the future of Houston Ship Channel security.

Date: Wednesday, November 12, 2014 | 11:30 AM - 1:00 PM Location: Houston Marriot South | 9100 Gulf Freeway | Houston, TX 77017 Cost: Free to attend. Space is limited, and admission is by reservation only.

Reservations are required by Nov. 7 to reservations@hscsd.org

2014 Keynote Speaker Vice Admiral Peter N. Neffenger Vice Commandant US Coast Guard Headquarters