2015 June Port Bureau News

Port Bureau June 2015

Greater Houston Port Bureau Hurricane Season Has Arrived: Be Prepared

News

New Cranes Rise Above Barbours Cut

www.txgulf.org

Port Bureau

News

Publisher/President CAPT Bill Diehl, USCG (Ret.), P.E. Editor Emily Mitchell

June 2015

Copy Editors Emily Mitchell Judith Schultz

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16 Hurricane Season Has Arrived: Be Prepared

3 Captain’s Corner

Are We Ready for Hurricane Season?

4 Port Watch

Aphrodite Would Be Proud

6 Punitive Damages Present Hidden Risks in the Marine Market

Guest Article

10 NTSB Releases

Preliminary Accident Report for March Incident on Houston Ship Channel Like us on Facebook facebook.com/portbureau

24 Spotlight on Tim Haas,

Senior Vice President of Terminal Operations, Watco Companies

28 ITC Expansion 30 New Cranes Rise

Above Barbours Cut

31 Panama’s Cabinet Council Approves Canal’s New Tolls Structure

34 May Commerce Club Featuring Capt. Tim Downs, General Manger, Shipping & Maritime - Americas, Shell Trading (US) Company

Follow us on Linkedin linkedin.com/company/ greater-houston-portbureau

Art Director Kyle Beam Writers Emily Mitchell Patrick Seeba Photographers Kyle Beam Patrick Seeba Cover Photograph WikimediaCommons Port Bureau Staff Jeannie Angeli Dave Cooley Al Cusick Megan Essenmacher Cristina Gomez Janette Molina Christine Schlenker Printing Company DiPuma Printing and Promotional Products www.dipuma.com

For information about the Port Bureau: Phone: (713) 678-4300 Email: info@txgulf.org For information about the Port Bureau News stories or advertising: Email: editor@txgulf.org

Captain's Corner

Are We Ready for Hurricane Season?

CAPT Bill Diehl, USCG (Ret.) most importantly, remember to get your family out of the way. Aunt Patty is living proof that things are replaceable but you are not.

Port Bureau research analyst and news editor, Emily Mitchell, is reporting on hurricane preparedness along the Gulf ’s maritime freeway this month. Her rundown begins on page 16, and I believe you will find it an insightful look at where we are in this continuing mission.

Hurricane season begins on June 1 and they already named the first storm of the year, Tropical Storm Ana, back in May. Fittingly, the second name up is Bill. Part of me does not want it to be a tropical depression, and that may be twisted thinking. But I will leave you with this thought: These storms are deadly. Be ready. The season is here.

Ed. Note: For more information about Aunt Patty’s artwork, visit www.hagstromcollection.com.

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peppered Aunt Patty with questions about Hurricane Ike. Aunt Patty reminded me that not even two weeks before Ike struck, Hurricane Gustav was bearing down on Bolivar and Galveston. In preparing for Gustav, she said she had packed up her van with valuable documents and keepsake items and drove out of the area to visit relatives.

As you probably recall, Gustav curved at the last minute and dove into Louisiana. But before Aunt Patty finished her visit, Hurricane Ike started gathering strength and, fortunately, she extended her trip. Away went her house, and all her possessions that were not safely stowed in her van were plowed into the Intercoastal Canal, Galveston Bay, or the Gulf of Mexico.

I passed the Coast Guard Station on the ferry ride back. I remembered how hurricane preparation used to be an important part of our work in the Coast Guard. But now that I am retired, I rarely think about it.

This year is the tenth anniversary of Hurricane Katrina and, as we get closer to the date, I am sure we will see plenty on TV reminding us of how devastating a hurricane can be. So what have we learned about hurricanes since then? Not much we did not already know. The trajectory models are not perfect, small storms can quickly ramp up to major hurricanes, and technology cannot stop a powerful storm.

As I mount my soap box, and I know it might sound cliché, I must point out that preparation is crucial when it comes to hurricanes. We had two and a half years of false alarms while I was in the Coast Guard to get ready for Ike, and every storm brought key dividends in preparing us. My advice is to treat every hurricane that enters the Gulf as one that is going to crush you. Run through every procedure and do every checklist item. Do not just talk about it—see if it actually works. And,

June 2015

Over spring break I was invited by my friend JY to visit him at his aunt’s beach house on Bolivar Peninsula. I had not paid much attention to Bolivar Peninsula since my Coast Guard days, and my biggest memory of it was flying over the area after Hurricane Ike. At the time, it was pretty much wiped clean except for that one yellow house.

I don’t know why, but I was surprised when I drove off the ferry to find the place pretty much completely rebuilt with beautiful beach houses. I guess if I had given it a little thought, I would have asked JY, “So, I just drive through the dunes and stripped out beaches until I see the yellow house. You are at the yellow house, right?”

Arriving at the house, I was introduced to the owner, JY’s Aunt Patty. Aunt Patty is a remarkable lady with twice the energy any normal human should have. She lives in her house year round and her days are full of painting and taking in the beauty of the beach. Her silk screen art is rather impressive. You can find it in a shop in the Strand District and she works a lot of the regional art fairs.

After taking a long stroll down the beach, we settled in on the porch for cocktails and stories. I still could not believe how nice Bolivar looked, so I

© Christine Schlenker

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PORT WATCH

Aphrodite Would Be Proud Tom Marian, Buffalo Marine Service

The month named after the goddess of love also owes its derivation to the Latin word aperit—“to open.” This April, those who owe their livelihoods to the maritime trade along the Texas coast are most likely enamored with its vessel activity thanks to nearly half of the major ports posting highs for the year. Hence, trade was wide open for many of the terminals as imports and exports alike surged across the docks.

Of course, not every port benefited from April’s largesse. Port Freeport continued to falter on a year-to-date basis after thriving in 2014. At present, it is the only port that experienced percentage declines for both the year and the month, at 18% and 15%, respectively. Just to the east, the Port of Galveston was also off for the month, albeit by a mere 2%. However, given March’s rather impressive vessel count fueled by local shipyard activity, the port still enjoyed a rather strong showing.

This is reinforced by its nearly 11% year-todate climb. In fact, one of the more senior Galveston-Texas City pilots observed that

April’s ship activity was among the best of the year. This was particularly true for the Port of Texas City, which saw a 6% increase in arrivals in April. Granted, despite a vessel count high for the year, Texas City remains off by 4% on a yearto-date basis.

The Port of Brownsville also logged an arrival high for 2015, resulting in the best monthly jump for Texas ports at 16%. This, in turn, lifted its year-to-date gain to 10%. Likewise, Corpus Christi’s April arrivals were among the strongest for the year with a 6% increase for the

Texas Ports Deep Draft Vessel Arrivals April 2015 Year-to-Date Percent Change

port watch

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Port of Houston Deep Draft Vessel Arrivals

April 2015 vs. April 2014 Apr. 2015 YTD (Total: 2,789)

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Apr. 2014 YTD (Total: 2,673)

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carriers rose 18% for the month and pushed into triple digit territory with record amounts of steel being offloaded in the port. Bulkers are up 7% on a yearto-date basis. LPG arrivals also saw record levels in April with an 11.5% rise. This contributed to its year-to-date gain of 28%, among the best of all vessel categories.

The remaining vessel category that achieved a high tide mark for the year was tankers. The 23% monthly surge was attributable to an influx of exports thanks to an improved spread between WTI and Brent crude. One would expect chemical shipments to follow those of oil and, for the most part, they have with a climb of 7% in April. Chemical tankers remain a robust 18% and change above 2014’s pace.

Unfortunately, container vessels did not follow suit, as evidenced by 12% fewer arrivals for the month which edged its year-to-date numbers below those of 2014.

Even so, this is rather deceptive given the much larger container ships calling upon Houston. Accordingly, the port is poised to exceed its 2014 TEU count.

General cargo also posted double digit monthly gains of 16% but remains off by

over 4% as compared to last year.

In essence, given the stellar results nearly across the board, what is not to love about April? Even the region’s brownwater constituents were extremely busy. Locally, Houston welcomed 42% more bluewater barges in April and, while inland tow movements were up a scant 1% for the month, thus far they are eclipsing 2014’s totals by 12%. This is an extremely healthy number in light of 2014’s record tow numbers.

Mind you, there was one disconcerting data point for Houston in April’s numbers.

Specifically, the port’s car carrier activity has been in the doldrums, which may signal future softness on the consumption front.

Arrivals are down 27% for the month and 13% below last year’s numbers. Beyond the waterfront, there is certainly anecdotal evidence that car sales have been somewhat soft since oil’s free fall. Nonetheless, that could be temporary if oil settles in the $60 to $70 per barrel price range. Needless to say, one certainly does not see a lessening in construction activity in and about the city.

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month and an 8% uptick compared against 2014. Undoubtedly, the abundant barrels from the nearby shale gas fields played a substantial role in undergirding the positive performance of these ports.

To a lesser extent, the same could be said for the Port of Sabine, another port that logged its best month of the year.

Nonetheless, Sabine’s strong numbers were driven by a combination of crude imports and a corresponding export of distillates.

That said, things on this side of the Texas coast are off by 2% for the year, at least on the vessel arrival front.

In terms of raw numbers, the Port of Houston’s April showing was nothing less than herculean. Beyond its best showing for the year, Houston’s monthly spike of 12% represented almost 80% of the entire vessel arrival increase for Texas. This result certainly underscored that 2015’s positive trend line in the maritime trade arena will most likely result in a marked improvement over 2014. To date, Houston is 4.4% above 2014’s performance on an annualized basis.

Not surprisingly, several vessel categories set the bar for the year. Bulk

punitive damages

Punitive Damages Present Hidden Risks in the Marine Market Jason R. Kenney & Dominique Renaud

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June 2015

A History of Punitive Damages in the Maritime Setting

By Jason R. Kenney, Shareholder, Staines & Eppling, APLC By definition, punitive damages are designed to deter and punish a party’s behavior via the assessment of a monetary fine, generally not covered by insurance.

The availability of punitive damages has been an “on again, off again” proposition in the maritime setting. For a long time, punitive damages were not allowed in most aspects of marine claims, but that changed in 2009 when the U.S. Supreme Court — decided the case of Atlantic Sounding Co. v.

6 Townsend.

In the Townsend case, the Court addressed an injured worker’s contention that he should be able to recover punitive damages for his employer’s bad-faith refusal to pay him maintenance and cure. The Court concluded that “[punitive] damages for the willful and wanton disregard of the maintenance and cure obligation should remain available in the appropriate case as a matter of general maritime law.” Although the Court did not assess any punitive damages against the employer, in the case of Atlantic Sounding Co. v. Townsend it did make clear that punitive damages could be assessed in the maritime legal setting.

Then, in October 2013, the United States Fifth Circuit Court of Appeals decided a case called McBride v. Estis Well Services and held that punitive damages were available against all maritime defendants when the defendant was found to be grossly negligent. Suddenly, punitive damages were thrust back into the marine setting for all claims where an injured seaman sued his employer. Following this ruling, punitive damages were all the rage amongst injured people who had maritime claims.

Fortunately, the Fifth Circuit Court realized its error and reigned in its overreaching decision in McBride when the entire Court came together and reversed itself in September 2014, stating that punitive damages for general maritime claims were no longer available except in cases of the willful and wanton failure to pay maintenance and cure benefits.

Therefore, employers remain exposed to punitive damages if they make a mistake on paying an employee-seaman maintenance and cure. However, the lack of clarity surrounding this subject has made insuring punitive damages a “risky business” for the insurance market.

What Effect Can Punitive Damages Have on My Company’s Financial Well Being?

By Jason R. Kenney, Shareholder, Staines & Eppling, APLC The unpredictable decisions of judges and juries have made the awarding of punitive damages an enormous threat to the viability of a business. While most companies are genuinely concerned about the well-being of their employees, the risk is borne due to overzealous attorneys seeking a way to trump up a jury verdict and, in the process, increase their fees. As a result, plaintiff ’s attorneys routinely seek punitive damages for failure to “properly” pay maintenance and cure. This allegation could include failing to pay a proper daily maintenance rate, beginning payments too late, stalling medical treatment, or any other abnormality that a plaintiff ’s attorney may identify after scrutinizing a company’s actions.

The most obvious financial impact on a company occurs when a company goes to trial and is assessed punitive damages for its actions regarding handling maintenance and cure benefits. Punitive damage awards

are difficult to assess, but awards can be very significant. For example, a group of jurors in Louisiana assessed a $300,000 punitive damages award against Archer-DanielsMidland for failing to pay maintenance and cure to an employee whom they did not believe was hurt at work. Even worse, last year Hercules was slapped with a $2 million punitive damages award by a group of jurors in Harris County. Clearly, the unexpected and uninsured assessment of hundreds of thousands of dollars, or even millions of dollars, in a judgment can literally bankrupt a company.

However, there is a more subtle way that punitive damage exposure affects companies. This effect is the result of savvy plaintiff ’s attorneys using uninsured exposure as leverage to artificially inflate claim values. This affects a company’s bottom line by increasing their insurance losses and, in turn, causing them to experience a rise in insurance premiums.

Here is how the scenario works: Acme, LLC, gets a letter from their former employee, Iam Slimey. Mr. Slimey claims that he had an accident two years ago that was unwitnessed and not reported. Mr. Slimey now needs back surgery and he demands that Acme pay for his $100,000, 3-level lumbar fusion. Predictably, Acme says “NO WAY!” Mr. Slimey then sues Acme for maintenance and cure and claims that they are “arbitrary and capricious” for failing to pay his medical expenses (cure), so his lawyer petitions the court for punitive damages. Acme’s marine employer’s liability policy appoints a lawyer to defend them, but sends a Reservation of Rights letter telling them that there is no insurance coverage for any award of punitive damages. Now, Acme has a problem. So, Acme hires a lawyer, at

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June 2015

its expense, to defend solely the punitive damages claim.

This is where things go wrong.

Acme’s punitive damages lawyer properly advises them that it is unlikely they will be assessed punitive damages, but if they are assessed punitives the award could be significant. Accordingly, Acme’s punitive damages lawyer’s goal is to protect Acme from any exposure to uninsured claims.

That goal is best accomplished when the case settles and the plaintiff dismisses his claim because going to trial is too risky. Accordingly, the punitive damages attorney pressures the attorney appointed by the insurance carrier to settle the claim so as to ensure that Acme is protected from exposure to an uninsured judgment.

Now, the plaintiff ’s attorney and the punitive damages attorney for Acme become strange bedfellows insofar as they are both working to pressure a settlement — out of Acme’s insurer. In essence, the 8 punitive damages attorney wants the insurance appointed attorney to settle the claim, even at a higher than market value, because he is protecting Acme’s money, not their insurer’s money. If the punitive damages lawyer is effective, he will get a settlement with no contribution of uninsured money from Acme, but the eventual settlement will likely be higher than market value.

Now, even though Acme did not pay any amount in punitive damages, they have a higher-than-necessary number on their loss record. Therefore, when they renew their insurance, their premiums increase, not to mention whatever amount Acme had to pay their separate lawyer. Rest assured, plaintiff ’s lawyers know the effect of this strategy and employ it with great success on a regular basis.

Mitigating and Minimizing Companies’ Exposure to Punitive Damages

By Jason R. Kenney, Shareholder, Staines & Eppling, APLC All marine employers are at risk for claims of punitive damages by injured or ill employees. While admittedly uncommon, a single award can inflict huge financial and reputational damage to a business and less subtle effects are experienced even when

companies successfully avoid an award for punitive damages but pay larger settlements to avoid exposure at trial. To avoid the implications of a punitive damages claim, a business can mitigate their exposure to the risk by implementing appropriate risk management processes while acting in a swift, reasonable, and consistent manner when potential claims arise.

It is imperative that marine employers vigilantly comply with maintenance and cure obligations to avoid exposure for punitive damages. Failing to properly comply with this obligation can expose the employer to punitive damages. Employers are liable to pay maintenance payments and provide curative treatment any time a seaman becomes ill or injured in the service of the vessel, regardless of whether it was the result of any negligence on the part of the ship owner.

Courts have analyzed proper behavior in dealing with maintenance and cure and have previously held that, upon receiving a claim for maintenance and cure, the employer need not immediately begin payments. The employer is entitled to investigate and corroborate the claim. The courts in our area have reasoned that an employer who is liable for maintenance and cure, but who has been reasonable in denying liability, may be held liable only for the amount of maintenance and cure.

Alternatively, when an employer is “arbitrary and capricious” in failing to properly pay maintenance and cure they can become liable to the injured seaman for punitive damages. In explaining exactly the type of behavior which rises to the level of invoking punitive damages, the Fifth Circuit Court explained that: “If the shipowner, in failing to pay maintenance and cure, has not only been unreasonable but has been more egregiously at fault, he will be liable for punitive damages and attorney’s fees. We have described this higher degree of fault in such terms as callous and recalcitrant, arbitrary and capricious, or willful, callous and persistent. Thus, there is an escalating scale of liability: a shipowner who is in fact liable for maintenance and cure, but who has been reasonable in denying liability,

may be held liable only for the amount of maintenance and cure. If the shipowner has refused to pay without a reasonable defense, he becomes liable in addition for compensatory damages. If the owner not only lacks a reasonable defense but has exhibited callousness and indifference to the seaman’s plight, he becomes liable for punitive damages and attorney’s fees as well.” Morales v. Garijak, Inc., 829 F.2d 1355, 1358 (5th Cir. 1987).

Specifically, the Court has held that “[w]e think, however, that the willful, wanton and callous conduct required to ground an award of punitive damages requires an element of bad faith.” Harper v. Zapata Off-Shore Co., 741 F.2d 87, 90 (5th Cir. 1984). Examples of behavior which have warranted an award for punitive damages are: (1) laxness in investigation of the claim; (2) termination of benefits in response to the seaman’s retention of counsel or refusal to settle; (3) failure to reinstate benefits after a change in medical circumstance or new diagnosis; and (4) refusing or terminating benefits without compelling medical support from a qualified physician.

Mitigating Risk via the Purchase of Insurance and Employment Practices

By Dominique Renaud, President, Houston Business Insurance Agency, Inc. The history of intermediate federal appellate courts allowing punitive damages judgments against marine employers has been somewhat fickle. Those courts have seemingly had difficulty in determining lasting, rock-solid ground rules for what conduct of the marine employer will and will not entitle an injured employee to recover punitive damages. However, since, in Atlantic Sounding Co. v. Townsend in 2009, the U.S. Supreme Court spelled out that employees are entitled to punitive damages where their employer is found to have acted willfully and wantonly in failing to timely pay maintenance and cure, that aspect of punitive damages awards is likely to be here to stay.

With the U.S. Supreme Court having firmly addressed the issue in Atlantic Sounding Co. v. Townsend, marine employers are likely to see a significant rise in suits

punitive damages A third means for a marine employer mitigating its likelihood of becoming a target of a punitive damages judgment is for that employer to diligently uphold their obligation to pay maintenance and provide

medical services to the seaman while in the service of the ship, without regard to fault.

Disclaimer: The views expressed in each section of this article are those of the author of that section only and are not attributable to the other authors of this piece.

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asserted by plaintiff ’s attorneys looking to score big by recovering punitive damages awards for their client (and for themselves, as well) in the decade that follows that decision. With the U.S. Supreme Court in their corner, they will be far less hesitant to invest the time and resources necessary to pursue those types of cases.

A single punitive damages award can inflict huge financial and reputational damage on marine employers.

Furthermore, insurers are conservative by nature and, for that reason, they are slow to develop products without the ability to have sustained predictability in risk and profitability in the long run. Because of the uncertainty and size of punitive damages awards, the insurance marketplace is slow to develop coverage for punitive damages for marine employers. The availability of that coverage is in short supply, and, when the coverage is provided, the amount of limits available is usually restricted.

Both types of marine operations, those that do secure punitive damage coverage and those that do not, should be proactive in their operations to avoid becoming a target of punitive damages awards. There are three major areas that all marine employers can effectuate with minimal effort.

One area is for the marine employer to be diligent about requiring preemployment physicals, including drug and alcohol screening. Those will provide the marine employer with an insight into the background of the employee while highlighting any individuals who may present security or medical concerns.

Moreover, there is the added bonus of learning of any undisclosed existing bodily infirmities that could hasten an injury to that individual or to others working around him or her.

The second means of mitigating exposure to suits for punitive damages for claimed failure to timely pay maintenance and cure in good faith is to implement and maintain ongoing safety training in conjunction with progressive audits and inspections that can help identify further training requirements.

carla maersk

NTSB Releases Preliminary Accident Report for March Incident on the Houston Ship Channel Patrick Seeba, GHPB

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June 2015

At 12:30 p.m. on Monday, March 9, 2015, the Liberian-registered, 623-foot bulk carrier Conti Peridot and the 599foot Danish-flagged chemical tanker Carla Maersk collided near buoys 89 and 90 in the Houston Ship Channel, just off Morgan’s Point. In early April, following an independent investigation led by Marine Safety Investigator Eric Stolzenberg, the National Transportation Safety Board — (NTSB) team released a preliminary 10 Marine Accident Summary describing what happened that day when the two vessels collided on the channel.

The Conti Peridot began its inbound journey on the Houston Ship Channel with good visibility at 9:30 a.m., heading to City Dock 24 in order to discharge its cargo of steel rolls. At the same time, with a low ceiling and light rain, the Carla Maersk departed the Kinder Morgan Galena Park terminal outbound for Venezuela carrying 216,049 barrels of methyl tert-butyl ether (MTBE), a colorless, flammable, and watersoluble liquid. By 11:30 a.m., two hours into the vessels’ journeys, the Houston Pilots had suspended new boardings due to fog; however, vessels already underway were allowed to continue their transits.

As the ships moved, visibility dropped to an estimated 1,000 feet as the vessels slowed to half-ahead (just over 8 knots) near Morgan’s Point. Having just passed another vessel, the NTSB reports that “the pilot on the Conti Peridot was having trouble returning to the channel…and initiated a port-to-port passing arrangement with the pilot on the Carla Maersk.” The report continues that, “after this arrangement was made, preliminary data show the Conti

NTSB investigators examine the damage to the Carla Maersk. (Photo by NTSB) Peridot moved to the left side of the channel and then back to the right. At this time, the Conti Peridot pilot ordered hard starboard and full ahead in an effort to counter his vessel’s anticipated movement to the left.”

As this was happening, the report notes that “the pilot on the Conti Peridot warned the pilot on the Carla Maersk that he was coming back across the centerline of the channel toward his vessel. When the pilot on the Carla Maersk saw the bow of the Conti Peridot emerge from the fog, he ordered hard starboard and full ahead in an effort to avoid what he perceived to be an imminent collision.”

Unfortunately, soon thereafter the Conti Peridot’s bow impacted the Carla Maersk just fore of amidships, pancaking the two port wing ballast tanks and puncturing three holes in a cargo tank holding just under 16,000 barrels of MTBE. An uncontrolled release of the substance immediately followed. Upon impact, the Carla Maersk

began listing to port as the crew conducted emergency action in what the U.S. Coast Guard Incident Commander, Captain Brian Penoyer, later called “a heroic effort” on the part of the crew. They took suction on the tanks and ballast, moving tons of MTBE and ballast water into other tanks on the vessel in an effort to contain the release.

The initial incident response took just over twenty-two days. This was the first spill of its kind in recent memory and the first true test of the U.S. Coast Guard’s Salvage and Marine Firefighting regulations that were published in December 2008. These regulations ensure that appropriate salvage and marine firefighting resources are identified and available to respond to incidents up to and including a worst case discharge.

In addition to the technical challenges of coordinating resources, the nature of the damage and the contaminant presented serious hazards for the response teams. The

Carla Maersk

hazardous vapor coming from the damaged tanks was not only an environmental risk but a fire and explosion hazard. While the NTSB was still conducting its independent

investigation as of this publication, it is highly likely that a nitrogen blanket, which covered the MTBE in its tank to prevent cargo loss or contamination

June 2015

Damage to the Carla Maersk following the collision. (Photo by Patrick Seeba)

from condensation while the vessel was underway, may have prevented a largescale explosion upon the initial impact.

After the incident, the U.S. Coast Guard immediately classified the accident as a Major Marine Casualty and established a Unified Command to manage response efforts. Captain Penoyer, addressing the Lone Star Harbor Safety Committee, explained some of the difficulties in conducting such a large response operation in a protected harbor: “There is no part of the Vessel Response Salvage and Marine Firefighting Plan that gives you the ‘how’ of responding to a big ship casualty, or provides a corollary for salvage to an Average Most Probable Discharge.”

Because of this, the Unified Command had to look very carefully at how salvage operations would be conducted and subject any plan to a review of how the action would impact air quality, the surface of the water, the marine environment, and —

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Carla maersk on this collision in due course. While relatively unusual for the NTSB to conduct a marine investigation entirely separate from the U.S. Coast Guard, the agency’s distance from operational requirements allows it to conduct a thorough and independent inquiry and issue recommendations based on optimal situations.

Concluding his remarks to the Lone

Star Harbor Safety Committee, Captain Penoyer reminded the regional maritime community that “this is the future of shipping and response. The days of easycleanups, of simple surface response efforts, if they ever existed, are surely gone.”

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June 2015

the water column. “I’ll tell you,” Captain Penoyer continued, “making sure that we suppressed air emissions was one of the hardest parts of this response and created an incredibly difficult operating environment.”

After taking several days to steady the Carla Maersk enough to move her out of the open channel, the Unified Command called on the regional Places of Safe Refuge Plan and moved the wounded tanker to the Barbours Cut turning basin. The final stabilization of the Carla Maersk took nearly three weeks due to the fact that the vessel remained a fire and explosion risk for much of that time. After completing all the work possible in the Houston area, the Carla Maersk headed to dry dock in Freeport Bahamas where she is currently undergoing major structural repairs.

The collision between the Carla Maersk and Conti Peridot has already stirred — conversation as to how to prevent future 12 incidents on America’s waterways. The NTSB is beginning an independent study of Vessel Traffic Service Areas across the nation, and will no doubt release its report

Greater Houston Coffee Association Annual Luncheon October 7, 2015 11:30am - 1:00pm Brady’s Landing Restaurant 8505 Cypress St. Houston, TX 77012 Please contact Cristina Gomez if you are interested in sponsoring a table: cgomez@txgulf.org / 713-678-4300 Greater Houston Coffee Association 111 East Loop North Houston, TX 77029 713-678-4300 www.greaterhoustoncoffeeassociation.org

BARGING AHEAD ever so politely.

B

Buffalo Marine Service, Inc.

www.BuffaloMarine.com

2015 Commerce Club Luncheons July 9, 2015 Jennifer A. Carpenter Executive Vice President - American Waterways Operators (AWO) Ms. Carpenter joined AWO in August 1990. She served as Government Affairs Assistant, Manager-Regulatory Issues, Director-Government Affairs, Vice President-Government Affairs, Senior Vice President-Government Affairs and Policy Analysis, and Senior Vice President-National Advocacy before assuming her current position in December 2013.

From 1994 to 2007, she was a member of the congressionally authorized Towing Safety Advisory Committee (TSAC). Ms. Carpenter has also served on the Committee on Inland Water Transportation of the National Research Council’s Transportation Research Board. She has received two Meritorious Public Service Awards and a Public Service Commendation from the U.S. Coast Guard for her contributions to the Towing Safety Advisory Committee and the Coast Guard-AWO Safety Partnership.

Current Sponsors:

Upcoming Luncheons:

July 9, 2015..................................................................................................................................Edwin Bastian, Global Sales Director, BBC Chartering USA Current Sponsors: Houston Pilots, Manchester Terminal, Port of Houston Authority, Richardson Companies, West Gulf Maritime Association

September 10, 2015...................................................................................................................Roger Guenther, Executive Director, Port of Houston Authority Current Sponsors: Houston Pilots, Port of Houston Authority, Richardson Companies, West Gulf Maritime Association

The Commerce Club Luncheon Series by the Greater Houston Port Bureau brings together Houston-area maritime professionals to network and to learn from regional and national speakers. Join us every second Thursday from 11:30 am to 1:00 pm at Brady’s Landing in Houston. Advanced individual tickets are $30 for members or $40 for non-members ($5 surcharge for seats paid at the door). Sponsorship tables of 8 are available for $750. To register, please call 713-678-4300 or email cgomez@txgulf.org.

Commerce Club Luncheons held at: Brady’s Landing 8505 Cypress Street Houston, TX 77012 713-923-9489

Greater Houston Port Bureau 713-678-4300 info@txgulf.org www.txgulf.org

Hurricane Season Has Arrived: Be Prepared

By Emily Mitchell, GHPB

Hurricane season

Types of Tropical Cyclones

Information from the National Weather Service’s National Hurricane Center

18 feet above normal. Structures near the coast will sustain major damage due to flooding and battering, and low-lying escape routes will be cut off by water 3 to 5 hours before the storm’s center arrives.

Homes and buildings can sustain severe damage, particularly to the roof and exterior walls. Most trees and power poles will be toppled, leading to residential areas becoming isolated. Power outages could last for months and much of the affected area will be uninhabitable for weeks or months.

Category 5: Sustained winds of 157 mph or greater will cause catastrophic damage. The storm can produce a storm surge of greater than 18 feet above normal, leading to severe flooding and extensive damage to structures up to and including complete destruction. A large number of homes will suffer total roof failure and wall collapse and residential areas will be isolated due to fallen trees and power lines, — with power outages possibly continuing for 17 months. Most of the affected area will be rendered uninhabitable for a substantial period of time.

While Category 4 and 5 storms are rare, comprising less than 10% of all hurricanes, the U.S. Coast Guard notes that these extreme storms have historically caused over 80% of all damage and deaths attributable to hurricanes. They inflict severe damage to the infrastructure in the storm’s path and extreme sustained winds can continue far inland, damaging and even incapacitating utility systems, schools, law enforcement assets, and medical facilities.

In a typical year, the Atlantic Ocean, Gulf of Mexico, and Caribbean Sea experience approximately 100 tropical disturbances, around 15 of which will become tropical depressions. Of those, ten will become tropical storms and six

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damage here in Houston has been caused by these lower level storms.

Category 1: Very dangerous winds of 74 to 95 mph will produce some damage.

The storm is capable of producing a storm surge of 4 to 5 feet above normal, flooding low-lying coastal areas and inflicting minor pier damage. Well-constructed homes may have some damage to the roof and gutters and tree branches will probably snap, with some trees uprooted. Areas affected by the storm are also likely to deal with power outages lasting up to several days.

Category 2: Extremely dangerous winds of 96 to 110 mph will cause extensive damage. A possible storm surge of 6 to 8 feet above normal could flood low-lying areas and cut off escape routes 2 to 4 hours before the center of the storm arrives.

Port areas should expect considerable pier damage and flooded marinas. Wellconstructed homes will likely experience major roof and siding damage, and shallow rooted trees will be snapped or uprooted, blocking the roads. The storm will bring near-total power outages lasting anywhere from several days to a few weeks.

Category 3: Devastating damage will occur with sustained winds of 111 to 129 mph, producing a possible storm surge of 9 to 12 feet above normal and serious flooding along the coast. Smaller structures will be destroyed while larger structures will be damaged by floating debris. The rising water may cut off low-lying escape routes 3 to 5 hours before the center of the storm arrives. Homes will sustain major damage, uprooted trees will block roads, and affected areas will not have access to electricity or water for several days to weeks after the storm.

Category 4: Catastrophic damage will occur with sustained winds of 130 to 156 mph and a possible storm surge of 13 to

June 2015

The 2015 Atlantic hurricane season starts on June 1 and runs through November 30. Thanks to global weather conditions, this year’s season is expected to be rather light, and the Tropical Meteorology Project at Colorado State University predicts that the “2015 Atlantic basin hurricane season will be one of the least active seasons since the middle of the 20th century,” with seven named storms and three hurricanes. The 2015 season is already off to an early start, though, with Tropical Storm Ana forming off the Southeast coast of the United States in early May. Even with predictions of a less active season, the possibility of a dangerous storm coming through Houston still looms.

Everyone located along the Gulf Coast and doing business at the Port of Houston should make sure they are prepared.

The Basics According to the National Weather Service, a tropical cyclone, of which a hurricane is one type, is a “rotating, organized system of clouds and thunderstorms that originates over tropical or subtropical waters and has a closed low-level circulation.” These storms rotate counterclockwise in the Northern Hemisphere and include tropical depressions, tropical storms, and hurricanes.

Hurricanes are classified into five categories according to the Saffir-Simpson Hurricane Wind Scale, which estimates potential property damage. A Category 3, 4, or 5 storm is considered a major hurricane because it brings the potential for substantial, at times catastrophic, damage and loss of life. Category 1 and 2 hurricanes, however, are also very dangerous and some of the greatest

hurricane season Hurricane Preparedness - Watches and Warnings

Information from the National Weather Service’s National Hurricane Center

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June 2015

will reach hurricane status. A Category 5 hurricane will form once every five years, usually in the western Atlantic or the western Caribbean, with such a storm making landfall in the U.S. once every 50 years.

The National Weather Service will issue storm watches and warnings to — areas that are expected to be affected by a 18 major weather event. A tropical storm or hurricane watch means that an area could experience storm conditions within 48 hours. The public should be aware of the threat and ensure that they are prepared to take action if necessary.

A warning indicates that storm conditions are expected to affect the region within 36 hours and immediate action is required. A warning means that the severe weather conditions are either occurring

or about to occur at any moment. When a warning is issued, everyone is expected to take action and head to safety immediately.

An international committee of the World Meteorological Organization (WMO) maintains the lists of names used for tropical storms during the Atlantic hurricane season. The committee utilizes six lists of 21 names each that are used in rotation, with each list recycled every six years. When a storm causes a particularly high level of damage and/or loss of life, the committee may choose to retire that storm’s name out of respect for those affected and replace it on the list with a new name. Several names have been retired in this manner, including Katrina, Ike, and Allison. If a season is unusually active and more than 21 named storms develop in the

Hurricane Ike damage in Gilchrist, Texas. (Photo courtesy of Wikicommons.)

Atlantic, additional names are chosen from the Greek alphabet.

Hurricanes in Texas In 2012, Climate Central, a nonprofit news organization that analyzes and reports on climate science, ranked Houston/ Galveston as the fifth most vulnerable U.S. city to hurricane strikes. The report takes into account storm frequency, typical storm tracks, and the population living at or below the level of the potential storm surge.

2015 Atlantic Storm Names

Information from the National Weather Service’s National Hurricane Center

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most likely time for a hurricane to make landfall in Texas is the month of August.

Besides the damaging winds and storm surges, tropical cyclones bring heavy rains to the Lone Star State. This does have its benefits, helping to alleviate drought conditions and propping up agricultural sectors. However, tropical storms and hurricanes can also cause severe flooding and devastating damage – Amelia (1978) hung around the state for over a week dumping rain while Allison (2001) brought up to 40 inches in some parts of southeast Texas.

Worst Storms in Houston Houston has seen its share of tropical storms and hurricanes but a few stand out as particularly devastating.

June 2015

With a large population living throughout the Houston metropolitan area, and the critical oil and gas infrastructure located along the coastline and other low-lying areas, the Houston region is particularly vulnerable to the damage brought by hurricanes coming in from the Gulf of Mexico.

Historically, any 50-mile section of the Texas coastline will experience a hurricane strike once every 6 years, with tropical storms coming ashore more often.

According to a study by the National Weather Service, annual probabilities of a hurricane affecting a 50-mile segment of the coast range from 31% at Sabine Pass to 41% at Matagorda Bay. Furthermore, the

The Great Galveston Hurricane (1900): This Category 4 hurricane is considered one of the worst natural disasters to strike the United States, if not the worst.

An estimated 8,000 people died out of a total Galveston population of around 30,000. Many of those who lost their lives were carried out to sea by the 15-foot storm surge. Most of the buildings were destroyed, with three quarters of the city completely wiped out and all of the bridges across the bay lost. The few structures that remained are now historical sites and the devastation led to a substantial public works project, including the erection of the 10-mile long, 17-foot high seawall that has since prevented a similar tragedy from striking Galveston.

Unnamed Hurricane (1915): This hurricane brought sustained winds of 120 mph and the first real test of Galveston’s new seawall. While the 16-foot storm — surge flooded the city, and the causeway 19 bridge was destroyed, there was thankfully a minimal loss of life thanks to the seawall, especially compared to the disastrous hurricane of 1900.

Hurricane Carla (1961): Hurricane Carla, which made landfall near Port Lavaca, was one of the largest hurricanes in history. Almost the entire Texas coast experienced hurricane force wind gusts, with some estimated up to 175 mph. Port

Hurricane season existing weather and port conditions are deemed safe, but the Ports of Freeport, Galveston, Houston, and Texas City are not considered safe havens during a hurricane.

When a storm is approaching, vessels are expected to leave port unless they apply for

and receive explicit permission from the COTP and the facility to remain in place.

The ship channel is closed to all inbound traffic when the COTP sets port condition Yankee and all traffic, both inbound and outbound, is stopped upon port condition

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O’Conner saw a storm surge of 22 feet as Carla produced massive amounts of rain and sprung numerous tornadoes. However, thanks to a huge evacuation of 250,000 people from the Texas coastlines, loss of life was limited to 34 people.

Tropical Storm Allison (2001): Allison is a perfect example of how a storm does not necessarily have to be a major hurricane to cause major damage. Making landfall near Galveston, Allison seemed like a typical tropical storm at first. It ended up winding around the state and then sat on top of Houston as it unleashed up to 36 inches of rain in the Houston area over the course of 24 hours. The storm created 100-year flood conditions, with the bayous overflowing their banks.

Allison caused billions of dollars in damage and is the only non-hurricane to have its name retired.

Hurricane Ike (2008): Ike was a — massive storm that vacillated between 20 Category 2 and Category 4 status before finally making landfall as a Category 2 storm. However, due to its sheer size, Ike produced a 20-foot storm surge that devastated the east side of Galveston Island and completely wiped out entire communities on the Bolivar Peninsula, including Crystal Beach, Gilchrist, and High Island. It also heavily impacted the city of Houston, flooding downtown and leaving thousands without power for weeks. In all, 2.6 million people in Texas and Louisiana were left without electricity because of Hurricane Ike. Preparing the Port With tropical storms and hurricanes inevitable in Houston, the port community must ensure that it is prepared to handle the effects of these storms. Hurricane preparedness at the Port of Houston is the responsibility of the U.S. Coast Guard Captain of the Port (COTP), who sets port conditions to alert the maritime community about changes in operations in anticipation of a storm’s arrival. These port conditions are based on when gale force winds are expected to strike the region.

The COTP allows vessels to transit the Houston Ship Channel as long as

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hurricane season port up and running as quickly as possible. These areas are: (1) search and rescue, (2) immediate relief for personnel who have a catastrophic loss, (3) initial damage assessment, (4) restoration of operational capability, (5) establishing an emergency logistics system, and (6) reestablishment or maintenance of Command, Control, and Communication functions.

Conclusion For those of us in Texas and the rest of the Gulf Coast, tropical storms and hurricanes are simply a part of life. No one can prevent a storm from striking; however, we can all make sure that we are as prepared as possible to handle its effects with education and emergency planning. Through these efforts, we can get the Port of Houston and the surrounding area back to full economic capacity as soon as possible after a storm has passed.

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Zulu or whenever the COTP decides it is necessary in order to maintain the safety of the port, the facilities, and the vessels.

Generally, the U.S. Coast Guard advises that the safest course of action for a deep draft vessel is to avoid being in port during a hurricane. All vessels should depart for sea with plenty of time before the storm arrives. Commercial boats, barge tows, and fishing vessels are encouraged to leave the area when a storm is approaching or to find shelter as far inland as possible.

The U.S. Coast Guard also relies on the facilities themselves to secure any hazards and protect the docks when a storm threatens the port. The COTP encourages waterfront facilities to conduct a survey on an annual basis prior to hurricane season and to perform an emergency survey of their docks as soon as possible after a hurricane passes.

Following a hurricane, the U.S. Coast — Guard and the port community focus 22 on six primary response areas in order to protect life and property and get the

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Spotlight

Spotlight on Tim Haas, Senior Vice President of Terminal Operations, Watco Companies Emily Mitchell, GHPB

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June 2015

Tim Haas, Senior Vice President of Terminal Operations at Watco Companies since 2012 and Port Bureau board member since 2014, has spent his career traveling the globe. After several years moving from one country to the next, Tim has finally come full circle to settle down with his family in his hometown of Houston.

Growing up in the South, Tim spent half of his time in Houston and the other — in Baton Rouge, Louisiana, but he 24 half considers Houston his home base. With his father working in railroad transportation, Tim was exposed to that segment of the economy from an early age, meeting people and developing contacts. Therefore, when he was finishing school and looking for a place to start his career, it made sense that he was drawn to the transportation industry.

After receiving his degree in business administration from Southeastern Louisiana University in 1989, Tim moved on to the MBA program at the University of Southern Mississippi. With graduation coming up, he realized that he was interested in pursuing a career in international business. That goal, combined with his exposure to the transportation industry, led him to a job with an American containerized shipping company called Sea-Land.

Tim started with Sea-Land in the company’s management training program in 1991. He spent a period of time working in a variety of roles in different locations before settling in an operations position for Sea-Land in New Orleans. According to Tim, “my introduction to international business was really through Sea-Land.”

It would take almost 10 years before Tim found his first overseas assignment and, in the meantime, he managed operations for Sea-Land first in New Orleans and then in Tacoma, Washington.

After A.P. Moller Maersk bought Sea-Land in 1999, Tim returned home to Houston to manage operations for one year before moving on to the Middle East with Maersk.

In 2000, Tim became the terminal manager of a transshipment hub in Salalah, Oman. Now working for Maersk following its purchase of Sea-Land, Tim was seconded to a company called Salalah Port Services, of which Maersk was part owner.

At first, Tim ran the port facility in Salalah that consisted of both a container terminal and a general cargo facility. “It was really interesting because we had responsibility for the whole port,” he says.

“The tugs, pilots, harbor master, general cargo terminal, container terminal— everything was under our control.”

According to Tim, his company operated the facility while the Omani government regulated it.

With Tim in charge of operations, he says that things were slow going at first but then grew substantially in a relatively short period of time. Over the course of his tenure, “We grew from 400,000 TEUs up to 2.4 million, all over four years.” This growth is especially impressive given that, before Tim arrived with Salalah Port Services, the local labor force had no experience in this sort of enterprise. They spent the time and resources to train the workforce and develop an understanding of the various roles required in running a

Tim Haas, Sr. VP of Terminal Operations, Watco Companies port facility, turning the facility in Salalah into a major transshipment hub in just a few years.

At the same time, Maersk was in the process of developing what is now known as APM Terminals. Furthermore, other Middle Eastern governments were taking notice of the success Tim and his team were enjoying in Salalah and wanted to replicate that. As such, Tim traveled around the Middle East and India for Maersk, looking for opportunities to achieve results similar to those they accomplished in Oman.

Tim started in Jordan, working towards privatizing the Port of Aqaba. “I went there to determine an operating plan,” Tim says, “and along with a team of people, we negotiated a concession agreement with the Jordanian government.” Tim also points out that, with such a small amount of coastline and limited options for moving goods in and out of the country, this was a strategic opportunity for the country of Jordan. The individual whom APM

Spotlight track inside the park, Watco has spent the years since it bought Greens Port focusing on driving synergies wherever possible.

For Tim and Watco, the question was: “What customers can we have inside this industrial park that can take product over the dock, maybe have it land in a warehouse, and then maybe take it out on the rail?” For example, since 2012, the proportion of park tenants utilizing Watco’s docks along the Houston Ship Channel has grown from 20% to over 40%.

The next area of focus was for Watco to start operating more of the park’s segments itself. Beginning with an ethanol facility the company started with its customer, Watco also handles material such as steel, pipe, and hydrochloric acid, and is working with another company on a facility to handle aggregates.

The biggest asset, however, is Watco’s crude by rail facility at Greens Port. As Tim explains, this facility consists of a 70- — car crude rack that has the ability to unload 25 two unit trains and load back one unit train in a 24-hour period. With one unit train being 105 cars, that translates to 210,000 barrels of crude oil a day being moved to and from rail cars. The crude rack also has the ability to handle different types of crude oil, from light crude to heavy bitumen.

Watco’s crude rack is connected to two tanks that are built on the facility as well as to Magellan’s tank farm next door and to Watco’s liquids barge dock. Not only does Watco have the ability to move 100,000 barrels per day over the barge dock, but Magellan’s tank farm is also connected to the Houston pipeline district. According to Tim, “What makes this interesting is that we can take crude oil from all over the United States and Canada, bring it into this rack, and have the optionality to either put it into our own tanks, put it into Magellan’s tank farm and on to the pipeline district, or move it out to the barge.”

Additionally, last year Tim says that Watco handled 2.3 million tons of cargo across the company’s two deep water docks. With plans to finish construction of three additional berths by December 2016, Watco’s Greens Port facility will soon have

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investor in multiple joint ventures with the Chinese government. Part of Tim’s role was to manage the company’s relationship with the government entities. According to Tim, an interesting aspect of this position was that the government wanted everything to be as big as possible: “They wanted more capacity, they wanted more cranes—each local government wanted to have the biggest.” From APM Terminals’ perspective as the foreign investor, however, the company had to be more concerned with avoiding overcapacity.

As such, Tim found himself involved in a good deal of stakeholder management, balancing the government’s focus on status and the company’s focus on maintaining profitability.

When asked about his favorite aspect of working in international business, Tim immediately references the diversity of culture, both within personal relationships and business relationships. “It gives you a different perspective on things,” he says.

“It also helps you appreciate things in the United States, but you look at it a little bit differently.”

After eight years in overseas posts, Tim returned to Houston with APM Terminals in 2008. At this point in his career, with his children growing older and entering high school, he decided it was time to settle in one place for the time being. And since taking regular expat positions was a fact of life with APM Terminals, Tim made the switch to Watco Companies in 2012.

As Senior Vice President of Terminal Operations, Tim’s primary focus is on Watco’s operations in Houston, and particularly on growing the company’s largest terminal asset: Greens Port.

Greens Port is a 655-acre industrial park located on the Houston Ship Channel.

Originally an Armco steel mill in the 1940s, the property was later sold to a real estate investor who then sold it off in multiple pieces. Several years ago, Watco was asked to perform the rail switching activity inside the park, becoming a minority shareholder in 2004 and then buying it outright in 2010.

With 655 acres, 3 million square feet of warehouse space, and 31 miles of rail

June 2015

Terminals placed as general manager in Aqaba did such a superior job turning the facility into a successful port operation that the king of Jordan awarded him Jordanian citizenship. As Tim notes, “That says a lot about the importance of what was done there…From an economic independence perspective, it was really critical.”

Also around that time, Tim and an engineer were embedded with the 101st Airborne in Iraq to assist with getting goods into the war-torn country. The Umm Qasr Port was being run by one company there but, according to Tim, they were having major difficulties getting relief goods through that point of entry. Tim’s team instead moved upriver to a place called Al-Zubayr, which was a general cargo facility. They figured out a way to run a container terminal operation out of the Al-Zubayr facility and managed to get much needed cargo into Iraq at a critical time. According to Tim, “APM Terminals then ran that facility in Al-Zubayr for about two years until the Iraqis took it over themselves, which was the right thing to do at the time.”

Following his tenure in the Middle East, Tim moved to the APM Terminals corporate office in The Hague, focusing on business development in Africa and the Middle East. He spent a fair amount of time in Bahrain and West Africa, negotiating concession agreements with the Bahraini and Angolan governments. He also served on a number of boards for operations in Cameroon and Ghana.

When asked about his experiences in Africa, Tim describes the extent of the poverty one finds in these places and the hope that what he and his company were doing was helping the country get better.

For Tim, “You hope that you’re making a difference and that you’re improving quality of life in those locations by investing in better infrastructure and making it easier to get goods into the country.”

From The Hague, Tim accepted the role of Chief Operating Officer in China for APM Terminals. Located in Beijing, Tim oversaw about 11 different port facilities up and down the coast of China, with APM Terminals serving as an

Spotlight

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June 2015

a total of 3,600 linear feet of deep water dock space.

Throughout his career, Tim’s family has joined him on the adventure. When they first moved to Oman, Tim and his wife had two sons and their third son was born in the country. The two older boys were enrolled in a British school there with a total of 14 students, all taught in one classroom. According to Tim, “My kids ended up with a British accent for quite a while, so that was interesting bringing them home to the grandparents.”

Now, Tim’s sons are 19, 17, and 12, and he also has an 18-month-old daughter.

His oldest son is currently studying Kinesiology at the University of Houston while his middle son, currently a junior in high school, will be participating in a summer engineering program in Boston this year with plans to study engineering in college.

— As for how he likes to spend what 26 free time he can manage, Tim focuses on

managing his youngest son’s soccer team.

Growing up overseas, the three boys became big soccer fans. So, Tim says, “I spent quite a bit of time first learning soccer, because I didn’t know it growing up here in Houston, and then figuring out how to coach it.” And while he has a lot of fun

coaching his son’s team, he also tries to fit in a round of golf whenever possible.

Ed. Note: If you are interested in participating in a spotlight on you or your company, please contact Emily Mitchell at editor@txgulf.org.

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Itc expansion

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Photo Courtesy of ITC

ITC Inaugurates First Phase of New Expansion On Saturday, May 9, 2015, the Kirby 10090 arrived at Intercontinental Terminals Company - Pasadena to inaugurate operations at the facility. Just under a week later, the first ship, the Ice Base, tied up at the Number 2 dock to begin cargo operations. ITC’s Pasadena terminal, on which ground was broken in 2012, includes ten 100,000 barrel tanks in its first phase of construction. ITC has already broken ground on phase two, which will add 2 million barrels of capacity to the company’s Houston-area operations. ITC is one of the busiest terminals on the Houston Ship Channel with over 500 annual vessel calls at their 12.8 million barrel capacity Deer Park facility.

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On May 5, 2015, four new ship-to-shore cranes were delivered at the Port of Houston’s Barbours Cut Terminal following a 73-day sea journey. Fabricated by Konecranes in Mokpo, South Korea, and coming in at 30 stories tall and 1,500 tons, the dockside container cranes are the largest the company has ever built and the largest to be installed at the Port of Houston.

An integral part of the Port of Houston Authority’s (PHA) $700 million modernization and development plan, the contract for the new cranes was awarded to Konecranes in May 2013. Along with the cranes, PHA is updating the almost 40-year-old Barbours Cut facility with new lights and dock improvements in order to more efficiently handle the larger ships and cargo volumes expected with the expansion of the Panama Canal. Dredging of the channels to both the Barbours Cut and Bayport Terminals is expected to be completed later this year to accommodate these larger vessels.

The four new supersized cranes are twice as big as the older cranes and can reach across vessels that are 22 containers wide. This is a substantial improvement over the existing cranes, which can reach across 13 containers, and will allow for more efficient loading and unloading operations.

The expansion of the Panama Canal, expected to be completed in 2016, will substantially increase the volume of cargo making its way through the Port of Houston. According to PHA Executive Director Roger Guenther, currently more than 25% of Houston’s imports, or the equivalent of 250,000 TEUs, transit through the Panama Canal, up from next to nothing a decade ago.

That volume will only increase as ever-larger vessels start making their way through the expanded Panama Canal, looking for ports capable of handling them. The recent delivery of new ship-to-shore cranes at Barbours Cut is only one element towards improving the Port of Houston’s ability to accommodate these ships and compete on a global scale. (Photo by Patrick Seeba)

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Panama Canal Tolls

Panama’s Cabinet Council Approves New Canal Tolls Structure

Cluster segment, which includes local tourism, marine bunkering, and container transshipment service vessels that do not compete with international trade. The new tolls for this segment are already in effect.

Furthermore, the ACP will be instituting a customer loyalty program for the container segment through which frequent container customers will receive premium prices based on TEU volume.

The preferential tariff system aims to encourage container vessels to transit the canal at full capacity.

The revised toll structure is the first — to take effect in three years, when the 31 last modifications were put into place for dry bulk ships, tankers, chemical and gas carriers, ro-ro vessels, and general cargo ships. Tolls for container, reefer, and passenger vessels were last changed in 2011.

Panama Canal Customer Loyalty Program

Information from the Panama Canal Authority

Photo by Brian Grawicke, www.flickr.com/photos/briangratwicke

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will take effect no earlier than February 1, 2016, according to the ACP. The tolls will be priced according to different units of measurement, taking into account the variety of marine traffic utilizing the canal. Dry bulk vessels will be based on deadweight tonnage and metric tons of cargo, LNG and LPG carriers will be based on cubic meters, and tankers will be based on the Panama Canal Universal Measurement System (PC/UMS) and metric tons of cargo. Container vessels and passenger ships will continue to be priced as they were previously, with the former based on TEUs and the latter based on berths or PC/UMS. For the first time, the recently approved toll structure includes tolls for LNG carriers, which currently cannot transit the canal due to beam dimensions that are too wide for the existing locks.

It also creates a new Intra Maritime

June 2015

In April 2015, the Cabinet Council of the Republic of Panama officially approved the Panama Canal Authority’s (ACP) proposal for a modified toll structure.

The approval comes after more than a year of discussions and consultations with industry representatives as well as a written comment period and a public hearing.

The ACP formally announced its proposal for a restructured toll system in January 2015, with the final version issued in March that took into account the industry feedback received by the ACP. The new toll structure will go into effect on April 1, 2016, for all market segments (except for the Intra Maritime Cluster segment) and will apply to the existing canal in addition to the new lane of traffic that will open when the expansion project is completed. If the expansion is finished earlier, the new tolls

Emily Mitchell, GHPB

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

Port of Galveston

AN EFFICIENT PART OF YOUR SUPPLY CHAIN • Served by Wallenius Wilhelmsen • Roll-On / Roll-Off, Break Bulk and Project Logistics, ARC, "K" Line Ro-Ro, Höegh Cargo Terminals Autoliners, CSAV Ro-Ro & NYK Ro-Ro • Direct Connection to BNSF Railway and • 30 minutes to Open Sea Union Pacific Railroad • Efficient Labor and Competitive Rates • Immediate Access to the Interstate Highway • Foreign Trade Zone No. 36 System and Gulf Intracoastal Waterway

Roll-On / Roll-Off terminal - New vehicle imports

P.O. Box 328 • Galveston, TX 77553 Phone 409-766-6112 • Fax 409-766-6171 Website: www.portofgalveston.com Contact: Capt. John G. Peterlin III Sr. Director of Marketing & Administration Email: jpeterlin@portofgalveston.com

Imported wind turbine towers departing the port by rail

Commerce Club

Commerce Club May 2015

Featuring Capt. Tim Downs, General Manager, Shipping & Maritime - Americas, Shell Trading (US) Company Emily Mitchell, GHPB

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June 2015

Over 200 port region professionals gathered at Brady’s Landing Restaurant on Thursday, May 14, for the Greater Houston Port Bureau’s monthly Commerce Club luncheon. Captain Tim Downs, Shell’s General Manager of Shipping and Maritime for the Americas, spoke about Shell’s global and regional shipping efficiency initiatives and invited Houston port stakeholders to participate in the Port Bureau’s recently created traffic efficiency committee.

Turning 125 years old in 2017, Shell has enjoyed a “long, illustrious history” in — 34 the maritime realm. Although Shell is an oil company, Capt. Downs told the crowd, “Almost everything we do these days has a maritime element to it.” His presentation noted that on any given day, there are around 1,500 vessels carrying Shell cargo along with 300 other floating assets like drilling rigs and storage.

With such a large part to play in maritime shipping, Capt. Downs said, “We have people working on efficiencies 24/7.” He mentioned that the company has recruited a number of people for this purpose, with efficiency coordinators and managers working together across the globe.

Capt. Downs provided the audience

Capt. Downs addresses attendees at the May 14th Commerce Club luncheon with a case study as an example of Shell’s initiatives related to shipping efficiencies.

Pulau Bukom, located off of Singapore, is Shell’s largest refinery in Southeast Asia.

According to Capt. Downs, even though the 13 berths are more than enough to accommodate traffic, inefficiencies had led to an average port turnaround time of 19 hours and outliers of up to 40 hours.

Focusing on areas such as early departure procedures, concurrent vessel movements, concurrent bunker operations, and enhanced berth planning, Capt. Downs told the crowd that efficiency efforts over

the last 18 months have “resulted in a huge reduction in demurrage” and have “saved tens of millions of dollars.”

As for Shell’s approach to efficiency in the Americas, Capt. Downs mentioned that the “common thread” throughout the various aspects of this approach is that “they’re all collaboration and communication issues.” These include coordinating across organizational boundaries through joint planning, identifying areas for improvement, optimizing the utilization of equipment, and minimizing crude loss.

Commerce club To close his presentation, Capt. Downs talked about the Port Bureau’s traffic efficiency committee that he chairs. At the first committee meeting, the members took part in a conversation to find out what areas are most concerning to port stakeholders.

For example, the committee found that those docks with their own gangways are more efficient when it comes to mooring time. And while minutes saved may seem small on a daily basis, Capt. Downs noted, “even if you save 30 minutes a day, that could mean a week of savings every year.”

Another subject that came up was shifting versus anchoring. According to

Capt. Downs, “at least 500 ships a year request a layby berth,” and, in addition to those, “a significant number cannot secure one and have to go back to anchorage.” In order to address this, Capt. Downs told the attendees that the Port Bureau is currently developing a centralized berth availability exchange to help facilitate communication between the terminals and agencies and to assist ships in finding a layberth instead of returning to the anchorage.

Going forward, Capt. Downs said that the traffic efficiency committee will continue gathering more data in order to keep the conversation going. As Capt.

Downs noted in his presentation, “We’re breaking down voyages to see where we can create efficiencies.”

Port stakeholders who are interested in the traffic efficiency committee or the layberth database are encouraged to contact Capt. Downs at Shell or Patrick Seeba at the Port Bureau.

Ed. Note: The next Commerce Club luncheon will be held on Thursday, June 11, 2015, and will feature Jennifer Carpenter, Executive Vice President of American Waterways Operators (AWO). Individual seats and table sponsorships are available. Sign up by visiting www.txgulf.org/commerceclub.php or calling Cristina Gomez at 713-678-4300.

June 2015

Thank you to our table sponsors

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Shell Trading (U.S.) Company

Greater Houston Port Bureau www.txgulf.org 111 East Loop North Houston, TX 77029 713-678-4300 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 non-profit 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 7,000 professionals in the Houston maritime community via U.S. mail and email. Advertising is available for members.

Photo by Patrick Seeba

ŠLou Vest