apr2011 news

Port Bureau News April 2011

www.txgulf.org

Coffee: More Than Just Your Daily Grind

Spotlight on Ken Burnett General Manager—Greensport Industrial Park

Captain’s Corner

“It’s all about Relationships—Knowing your Customers and Potential Customers”

Relationships play a big part in business. Last month, I visited Washington DC with representatives from Port Bureau members Houston Fuel Oil Terminal ComPort Bureau Staff pany, Odfjell, G&H Towing Company, the Houston Pilots Association and WGMA, and I think the trip was a success. Meeting with our congressional delegation, we kept Bill Diehl pushing the message that over 95% of our foreign trade—which represents 1/3rd of Jeannie Angeli our economy—moves by ship, and that the maritime industry represents good jobs Al Cusick and economic growth.

Jonathan Edwards The Port Authority was also up in Washington at the same time, and I’m told that repreCristina Gomez sentatives of the brownwater industry had been visiting in the weeks preceding our trip. EstablishJanette Molina ing those relationships with our elected officials is key to seeing progress when it comes to the legPatrick Seeba islative issues affecting our industry. For example, I’m glad to report that there are now 51 cosponBoard of Directors sors to the Harbor Maintenance Trust Fund legislation, and we are supporting a plan to move the *Tom Marian—Chairman bill down the path to law.

At the same time, when global trade represents such a huge section of our economy, and *Dennis Hansell—1st Vice Chair. an even larger portion of the maritime industry, meeting customers and potential customers from *Mike Drieu—2nd Vice Chair. *John Taylor—Secretary /Treas. around the world is of critical importance when attracting business to the region. *Robert H. Blades In the past year, the Port of Houston Authority has met with trade delegations from around *Alec Dreyer the globe; representatives from Brazil, Colombia, the Czech Republic, Libya, and many others have *Charles H. Flournoy come to discuss how we can work together to increase trade between our regions. On many of the*Capt. Steve Conway se occasions, Port Bureau representatives have been involved to discuss the perspective of industry *Capt. John G. Peterlin III in the Houston Port Region. *Capt. Richard Russell Recently, a visit by Khamis al-Qaddafi, son of Libyan leader Muammar al-Qaddafi has drawn *Steve Stewart the attention of certain news outlets. Let me tell you about this visit, because the presentation was *Nathan Wesely representative of the way that we discuss the Houston Port Region.

Jim Black On Wednesday January 26th, Patrick Seeba and I represented the Port Bureau in a meeting Ken Burnett with Mr. al-Qaddafi as part of his planned month-long trip to the United States. During his trip Jan Crittenden here, he was supposed to tour the Port of Houston, Rice University, Universal Studios, MIT, Harvard, Celeste Harris West Point, and the Air Force Academy. During the meeting, I talked about some of the concerns Jason Hayley involved when engaging global trade including how necessary it is to have a stable business enviKevin Hickey ronment, communication and partnership between industry, government and regulators, and Guy W. Hitt awareness of global issues such as environmental stewardship. Patrick gave the delegation a virtual Charlie Jenkins tour of the port using the HarborLights Harbor Management System, a vessel tracking program that Shareen Larmond keeps local industry informed of vessel movements and the real-time status of the Houston port Kathy Murray region.

Jerry Nagel During the meeting, we were united with Port of Houston Authority officials in stressing Vinny Pilegge that in order for global economic activity to invest in Libya, the country needed to have stable busiNolan Richardson ness, regulatory, and governmental environments. This is something we stress to every delegation, Lloyd Schwing however the warning was particularly timely in speaking to the Libyans.

Earl Smith Tim Studdert Since 2003, the US Government has been proactive with the al-Qaddafi government to imLawrence Waldron prove relationships and trade with Libya. However developing business relationships takes years of Armando Waterland care, effort, and discussion. The first time we met with the Libyan delegation over a year ago, we Don Welch began discussing ways to become more involved in projects over there. Since then, we visited the *Denotes Executive country, began looking at some of the facilities that we’d be working on, and the visit by Mr. alCommittee Members Qaddafi was another step towards bringing more trade to the Houston region. Then, in mid-March, violence erupted, and Muammar al-Qaddafi drew a line in the sand between himself and the Libyan people. We didn’t even have to think about this decision: since then, we’ve had no contact with Libyan officials or personnel. We realize that, in diametric opposition to Houston’s stable and benign business environment that makes it such a vibrant economic community, Libya has a long way to go, and step one is a government that respects the fundamental rights of its citizens.

So now what do we do? Simple: we keep promoting the importance of the maritime community to our elected officials and neighbors. We also keep supporting our Port Bureau members as they reach out to potential customers in the global community. –B. Diehl, GHPB

Building a Partnership The Houston Ship Channel Security District & Harris County Starting with Round 5 grants, Harris County has spent years developing security projects for the Houston region, and on March 8th, the Houston Ship Channel Security District approved an agreement to provide funding for federal matching requirements to the county. This agreement means that over the course of the next three years, the Ship Channel Security District will provide over $12 million to the county which will then receive an additional $30 million from the Federal Government for the construction, operations and maintenance of security infrastructure in the region.

The initial projects will establish a command center linking arrangement and protocols with the US Coast Guard, the Port of Houston Authority’s Port Command Center, Houston TranStar and the City of Houston, with a network of cameras and data collection devices. The projects will also strengthen waterside and land patrols conducted by the Harris County Sheriff’s Office.

Below, HSCSD Board Members pass the first installment for $2,978,941 to Harris County Officials. From left to right: LT Bill Sparks, HCSO, Deputy Tommy Diaz, HCSO, Tom Schroeter, PHA, Greg DeLong Westway Terminal Company, Doug Atkinson, Harris County, Gary Scheibe, Shell Chemicals, Lawrence Waldron, Vopak, Robin Riley, Harris County Mayors and Councils Association, Steve Stewart, Gulf Winds International, Mark Skobel, Valero, Beth Bowles, Celanese Chemicals, Ray Yellig, Haldor Topsoe, ad Clayton Curtis, OilTanking USA.

Coffee

More than Just Your Daily Grind

What is Exchange Coffee?

Why does coffee come to Houston? In addition to its highly diversified economy and the fastest job growth in the United States, over 60 million consumers live within 700 miles of the port. With Americans drinking an average of 3.1 cups of coffee per day, the coffee world consumes over 115 million bags per year, and the coffee industry brings jobs to the Houston region. With everything from warehousing facilities, and transload operations, to soluble/decaffeination plants, roasters and retailers, the region plays a strong role in the US Coffee Market. But where does the process begin?

Bringing Coffee to Market Much like turning grapes to wine, there are a number of different methods that can transform the coffee bean into the familiar brew enjoyed the world over.

Put simply, green coffee is the term to describe raw coffee.

With an extraordinarily volatile price over the years, green coffee is traded on the InterContinental Exchange alongside commodities like Sugar, Cotton, Concentrated Orange Juice, and Iron Ore. ICE operates futures and options markets where traders bet on directional profit and loss profiles relative to price.

Coffee is traded on the exchange in units of 37,500 lbs and, after being graded for flavor, is delivered to one of four American ports (New York, Houston, New Orleans, and Miami), or the European ports of Bremen/Hamburg, Antwerp, or Barcelona.

Everything begins with the coffee plant. An evergreen plant found in the world’s subtropical belt and some equatorial regions, the coffee plant can grow up to ten meters high and produces a flowering fruit—the coffee cherry—that is harvested when it turns bright red.

There are two types of coffee generally cultivated for the world markets: Robusta and Arabica. The Arabica beans are slower to grow and more temperamental in terms of where they thrive, generally doing well at high altitudes with defined rainy and dry seasons such as Colombia and Kenya. Considered more flavorful and complex, the Arabica bean yields slightly less coffee per acre than its cousin Robusta incurs a higher cost of pro-

Robusta Bean

Arabica Bean

duction. Robusta coffee is cheaper and easier to grow, contains more caffeine, however is also generally more bitter and acidic than the Arabica variety. Far more tolerant to warm conditions most American coffee blends contain a large percentage of the Robusta variety with Arabica used as a flavor enhancing mixer.

Harvested either by hand or mechanical picking and stripping, generally about 15 kg of coffee will be produced from each 100 kg of cherries harvested. Coffee processing can be done one of two ways: the dry method or wet processing.

With the dry method, the cherries are sorted and separated often by hand with a large sieve or by floating the mix in waterwhere different densities allow the undesired elements to be filtered out. Then, the beans are laid in the sun on large brick or concrete patios where they are raked, turned and spend up to a month drying to a moisture content of 10-12%.

When dried, the cherries go to a mill for hulling, sorting, grading and bagging before moving on for export. This operation can have a great effect on the coffee’s final quality with overdried beans becoming brittle and broken and beans too moist prone to rapid deterioration. The dry method is not practical in rainy climates, however the overwhelming majority of Robusta coffee is processed by this method.

The wet (or washed) method of coffee processing produces what is considered a better quality product because the final product contains few defective beans and has a homogenous quality. First, coffee is washed and separated to remove unripe cherries, leaves and other debris, much like the dry method. After this, machines remove the pulp from the beans which are then washed and sent to tanks where fermentation breaks down the leftover mucilage left on the beans by the pulp.

After fermentation, the coffee is washed again and dried either on patios by the sun (like the dry method) or special mechanical dryers until being hulled, cleaned, sorted and graded before being bagged for export. The grading process takes into account the altitude at which the bean was grown, size of the bean, and quality of the final cup when being scored.

During transport, the coffee is stored in jute sacks or supersacks that can be palletized and are often

placed in ocean containers and transported by ship. Arriving at the docks, the coffee bags are brought to food-grade warehouses and can be stored for up to three years before incurring significant flavor loss.

At this stage in the process, the coffee is still “green coffee”, a pale bean not yet ready for consumption.

Getting Ready to Drink Before drinking the coffee, the beans are once more cleaned and sorted and often blended to create different flavor combinations. Here is when US roasters often add Arabica to enhance the flavor of Robusta beans. The coffee is then roasted at temperatures between 350 and 425 degrees Fahrenheit for eight to fifteen minutes to prepare the bean. Internally, starches are converted to sugars, proteins are broken down, and a substance called caffeol is released. This water soluble substance is what will later permeate near-boiling water to create the brew’s flavor.

After roasting, the quality of the beans can now be damaged by moisture, light, and oxygen, so the coffee should be consumed within days of roasting. Now, the coffee can be ground and brewed into its drinkable form. Because grinding drastically increases the surface area of the bean, coffee aficionados maintain that the drink should be brewed within minutes of grinding to prevent oxidation from occurring and the beans from becoming stale.

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Special Processing

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For certain types of coffee, special processes alter the properties of the finished product. Soluble coffee can be directly dissolved in water and is known as instant coffee. To produce it, after roasting, the coffee beans will be finely ground and dissolved in water. Then, the water will be removed either by freeze drying, wherein the wet granules are rapidly frozen, dried, and then placed in a vacuum chamber for drying and condensation. Another method of creating soluble coffee is spray drying, which produces fine, rounded coffee particles.

Here, the ground coffee is atomized with spray wheels to a

(upper-left) - David P. Russell, President, Rowan Drilling Company, addresses the Commerce Club (uppercenter) Buddy Schurig and Joe Burkett, Texas Terminals (upper-right) - Mr. Russell begins his discussion on drilling operations (upper-center-right) Art Flanagan, Hubb International Rigg and John Vague, NLV International (midlow right) John Peter, J. Peters & Associates (lower-right) Jorgan Jorganson, Biehl & Company and Steve Stewart, Gulf Winds International (bottomright) Oktay Bay, UTC Overseas and Hugh McCulley, PTRA (bottom-left) The crowd listens to the discussion on the impact of the drilling moratorium (lower-left) Signing in for the Commerce Club Luncheon (mid-low left) David Halbert, Houston Mooring Company, James Nash, Port Freeport, and Jorgen Jorgenson, Biehl & Company (middle-left) Blake Trehan and Don Welch, Midpoint Partners, with Kevin Hickey, Houston Fuel Oil Terminal. (mid-upper left) Glen Kourik, Midstream Fuel Service, and Kevin Wallace, Shell.

size of approximately 1/100th of an inch.

Another type of special processing is decaffeination.

There are several processes, but one common process is to soak the beans in a bath of supercritical carbon dioxide at over 100 times normal atmospheric pressure for approximately ten hours. Another process involves soaking the beans with methylene chloride or ethyl acetate for ten hours, and then steaming the beans again for the same length of time to remove traces of the chemicals. In almost every case, decaffeinated coffee still retains a minimum amount of caffeine. According to the University of Florida, drinking four or five cups of decaffeinated coffee will generally produce the same level of caffeine intake as drinking one or two cups of regular coffee.

The Greater Houston Coffee Association Formed in 2001, the Greater Houston Coffee Association promotes the regional coffee industry through trade development, networking, and advocacy for industry initiatives.

The Coffee Association’s first project was to secure Houston’s status as a Coffee Exchange Port by the New York Board of Trade in 2003. Since obtaining the status, member companies have grown the coffee storage business in Houston by over 400%. The Houston region is now the 2nd largest exchange port in the United States, and has almost driven Miami out of the exchange coffee business.

With yearly conventions and quarterly meetings, the Coffee Association provides members valuable opportunities to network and form business connections. The Coffee Association is also very active following issues that affect coffee traders and businesses. Representing Association members to governmental agencies, the Association works to ensure favorable conditions for the industry.

Last year, the Coffee Association reached out to the Specialized Coffee Association of America and arranged for the 2011 SCAA Symposium and Exposition to be held in Houston. Bringing more than 8,000 participants, the event will take place April 28—May 1 and host discussions on sales, cost mitigation, employee development, equipment selection, and a score of other timely topics.

In addition, product competitions, a barista championship, and blind tastings will highlight this well attended conference.

The Greater Houston Coffee Association is currently reaching out to international and regional coffee producers and processors that recognize Houston’s unique location as the immediate gateway to over 60 million consumers and the fastest growing economic marketplace in America. For more information on how to join us, please call the Port Bureau at 713-678-4300 or visit the Coffee Association’s website at http:// www.houstoncoffeeassn.org. -P. Seeba, GHPB

Spotlight on Ken Burnett

General Manager—Greens Port Industrial Part/WATCO

Ken Burnett’s been a steel man all his life. Growing up in Sterling, IL just west of Chicago, his father worked as an electronic technician for Northwestern Steel and Wire, and when Ken turned 18, he went to the mill and began working the shop floors. In 1965, like many of his compatriots, Ken was drafted into the Navy, though after getting out of boot camp, he received a somewhat unusual assignment: chase boat driver for President Johnson.

For the next few years, Ken drove LBJ’s 19 foot Glastron and Donzi speedboats in service of the President and worked aboard the Presidential yachts Honey Fitz and Patrick J. President Johnson’s penchant for speedboat racing is well known, and Ken enjoyed the experience of taking the racing boat over 70 mph on the open water. During his service, he would often fly down ahead of the President to the LBJ Ranch in Johnson City just outside of Austin, spend several days making arrangements for a presidential visit with other seamen and the President’s Naval Aide. According to Ken, the President enjoyed watching broadcasts of his own speeches, and “as a young kid, it was pretty surreal: watching the President on television giving a speech, and sitting across from you was the man himself, critiquing his own performance”. During the period, Ken even rented a small house from the President for $5.00/day.

In 1968, Ken returned to civilian life and worked as an engineer for Northwestern Steel & Wire. During his stint in the Navy, he’d attended college at Maryland University, and, finished his degree after returning to Illinois. With his goal of managing a mill, Ken fully expected to transfer to another company, but Northwestern expanded so much that Ken was an Engineering Manager by 1985 and Vice President of Operations by 1990. Also in 1989, Northwestern bought a portion of the Greens Port terminal between Federal Road and Greens Bayou.

In 1994, Ken came down to Houston and began working Greensport West and the barge dock. On the other side of the railroad tracks ARMCO operated Greens Port Industrial Park, and when it came time for Ken to retire in 1999, ARMCO was looking to replace their general manager who was considering retirement, so leaving GP West on a Friday, he began his second career with the terminal on Monday morning. In December 2010, the Watco Companies out of Pittsburgh Kansas, who had been a partner in the Greens Port Terminals since 1994, completed an ownership transfer to take sole possession of the industrial park. Ken says, of the ownership, “I really enjoy working for Watco—we’re customer oriented and privately owned, here at Greensport, we have a good relationship with the PTRA, room to grow, and opportunities to move in many different directions.”

Ken and his wife May have four children. When he left the Navy, Ken told himself he’d buy a Donzi speedboat and even ordered one from the manufacturer. When the mill went on strike soon thereafter, he was forced to put the order on hold, but thirty years later, he’s gone back and completed the transaction and enjoys spending his free time on the water or playing a few rounds of golf.

Watco’s Greens Port Industrial Park is located on 655 acres in the heart of the Houston Ship Channel in Harris County, Texas and is the largest private multi-tenanted industrial park in the Gulf Coast market. Greens Port offers deep water and barge docks along the Houston Ship Channel with services through two non-union stevedores. Greens Port provides approximately 3 million square feet of indoor facilities in 20 buildings that feature large bay widths, numerous cranes ranging from 5 to 125 ton capacity, the ability to clear heights ranging from 20 to 112 feet, and heavy floor loading capacity. Direct rail served buildings and rail storage yards connected by over 22 miles of inter- Park rail are available within Greens Port.

At Greens Port, buildings can easily be subdivided, offering users flexibility in their leasing requirements. In addition to the existing improvements, stabilized or concrete outside storage areas are available with additional acreage for future expansion. Approximately 14 acres are designated Foreign Trade Zone Status.

Port Watch

Tom Marian, Buffalo Marine Service Throughout the major ports in the western Gulf of Mexico, February was a rather subdued month punctuated with periods of frenzied activity directly attributable to a large number of fog days in the year’s shortest month. It was not uncommon to see – albeit electronically – scores of ships anchored outside the entrance to Galveston Bay biding their time until the fog had lifted. The longer the “shut out” conditions persisted, the more aggravated the vessel queues became since vessels fog bound at facilities had to depart before the offshore vessels could enter the port. Within a port complex spanning 53 miles this was a daunting spacemanagement exercise for the U.S. Coast Guard and the various port stakeholders that relied on just-in-time commerce.

As expected, the nine cumulative days of fog reduced vessel arrival counts by over 19% when compared to January’s numbers. The disproportionate share of the reduced commerce was experienced by those ports to the east of Freeport as reflected in a drop of 29% in vessel arrivals in Texas City; a decrease in Sabine of 28%; an over 21% decline in Houston; and a 16.5% drop in Galveston. Freeport and points west saw less fog. Thus, those same port experienced either minor reductions or slight increases in vessel arrival numbers.

In the port of Houston, the public terminals fared a bit better than the private docks as the former was off 17% from the previous month while the latter trailed by 23%. As expected, nearly every terminal and vessel type registered vessel arrival numbers at or below January 2011. Nonetheless, a typical February (i.e., non-leap year) is always at a 10% disadvantage when compared to the first month of the year. Hence, in order to divine a more accurate trade picture, it is helpful to compare year-to-date totals. This comparison literally reverses the trade picture trends as most ports registered strong gains. As expected, Sabine and Texas City which are energy-focused ports were running nearly 8% above last year’s performance. Houston is also nearly 6% above last year’s vessel-arrival pace with both private terminals and public docks even on a percentage-wise basis.

Perhaps the most telling impact of prolonged fog closures is reflected in the Houston Ship Channel tow movements. A year-to-year comparison for the first two months reflects a nearly 5% increase over 2010; however, tow movements were down a substantial 15% in February against January’s brownwater numbers. Yet, this sets up March for the potential of a marked positive swing despite several more days of fog. Initial indicators are that vessel movements have been on a rapid ascent and tug and tow activity is robust throughout the intercoastal waterway. Indeed, spring has certainly sprung in Gulf Coast ports and hopefully the numbers will continue to build as the warmer water temperatures bring an abrupt end to the fog. -T. Marian, Buffalo Marine Service

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Upcoming Events at the Port Bureau April 14

Commerce Club Luncheon Brady’s Landing Restaurant Steve Flynn, President—Center for National Policy

April 27-May 1

Specialized Coffee Association of America Exposition George R. Brown Convention Center

May 12

Commerce Club Luncheon Brady’s Landing Restaurant CAPT Marcus Woodring, USCG—Sector Houston-Galveston

June 6-9

Joint Harbor Safety & AMSC Conference Hilton of the Americas Hotel & Conference Center

August 20

82nd Annual Maritime Celebration & Silent Auction Houstonian Hotel

August 30

Maritime Steel and Petrochemical Outlook Conference Pasadena Convention Center

November 7

Captain’s Cup Golf Tournament Brae Burn Country Club

GHPB Members Advertise in the Port Bureau News Reaching 3000+ Professionals in the Houston Port Region, contact the Port Bureau at (713) 678 4300, or pseeba@txgulf.org to arrange for either 1/6 page, 1/2 page, full page, or back cover advertisements.

GREATER HOUSTON PORT BUREAU 111 East Loop North Houston, TX 77029 713.678.4300 ph 713.678.4839 fax www.txgulf.org