October 2015 Port Bureau News

Port Bureau October 2015

Greater Houston Port Bureau

News

Spotlight on Texas Terminals

U.S. Waterborne Foreign Trade The Trade Balance www.txgulf.org

Port Bureau

News

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Publisher/President CAPT Bill Diehl, USCG (Ret.), P.E. Editor Christine Schlenker Copy Editors Christine Schlenker Judith Schultz

3 Captain’s Corner

Choppy Waters Ahead for Break Bulk

4 Port Watch

Up a Bit, Down a Bit - It’s Just a Summer Thing

6 Port Bureau Updates

10 U.S. Waterborne Foreign Trade - The Trade Balance

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22 Houston Perched

to Prosper from Manufacturing Moves on the Gulf Coast 22 House Committee Votes to Remove the Ban on Foreign Oil Exports 24 Spotlight on Texas Terminals LP

32 September 2015

Commerce Club

Featuring Roger Guenther, Executive Director , Port of Houston Authority

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Art Director Kyle Beam Writers Dave Cooley Christine Schlenker Judith Schultz Photographers Kyle Beam Patrick Seeba Port Bureau Staff Jeannie Angeli Al Cusick Megan Essenmacher Cristina Gomez Bridget McGee Janette Molina Elizabeth Sandefur 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

Choppy Waters Ahead for Break Bulk Houston is the break bulk capital of the Americas and proud to host the Breakbulk Americas 2015 conference at the George R. Brown Convention Center in October. This is the premiere event for people involved in project cargo, multipurpose vessels, stevedores, and all sorts of professionals who ensure that Houston is the best place in the hemisphere to move everything from steel plate to high, heavy, and/or out of gauge cargo.

As the conference opens, it’s no secret that the market is in rough shape.

The U.S. rig count is falling, freight rates are dropping, and all this comes while prices for raw materials, commodities, and semi-finished products are at cyclic lows with no sign of respite. Despite the ebb of 30,000 DWT vessels on the Houston Ship Channel carrying pipe and tube for domestic exploration, we still have reason for optimism.

Since September 2014, the price of oil has dropped from $93.52 per barrel to

$45.68. Correspondingly, the rig count in the United States has fallen from 1,931 rotary rigs to 842, and that decline has had a direct impact on the pipe and tube shipping through Houston. Even with steel prices down from the astronomical highs of 2008 when hot rolled coil was $1,203/ton, now at $497/ton, orders have declined or have been halted, and domestic production is down nearly 10% year-over-year.

Simultaneously, the charter rates of Panamax and Handymax vessels are in a nosedive. The oversupply of many types of vessels – especially in the Atlantic and U.S. Gulf – are causing carriers with multipurpose vessels to explore new ways to sell their ships’ time. This means that vessels that traditionally handle dry bulk or containers now are moving whatever break bulk they can find, further depressing the market.

Like putting to sea, we are always exposed to forces that we cannot control.

How we adapt will dictate how the

CAPT Bill Diehl, USCG (Ret.), P.E. voyage will end. With service centers predicting choppy seas ahead, there is good news in the direction of our regional manufacturing base. At the Port Bureau, we know that the margins on polyethylene are one of the major factors that keep plant expansions in our area strong. The Houston region exports petrochemical products and by-products, and this trend should ensure a steady enough stream of cargo through our port that we can weather this storm.

In 2012, the Port Bureau conducted a study of investment along the ship channel, and the $35+ billion of planned investment that companies along the channel reported is slowly coming to fruition. The Port of Houston Authority’s City Dock 32 is full of project/engineered cargo and components, and private facilities like Port Bureau members Texas Terminals, Inbesa, Manchester Terminal, Watco Greens Port, and Intermarine’s Industrial Terminals attract challenging cargo with their worldclass service. State-of-the-art facilities coupled with exceptional service and transportation access to the heart of country should keep this important industry strong in Houston as we ride out the economic cycle into a new upswing of prosperity.

ò

Photo By Lou Vest

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© Christine Schlenker

PORT WATCH Up a Bit, Down a Bit - It’s Just a Summer Thing

Tom Marian, Buffalo Marine Service It just happens. The weather becomes oppressively hotter, cold fronts become a distant memory, and the pace of things on the waterfront is enervating at best. With such a setting, it is understood that no records will be broken on the vessel-arrival front. There will be time enough to worry about congested docks and overflowing offshore anchorages at summer’s end. So passes another August where one percent fewer ships called upon Texas coastal wharves but most ports continued to outpace their prior year’s performance.

Granted, the brownwater picture was far more lackluster given that 5.3% fewer tows crossed the Houston Ship Channel over the last month. Fortunately, tow activity throughout the region is up 10% in the last year.

The Port of Corpus Christi fared the best during the last full month of summer as it matched its previous month’s vesselarrival tally. Thus, back-to-back peak months kept the port 2% above its 2014 totals. On the other hand, the much smaller Port of

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Brownsville’s year-to-date improvement was over 11 times that of Corpus Christi at 23%. This was in spite of the 3.4% drop over the last month. It is interesting to note that both of these ports continue to weather the vagaries of soft oil and declining rig counts.

This is most likely due to the continued productivity increases in existing wells and the imperative of moving that oil into the market.

The Port of Sabine – another petrochemical-centric port – was also off by over 5% in terms of vessel arrivals but continues to outpace last year’s activity by 4.6%. Texas City mirrored its previous month’s vessel count but still lags behind 2014’s figures by 4%. Port Freeport matched its monthly arrival high for 2015 resulting in a 3% climb for the month. Nonetheless, 2015 remains appreciably weaker than 2014

Texas Ports Deep Draft Vessel Arrivals August 2015 Year-to-Date Percent Change BROWNSVILLE, 22.9% CORPUS CHRISTI, 2.2% FREEPORT, -11.5% GALVESTON, 6.7% HOUSTON, 2.5% PORT LAVACA, -5.2%

SABINE, 4.6% TEXAS CITY, -4.2% GRAND TOTAL, 1.3%

port watch

2000

Port of Houston Deep Draft Vessel Arrivals

August 2015 vs. August 2014

1500

Aug. 2015 YTD (Total: 5,676)

1000

Aug. 2014 YTD (Total: 5,535)

500

0

— to the tune of 11.5% — making it the only port to be down by double digits for the year.

The Port of Houston, for all intents and purposes, matched its previous month’s vessel count with a mere 0.4% wane. For the year, the port is running 2.5% ahead of last year’s arrival totals. Most of the vessel categories were in the negatives in terms of last month’s percentage changes.

Of note, there were a few interesting swings in several of the vessel types. Bulk carriers continued their decline on both the monthly and annualized front, registering their lowest count for the year. This resulted in a decline of 17% for the year and 11% on a year-to-date basis. Conversely, general cargo peaked in August reflecting a 45%

leap. Nevertheless, the vessel call count for this vessel type is still on the soft side with 6% fewer arrivals as compared to last year.

The sheer number of containers is up for the port but the ship count fell 5% over the last month and is flat for the year. Again, this is a reflection of the larger ships that have been calling upon the port.

The energy portfolio was as mixed as the other vessel categories. Chemical tankers logged one of their best months with a 4% count rise. Conversely, tankers had one of their worst months of the year with a 7.6% wane. This slide was enough to pull tankers into the slight negatives for the year, whereas chemical tankers have had a 19% count climb in 2015. Fortunately, the 3% drop in the monthly LPG count had

a rather marginal impact on the annual performance of this vessel type, and it remains 25% above 2014’s count. Rounding out the by-vessel-type count were car carriers, which have been consistent all year, and offshore barge movements, which have essentially emulated their brownwater cousins over the last month with a 8% fall.

Mind you, the similarity ends there due to the fact that ocean-going tow arrivals are 8% fewer than last year.

Year-to-date, the maritime commerce picture reflects business as usual with some signs of softness. Yet, when one is beset by the heat, sometimes it is best to find a piece of shade, a cool drink, and a tad of patience, because it is only a matter of time before the cool weather reenergizes us all.

ò

ò October 2015

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port bureau updates

Summer Ends with Record-Breaking Numbers for the Port Bureau August was a milestone month for the Port Bureau. Not only did our Annual Dinner break previous attendance records with nearly 800 attendees, but the Port Bureau reached a membership milestone by welcoming our 200th member company. In 2009, fewer than 300 attendees came to the Annual Dinner, and membership numbered 98. The Port Bureau finished out the third quarter of 2015 with 204 members.

“We feel the growth of our membership is a result of our continuing commitment to foster synergy among port region stakeholders, to provide quality port information, and to promote the value of the port to the broader community,” said CAPT Bill Diehl, President of the Port Bureau.

The Port Bureau staff has also increased by twofold to provide continually improving services and to offer new membership benefits.

Seven of the 12 regular staff members have graduate degrees, and the Port Bureau has started offering one university internship each semester to promote interest in maritime employment.

The Port Bureau staff looks forward to serving as the industry’s port information hub and offering the maritime community new opportunities for networking, business advancement, education. “If your business or your customers’ business touches the water, we would like to know you and help you,” explained CAPT Diehl.

Port Bureau Upcoming Events Port Bureau’s Captain’s Cup Golf Tournament Presented by BB&T

Hole sponsorships are available for the Port Bureau’s popular Captain’s Cup Golf Tournament. This year’s presenting sponsor is BB&T. The 4-Man Shamble competition is slated for the membersonly BraeBurn Country Club, offering numerous elevation changes and traditional parkland features with a classic 1930s feel, on Monday, November 2, 2015. Team registration and premium sponsorships are sold out, but hole sponsorships allow your company the opportunity to demonstrate your dedication to the Houston maritime community at the Captain’s Cup Golf Tournament. Don’t miss this excellent marketing opportunity.

Call Kyle Beam at (713) 678-4300 or email golf-info@txgulf.org today.

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Certified Port Executive Program™, November 2-6, 2015

Take part in specialized port and terminal management training from the Certified Port Executive Program™ (CPE) and hosted by the Greater Houston Port Bureau. This five-day training program enhances your management skills and offers you and your organization a competitive edge. Training is suited to several levels of management, including staff in terminal management, shipping agents, military personnel, and government officials. The CPE program comprises 17 learning modules to equip attendees with new skills and real-world port knowledge. See the ad on page 9 or visit www.certifiedportexecutive.com.

December Commerce Club

Salute the career of Captain Mike Morris with the Port Bureau in December as he steps down as Presiding Office of the Houston Pilots in preparation for retiring in the spring of 2016. The Port Bureau plans a special Commerce Club on December 10, at Brady’s Landing, to celebrate Captain Morris’ 41 years in the maritime industry, including 21 years as a Houston Pilot and over 20 years with Exxon, 13 of which he was a Master.

In 2005, he was the Port Bureau’s Maritime Person of the Year. Captain Morris will share his reflections and best sea stories from his long and successful maritime career. Join our Premier sponsors the Houston Pilots and our table sponsors American Commercial Barge Lines; Blades International; Buffalo Marine Service, Inc.; Enterprise Products, LP; Houston Fuel Oil Terminal; Houston Mooring Co.; Intercontinental Terminals Company; Kinder Morgan; Moran Gulf Shipping Agencies; Richardson Companies; Schröder Marine Services, Inc.; Shell (US) Trading Company; Suderman & Young Towing; Targa Resources; Texas Terminals, LP; and West Gulf Maritime Association.

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

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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

port bureau updates

Port Bureau Member News Port of Brownsville Foreign Trade Zone Continues to Rank High Nationally

The U.S. Foreign Trade Zone Board has ranked the Port of Brownsville third in the nation out of 179 active U.S. Foreign Trade Zones for the volume of goods exported during 2014, and 25th for the volume of merchandise imported. The Port of Brownsville is the grantee of Foreign Trade Zone (FTZ) No. 62, and the board’s 76th Annual Report to Congress reported more than $3 billion in various commodities were warehoused and distributed through the Port’s FTZ No. 62.

Gas Innovations Leads Charge on Rapidly Emerging Refrigerant Market Growth

To support burgeoning hydrocarbon refrigerant markets, Gas Innovations has expanded its capability to supply refrigerant gases to LNG and FLNG liquefaction plants worldwide. The unprecedented economic success of U.S. shale gas has created seemingly unending ripples for numerous industries – and economies – across the globe. For Gas Innovations, one of only two companies in North America solely focused on purifying and packaging hydrocarbon, specialty gas, and welding consumable products, the significant cost advantages to producing natural gas have resulted in the ability to produce and package great quantities of ethylene.

Port of Galveston Receives Prestigious Quest for Quality Award The Port of Galveston was awarded a Logistics Management 2015 Quest for Quality Award in the Ports category. The Port was evaluated on five critical areas that include ease of doing business, value, ocean carrier network, intermodal network and equipment operations. The result of this overall effort offers the logistics market a crystal clear look at not only the overall winner in any given category, but a broad list of companies that finished above the average. The Port joined only 16 other U.S. and Canadian ports in receiving this prestigious award.

Read more member new on our website: www.txgulf.org/pressrelease.php

The Port Bureau Welcomes New Members in the Third Quarter Axiom www.axiom.us.com

Mutual of Omaha Bank www.mutualofomahabank.com

General Steamship Corp www.gensteam.com

Regions Bank www.regions.com

Hilton Houston NASA Clear Lake www.houstonnasaclearlake.hilton.com

Porter Hedges LLP www.porterhedges.com

KPLER www.kpler.com 8

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Partners with the Greater Houston Port Bureau

Port & Terminal Management Training Houston, November 2nd – 6th, 2015 Hosted at the Greater Houston Port Bureau

THE PROGRAM THAT BENEFITS YOU ALSO BENEFITS YOUR WHOLE ORGANIZATION 17 Learning modules over 5 days

Take part in this 5 day training program that will enhance your management skills and give you and your organization a competitive edge WHAT DO YOU LEAVE WITH? • Enhanced management skills to bring back to your terminals, ports or maritime operations.

• Real world knowledge of port and terminal operation and management • Tools and knowledge to be able to advance in your organization • Interconnectedness with a global network of port management professionals • Knowledge about the five key areas affecting port management today

WHO SHOULD ATTEND? • Port authority directors and executives • Terminal Managers • Port stakeholders including municipal, provincial and federal government officials • Shipping company agents • International transportation companies • Importers and exporters • Dockyard, navy, and military personnel • Coast guard officials • Intermodal, global and marine organizations

Being CPE Certified Starts here! Visit our NEW Website CertifiedPortExecutive.com

register by email at registration@macdonnell.com or call 902.425.3980

U.S. Waterborne Foreign Trade – The Trade Balance By: Dave Cooley, GHPB

us waterborne trade Introduction The economy of the United States has long been driven on foreign trade, specifically waterborne foreign trade. Beginning this month we will take an in-depth look of the waterborne foreign trade of the U.S. with a six-part series. The series will discuss the balance of foreign trade, commodities that drive U.S. and Houston trade, the top U.S. ports and their evolutions, and what could impact maritime trade in Houston.

This edition of the Port Bureau News begins the series with an overview of the main commodity groups that drive the trade balance for the U.S. as a whole and the Port of Houston (public and private terminals) in particular. Being aware of the magnitude and direction of the trade balance offers additional insight when analyzing the components of trade – imports and exports.

Methodology Before moving forward, a methodology review is appropriate. Trade data are gathered

by U. S. Customs and Border Protection from import and export manifests of all goods arriving and leaving the U.S. These data are entered by the U.S. Census Bureau into a database published each month. The commodities are organized according to the Harmonized Tariff Schedule (HTS) which is utilized throughout the world to describe the products moving in international trade.

To more easily analyze the data, the 99 main

HTS codes were further grouped into 26 Port Bureau-defined commodity groups; the resulting database is the basis for the following discussion. The database includes value and weight for each commodity group for both imports and exports for each year from 2003 to 2014. Unless noted otherwise, the 11-year average of each selected variable determines the rank.

U.S. Trade Balance The U.S. trade balance is the difference between the value of exports and the value of imports and can result in either a positive outcome (a trade surplus) or a negative outcome (a trade deficit). The end result is a function of the balance between the combined wants and needs of the populace compared to the types and quantities of the goods indigenously manufactured.

Consequently, if manufacturing does not satisfy consumers’ wants and needs, the difference is imported and can create a trade deficit. Conversely, if the manufacturing complex makes more than what consumers want and need, this excess is exported and can create a trade surplus.

The U.S. trade balance, expressed in billions of U.S. dollars, became a significant point of contention in the early 1990s when the trade deficit began to expand.

During the previous decade, outsourcing was in vogue as U.S. manufacturers sought to remain competitive by moving various

THE HOUSTON PILOTS Silent Servants of Progress

www.houston-pilots.com

elements of the manufacturing process overseas, seeking those countries where the labor cost component of manufacturing was lower than in the U.S. The resulting surge in imports over the next 24 years is manifest by a widening trade deficit from $111 billion in 1990 to $741 billion in 2014.

The U.S. trade deficit stabilized around $740 billion over the last four years.

Looking forward under today’s conditions, the primary drivers of the trade deficit — consumer goods and energy—could be poised to widen and thus potentially increase the trade deficit in the future.

From the very early ‘90s until today, the demand for consumer goods (the key driver of the container trade) grew inexorably, which significantly contributed to a continual widening of the total trade deficit by more than $400 billon. This reflects the desires of U.S. consumers to acquire the newest electronic gadgets, drive ever fancier automobiles, and wear the latest trends in fashion and accessories. This driver of trade deficit will continue to widen as consumer demand continues to rise into the future (increasing tonnage), and as prices are escalated by higher foreign labor costs increasing the value of imported goods.

The trade balance of energy, the other driver of the trade deficit, has narrowed considerably over the last few years as U.S. oil production increased. This is demonstrated by decreasing tonnage and the associated value of oil imports accompanied by increasing tonnage and value of refined product exports. This synergy may be nearing its peak. Since the industry did not take any overt action to correct the recent world-wide supply-demand imbalance, the oil price intervened by dropping 66% to around $40 a barrel. This price reduction will curtail industry cash flow, which will reduce funding for new drilling. A chain reaction will ensue as both U.S. oil production and U.S. refined product exports decline. Foreign oil imports will increase and will ultimately exacerbate the energy trade deficit.

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us waterborne trade U.S. Waterborne Foreign Trade Balance Overview A subset of the U.S. trade balance, waterborne foreign trade balance represents the net difference between the flows of exports departing from U.S. ports aboard a ship bound for a foreign destination less the flows of imports arriving at U.S. ports aboard a ship that originated overseas.

Data are either a value expressed in U.S. dollars or weight expressed in metric tons.

The waterborne foreign trade balance is depicted in Figure 1 as the darkened area from 2003 to 2014 and, on average, is about $190 billion a year less than the total U.S. trade balance. The remaining trade occurs via land crossings with Canada and Mexico or through airports.

Value – U.S. Dollars At the beginning of the analysis period, 2003, U.S. waterborne foreign trade balance was at a deficit of $330 billion (the solid

U.S. Trade Balance Billions USD

100

100

0

0

-100

-100

-200

-200

-300

-300

-400

-400

-500

-500

-600

-600

-700

-700

-800

-800

-900

-900

U.S. Trade Balance

U.S. Waterborne Foreign Trade Balance

Figure 1: The total U.S. trade balance from 1960 through 2014 with an overlay of a subset, the U.S. waterborne foreign trade balance from 2003 through 2014. Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data.

U.S. Waterborne Trade Balance by Value Billions US

100

100 Other Trade Deficit Foodstuffs

-100

-100

Toys, Games, and Sporting Equipment Furniture and Bedding

-200

-200

Metals

-300

-300

Transportation Equipment Textiles and Apparel

-400

-400

-500

-500

-600

-600

-700

-700

Boilers, Machinery, Motors, and Electronics Energy Other Trade Surplus Grains and Milling Products Oil Seeds, Gums, Vegetable Oils Total All Commodities

-800

-800 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Figure 2: The U.S. waterborne trade balance for the 26 Port Bureau-defined commodity groups by value. The green line represents the total U.S. waterborne trade balance by value. Source: GHPB analysis of U.S. Census Bureau, Department of Commerce.

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us waterborne trade Table 1- U.S. Waterborne Trade Balance- Top 4 Commodity Groups Average Annual Trade 2014 Trade Balance Balance (Billions USD) Commodity Group 2003-2014 (Billions USD) U.S. Trade Balance -559 -550 Billions U.S. Dollars Energy Boilers, Machinery, Motors, and Electronics Textiles and Apparel Transportation Equipment Total Top 4 Commodity Groups

-205 -110

-115 -143

- 81 - 69 -466

- 99 - 73 -430

Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data. green line and referenced to the right axis in Figure 2). Over the next five years the deficit steadily widened, reaching $680 billion in 2008, then narrowed to $430 billion in 2009 as a result of the Great Recession. The recovering economy increased the demand for foreign goods and the waterborne foreign trade deficit widened again to $530 billion in 2010 and continued to widen further during each of the next two years, reaching a level just under $600 billon at the end of 2012. At this point, the economic recovery temporized, which moderated the demand for consumer goods. In addition, increased oil production in the U.S. not only reduced need for imported oil, but also increased refined product exports. As a result of these

converging factors, the waterborne foreign trade deficit narrowed slightly to $550 billion a year and remained steady around this level during 2013 and 2014. See Figure 2 for a display of the U.S. waterborne foreign trade balance.

The value of the annual waterborne foreign trade deficit for the U.S. averaged $560 billion from 2003 to 2014, which is not significantly different than the waterborne foreign trade deficit for 2014 of $550 billion. A similar conclusion applies to the top four commodity groups. The average annual waterborne foreign trade deficit from 2003 to 2014 of $466 billion and the waterborne foreign trade deficit for 2014 of $430 billion are essentially the same. A

time series tracking to its mean will display smaller annual variations. See Table 1.

Comparing the values of the average annual waterborne foreign trade deficits with the 2014 trade deficit suggests that the energy commodity group is directionally narrowing and the trade deficits for three commodity groups (boilers, machinery, motors, and electronics; textiles and apparel; and transportation equipment) are all directionally widening. A narrowing trade deficit implies that the value of exports exceeds the value of imports, while a widening trade deficit suggests the value of imports exceeds the value of exports. The three non-energy commodity groups that are widening are primarily composed of consumer-oriented goods, indicating that U.S. consumer demand is driving several large components of the waterborne foreign trade deficit.

Examples of the remaining commodity groups include: metals; furniture and bedding; toys, games, and sporting goods; ceramics and glass; pharmaceuticals; and foodstuffs. The average annual waterborne

Port of Houston Authority

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

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us waterborne trade foreign trade deficit for these groups was $94 billion. Also included are two commodity groups with a total average annual trade surplus of $29 billion, viz., vegetable oils, gums, and oil seeds and grains, namely corn, soybeans, and wheat.

Tonnage The waterborne foreign tonnage trade balance widened from a deficit of 550 million metric tons in 2003 to a deficit of 640 million metric tons in 2005. The deficit then narrowed each ensuing year, reaching a tonnage deficit of 60 million metric tons in 2014, balance of 489 million metric tons less than in 2003. The driving force is the narrowing of the energy commodity group’s trade deficit and the widening of the trade surplus for two commodity groups: grains and milling products; and oil seeds, gums, and vegetable oils. The energy component of the U.S. waterborne foreign tonnage trade deficit had the most impact, narrowing from

Table 2- U.S. Waterborne Trade Balance- Top 6 Commodity Groups Average Annual Trade 2014 Trade Balance Balance (Millions MT) Commodity Group 2003-2014 (Millions MT) U.S. Trade Balance Million Metric Tons

-366

-60

Energy

-370

-84

Grains and Milling Products

72

75

Salt, Sulfur, Lime, and Ores

- 67

-63

Oil Seeds, Gums, and Vegetable Oils

37

50

Wood, Cork, Paper, Books and Paperboard

24

38

Metals

- 20

-34

Total Top 6 Commodity Groups

-324

-18

Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data.

U.S. Waterborne Trade Balance by Tonnage Millions Metric Tons

300

300

Other Trade Deficit

200

200

Transportation Equipment

100

100

Furniture and Bedding Ceramics and Glass Boilers, Machinery, Motors, and Electronics Metals

-100

-100

-200

-200

-300

-300

Salt, Sulfur, Lime, and Ores Energy

-400

-400

Other Trade Surplus

-500

-500

-600

-600

-700

-700

-800

Grains and Milling Products Oil Seeds, Gums, Vegetable Oils Wood, Cork, Paper, Books and Paperboard Total All Commodities

-800 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Figure 3: The U.S. waterborne trade balance by commodity groups by tonnage. The green line represents the total U.S. waterborne trade balance by tonnage. Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data.

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us waterborne trade its 2005 high of 553 million metric tons to 84 million metric tons reported in 2014.

This narrowing of the energy waterborne foreign tonnage trade deficit is the net result of the combination of lower quantities of energy imports and higher quantities energy exports that include increased exports of refined products, coal, and LPGs. Over the 11-year period, the energy tonnage trade deficit narrowed by 426 million metric tons, or 87% of the total change in the U.S. waterborne foreign tonnage trade deficit.

Figure 3 shows the details of the U.S. waterborne foreign tonnage trade deficit.

In addition to energy, the other top five commodity categories contributing to the waterborne foreign tonnage trade deficit include: grains and milling products; salt, sulfur, lime, and ores; oil seeds, gums, and vegetable oils; wood, cork, paper, books and paperboard; and metals. The total average annual trade deficit for these six categories over the analysis period is $324 million metric tons. See Table 2.

Five of the top six commodity groups contributed to the reduction of the U.S. trade balance by either greater trade surpluses or decreased trade deficits. The exception is the metals commodity group, which experienced a deficit growth. All three commodity groups that experienced increased trade surpluses are related to agriculture and are minimally processed, low value-added commodities.

The average annual waterborne foreign tonnage trade deficit of the remaining 20 groups is 42 million metric tons. These commodity groups, which are generally higher value-added products, include: boilers, machinery, motors, and electronics; ceramics and glass; furniture and bedding; transportation equipment; and textiles and apparel.

Houston Waterborne Foreign Trade Balance Value The waterborne foreign trade balance for Houston in 2003 was at a deficit of $4 billion, which swung to a trade surplus of $9 billion by 2009. The trade surplus continued

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Table 3- Houston Waterborne Trade Balance- Top 4 Commodity Groups (USD) Average Annual Trade Balance 2003-2014 (Millions MT)

2014 Trade Balance (Millions MT)

1

17

Energy

-13

3

Chemicals, Fertilizers, Plastics, and Rubber

13

14

Boilers, Machinery, Motors, and Electronics

7

10

Metals

-6

-9

1

18

Commodity Group Houston trade Balance Billions USD

Total Top 4 Commodity Groups

Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data.

Houston Waterborne Trade Balance by Value Major Commodity Groups Billions of USD

Energy

40

25

Metals

30

20

Foodstuffs

20

15

Ceramics and Glass

10

Wood, Cork, Paper, Books and Paperboard Other Trade Deficit

10

5

Other Trade Surplus

-10 -20

-5 -10

-30

-15

-40

-20

-50

-25

Transportation Equipment Optics, Photography, Medical Equip Grains and Milling Products Boilers, Machinery, Motors, and Electronics Chemicals, Fertilizers, Plastics, and Rubber Total All Commodities

Figure 4: The Houston waterborne trade balance by commodity groups. The green line represents the total Houston waterborne trade balance by value. Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data. to widen to a $19 billion in 2013, then tapered to a $17 billion surplus in 2014.Three commodity groups drove this change. The trade surplus for the chemicals, fertilizers, plastics, and rubber; and boilers, machinery, motors, and electronics commodity groups reported a trade surplus that widened by $7 billion and $9 billion, respectively. The third group — the energy commodity group, transitioned from a $10 billion trade

deficit to a $3 billion trade surplus — a net change of $13 billion. The surplus was offset by a widening trade deficit for the metals commodity group of about $7 billion over the same time period.

Figure 4 shows the Houston waterborne foreign trade balance from 2003 through 2014.

us waterborne trade Table 3 shows the top four commodity groups influencing the value of Houston waterborne foreign trade balance.

Tonnage The Houston waterborne foreign tonnage trade deficit in 2003 was 46 million metric tons and grew to 53 million metric tons in 2006. At this point, the rise in U.S. oil production affected the Houston tonnage trade balance in two phases. First, in 2007 crude oil imports started to decline, and secondly, in 2009 refined products exports started to increase with gusto. Both of these events resulted in narrowing the tonnage trade deficit each year from 2007 through 2014 with Houston reporting a 9 million metric ton trade surplus, a net change of 56 million metric tons. Of the net increase in trade surplus, 55 million metric tons can be contributed to the energy commodity group.

While perhaps less significant in terms of absolute value, the three commodity groups that have consistently contributed to the trade surplus in Houston – oil seeds, gums, and vegetable oils; textiles and apparel; and boilers, machinery, motors, and electronics (primarily the project cargos boilers and machinery) — have, relative to the individual tonnage for each, declined rather significantly during the last three years. Could these commodity groups be a harbinger of change? Figure 5 shows the Houston waterborne foreign trade tonnage balance from 2003 through 2014.

All commodity groups, except metals, directionally show improvement in each groups in the Houston waterborne foreign tonnage trade balance. See Table 4 .

Houston Commentary The flow of waterborne foreign trade, when comparing Houston to the remainder of the country, suggests that while Houston is indeed a port highly dependent on the oil trade, it is also produces a positive trade balance for several of the key commodity groups such as chemicals and fertilizers; boilers and machinery (project cargos); wheat, rice, and sorghum; and iron and steel.

Houston achieves positive trade balance by

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Table 4- Houston Waterborne Trade Balance- Top 4 Commodity Groups (MT) Average Annual Trade 2014 Trade Balance Balance (Millions MT) Commodity Group 2003-2014 (Millions MT) Houston Trade Balance Million Metric Tons

-24

9

Energy

-28

8

Chemicals, Fertilizers, Plastics, and Rubber

8

8

Grains and Milling Products

5

6

Metals

-5

-8

-20

14

Total Top 4 Commodity Groups

Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data.

Houston Waterborne Trade Balance by Tonnage 30

Major Commodity Groups Millions Metric Tons

30

20

20

10

10

Energy Metals

Salt, Sulfur, Lime, and Ores Ceramics and Glass Foodstuffs

-10

-10

Other Trade Deficit

-20

-20

Other Trade Surplus

-30

-30

-40

-40

Boilers, Machinery, Motors, and Electronics Textiles and Apparel

-50

-50

-60

-60

-70

-70

Oil Seeds, Gums, Vegetable Oils Grains and Milling Products Chemicals, Fertilizers, Plastics, and Rubber

Figure 5: The Houston waterborne trade balance by commodity groups by tonnage. The green line represents the total Houston waterborne trade balance by tonnage. Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data. exporting a greater quantity of higher value products as compared to imports. This is a key ingredient to the growth and success of not only the Port of Houston, but also the overall metropolitan area.

General Observations The two driving factors of the waterborne foreign trade balance are the energy commodity group and consumer

goods which are generally equated to the container trade. Comparing the changes to the trade balance for both the country (U.S.) and the Port of Houston along with changes to the value and tonnage aspects of these two components offers interesting observations.

For the U.S. as a whole, the value of the trade deficit widened for the three critical

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us waterborne trade

Table 5 - Waterborne Foreign Trade Balance U.S.

Category

2003 Energy

Energy

-249

3

-153

4 157

-550

-5

-150

17 22

Million Metric Tons -84 -48

-511 427 -57

-46

-550

9 56

-604

11

Change

Total Value Change

-461

-400

2014

12

-214

Change Container

2003 Billions USD -115 -9

-6

Change

Total Value Change

2014

-109

Change Container

Houston

6 610

-60 490

-46

9 56

Source: GHPB analysis of U.S. Census Bureau, Department of Commerce data. categories — the energy commodity group, the container trade, and for the total country — from 2003 to 2014. The related tonnage trade deficit, however, narrowed for all three categories, as reflected by a narrower aggregate tonnage trade deficit at the end of the 11-year analysis period. This suggests the U.S. is a net importer of continually higher-priced goods.

Conversely, the value and tonnage of the trade deficit for Houston narrowed for the energy commodity group, the container trade, and for the Port of Houston as a whole from 2003 to 2014. As a result, Houston’s waterborne foreign trade balance measured by value and tonnage from deficit to surplus by 2014. This is good news for both the Port of Houston and the country.

While reduced oil imports and increased oil exports definitely benefit the Port of

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Houston, the movement the container trade as well as energy contributed significantly to the transition of Houston’s trade balance from deficit to surplus, which suggests that Houston’s port activity is somewhat more diversified than the country itself. Table 5 offers details of this comparison.

Conclusion The historical drivers of the U.S. waterborne foreign trade balance over the last 25 to 30 years have been energy and consumer goods. The energy commodity group became a significant contributor to the trade deficit during the late 1970s as U.S. oil production declined and foreign oil imports increased. Today, even with the rise in U.S. oil production, energy remains a primary contributor to the trade deficit.

Another significant contributor to the trade deficit is consumer goods, generally manifest

as the container trade. Consumer goods have been running a trade deficit since the late 1980s to early 1990s as manufacturers, responding to competitive pressures, moved various aspects of the manufacturing process overseas. The deficit remains through today.

As value-added manufacturing becomes continually less influential as the primary driver of the U.S. economy, a large structural trade deficit reflecting a net inflow of high value finished goods accompanied by a net outflow of lower-valued commodities is the result. This leads one to question the drivers of future U.S. economic growth.

The next part of this series will appear in the November 2015 edition of the Port Bureau News, and will analyze the top commodity groups that arrive or depart from U.S. ports aboard ocean-going ships.

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Houston Perched to Prosper from Manufacturing Moves on the Gulf Coast Judith Schultz, GHPB For years, manufacturers have outsourced operations overseas to take advantage of lower labor costs, avoid regulation hassles, and gain proximity to additional resources. Now, according to a new report – Third Coast Reshoring-Primed For Success — published by the legal firm of Phelps Dunbar earlier this year, many corporations are considering the benefits of stateside manufacturing. The term “reshoring” is used to describe the return of manufacturing operations to the U.S., or the location of new facilities domestically that would otherwise have been located overseas.

The report names proximity to customers, flexibility to respond to changes in demand, and supply chain efficiency as chief attractions for a move to U.S. operations.

Houston emerges repeatedly in the report as a strong candidate for market share leader in these economic developments.

Evidence for success includes Houston ranking 6th for well-educated graduates, an existing labor pool in spite of shortages,

and tax-based incentives and exemptions for relocators. Manufacturing spurred in the area by new refinery and pipeline requirements prompted Forbes to rank the HoustonSugar Land-Baytown metropolitan region as “best in the country” for manufacturing growth. Forbes also named Houston as one of the country’s most “cost friendly” cities to do business.

The concentration of liquefied natural gas facilities in the works could help lure energy-products manufacturers to the Gulf Coast region with lower input costs.

The boom in investment in energy’s sister, the chemical industry, also offers potential opportunities for “reshoring” business. Once again, Houston stands to benefit from both these sectors as it is a top petrochemical manufacturing locality.

Texas also scores heavily in the realm of aerospace, with numerous manufacturers operating on the Gulf Coast and Houston home to several in the sector, including NASA, United Airlines, Lockheed Martin,

Boeing, Expressjet, Jacobs, UTC Aerospace, and more.

While Phelps Dunbar paints a bright picture for the Third Coast, decisionmakers are advised to be especially savvy in considering the questions of employment, immigration, real estate, construction, corporate finance, and taxation. Understanding and implementing skilled labor recruitment; knowing potential real estate values, environmental issues, or limitations; a firm grasp on regional legal ramifications; and, corporate tax breaks and financing are among the issues requiring a skillful navigator. All in all, though, the economic weathervane points straight at Houston as its preferred destination on the Gulf.

To read the publication, Third Coast Reshoring-Primed For Success, please visit www. phelpsdunbar.com.

which is expected to be considered by the full House later this month.

Rep. Barton commented, “The ban on exporting crude oil imposes an estimated $200-$600 billion cost to the U.S. economy, discourages crude oil production, prevents the creation of jobs, and causes higher gasoline prices for U.S. consumers. We need to use our abundant resources for the highest and best causes – creating jobs, encouraging

innovation, supporting our allies and being a leading player in the world market.”

The press release announcing the vote noted that lifting the ban on oil exports enjoys broad bipartisan support and will help create jobs, lower energy prices, and boost America’s standing around the globe.

Locally, U.S. Senator John Cornyn (R-TX) praised the committee’s passage of H.R. 702. “For far too long this antiquated

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House Committee Votes to Lift the Ban on Crude Oil Exports Judith Schultz, GHPB The House Energy and Commerce Committee approved legislation on September 17, 2015, to lift the nearly 40-year-old ban on crude oil exports.

H.R. 702 (to adapt to crude oil market conditions) passed the committee by a vote of 31-19. Chairman Emeritus Rep. Joe Barton (R-TX) and Rep. Henry Cuellar (DTX) introduced the bipartisan legislation

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exports

West Texas Pumpjack. Photo Courtesy of Wikipedia Commons law has stifled American job creation and If the bill passes in the House, prevented lower energy costs at home and opposition still waits in the Senate and abroad. Today’s vote to lift the ban was from the White House. When asked about an essential step forward in strengthening the bill, White House press secretary Josh our economy and empowering our allies to Earnest said the decision on whether the diversify their resources and enhance their ban should be lifted should be left to the energy security.”

Commerce Department.

“We’ve got a position on this, which is this is a policy decision made over at the Commerce Department, and for that reason we wouldn’t support legislation like the one that has been put forward by Republicans,” Earnest said September 15 just prior to vote, threatening a veto by the president if it reaches Obama’s desk.

The Commerce Department did lift restrictions last year for certain U.S. companies, allowing them to export condensate to foreign buyers, clearing the way for the first exports of unrefined oil in over four decades. The U.S. also exports crude oil to Canada, and recently announced a landmark decision to allow crude oil exports swaps with Mexico.

The above article includes comments from press releases provided by the House Energy and Commerce Committee and the Office of Sen. Cornyn.

ò

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Spotlight on Texas Terminals LP By: Christine Schlenker, GHPB

spotlight

A helicopter is loaded onto a vessel. Some helicopters fly to the terminal and are partially disassembled for shipping. Photo courtesy of Texas Terminals, LP. Situated on 65 acres on the Houston Ship Channel between Beltway 8 and the San Jacinto Monument, Texas Terminals, LP, is a project cargo-oriented facility serving the Port of Houston. The terminal’s specialties are heavy lift and out of gauge project cargos, and it has also made a name for itself with the handling of dry bulk cargos. Texas Terminals celebrated 20 years of service as a privately-owned non-union terminal operator and stevedoring company on August 1, 2015.

Before Texas Terminals The current Texas Terminals site has had a few owners over the past 40 years but one constant purpose: handling heavyweight products. From the 1970s until 1985, the location was operated by West India Shipping Company, described in the May 1971 Port of Houston Magazine as “a maritime firm specializing in the handling and carrying of jumbo-sized equipment.”

After the company owners decided to cease operations in 1985, the prime property sat vacant until 1988 when it was purchased

by Proler International, a prominent metal scrap recycler. Several metals markets enjoyed high demand and high prices in the late 1980s through the early 1990s,

which justified Proler’s use of the terminal for its scrap metal recycling operation.

However, Proler shuttered its Houston metal recycling facility in 1992 following a precipitous decline in the metals markets and concurrent increased competition in the scrap recycling scene.

A Diamond in the Rough After not being used for three years, Proler sold the facility July 1, 1995, to private investors out of Port Everglades.

Exactly one month later Texas Terminals, LP – Stevedoring and Marine Terminal Operators, opened its doors.

The owners of Texas Terminals, LP, Mr. and Mrs. John Gorman Jr., come from a stevedoring background, and their experience and entrepreneurial spirit provided the vision and drive necessary to transform the terminal.

The facility had received few improvements since the 1970s. It featured a dockside rail line that directly connected to the Port Terminal Railroad Association (PTRA) lines and one 40,000 square foot warehouse butted against a walled retaining area for scrap metal. The dock strength was satisfactory from the terminal’s years of receiving oversized

cargo, but a significant portion of the site’s acreage was completely undeveloped. The terminal needed improvements for the site to become and remain a competitive project cargo destination in Houston. Such metamorphoses take time and substantial investment, and over the last twenty years conservative but methodical improvements transformed the property while allowing the company to grow in a sustainable manner.

Polishing the Diamond One of the first orders of business after opening Texas Terminals was to revert the terminal back to its pre-scrap yard condition.

During operation as a scrap yard, giant lifting magnets were often used to handle the metal; however, some smaller metal pieces were dropped in the process. This left the dock area littered with metal debris, a hazard to tires on the workers’ and truck drivers’ vehicles. Very soon after operations opened, the operations team combatted the problem by attaching a magnet to a forklift and slowly driving through the heavilytrafficked areas to collect debris.

Another scrap yard feature impeding business was a number of truck ramps positioned near the docks and the warehouse. During the metal recycling operation, these ramps enabled scrap trucks to dump their contents into holding areas or to be filled for transport. As a heavy lift terminal, however, they were simply taking up valuable marshalling space and were removed by 1998.

As the demand for covered warehousing space grew, the terminal converted the walled area behind the original warehouse into another covered building. An additional adjoined warehouse was added in 2008, bringing the total warehousing space to nearly 200,000 square feet. The 2008 expansion included an offshoot of the private rail line into the new warehouse, enabling covered rail loading and discharge.

Hector Saenz, head of operations and Texas Terminals employee since 1998, remembers working vessels before the investments in dock lighting. Stevedores

October 2015

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spotlight would use their headlights for illumination if the vessel they were servicing did not have spotlights available. Within a few years of opening, management started renting portable lights, as construction of permanent lighting began. Around 2000, the dockside lights were installed, and lighting across the remainder of the facility followed in the subsequent years.

On January 1, 2002, Texas Terminals added its own locomotive for switching within the terminal. Previously relying on PTRA switching, the brightly-painted locomotive added flexibility to the terminal’s direct discharge and rail access capacity.

The year 2003 brought significant upgrades to the facility. On the east side of the channel dock, an additional 402 feet of dock was added to wrap around the corner of the berth with a roll-on roll-off ramp.

Parts of the apron and dock area were improved further by constructing reinforced landing areas for weights of up to 1,000 tons, making it the highest capacity dock in the

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Texas Terminals has its own locomotive for switching within the terminal. Photo courtesy of Texas Terminals, LP. Port of Houston, while the remainder of the marshalling areas already had a substantial loading capacity of 400 tons.

The other major improvement was paving. As with many break bulk terminals,

Texas Terminals had dirt and gravel roads and marshalling areas. The maintenance of dirt roads bearing the massive loads of a project cargo terminal became untenable, made worse by Houston’s often rainy

spotlight weather, and no amount of regular grading could prevent pot holes from developing.

In 2003 key areas such as the main road, docking area, and marshalling areas near the warehouses were fully paved. The rest of the marshalling areas were properly stabilized as

pipe, break bulk, and container yards.

Texas Terminals cemented its position as a heavy lift terminal with the acquisition of its 600 metric ton Demag CC2800 crawler crane in 2005. The largest break bulk terminal crane in the Port of Houston

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at the time, and still the largest crane used for stevedoring in Houston today, this crane filled the niche market in Houston for oversized and heavy lift cargos. The presence of the Demag CC2800 has enabled loading or discharging of offshore platforms, blow out preventers (BOPs) bound for Asia, and transformers independently and regardless of vessel gear capacity.

The newest upgrades to the facility came in 2014. The bulkheads on both the channel-side dock and the slip dock, a total of 1,320 linear feet, were completely replaced. These bulkheads have a lifespan of 40 years. In addition, extensive dredging efforts to deepen the draft of the channelside dock to 40 feet and the slip dock to 34 feet were undertaken.

Flexibility Leads to Interesting Cargo Peter Wurschy, manager of business development and sales, said, “We pride ourselves with being a one-stop shop, from stevedoring and terminal handling, to expert technical advice and certified welding crews.

We are a strong partner to industry.” The majority of the terminal’s cargos are project cargo and break bulk, including significant quantities of oil country tubular goods and components for the local chemical complex infrastructure development. The combination of improved marshalling areas and direct discharge to truck or rail also enable Texas Terminals to accommodate direct to rail discharge of break bulk, heavy cargos, and containers. In addition, container repair, stuffing, and stripping are regular service offerings as well.

Texas Terminals’ management has invested significantly in equipment needed for the stevedores to increase dry bulk handling efficiency for barite, talc, bauxite, fluorspar, and other dry bulk commodities.

The owned and operated mobile harbor cranes have average discharge production of 15,000 tons per weather working day (PWWD). The industry average from Brownsville, Texas, to New Orleans, Louisiana, is about 10,000 PWWD. Texas Terminals seeks to be flexible

October 2015

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spotlight

Photos Courtesy of Texas Terminals, LP.

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spotlight enough to handle any cargo, and that sometimes leads to diverse and challenging cargo that has opened interesting opportunities for the stevedores. Imported helicopters are often discharged via the roll-on roll-off ramp, assembled onsite in

the terminal marshalling area, then flown out of the terminal. One of the more memorable shipments was the export of over 1,500 head of cattle to Russia. Texas Terminals stevedores created an ad hoc corral out of shipping containers to stage

many truckloads of cattle prior to loading on a specialized Spliethoff animal transport vessel. At the end of the voyage, the recipient sent an update to Texas Terminals saying all of the cattle had arrived safely, plus 25 calves born in transit.

The People of Texas Terminals At the foundation of Texas Terminals is the staff ’s commitment to customer service, transparency, and integrity. This philosophy is applied to interacting with customers, visitors, and employees of the terminal.

In an industry challenged by employee turnover, Texas Terminals strives to provide an environment that encourages its employees to stay their entire career with the company. Of the current staff, 27% have been with the company over five years and 3% over 15 years. A component of Texas Terminals’ strategy to retain good employees is to demonstrate that hard work and dedication do pay off, and professional growth is attainable within the company. With about 180 employees, Texas Terminals is actually quite small compared to many stevedoring operations, but the management uses the small size to promote a family-oriented and caring atmosphere.

Because the well-being of employees is so important, Texas Terminals has strict policies and safety requirements, and all employees are accountable for compliance.

Texas Terminals’ stevedores are exposed to the terminal’s key cargos on a daily basis, providing them the experience necessary to become experts in how to handle project cargos and break bulk. All new hire stevedores go through a recentlyimplemented 90 day mentorship program and training curriculum. Not only do the new employees have a guided opportunity to become accustomed to the stringent safety requirements of the terminal, but shift supervisors can observe the talents of the employees and recommend new training opportunities to help that person grow as a stevedore. A hard hat color system is in place to help the stevedores quickly identify the new hires and those with specialized

October 2015

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spotlight training.

Another key labor strength of the terminal is the maintenance and repair crew, which accounts for about 30 individuals, including eight to ten certified welders. The crew handles all of the equipment repair for the containers, cranes, forklifts, top loaders, front loaders, and more. Every member of the welding team is certified and are often contracted to perform hot work at other terminals.

Texas Terminals Now and Into the Future In March 2013, Robert Schwarz was hired to take over the reins at Texas Terminals as general manager. Robert joined the company during a difficult downturn period for break bulk and project cargo, yet his commitment and leadership have allowed Texas Terminals to not only maintain but grow with demand.

Robert spent the majority of his career prior to his tenure with Texas Terminals working for shipping lines, most recently for HPL Hartmann Project Lines and Beluga Shipping America, and became acquainted with the facility as a customer of it. “When I was presented with the opportunity to manage a marine terminal after having been on the vessel owners’ side for 25 years I was intimidated, but even more so, intrigued,” he said. “I am a person who enjoys a challenge, and taking on the management of Texas Terminals definitely presented such challenge and, of course, a fantastic opportunity for myself to broaden my horizons and continue to learn.”

When considering the growth plans of the terminal, Robert explained that, “when it comes to matters of heavy lift, out of gauge project cargo, or the handling of dry bulk, Texas Terminals will continue its leadership role and stay the course. Growth and expansion is part of a progressive business model, and Texas Terminals, LP is planning to continue to grow and expand in order to provide additional opportunities to existing clientele and secure new business.”

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To keep up with rapidly-changing technology, the terminal transitioned to a cloud-based shipping and receiving platform developed by ePortation. Customers can receive real-time information about their shipments, and the terminal staff can operate more efficiently with a computerized system

for managing cargo operations.

For more information about Texas Terminals, visit its website at www. texasterminals.com or contact Peter Wurschy at (281) 457-3131 or pwurschy@ texasterminals.com.

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commerce club

September 2015 Commerce Club Featuring Roger Guenther, Executive Director, Port of Houston Authority Judith Schultz, GHPB Roger Guenther, Executive Director, Port of Houston Authority (PHA), combined two of his favorite subjects – football and the Port of Houston – into his remarks at the Port Bureau’s Commerce Club Luncheon on September 10, 2015, at Brady’s Landing. “The Port of Houston and the Houston Ship Channel is our stadium.

We are the Super Bowl of ports, and we all go to play on the busiest waterway in the nation,” said Guenther. “The port has grown significantly, and we don’t see any signs of slowing down. We need to make sure the stadium is big enough for all our fans – our customers – to have access to it.”

The port may be facing a few giants but the PHA, with help from the industry, has developed a game plan to make all the right moves. “Our vision for the next generation encompasses a responsibility far greater than cargo coming across the docks. We huddled up with industry stakeholders to define what success looks like and to keep the Houston Ship Channel going forward,” emphasized Guenther.

The Port of Houston Authority’s scoreboard reflects a 30% increase in container cargo during a six-month period this year gained from cargo diversion from the West Coast. The model developed during this time may be used as business opportunities grow from the Panama Canal expansion, due now for completion in the spring of 2016.

Guenther’s team playbook includes advancing reefer cargo, resins exports, and natural gas opportunities. These are areas offering “fantastic growth” for Houston’s

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Executive Director of the Port of Houston Authority Roger Guenther speaks to over 270 attendees at the Port Bureau’s Commerce Club Luncheon on September 10, 2015.

maritime community.

Infrastructure, a sufficient and reliable work force, minimizing waterway closures, and ship channel improvements are vital to the defense zone to keep a competitive edge in the maritime league.

“We work closely with the Army Corps of Engineers to see what it [the ship channel] will look like 20 years from now,” explained Guenther. “We are determining costs to allow for safe navigation.”

Barbours Cut and Bayport dredging projects are near completion. $100 million has been invested to deepen and widen the federal channels. As critical as these improvements are, millions more will need to be invested for continued improvements, dredging, and disposal of materials to keep the Port of Houston a champion. The Port of Houston Authority’s current investments

are highlighted in a brief video available for viewing on its website.

The PHA also runs interference for freight mobility goals. The greatest challenge is how to handle growth. “The easiest way is via truck, but a future freight network is essential. We can’t continue to pour concrete,” he cautioned. “We are running out of money for the corridor.” Innovative rail methods and waterborne transit are solution possibilities to score points for freight mobility, and the PHA actively communicates with TxDOT to ensure the port region’s needs are considered.

The PHA keeps team recruitment strong with workforce development initiatives. Partnering with students from elementary to college, the Port Authority “keeps the pipeline going” to train and educate for the future. The PHA employed

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commerce club 14 students in their internship season this year. Guenther expressed appreciation for those active with the Partners in Maritime Education Program and their work to bring new players to the maritime commerce game.

Shifting his attention back to channel improvements, Guenther also expressed thanks for the support from the local delegation of congress. He named Senator John Cornyn for his introduction of legislation to get projects authorized, and Congressmen Brian Babin (R-36) and Gene Green (D-29) for actively speaking on behalf of the port.

Summing up his thoughts, Guenther said, “Our plan is your plan. Our greatest asset is the people of our maritime community.” With a last nod to sports, he added, “We’ve got to protect this house!”

The gathering drew to a close as Patrick J. Studdert, President, Buffalo Marine Service, Inc., made a special presentation to Mrs. Diane Howard to recognize her 60 years of dedicated service to Buffalo Marine.

Studdert selected the Commerce Club event as an apt venue for Buffalo Marine’s tribute because it brings the whole of the maritime community together.

“This is everybody in town that makes it happen,” Studdert commented

as he explained how Mrs. Howard had made things happen at Buffalo Marine for six decades. The spontaneous standing ovation as Mrs. Howard received her commemorative crystal eagle award was a fitting tribute to the final touchdown of the day.

Ed. Note: The next Commerce Club luncheon will be hosted in conjunction with the Greater Houston Coffee Association on Wednesday, October 7, 2015, and will feature Ragan Bond, Founder, Independence Coffee Company. Individual seats and table sponsorships are available. Sign up by visiting www.txgulf.org/commerceclub.php or by calling (713) 678-4300.

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Clockwise from top left: Vanessa Johnson and Angela Scioli, Argosy Transportation, with April Bailey, Amegy Bank; Diane Howard is recognized for 60 years of service with Buffalo Marine by Pat and Tim Studdert; Tom Marian, Buffalo Marine, talks with Capt. Steve Conway, Houston Pilots; Lawrence Waldron, LBC, with Mark McCullough, Capital One Bank; Over 270 professionals attended the luncheon; The Honorable Karen Bell, British Consul General, visits with Bernt Netland, Intercontinental Terminals Company; Patrick Browne, Flightdeck Safety Initiatives, talks with John Taylor, Houston Mooring Co., and another guest.

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.