October 2010 Newletter

Port Bureau News October 2010

Break-Bulk: Building the Port of Houston

Spotlight on Jürgen Schröder President—Schröder Marine Services, Inc.

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Mission Our mission is to foster economic growth and regional cooperation across a diverse interest of public and private stakeholders that rely upon or benefit from the commercial synergy of the greater Houston port community

Vision To be knowledgeable of all aspects of the port so that we can provide our members information and assistance to grow their businesses.

Port Bureau Staff Bill Diehl

Services

Jeannie Angeli To our valued members, we provide:

Al Cusick

 Real-Time and Historical Vessel Traffic Information for Houston, and the Ports of Texas

Cristina Gomez

 Expertise, Consulting, and Assistance in Maritime Affairs

Janette Molina

 Business Relationships and Networking Opportunities in the Houston Port Community

Patrick Seeba John Smith

Port Bureau News

Board of Directors

Contents/Port Bureau Mission/Staff/Board of Directors

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St Joseph Medical Center

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Captain’s Corner

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HarborLights

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Break-Bulk: Building the Port of Houston____________

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USCG Industry Day & Gulf Winds International ___________ 7 Port Watch

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October Commerce Club: RADM Mary Landry, USCG

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Break-Bulk: Building the Port of Houston (ctd)______

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2010 Petrochemical & Maritime Outlook Conference

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Spotlight on Jurgen Schroder

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Vessel & Bunker Charts

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2nd Annual Captain’s Cup

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Upcoming Events at the Port Bureau

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*Tom Marian—Chairman *Dennis Hansell—1st Vice Chair. *Mike Drieu—2nd Vice Chair. *John Taylor—Secretary /Treas. *Robert H. Blades *Alec Dreyer *Charles H. Flournoy *Thomas C. Pace *Capt. John G. Peterlin III *Richard Russell *Steve Stewart *Nathan Wesely Jim Black Ken Burnett Jan Crittenden Celeste Harris Jason Hayley Kevin Hickey Guy W. Hitt Charlie Jenkins Shareen Larmond Kathy Murray Jerry Nagel Vinny Pilegge Nolan Richardson Lloyd Schwing Earl Smith Tim Studdert Lawrence Waldron Armando Waterland Don Welch

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Captain’s Corner Unity Creates Strength

In 1774, Holland was just coming out of a financial crisis. Failed investments had left the wealthy upper class reeling, and capital for future projects was difficult to find. Adriaan van Ketwich, an entrepreneur and former merchant, realized that his only solution was to distribute the investment risk amongst a greater number of people and a greatest number of investments.

Rather than invest solely in one company, businessmen could back his investment trust that would fund projects across Europe and plantations across Latin America. Calling it “Unity Creates Strength,” van Ketwich created the first mutual fund.

Van Ketwich capitalized on an important investment precept: diversification is king. As many of the world’s ports have moved more towards containerization in the past 50 years, Houston has remained diversified, catering to containerized cargo as well as breakbulk. There are some items that are significantly more efficient and cost-effective to transport via breakbulk, from project cargo to steel to transformers. With 9 breakbulk facilities, 4 owned by the Port of Houston Authority, 5 privately owned, and numerous docks, Houston provides a flexibility that few other ports can rival.

For the second time, the Breakbulk Americas Transportation Conference & Exhibition is scheduled to take place in Houston on the 12th-15th of October. Regularly held in New Orleans, the conference was shifted to Houston once before, at the last minute, in 2005 due to Hurricane Katrina. As global forerunners in the breakbulk industry, it makes sense to hold the conference here this year. Houston has world class facilities and easy intermodal connections and this conference will give us an excellent opportunity to highlight our strengths.

I would like to close with connecting the importance of breakbulk to our dredging issues. Most of our breakbulk docks are located in the 36 foot portion of the Houston Ship Channel and for most of last year the turning basin area was silted into 28 feet. If we truly believe that diversity of cargo is important we must meet industry’s expectation that we can provide them 36 feet of water for their vessels to load to. We should also start to consider that, just as we’re expecting to see larger container vessels, we should expect to see larger breakbulk vessels headed this way in the years after the Panama Canal is deepened to 50 feet. Let’s take advantage of the 21st Annual Breakbulk Americas Transportation Conference & Exhibition to bring these issues into the foreground and deal with them in a responsible and timely fashion together, for, like Van Ketwich pointed out 200 years ago, “Unity Creates Strength.”

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Break-Bulk Cargo in the Port of Houston

Breaking cargo down into groups or packages that can be handled by whatever equipment is available: breakbulk can be traced back to the Phoenicians thousands of years ago, and remains one of the most widely used modes of transportation in the world today. At its most basic, breakbulk is the art and science of transporting goods which must be loaded individually from one port to another. These goods may be in any variety of shipment containers and qualities, from sacks to barrels to pallets, crates , and drums. Bulk and breakbulk cargo makes up half of the total cargo by volume entering and leaving the United States, a figure that is expected to remain constant throughout the next decade, even through the rise of the container market and growth of container vessel capacity.

Until the last fifty years, all general cargo shipments were breakbulk—cargo ships were caverns where stevedores would descent, wrestle parcels out with cargo nets and use hooks to bring them up through the hatches.

The advent of containerization has shifted some bagged or palletized cargos to container vessels, however for many commodities, breakbulk is still the most cost-effective method of transportation.

With the competition presented by containerization, tankers and bulk carriers to the intermodal fleet, many skeptics have questioned the sustainability of the breakbulk industry.

However, these other types of vessels are highly specialized and require very specific shore equipment in order to be successful and create any sort of timely turnaround. Breakbulk, though, does possess these restrictions. As all breakbulk cargo is loaded in prepackaged units, the entire vessel can be unloaded by hand, as it has

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been for centuries. This means that less developed ports can still participate in the global logistics industry without as significant capital investment in technology and infrastructure. It also means that the cargo can be transported onto lightering vessels and smaller cargo ships which are capable of landing in even more remote and undeveloped areas.

Much of the current breakbulk transportation in Houston is liner based rather than tramp based. Liners run like buses, with scheduled stops, while tramps tend to be more direct.

The behemoth of breakbulk along the Houston Ship Channel is steel. Accounting for over 70% of PHA breakbulk revenue, the Port of Houston Authority alone sees over two million tons of steel every year come across the docks as plate, pipe, coil, beam, and more with the remaining 30% coming in forest products (imported plywood, newsprint, etc.), transformers, storage vessels (cylindrical tanks), or roll-on/roll-off cargo. In 2008, Houston saw over six million tons of steel moving through the port—the best year in its history. This year, showing steady growth to begin the recovery, the public docks are expecting to see between 2.3 and 2.6 million tons with additional cargo moving through private terminals like Inbesa and Manchester Terminal.

Breakbulk Trends Encouraging trends at the Port of Houston this year are buoyed by the numbers. Container trade is up a robust 6-10% and breakbulk is up a slow but steady 3%.

Carriers operating liner services have been slow to add vessels to the worldwide fleets, however the increase in demand is fueling a slow return of dormant vessels to service.

Much of the breakbulk cargo coming through (Continued on page 10)

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Announcing the 5th Annual

USCG Industry Outreach Day - October 5th Don't miss this once a year experience to meet your local Coast Guard representatives. The last 5 events were standing room only!

WHERE: City of Galena Park

WHEN: Tuesday, October 05, 2010

Alvin D. Bagget Community Center

Coffee and Donuts at 0830

1302 Keene Street

Followed by Presentations

Galena Park, TX 77547-2457

You do not have to be a Greater Houston Port Bureau or WGMA member to attend this free educational program. All industry stakeholders are invited but we must have your advanced RSVP. If you have suggestions for topics of discussion please remit ideas & your RSVP’s to : LT Jennifer Hnatow at Jennifer.L.Hnatow@uscg.mil or (713) 671-5184.

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Port Watch Tom Marian—Buffalo Marine Service A Lull, a Stall, or Nothing at All August 2010 may have been the hottest month on record in Houston but in terms of vessel arrivals it was 2% less than July’s record performance. On the other hand, Galveston’s numbers were up an impressive 22% and firming oil prices helps boost Texas City and Sabine 5% and 13% respectively. Overall, the population of Texas ports are outperforming last year’s number with Galveston leading the pack at 76%, Sabine up 26%, Texas City close behind with a 24% rise, Corpus Christi - despite a 6% dip from last month - remains 12% above last year’s pace and, at the center of it all, Houston’s positive trend line continues at 5 ½ % over the same period last year.

Of course, divining what this all means is the challenge. In the confines of the port of Houston, the container ship count from July to August was up 4%; however, the overall count for the year is down 3%. Yet, the overall container count is up due to increased loads on the individual ships. In the break bulk realm, ship arrivals for the month are up 6% and car carrier movements are nearly double than that of last year. With that being said, both steel and vehicles appear to be stacking up again in the various storage lots scattered throughout the port. Perhaps this is no more than a lull in the movement of inventory to its ultimate destination – the consumer.

With so many conflicting data points over the last several months, the big picture on the economic front has become rather murky. That being said, the Port of Freeport may provide a glimpse of what lays in store. This port handles a variety of commodities ranging from chemicals to bananas that amount to over 30 million tons annually. Last month the port witnessed its fourth consecutive drop in vessel arrivals having peaked in April. Having dropped 3% over the last month its ship arrival numbers are now identical with 2009. Does this mean that things are not really improving since the onset of the Great Recession or is it simply a matter of one port’s loss is another port’s gain?

Either way, as the final quarter looms, if things remain flat they will still be better than 2009.

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Breakbulk: Building the Port of Houston, continued Houston is heavy machinery, pipes, and other project cargo used for building infrastructure, a key sign of an improving global economy. For many of these basic infrastructure building materials, breakbulk is the most efficient method of transportation.

Like all global shipping, the amount of breakbulk cargo coming through the Port of Houston was dramatically affected by the global recession in 2009. While the first quarter of 2010 showed a nearly 71% decline in steel coming across the city docks, year to date numbers show steady climb back to normal tonnage. The entire port region moved 5.3 million tons of steel in 2009, and the Houston region has moved only 3.6 million tons to date in 2010. While low, this number is a sign of progress compared to the nearly 71% drop shown in January while comparing the yearover-year numbers. As a trailing commodity, steel numbers continued to rise through the beginning of what many call “The Great Recession,” and so steady growth only one year after the numbers began to drop is a sign of the Houston area’s resilience and of the versatility that customers can take advantage of when moving breakbulk cargo. The Port of Houston Authority estimates that they will move between 2.3 and 2.6 million inbound tons of steel this year, followed by 2.6 next year – for both years, they’re expecting 300,000 outbound tons of scrap steel. For non-steel breakbulk, the Port of Houston Authority estimates 2 million tons of total traffic, 75% of which is bound for export.

The Port of Houston is home to the largest petrochemical complex in the United States so is rightly known as a petrochemical hub. But breakbulk founded the port and during difficult times for the energy industry, provides valuable diversification—the diversification that makes Houston such a resilient hub of economic activity.

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On September 8th, The Economic Alliance for the Houston Port Region held their first annual Petrochemical Maritime Outlook Conference at the Pasadena Convention Center. The Economic Alliance provides professional economic development services on behalf of the 16 communities surrounding the 25-mile Houston Ship Channel – home to one of the world’s most influential energy corridor and trade ports. Since 2004 alone, the Economic Alliance has facilitated activities to help bring approximately $320 million of capital investment to the area.

The Intergulf Corporation’s exposition booth

As CEO/President of the Economic Alliance Houston Port Region, Chad Burke, pointed out that there are “35,000 direct and over 300,000 indirect jobs in our region alone that depend on those in the petrochemical industry, and this conference provided a topdown perspective on the short and mid-term future of this vibrant industry.”

Bob Moore, Vice President of Salzgitter Mannesmann International, Sylvia de Marucci from the Panama Canal Authority, and a petrochemical panel consisting of executives from ExxonMobil, Shell, and Dow Chemical Company all debated the outlook for the steel & petrochemical markets in the coming years Commissioner Burke, PHA & Wade Battles, Halcrow and their conclusions showed cautious optimism for reasonable growth.

Chad Burke, Economic Alliance, and Bob Moore, Salzgitter Mannesmann International

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Dr. Loren Scott, president of Loren C. Scott & Associates, Inc. delivered the luncheon keynote speech on the Gulf of Mexico’s oil spill’s impact on refining, chemical, and associated industries on the region. As an energy specialist on the National Business Economic Issues Council, Dr. Scott shared his perspective on the impact of uncertainty over current policy regarding drilling in the Gulf of Mexico, and the United States’ policies on alternative energy.

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Spotlight on Jürgen Schröder President—Schröder Marine Services, Inc.

Though his accent unmistakably showcases his roots in Hamburg, Germany, Jürgen Schröder is a proud Texan. Walking into his office, one usually finds Mr. Schröder hunched over his desk working furiously in front of pictures of his children, Ronald Reagan, and Troy Aikman wearing Cowboy Metallic Blue & Silver. He proudly speaks of his decades of work in the Houston shipping industry and his experience on the sea, and uses that experience to serve the customers of Schröder Marine.

Born in 1940 just outside of Hamburg, Mr. Schröder grew up in the British zone of West Germany and knew from a very early age that he wanted to be a sailor. With his father missing in action during the war, he was raised by his mother who worked two or three jobs to keep the family afloat. As a child, Jürgen’s first passion was soccer, and he played constantly while going to school until he graduated with his Mittlere Reife and went to sea.

At a little over 16 years of age, Jürgen sailed as a crewman on the German vessel Kamerun, and spent three years working along the coasts of Africa. Even though he suffered a bout of malaria, he still speaks fondly of his time as a young sailor.

Around the time he turned 19, Jürgen found himself in Houston at City Dock 13 for the first time and drawn to the Latin American influences of the gulf coast. Back in Hamburg, he earned his officer’s license and sailed on banana ships from Latin America to New Orleans as well as the US East/West coasts. When Hurricane Betsy flooded New Orleans in 1965 and destroyed the banana pier, the banana trade shifted to Gulfport, MS and soon thereafter, Jürgen found a job as the stevedoring superintendant for Texas Transport Terminal in Houston, so he drove his Opel to Texas. Reminiscing about the drive, Jürgen mentions it as a turning point for his passion and love for America— “Driving down to Texas, I had three flat tires, because my tiny auto was so weighted down—I remember a man stopped in a pickup truck and said “Can I help ya’ boy?”. That really impressed me.”

Living near Greenway plaza, Jürgen took a two hour series of bus trips to the Port of Houston every day, and spent days on end working from the Woodhouse terminal unloading grain, and picking up a Texan accent from his stevedoring crews. Soon, Jürgen was in high demand and he built the Texas operations of Roberts Steamship Agency, was the Vice President of Charter Oil, the President of Manchester Terminal, and other private terminals.

Mr. Schröder joined the Port Bureau in 1978 and served as a board member for 31 years. In 1981, he became one of the youngest Presidents of the Port Bureau, where he served for three years. While there he met his wife Vera, and soon thereafter they took a short trip back to Hamburg to be married.

In 1986, Jürgen decided to take his accumulated knowledge and opened Schröder Marine Services, a stevedoring and freight handling organization that now handles cargo from several shipping lines in the Houston area and is responsible for a substantial amount of the breakbulk cargo that moves through the Port of Houston. At Schröder Marine, Jürgen proudly works to ensure that his customers receive responsive, dedicated service, and that their cargo moves quickly, safely, and cost-effectively through the port.

Over the past twenty years in Houston, Jürgen has served as a director and president of the Houston International Seafarer’s Center, and Chairman of the Pines Montessori School in Kingwood, and even as an honorary fire marshal and fire chief. Jürgen and his wife Vera are the proud parents of Karl, Kristofer, and Kirsten, and during his free time, he can be found in the house of the Houston Grand Opera, the Heights Opera, or the Houston Symphony listening to Puccini, Verdi or Beethoven. He is also a great supporter of the local Houston Dynamo, the Dallas Cowboys, and Hamburger SV.

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Advertise in the Port Bureau News Reaching 1200+ 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.

Upcoming Events at the Port Bureau Tuesday, October 5, 2010— 5th Annual USCG Industry Outreach Day Come meet your local Coast Guard representatives over coffee and donuts, followed by presentations.

Thursday October 7, 2010—Commerce Club Luncheon The October Commerce Club meeting will feature RADM Mary Landry, USCG speaking about Coast Guard actions and responses to recent events as well as current Coast Guard priorities.

Tuesday October 12th-15th— Breakbulk Americas Transportation Conference & Exhibition

Special Thanks

The 21st Annual Breakbulk Americas Conference & Exhibition includes an agenda in

Special Thanks this issue to the PHA for providing many of the photos used in the feature article and the front cover.

which industry leaders will review emerging markets as well as logistical challenges for breakbulk and heavy-lift shippers and their transportation and supply chain providers.

Monday November 1, 2010— 2nd Annual Captain’s Cup The 2nd Annual Captain’s Cup Golf Tournament will be held at the Braeburn Country Club and feature 18 rounds of golf, a $10,000 Hole-in-One Challenge, Driving Range, Putting Green, and Steak Dinner.

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