Port Houston 2017 Annual Report

BO LD [17] [17]

Y E A R

I N

R E V I E W

T W E N T Y

T W YEAR I N E RNE TV IYE W

M

O

V

E

S

We move the world and

TA B L E O F C O N T E N T S 4 Message from the Chairman | 12 The Port Commission | 14 Message from the Executive Director 20 Financial Highlights | 22 Financial Information | 24 Operational Performance 26 Health, Safety, Security and Emergency Management (HSSE) | 28 Government Relations 34 Environmental Stewardship | 36 Community Focus | 40 Outreach | 41 Recognition of Service

“Our continued infrastructure investments include the Houston Ship Channel, our terminal channels, our container terminals and other targeted projects. We strategically identify and fund capital projects that provide the greatest return on investment that serves the growing demands of our customers. This doesn’t just benefit Port Houston, it benefits the Houston region as a whole.�

Chairman Janiece Longoria

drive regional prosperity

B O L D L E A D E R S H I P. B O L D E F F O R T S . B O L D R E S U L T S .

2017 YEAR IN REVIEW

Our four strategic goals Infrastructure GROWTH People STEWARDSHIP

4 MESSAGE FROM THE CHAIRMAN

Message FROM PORT CHAIRMAN JANIECE LONGORIA

The year 2017 was a memorable year for many reasons. It was a great year for business at Port Houston with growth of 12% overall at our terminals as compared to 2016. But it will also be remembered for two disparate but compelling events: the devastation and challenges wreaked by Hurricane Harvey, and our pulling together to rebuild damaged structures and reframe the conversation around preparedness and resilience; and as medicine for our battered spirits, the uplift that came from the stunning World Series Championship victory of the Houston Astros. Against this backdrop, it is my pleasure to frame this annual message for the year 2017.

ANOTHER YEAR OF RECORD PERFORMANCE As the premier Texas gateway for international commerce, Port Houston enjoyed another record year in 2017. Representing 80% of Port Houston gross revenue, containerized cargo continued to be our fastest growing business line, and our container volume outpaced 2016 by 13%.

Port Houston is the fastest growing port in the nation, growing more than 2 1/2 times faster than the average U.S. port in container activity, and currently capturing approximately 70% of the Gulf Coast container trade.

There is no mystery to the attraction of Port Houston to Carriers and Beneficial Cargo Owners. Because of our sweet spot on the central Gulf Coast with ready access to the expanded Panama Canal, our vast consumer reach of 142 million consumers within 1,000 miles of our port, and our best in class infrastructure coupled with customer service, we continue to capture additional cargo opportunity, including all-water Asia cargo that historically called on West Coast ports.

Through strategic investments in our terminals and operations, and because of long standing stability with the International Longshoremen’s Association (ILA), our essential labor partner, we are globally perceived, and have proved to be, a certain supply chain solution. This has been further enhanced because of our continuing strategic investment in terminal and truck gate innovations that increase efficiency. In turn, this drives additional demand. Our valued customers know that choosing Port Houston guarantees certainty of unloading, market reach and efficient distribution through a vast supply chain network. Because of our continued focus on strategic investment and customer service, we are on track for similar double-digit growth in 2018.

Our performance is not restricted to the importation of goods. We continue to be a significant exporter of commodities that are produced in our region.

PORT HOUSTON 5

We are the dominant port of export for synthetic resins, including polyethylene resins that are exported in containers through Port Houston to their ultimate destination for the manufacture of goods.

And after steep declines in steel imports beginning in 2014 related to the reduction of oil and gas production activities, with the recovery in the price of oil and ramped up drilling and production, steel rebounded in 2017 with an increase of 17% over 2016. Steel imports continue to grow in 2018, and through June, were up 21% over 2017.

We are grateful for the many blessings that we enjoy at Port Houston; best in class people that achieve our mission, top-notch infrastructure, supportive partners including our elected officials, labor partners, industry and citizens that support our public bond issuances in cities across Harris County, and the business climate so favorable to continued growth and prosperity for our region and our state. With that said, we must protect, improve and strategically invest additional attention and resources to assure that the Houston Ship Channel continues to serve growing demand, and as described in brief below, this is a challenge not only for Port Houston; but also the industry that depends on the efficient flow of commerce through our channel that is also essential to our nation’s energy security.

THE HOUSTON SHIP CHANNEL IS ESSENTIAL TO OUR ECONOMIC AND ENERGY SECURITY The Houston Ship Channel is a federal waterway that is unique in all respects.

It hosts the largest and most productive petrochemical complex in the nation.

Because of private energy company investment along the channel and all of the industry that flows from that investment, the Port of Houston is the #1 port for foreign waterborne tonnage, petroleum, steel, and project cargo, handling almost 290 million tons per year. It generates $617 billion in economic activity annually in the U.S., sustains 2.7 million American jobs and contributes $35 billion of local, state, and federal tax revenue.

The optimum utilization of the Houston Ship Channel is also essential to our nation’s energy security, since the industry along the Houston Ship Channel supplies 60% of the nation’s jet fuel and approximately 40% of refined gasoline. The Port of Houston also contributes a significant share to the economic health of the state of Texas, contributing 16% to the state’s gross domestic product. And our region thrives and continues to grow in large part because of the industry that depends upon the Houston Ship Channel.

These important industries, both petrochemical and maritime, contribute not only direct jobs, but jobs in corollary areas that includes real estate, logistics, warehousing and distribution. The efficient flow of commerce through our channel and beyond is important to our future prosperity; it may in fact be essential to our future.

Let’s place this in context. The Houston Ship Channel that serves the Port of Houston is the busiest waterway in the nation. With nearly 9,000 deep draft ship calls, 22,000 vessel movements and 200,000 barge transits annually, vessel traffic within the Houston Ship Channel and the Port of Houston is equivalent to the ports of Los Angeles, Long Beach and New York/New Jersey combined. With this exceptional level of vessel traffic, much of it tankers carrying volatile fuels, it is imperative to assure that the channel is wide enough to accommodate two-way traffic of ever larger vessels, and that navigation safety is not only preserved, but enhanced.

6 MESSAGE FROM THE CHAIRMAN

CONSIDER THIS: If you added the traffic for the ports of Los Angeles, Long Beach and New York/New Jersey, all together their combined annual activity is roughly the same as one year’s worth of vessel calls for the Houston Ship Channel.

The Houston Ship Channel remains the backbone of economic activity for our region, our state and our nation.

PORT HOUSTON 7

We are deeply committed to our core mission to Move the World and Drive Regional Prosperity, as we achieve our vision to be America’s Distribution Hub for the Next Generation.

8 MESSAGE FROM THE CHAIRMAN

As the local sponsor of the Houston Ship Channel, and in partnership with

Because of this dredging deficit, and the almost constant shoaling that

the U.S. Army Corps of Engineers (USACE), we take our responsibility

plagues the channel without adequate federal maintenance dredging,

to protect and improve the Houston Ship Channel very seriously. While

siltation after major rain events compounds the problem. Runoff from

maintenance dredging of the Houston Ship Channel is the federal

Buffalo Bayou comes into the Houston Ship Channel, which is the last

government’s obligation, the allocation of federal funds for maintenance

link in an already compromised flood drainage system. The natural

dredging has fallen short of the amount needed to maintain the channel at

channel shoaling, if not properly removed through adequate and routine

its authorized depth of 45 feet and width of 530 feet.

maintenance dredging grabs the run-off material rather than letting it flow through the drainage system, so that when we have a major flooding event

From the inception of the deep-water Houston Ship Channel in 1914, the

such as the flood of 2015, the flood of 2016 and the flooding related to

taxpayers of Harris County have been effective partners with the federal

Harvey, we experience as much as six to ten feet of siltation in areas of the

government sharing the cost of channel improvement projects through their

channel that interferes with the efficient flow of maritime commerce, that

support of public bonds. In addition to local taxes, private industry and the

can severely impact national energy supplies.

users of the channel also pay federal taxes, including Harbor Maintenance Tax, which if allocated appropriately, would be more than sufficient to fund

As proof, the channel was closed for only five business days after Harvey

maintenance dredging and needed improvements to our channel.

and the nation experienced jet fuel and gasoline shortages. So there is no doubt that an open and efficient Houston Ship Channel is essential to

To illustrate, approximately $100 million is collected every year in federal

our nation’s energy security. And yet, it took more than six months for the

Harbor Maintenance Tax from channel users, based on the value of

Corps of Engineers to dredge the main part of the channel to remove draft

imported cargo.

restrictions, and there are still draft restrictions at the Turning Basin one

Those tax revenues are deposited in the Harbor

Maintenance Trust Fund intended for maintenance dredging of federal

year after the storm.

navigational waterways. The federal appropriations for the Houston Ship Channel average only $30 million annually, which is approximately 30% of

So what are we doing about this you may ask? We constantly advocate

what the government collects from our users, and far short of the $50-$60

with our federal delegation to address this deficit of funding, and we work

million needed to adequately maintain the channel at its authorized depth

closely with, and look for opportunities to advocate our needs to the Corps

and width.

of Engineers. We strongly advocated for and supported amendments to the Water Resources Development Act (WRDA) 2014 to include a Corps

Because of the federal government’s failure to appropriately allocate an

of Engineers mega-study for widening and deepening the Houston Ship

adequate percentage of the tax collected from our users for maintenance

Channel. After Harvey, we also advocated for flood mitigation funding to

of our channel, and because of continued silting of the channel from rain

appropriately dredge our channel.

runoff into Buffalo Bayou and other upland streams, most people are surprised to learn that at any given time, only a fraction of the channel is at

In connection with the Corps’ mega-study, we are requesting that the

its authorized depth and width.

channel be widened to 700 feet (from 530 feet), and that it be deepened

PORT HOUSTON 9

beyond its current 45 feet to assure that there is greater cushion to avoid significant shoaling from the next flooding event. In that regard, we continue to meet frequently with the entire chain of command of the Corps, from the Galveston Division all the way to the home office in Washington D.C., to underscore the importance of the requested improvements to permit widening the Channel to accommodate safe two-way traffic of container and tanker vessels, and to deepen the channel for advance maintenance to protect against the next flood. Both of these requested measures are sound efforts to plan and invest strategically, and are necessary to assure the safe and uninterrupted operation of our channel. It is better to invest in

2-WAY TRAFFIC - HOUSTON SHIP CHANNEL Widening is necessary for safety and efficiency

improvements now, than to take a wait and see approach when we know that the cost of taking corrective action after the next flood or vessel collision,

CURRENT 530’ WIDE

far exceeds the investment in improvements now, and could be catastrophic to our nation’s energy security.

Let’s not repeat the lesson of Harvey where after only five business days, the nation was hurled into crisis with a shortage of jet fuel and gasoline supplies.

Imagine the channel being closed for weeks after a major collision. Our economy could be thrown into recession.

Although there is no doubt that the federal return on investment is unparalleled

PROPOSED 700’ WIDE

by any measure considering the importance of our channel to our nation’s energy security and the economic health of our state and region, the Corps’ navigation study highlights the flaw in a federal metric that uses a one-size fits all approach for a channel that is unique. The national Economic Model that the USACE has used for the WRDA authorized mega-study is solely depth driven without consideration for width and safe navigation as vessels get larger and wider, including the significant loss of opportunity to our petrochemical industry partners. Instead of allowing unique assets such as ours to apply a different model that incorporates safety and opportunity loss with two-way vessel traffic in the upper reaches of the channel, their solution

FEDERAL RECOMMENDED PLAN Resume 2-way channel

No widening, 1-way channel (operationally unsafe)

is for the local sponsor to pay for the cost as a locally preferred plan. This solution is not fair to our taxpayers who have already shouldered the burden of all of our infrastructure and their share of the cost of the channel; it also ignores that harbor maintenance taxes collected from our users, although more than sufficient to pay for what we need, are not appropriately allocated for our maintenance and improvement projects.

To demonstrate the fallacy of the Corps’ analysis, its current economic model provides that the channel will be widened only one-third of the way up the channel, to the mid-point of Galveston Bay, and far short of Port Houston’s two container terminals, and far short of all of the petrochemical terminals that are further up the channel. If this is the outcome, it is the equivalent of building a bridge to nowhere. What good does it do to widen the channel only onethird of the way, ignoring the need for a wider channel that can accommodate safe two-way vessel traffic at our container terminals and at the scores of industry terminals further up the channel? If the Corps refuses to consider the unique aspects of our channel, with a model that takes into consideration the need for safe two-way navigation in the upper 2/3 of the channel that serves the largest petrochemical complex in our nation, and the fastest growing container terminals in the U.S., the results could be catastrophic not only for potential collisions of vessels carrying volatile products, but also the potential loss of opportunity and competitive advantage that could significantly impair the growth of our maritime industry that feeds so much of our regional and state prosperity.

10 M E S S A G E F R O M T H E C H A I R M A N

2-way channel

The Corps of Engineers’ mega-study is nearing the final phase and we

We are deeply committed to our core mission to move the world and drive

are expecting the Chief’s report in 2019. In anticipation of this, federal

regional prosperity, as we achieve our vision to be America’s distribution

advocacy to demonstrate the flaw in the Corps of Engineers’ study and in

hub for the next generation.

the economic model that they apply is of paramount importance. We ask our stakeholders and industry partners to join with us in advocating for a

This will be the last opportunity for me to write an annual message to you.

practical approach to the Corps’ review and analysis of the channel, so that

Although I have overseen as Chairman the additional growth and value

the Chief’s report includes widening the channel all the way to the terminals

that Port Houston has achieved in 2018, which is likely to exceed 2017

at risk, and assuring sufficient funds for advanced dredging for mitigation

by a healthy margin, by the time that annual report is released in 2019,

of future flood impacts to the channel.

I will have been term-limited and replaced by the next successor to this important position. I thank you in advance for all of the courtesies that you have extended to me during my service, and all of the partnerships that we

MARKET CERTAINTY IS IMPORTANT TO OUR FUTURE GROWTH

have achieved that have brought so much success and vitality to a vast

As maritime industry and business leaders, we understand the importance

range of industries during my six years as Chairman. I am proud that we

of certainty in the marketplace, and the role it plays in attracting additional

have exceeded our goals every year that I have served in this role. We have

cargo through our port. Because of our proactive approach to this

done it with friendship and grace, through a dedicated alignment to our

important concept, we have enjoyed unprecedented stability and a

important core values, and more fundamentally, as thoughtful stewards of

positive perception of our readiness for the growth of commerce through

an institution that far exceeds the sum of its parts, and that is an essential

the Houston Ship Channel and the Port of Houston over the last six years.

driver of our Region, our State and our Nation.

Our joint advocacy for improvements to the Houston Ship Channel is also important to maintain the stability and the certainty of the market that

We value your continued support of Port Houston today, and as we move

we serve, and to continue the growth trajectory that has played such a

toward our shared future. Together, we will assure that Port Houston is the

significant role in our economic prosperity. Let’s work together to assure

Gulf Coast port of choice, the International Port of Texas and the premier

that we continue to be recognized as the nation’s most certain and efficient

gateway for international commerce.

supply chain solution.

I have often said, and I believe, that Partnership is essential to our continued success. We work in alignment with our elected leaders, our labor, our federal partners, our industry partners, our community stakeholders and

you, to assure that our region remains economically competitive and the Port of Choice for international markets.

P O R T H O U S T O N 11

Janiece Longoria, Port Chairman

The Port Commission OF PORT HOUSTON

JANIECE M. LONGORIA Chairman Janiece M. Longoria is an honors graduate of the University of Texas and received her J.D. from the University Of Texas School Of Law in 1979.

She has served as the Chairman of the Port of Houston Authority (Port Houston), the leading economic engine for the greater Houston region, since she was unanimously appointed by the City of Houston and Harris County in January 2013.

Ms. Longoria chairs the Port Commission’s Audit Committee and serves on the Governance Committee and Pension and Benefits Committee. She also created the Citizens Advisory Council to foster open communication between communities in and around the Port of Houston and the Port Commission.

JOHN D. KENNEDY

DEAN E. CORGEY

CLYDE FITZGERALD

THELDON R. BRANCH, III

STEPHEN H. DONCARLOS

ROY D. MEASE

She is also a Regent for the University of Texas System that oversees the flagship University of Texas at Austin, as well as eight other academic institutions and six healthcare institutions including MD Anderson Cancer Center in Houston.

She also serves on the board of directors of Superior Energy Services, Inc., a public company based in Houston, and is on the board of the Dallas Federal Reserve – Houston Division, the Texas Medical Center, the Greater Houston Partnership and MD Anderson Services Corporation.

Ms. Longoria has received numerous honors and recognitions including the Distinguished Alumnus Award from the University of Texas School of Law, the President’s Citation for exemplary service from the University of Texas, the Distinguished Alumnus Award for Public Service from the Universities of Texas School of Law and the Sandra Day O’Connor Award for Board Excellence.

She was named “Maritime Person of the Year” by the Greater Houston Port Bureau in 2017. She also received the “Female Executive of the Year” Award from the Houston Hispanic Chamber of Commerce (2010) and has been recognized as a “breakthrough woman” and inducted into the Hall of Fame by the Greater Houston Women’s Chamber of Commerce. She is a frequent speaker on the importance of Port Houston, transportation, infrastructure and leadership.

12 T H E P O R T C O M M I S S I O N

JOHN D. KENNEDY Port Commissioner

THELDON R. BRANCH, III Port Commissioner

John D. Kennedy was appointed to the Port Commission by Harris

Theldon R. Branch III, CEDFP, was appointed to the Port Authority

County Commissioners Court in 2012. Mr. Kennedy is Chairman of the

Commission in September 2013. He represents the City of Houston. On

Procurement and Small Business Development Task Force and serves on

the Port Commission, Mr. Branch serves on the Audit Committee and the

the Governance Committee. He also represents the port on the board of

Procurement and Small Business Task Force.

the Bay Area Houston Economics Partnership.

Mr. Branch is the Chairman and Chief Executive Officer of The Branch He is a retired U.S. Army colonel and a retired city manager of the City

Companies, a privately held Houston-based holding company that oversees

of Nassau Bay, Texas. As city manager of Nassau Bay, Mr. Kennedy was

investments in real estate, financial assets, the automotive industry and

the city’s chief executive officer for more than ten years. He focused

construction. Mr. Branch has an extensive professional background in both

on rehabilitation of the city’s aging infrastructure and attracting quality

the public and private sector. His public service experience consists of a

redevelopment in the city’s commercial areas.

mayor-appointed position as Chairman of the Rebuild Houston Oversight Committee, and working as an Assistant Director for the City of Houston Planning and Housing and Community Development departments.

DEAN E. CORGEY Port Commissioner Dean E. Corgey was appointed to the Port Commission in January of

STEPHEN H. DONCARLOS Port Commissioner

2013, representing the City of Houston. Mr. Corgey serves on the Pension

Stephen H. DonCarlos was appointed by the Harris County Mayors

and Benefits Committee.

and Councils Association as Port Commissioner of the Port of Houston Mr. Corgey has 40 more than years of maritime experience, including

Authority in September 2013. The Harris County Mayors and Councils

working as a merchant mariner, elected union official, regulatory advisory

Association is an organization representing 26 cities in Harris County.

board member and maritime industry advocate. He has been vice president of the Seafarers International Union (SIU), responsible for the

Mr. DonCarlos chairs the Port Authority’s Governance Committee. He

Gulf Coast region since 1990. He supervises SIU activities ranging from

was elected as Mayor of the City of Baytown in May 2006. He is an

Charleston, S.C., to Brownsville, Texas, including Puerto Rico and hiring

attorney with Reid, Strickland & Gillette, L.L.P. He is Vice Chairman of the

halls and offices in Houston, New Orleans, Jacksonville, Mobile, Port

Board of Directors of the Baytown Chamber of Commerce, a member of

Everglades and San Juan.

the East Harris County Bar Association and a member and past president of the Baytown Rotary Club.

CLYDE FITZGERALD Port Commissioner Clyde Fitzgerald was appointed to the Port Commission by Harris County

ROY D. MEASE Port Commissioner

Commissioners Court in June 2013. Mr. Fitzgerald chairs the Pension

Roy D. Mease was appointed to the Port Commission of the Port Authority

and Benefits Committee and serves on the Audit Committee.

in September 2013. He represents the City of Pasadena. On the Port Commission, he serves on the Procurement and Small Business Task Force.

Mr. Fitzgerald is a veteran of the Houston waterfront. He joined his father on the wharves of the Houston Ship Channel in 1959. In 1969, the ILA

Mr. Mease served as chairman of the Pasadena Second Century Corporation,

Local 28 elected him president and he served in that capacity for 20 years.

which is the city’s economic development entity and helped Pasadena earn

In 2015, he became president emeritus of the district. Mr. Fitzgerald is also

the annual Community Economic Development Award for 2013, awarded

a member of its Executive Council. In 2010, Mr. Fitzgerald was named

by the Texas Economic Development Council (TEDC). The award recognizes

“Maritime Person of the Year” by the Greater Houston Port Bureau, and was

excellence and the exceptional contributions of TEDC-member cities toward

recognized by Port Houston for 50 years of service in the maritime industry.

the economic vitality of their communities and the state of Texas.

P O R T H O U S T O N 13

14 M E S S A G E F R O M T H E E X E C U T I V E D I R E C T O R

Message FROM EXECUTIVE DIRECTOR ROGER GUENTHER

Outstanding leadership at the top, an unwavering commitment across the organization and alignment toward the direction for the future are key components to ensure success in any organization. Port Houston values its strength in each of these areas, with consistent and sound guidance from our Commission, driven employees with strong core values and a strategic plan embraced by all to reach our mission and vision.

Together, we achieved numerous priorities in 2017, and I am extremely proud of our staff for everything accomplished.

P O R T H O U S T O N 15

Steel tonnage saw a nice comeback over the previous year at 3.7 million tons and continues to trend upward. We also had increases in wind energy, automobiles and general cargo through Port Houston facilities. Container volumes were up nearly 13 percent, driven by a 22 percent increase in import loaded containers in the strengthening East Asian market. And, our region remains in a great spot for growth from the upcoming surge in the export of plastic resins, which are increasing from production in our region.

In addition, lease revenues from properties supporting cargo operations were up nearly 6 percent, a new record for Port Houston.

The strength of all this cargo activity drove record operating revenue of $332 million for the year, shattering the previous record of $292 million set in 2015 by 14 percent.

Our combined business through public facilities generated a record total

Cargo activity across our public facilities for the year was once again at record levels and consistent with our mission of creating economic activity and more jobs for the region.

cash flow of $145 million, surpassing the $128 million record set in 2015.

The cash flow generated from operations is critical to funding capital projects that are planned so we can remain in front of demand from the rapid cargo growth ahead, and address the needs of Port Houston as well.

2017 HIGHLIGHTS We are committed to stay focused on our goals of Infrastructure, Growth, People and Stewardship. Our staff remains steadfast in the priorities of our Strategic Plan, which defines what success looks like at Port Houston.

INFRASTRUCTURE Infrastructure is critical to capturing continued economic activity for our region, and 2017 saw numerous achievements to keep us competitive and provide infrastructure to meet demand. We brought more than $200 million worth of construction contracts to substantial completion, including completion and commencement of operation of both Container Yard 6 North and South at Bayport, receipt of new rubber-tired gantry cranes, Wharf 2 rehabilitation, East End Yard expansion and the receipt of three new ship-to-shore cranes at Barbours Cut. Our Channel Development team continues to work with the U.S. Army Corps of Engineers to advance plans for next generation improvements to the Houston Ship Channel. Our multi-year mega-study passed the “Tentatively Selected Plan� milestone and is moving into more detailed definition.

We stepped up our Asset Management efforts, initiating a full Facilities Inspection and Condition Assessment Program. This program will provide greater oversight of 130 docks and wharves, helping us better prioritize investment dollars.

Finally, we made strides in both long-term and near-term planning, with

commencement of our Port Houston 2040 master planning as well as several significant wins in federal and state grants supporting port infrastructure, security and trucking emissions reduction.

16 M E S S A G E F R O M T H E E X E C U T I V E D I R E C T O R

Our staff remains steadfast in

the priorities of our

strategic P O R T H O U S T O N 17

plan

GROWTH We continued to accomplish growth objectives, including handling tremendous container volume increases that included best-in-class turn times for the 35,000 trucks per week at our container terminals, and nearly 47,000 ship-to-shore crane hours. Our maintenance workers ensured a reliability rate of 99 percent uptime for 22 ship-to-shore cranes and over 90 percent crane availability for 81 rubber-tired gantry cranes.

We implemented new tools through our Navis system to provide improved interface for our customers and allow for better business intelligence in measuring efficiencies. Additionally, we began extended gates hours for our truckers at Bayport to more seamlessly handle current and future growth and better utilize our assets.

After our new brand was officially launched and pushed out to the marketplace, feedback in 2017 indicated that it is being well received as Port Houston’s new Port Houston brand identity.

We performed a conservative in-house study of Foreign Trade Zone 84’s impact on Port Houston’s container volume. FTZ 84 users account for at least 11 percent of our import TEUs and 6.5 percent of overall TEUs. This is a powerful marketing tool, funded by FTZ user fees, that helps bring the real estate and economic development community to the port for more engagement.

PEOPLE The year 2017 will always be remembered for the unprecedented devastation of Hurricane Harvey. But we persevered through the strength of our people and got back on track quickly by working with partners in labor, the Houston Pilots, the U.S. Coast Guard, users of our facilities and numerous industry stakeholders.

With Commission leadership, our staff provided a number of assistance programs to employees impacted by the storm.

Our focus on People in 2017 included a partnership with the U.S. Department of Labor (DOL) program intermediary (TransPORTs) to assist in developing an apprenticeship program and ensuring a developing workforce that is consistent with the growth of our Port.

We also completed the job description project, which is an instrumental foundation to the compensation market analysis and study that will be done in 2018.

With commission

STEWARDSHIP Our Stewardship and outreach to our community had many achievements in 2017.

The Environmental Affairs department worked toward renewal of the Port’s leading position as an ISO 140001 certified organization for Environmental Management, and we initiated efforts optimizing port-wide energy sustainability.

18 M E S S A G E F R O M T H E E X E C U T I V E D I R E C T O R

We obtained full recertification, by an external auditor, to the ISO 28000 Supply Chain Security Standard and are STILL the only Port Authority in the United States with this certification. And our Cybersecurity Development Program kicked off in late 2017 with continual improvement on information and cybersecurity ongoing in 2018.

Port Houston coordinated and hosted four Chairman’s Citizen Advisory Council meetings to educate members and solicit community feedback.

Safety of our employees remains a top priority, and our Lost Time Incident Frequency Rate went down from 1.11 to 0.97 (per 200,000 man hours worked) compared to the industry standard of 3.5.

Although the M/V Sam Houston experienced major closures in 2017 due to air conditioning replacement and shoaling issues from Harvey, more than 16,000 people boarded the vessel for educational tours of the channel.

Community engagement has been outstanding, with record participation by employees. Events included the fourth annual Park to Port Bike Ride; oyster reef restoration; working with the Houston Food Bank, the Adopta-Beach program; Junior Achievement; and a special Thanksgiving project benefitting community members and Port Houston employee families affected by Hurricane Harvey.

Small Business and Education Outreach efforts continued. That group participated in more than 250 outreach activities, many post-Harvey events.

Staffers were instrumental in leading the revived apprenticeship program; worked closely with most of the 1006 companies registered as local small businesses; and remain highly engaged with the more than 1,200 students in the maritime education program at local high schools, college and universities These are just a few of the many milestones accomplished in 2017 in what proved to be another banner year for Port Houston. And as we look forward to 2018, we are positioned to continue the ascent and deliver upon our vision to become “America’s distribution hub for the next generation.”

Roger Guenther, Executive Director

leadership, our staff

provided a number of assistance programs

to employees impacted by Hurricane Harvey P O R T H O U S T O N 19

Financial PERFORMANCE AND ECONOMIC DEVELOPMENT

Outstanding financial results were realized by Port Houston in 2017, a year chock-full of highlights.

Total steel tonnage in 2017 increased over the previous year, hitting 3.7

Expansion also was a key goal for Contanda Terminals, LLC in 2017

million tons and continuing to trend upward. Increases in wind energy,

finalizing a multi-year commercial agreement with the Port of Houston

automobiles and general cargo moving through Port Houston’s public

Authority for 339 acres of prime deep-water access property located on

facilities also were recorded for the year.

the Houston Ship Channel. The project provides Contanda the opportunity to increase its overall storage capacity by up to 20 million barrels, with

And then there was container activity, with Port Houston handling more

the initial phase expected to be operational in 2020. Chairman Janiece

than two-thirds of all containers that move through the U.S. Gulf of Mexico.

Longoria hailed the deal, which positions Contanda to achieve or exceed

Container volumes were up nearly 13 percent for the year, with import

its strategic goals to double terminal storage capacity while expanding into

loaded containers from the East Asian market jumping by 22 percent. Port

the bulk petrochemical and hydrocarbon terminal markets.

Houston is the fastest-growing port out of the top ten container ports in the United States.

“This positive development fits in well within our strategic growth plan objective to grow and diversify our business base,” the chairman said. “In addition, this

Port Houston’s cargo successes triggered record operating revenue of

partnership with Contanda helps us optimize and leverage our real estate

$332 million for the year, surpassing the previous record of $292 million that

assets, while helping the company meet its own strategic objectives.”

was generated in 2015. Total cash flow was $145 million, easily beating the 2015 record of $128 million.

The value of trade attributed to the greater Port of Houston increased by

THE IMPORTANCE OF FTZ 84

$6.1 billion in 2017, by far the highest of any port in the United States,

A total of 13 companies joined Foreign Trade Zone #84 in 2017, continuing

according to data compiled by the U.S. Census Bureau. That included

the ongoing increase of participants into the zone. As the Houston region

trade through Port Houston facilities, where much of revenue that is

and its population is growing rapidly, the zone has seen a significant

generated comes from container activity.

increase in authorizations as more large importers and exporters take advantage of the financial benefits of using FTZ 84.

The total value of cargo in the zone in 2017 was more than $9 billion, which

RECOGNIZED FOR TRANSPARENCY

were predominately imports bound for U.S markets.

Port Houston was recognized as the top- ranked special district in terms of online financial transparency in a report issued by the Texas Public Interest

Port Houston’s container volume was the focus of an in-house study

Research Group (TexPIRG) in April 2017. The report analyzed 79 special

of Foreign Trade Zone #84 that was performed in 2017. Results of that

districts across the country, and noted that three of the top seven districts

study showed that zone users accounted for at least 11 percent of Port

were from the Lone Star State.

Houston’s import twenty-foot-equivalent units (TEUs) and 6.5 percent of all TEUs.

ONGOING ECONOMIC DEVELOPMENT Economic development comes in a variety of forms. For example, Port Houston is partnering with the U.S. Army Corps of Engineers on a megastudy evaluating the feasibility of modifying the Houston Ship Channel, including more widening and deepening of the important waterway. The Corps in 2017 chose a tentative plan from a list of alternatives to address specific areas of the channel to improve navigation.

20 F I N A N C I A L H I G H L I G H T S

PORT OF HOUSTON AUTHORITY

Condensed Statements of Net Position AS OF DECEMBER 31, 2017, 2016 AND 2015

2017

(in thousands)

2016

2015

ASSETS:

Current and other assets............................................. $ 464,214

$ 516,594

$ 536,544

Capital assets................................................................ 1,693,043

1,611,496

1,505,636

TOTAL ASSETS................................................................... $2,157,257

$2,128,090

$2,042,180

$

$

LIABILITIES:

Current liabilities.......................................................... $

Long-term debt (including current portion)........................ 673,898

60,197

697,123

78,693

717,632

44,605

Other non-current liabilities................................................. 42,835

75,029

60,593

TOTAL LIABILITIES................................................................... 776,930

850,845

822,830

919,177

794,075

NET POSITION:

Net investment in capital assets..................................... 1,023,578

Restricted assets................................................................ 45,622

45,705

41,853

Unrestricted assets........................................................... 311,127

312,363

383,422

TOTAL NET POSITION.......................................................... 1,380,327

1,277,245

1,219,350

TOTAL LIABILITIES AND NET POSITION....................... $2,157,257

$2,128,090

22 F I N A N C I A L H I G H L I G H T S

$2,042,180

(in thousands)

2017

2016

2015

Operating revenues................................................................$332,873

$290,226

$ 93,736

Operating expenses.................................................................261,076

265,103

225,928

Operating income....................................................................71,797

25,123

67,808

Net nonoperating revenues............................................................ (207)

7,402

Net nonoperating revenues related to property taxes..................22,596

22,917

16,792

697

Income before capital contributions............................................94,186

55,442

85,297

Capital contributions from federal agencies...................................8,896

2,453

116

Change in net position............................................................$103,082

$ 57,895

$ 85,413

Cash provided by operating activities.......................................$ 86,781

$155,448

$119,795

Cash provided by noncapital financing activities.........................55,368

49,043

42,241

Cash used in capital and related financing activities................ (191,836)

(234,822)

(136,244)

Cash used in investing activities..................................................89,280

14,864

(10,583)

Net (decrease) increase in cash and cash equivalents.........39,593

(15,467)

15,209

Balances at beginning of year.....................................................55,505

70,972

55,763

Balances at end of year........................................................$95,098

$55,505

$70,972

CONDENSED STATEMENTS OF CASH FLOWS

P O R T H O U S T O N 23

Operational PERFORMANCE

Port Houston’s operational performance and expansion continued on a strong trajectory in 2017, despite some difficulties triggered by Hurricane Harvey and the storm’s record rainfall in the Houston region.

Steel tonnage in 2017 increased over the previous year and continued

MORE NEW CRANES DELIVERED

to trend upward. During the year, increases in wind energy, automobiles

The cash flow generated from operations is critical to funding capital projects

and general cargo moving through Port Houston’s public facilities also

that are planned so Port Houston can remain in front of demand from the

were recorded.

rapid cargo growth forecast for coming years. That’s why Port Houston has been investing heavily in its infrastructure and assets, which Chairman Janiece Longoria highlighted during the 2017 State of the Port address.

ANNIVERSARIES ABOUND

Earlier in the year, three new Neopanamax cranes were delivered to the

In a year where both of Port Houston’s container terminals celebrated

Barbours Cut terminal, which are part of a $700 million improvement plan

anniversaries --- Barbours Cut turned 40 and Bayport, 10 -- container volumes

for the facility. Those were in addition to similar new cranes there that

were up by nearly 13 percent, primarily driven by a big increase in loaded

became operational in late 2015. Additional new ship-to-shore cranes for

import containers coming from the strengthening East Asia market. The result

Bayport were under construction in 2017.

was that Port Houston handled nearly 2.5 million in containers for the year.

As part of that increase, a record number of container lifts took place in June after the M/V COSCO Boston docked at the Barbours Cut

COMPTROLLER’S AWARD

Container Terminal. A total of 4,198 container lifts were recorded between

In 2017, Port Houston also was recognized by the Texas Comptroller’s office,

the evening of June 14 and the morning of June 16. Longshoremen from

receiving a Transparency Star in the area of public pensions. The comptroller’s

the stevedoring firm Cooper/Ports America worked around-the-clock to

office launched the Transparency Stars program to recognize organizations

make that happen. And a Maersk vessel docked at the Bayport Container

making important strides toward greater government transparency.

Terminal earlier in the year logged almost as many container lifts.

While those are noteworthy examples of a busy port, Port Houston’s container activity in general has created a fairly even balance of imports to exports, which keeps the port in a solid position strategically for growth from the upcoming surge in plastic resins that will be moving across the docks.

Additionally in 2017, lease revenues from properties supporting cargo operations were up nearly 6 percent, which was a record for Port Houston.

All of this strong cargo activity drove record operating revenue.

24 O P E R A T I O N A L P E R F O R M A N C E

The operations team supported the growth at Port Houston’s container terminals and other terminals, and that team was supported strongly throughout the year by organized labor.

P O R T H O U S T O N 25

26 H E A L T H , S A F E T Y , S E C U R I T Y A N D E M E R G E N C Y M A N A G E M E N T

HSSE H E A LT H , S A F E T Y, S E C U R I T Y A N D EMERGENCY MANAGEMENT

Highlighted by the delivery of a state-of-the-art Mobile Command Center, the year 2017 was noteworthy for Port Houston’s Health, Safety, Security and Emergency Management Division.

NEW MOBILE COMMAND CENTER The new command center, featuring the latest technology, was delivered to Port Houston in March. During major incidents, it serves as a central meeting place for first responders to establish the incident command.

Port Houston was awarded a FEMA Port Security Grant in 2015 for replacement of its existing mobile command center.

Mobile command centers can be invaluable tools during emergency situations, whether natural disasters, heightened threat alerts or to address other conditions. They can be dispatched anywhere throughout the region if needed and can be a vital infrastructure asset.

Health

SAFETY

Security

EMERGENCY MANAGEMENT

“LOST TIME” INCIDENT RATE WAY DOWN Port Houston further refined its safety initiatives in 2017 to continue to ensure a healthy and safe work environment for employees, tenants and visitors.

With nearly 3,500 observation audits on port property completed since 2014, Port Houston in 2017 lowered its lost time incident rate to .97 – well below the maritime industry average of 3.5 for cargo handling.

Those numbers highlight how seriously the subject of safety is taken at Port Houston.

Port Houston also adopted smart device use standards for employees to prevent distractions while driving vehicles, operating machinery and walking through parking lots or crosswalks.

Port Houston also participated in the National Safety Month campaign in 2017, which raises awareness for safety and focuses on reducing leading causes of accidents and deaths at work, on the road and in our communities.

Port Houston is committed to continual improvement of its operations and the prevention of injury and illnesses by focusing on health, safety, quality, productivity, cost effectiveness and environmental improvement.

P O R T H O U S T O N 27

TOP STATE AWARD FOR PORT HOUSTON’S EMERGENCY MANAGER Port Houston’s Emergency Manager Colin Rizzo received the Lou Harrell Emergency Manager of the Year Award at the Emergency Management Association of Texas Symposium in San Marcos March 7. The award recognizes and honors a member whose comprehensive emergency management program epitomizes the best in Texas emergency management practices.

The criteria for the award includes developing and implementing a highly effective program in the absence of other sophisticated programs and agency support; applying innovative ideas or creative techniques to enhance the local emergency management program and managing an extraordinary response effort to a major disaster.

NEW FIRE TRUCK ADDED TO PORT FLEET Port Houston welcomed a new fire truck to support and protect the Turning Basin and surrounding areas. Built by Pierce Manufacturing, Inc., the 2016 Enforcer Pumper fire engine is loaded with: LED lighting, rescue and hazmat supplies and firefighting equipment.

The fire engine replaced the Port of Houston Fire Station No. 1’s existing fire engine, which was not the Class A-type fire engine needed for structural firefighting. The new truck will provide improved water pressure, volume and water supply in order to protect the assets of Port Houston.

Even with the help from mutual aid departments, the port’s fire department is often the first fire team on scene for several minutes, and we need highly capable equipment, which also is required by our mutual aid agreements.

THIRD ISO CERTIFICATION The mission of the Health, Safety, Security and Emergency Response division of Port Houston is to safely protect and secure people and commerce. Port Houston received its historic third certification for the ISO 28000:2007 Security Management System for its Turning Basin, Old Manchester, Woodhouse, Bayport and Barbours Cut terminals in March of 2017.

Since being originally certified in 2008, this updated certification demonstrates that the port not only meets federal maritime security requirements, but goes above and beyond to maximize port security while expediting the flow of commerce. It also demonstrates our commitment to continual improvement.

Port Houston was the first port authority in the world to be certified by this program.

Safely protect a

28 H E A L T H , S A F E T Y , S E C U R I T Y A N D E M E R G E N C Y M A N A G E M E N T

HSSE 2017 STATISTICS

AN AVERAGE WEEK IN HSSE

EMERGENCY MANAGEMENT DEPARTMENT

• FD responds to five HAZMAT calls, three EMS calls, and one fire

• 63 Port Alert notifications sent

• FD inspects 110 fire hydrants, 287 fire extinguishers, and five buildings

• Major EOC activation for Hurricane Harvey (Aug/Sept)

• Security randomly screens 4,910 vehicles and randomly verifies 425

• Mobile Command Center (18 deployments)

TWIC cards

o 11 - Public outreach events (including the Texas Emergency

• Credentialing assists 75 people face-to-face with access requirements

• Safety conducts 19 audits, holds 31 hours of contact training and

o 7 - Incident responses or exercises (including two multiple day

does five incident investigations for process improvement

Management conference for 72 hours) deployments for 98 hours)

• PD responds to 616 calls/events, issuing 35 safety citations and making one arrest

SAFETY DEPARTMENT

• The Dispatch Center handles 1,112 calls for service, records 130 vessel movements and processes 28 late gate requests

• Facilitated 971 safety audits

• Emergency Management sends one PortAlert notification, resolves

• Conducted 240 incident investigations

two radio issues and provides seven hours of EM training

• Conducted over 1,600 training contact hours • Lost Time Incident Frequency Rate o US Maritime Alliance (East and Gulf Coast Ports) = 4.5

FIRE DEPARTMENT

o Port Houston = .97 (down from 1.12) and under 2017 goal of <1.0

• 521 total calls (down 10% from 2016)

o 10 total Lost Time cases (8 ILA and 2 Port Houston)

o 48% HAZMAT (248)

• Total Case Incident Rate

o 28% EMS (147)

o Port Houston = 2.33 (up from 2.13) and over 2017 goal of <2.0

o 11% Fires (55 total – 27 land/13 marine/15 mutual aid)

• Implemented Smart Device and Unauthorized Motor Vehicle Policies

o 12% “Other” i.e. Inspections, Fire Alarms and Area Checks (64) • Inspected 455 fire hydrants every month

POLICE DEPARTMENT

• Inspected 1,300 fire extinguishers every month • 250 Building Inspections of PHA-owned facilities, each building done

• 32,038 incidents recorded (down ~6,000 or 17%)

at least annually

• Average 88 incident responses per day (down 18 per day or 17%)

• 100 pre-fire plans completed for waterside facilities along ship channel

• 75 arrests made, vast majority for outstanding warrants • The Port Houston Dispatch Center: o Received 57,812 calls for service (158 a day, 19% increase)

SECURITY DEPARTMENT

o Entered 6,775 vessel arrivals/departures/shifts at Port Houston

• Security randomly screened 255,359 vehicles (982 per workday,

which means on average over 7,000 vehicles a day enter Port Houston

o Processed 1,464 gate requests and direct discharge requests

facilities)

terminals (19 a day, equal to 2016) (4 a day, slight decrease)

• Five annual USCG Inspections, 9 unannounced USCG spot-checks

o Distributed and sorted 6,791 wristbands for Ro-Ro operations

(no NOVs)

(19 a day, slight increase)

• One Internal FSP audit, one Internal SMS audit, one External SMS audit • 22,108 TWIC cards randomly verified (85 per workday)/50 discovered invalid/damaged • 3,811 face-to-face credentialing customers assisted (15 per workday) • Maintained C-TPAT and ISO 28000 certifications (added Woodhouse) • Replaced 6,000 linear feet of perimeter fence at Barbours Cut Container Terminal

t and serve- PEOPLE AND COMMERCE P O R T H O U S T O N 29

Government R E L AT I O N S

Government Relations Driving Port Partnerships

2017 was a big year for the Texas state legislature, which meant it was a busy time for Port Houston. That’s not unusual when lawmakers meet to conduct business every other year.

Port Houston’s Government Relations department acts as the liaison between the Port Authority and its local, state and federal government stakeholders. The department’s functions include informing and educating elected officials and regulatory agencies on issues that affect Port Houston by hosting briefings and tours, as well as responding to a myriad of requests.

HARRIS COUNTY COMMISSIONER RODNEY ELLIS TOURS PORT One longtime state legislator who visited Port Houston in 2017 was Harris County Precinct 1 County Commissioner Rodney Ellis, who visited the Port of Houston Feb. 23 for a briefing and tour. Ellis joined Commissioners Court after having served the Houston area for 25 years in the Texas Senate.

Port Chairman Janiece Longoria and Port Commissioner Clyde Fitzgerald welcomed Commissioner Ellis and his staff and provided an overview of the port with Executive Director Roger Guenther.

Port Houston Director of Channel Development Mark Vincent gave a presentation about the Houston Ship Channel, while Chief Commercial Officer Ricky Kunz discussed trade development. Senior Director of Small Business and Education Outreach Gilda Ramirez highlighted Port Houston’s maritime education efforts.

The delegation was given a tour of the Bayport Container Terminal before boarding a Port Houston fireboat for a tour along the ship channel led by Chief HSSE Officer Marcus Woodring. Both tours provided the commissioner and his staff a perspective on the volume of commerce at Port Houston, its impact on the economic health of the region and the diversity of the stakeholders that contribute to the port’s operations.

The Texas Legislature passed several measures intended to enhance Texas ports’ competitiveness, support their growth and ensure readiness for future opportunities during its 85th Regular Session.

U.S. ARMY CORPS OF ENGINEERS LIEUTENANT GENERAL VISITS PORT Port Houston hosted Lt. General Todd Semonite for a briefing and tour May 17. Semonite serves as the commanding general and chief of engineers for the U.S. Army Corps of Engineers. The Corps is a key partner with the port because of its mission to maintain the Houston Ship Channel.

30 G O V E R N M E N T R E L A T I O N S

P O R T H O U S T O N 31

Port Houstonâ&#x20AC;&#x2122;s

Government Relations Department

liaison between the Port Authority and government acts as the

stakeholders

32 G O V E R N M E N T R E L A T I O N S

TEXAS HOUSE SELECTS COMMITTEE MEETS AT PORT HOUSTON

Port Chairman Janiece Longoria and Commissioner Clyde Fitzgerald welcomed the lieutenant general. Executive Director Roger Guenther provided an overview of the port, highlighting its economic impact.

Port Houston welcomed the House Select Committee on Texas Ports, Innovation and Infrastructure at the Bayport Container Terminal Nov. 1.

The briefing was followed by a tour of the Shell Deer Park manufacturing site, a refinery and chemical plant on the ship channel that handles more

Created in 2017 by Texas House Speaker Joe Straus, the committee

than 2,500 vessels each year. The tour continued aboard a Port of

is responsible for reviewing state policies and discussing long-term

Houston fireboat to view other facilities along the channel, concluding at

challenges facing Texas ports and infrastructure and to propose solutions

the Barbours Cut Container Terminal.

to address those needs and keep ports competitive.

The Port of Houston Authority serves as local partner with the Corps in

Port Houston leadership and staff discussed the port’s role and operations

maintaining the Houston Ship Channel. This vital waterway serves the

and provided an overview of the greater Port of Houston, highlighting its

manufacturers and employers at the Port of Houston who are responsible

economic impact to the state.

for sustaining more than two million jobs and $617 billion in economic activity for the nation.

Chairman Janiece Longoria noted that the port’s container traffic is growing every year. A total of 63 percent of Port Houston’s cargo is containerized, with East Asia cargo, making up 37 percent of containerized imports at Port Houston container terminals.

TEXAS LEGISLATURE PASSES LEGISLATION TO BENEFIT PORTS

Executive Director Roger Guenther noted that technologies are all about

The Texas Legislature passed several measures intended to enhance

creating a more efficient port for users.

Texas Ports’ competitiveness, support their growth and ensure readiness for future opportunities during its 85th Regular Session, which concluded

Port Houston Channel Development Director Mark Vincent gave a

May 29.

presentation about Houston Ship Channel development activities, while Chief Port Infrastructure Officer Rich Byrnes discussed transportation,

The session began with a report from the Texas Select Committee on

logistics and freight mobility.

Ports, created by Lt. Gov. Dan Patrick and chaired by Sen. Brandon Creighton, recommending that the state support channel improvement efforts in Texas. House Speaker Joe Straus also created a new committee to examine port issues – the House Select Committee on Texas Ports, Innovation and Infrastructure. The vice chair of that panel is Rep. Dennis Paul, who represents the Port of Houston region.

Patrick initiated Senate Bill 28, which was filed and passed by Sen. Creighton and Rep. Joe Deshotel, creating a state revolving loan program to assist state navigation districts with their share of federal channel improvement projects.

State appropriators allocated a total of $40

million ($20 million per year in the state’s two-year budget) to the Texas Department of Transportation for port freight mobility projects.

Sen. Creighton and Rep. Mary Ann Perez passed SB 1395, aimed at modernizing state navigation districts statutes and assisting them with their day-to-day operations and processes. SB 1864, which pertains specifically to the Port of Houston Authority, was passed by Sen. Larry Taylor and Perez to update the port’s governing statutes, including a clarification of its role in providing on-water fire protection along the entire length of the Houston Ship Channel.

Sen. Robert Nichols and Rep. Gennie Morrison passed SB 1524 to create a new heavy-haul permit for shipping containers that also includes truck safety equipment requirements and funding for local governments to assist with implementation.

P O R T H O U S T O N 33

Environmental STEWARDSHIP

Environmental stewardship and pollution prevention are incorporated into all of Port Houston’s business decisions and best management practices. We were the first port in the United States to be certified to the ISO 14001 standard for its environmental management system.

Port Houston’s dedication to ensuring that business and the environment

The port will reduce electricity demand by saving up to a million kilowatt

can co-exist successfully has been recognized nationally. We strive to

hours every year with the new building management system it is planning.

be the recognized leader in environmental stewardship in the maritime

The building automation system is a set encompassing system that can

industry through programs and policies focused on air and water quality,

control everything related to building energy load in one place.

land management, stewardship, sustainability and marsh restoration.

Other steps are being taken, as well. The port is working with Centerpoint The port works collaboratively with capable partners like the Galveston

Energy, which provides incentives to improve energy efficiency of

Bay Foundation to preserve and protect Galveston Bay, which is home to

businesses and institutions. The port is eligible for up to a million dollars

the Houston Ship Channel, the busiest waterway in the country.

in energy efficiency incentives, which makes it a smart investment to participate in Centerpoint’s program.

The goal of Port Houston’s energy project is to reduce asset and facility

SAVING MONEY

operational costs, including building maintenance expenses, and results

Among Port Houston’s environmental initiatives in 2017 we focused on

already have been seen through mitigating future environmental impacts.

expanding a new energy efficiency program to save money on energy.

When electrical consumption is reduced, air emissions at the electricity

Initially limited to the Executive Building, the program was extended to

plant site are reduced.

other Port Houston facilities and terminals.

From lighting and air conditioning to electrical cargo handling equipment, the port is expected to save a significant amount of money by using

ENVIRONMENTAL MANAGEMENT STANDARDS

products that are eco-friendly and use less power and omit less

Port Houston is the first port in the world to attain the newest international

emissions. For example, it is now a port-wide mission to use only LED

standard for port environmental management systems, meeting a stringent

light bulbs. About 30 percent of the electricity demand is from lighting at

set of criteria in the process ranging from the following requirements:

the port’s facilities.

Waste Minimization • Storm Water Pollution Clean-up Program The port’s Executive Building has all LED lighting because 3,585 T8’ bulbs

Energy Efficiency • Sustainability and Continuous Improvement Policies

were replaced starting in 2012, and this included bulbs at the parking lot

Dredged Material Area Management

and many of the wharves at the Turning Basin Terminal. Port Houston’s environmental affairs and maintenance departments conducted an

Known as ISO 14001:2015, the new standard requires significant organizational

inventory of the lights to be replaced with LEDs across warehouses

changes before the designation can be awarded, and steps have been taken

and wharves at the port’s other terminals. In 2017, the maintenance

by port environmental department officials to meet those goals.

department tested operational compatibility of LED options at Bayport to The ISO 14001 Environment Management System (EMS) standard is an

convert the container terminals through this program.

internationally recognized environmental management standard that was put The Sam Houston Pavilion and tour boat have LED lighting equipment as

in place in 1996. Open to any company or agency, the program is described

well. LEDs put off less heat, and therefore the demand on and use of the

as a systematic framework to manage the immediate and long-term

air conditioning cooling systems is lessened.

environmental impact of an organization’s products, services and processes.

34 E N V I R O N M E N T A L S T E W A R D S H I P

Port Houston is a leader in environmental affairs and remains committed to conducting all port operations through the use of a systematic approach to environmental management in order to protect and preserve the natural environment.

P O R T H O U S T O N 35

Oyster Reef Restoration

MarshMANIA Adopt A Beach Clean-up

TRASH PARK TO PORT Bike Ride Shoeboxes for Seafarers

36 C O M M U N I T Y F O C U S

A BIG

Community FOCUS FOR PORT HOUSTON

Port Houston is all about community. That was evident in the wide range of events in 2017 where employees pitched in to help.

TRASH BASH Port Houston team members, their families and friends gathered together near Sims Bayou to volunteer at the Rivers, Lakes, Bays and Bayous “Trash Bash” in March 2017. In addition to providing volunteers, Port Houston also supported the event as a platinum level sponsor.

Trash Bash is the largest single-day waterway cleanup in the state of Texas.

Throughout the state, an average of 4,500 volunteers gathered at various

THANKSGIVING Project

BASH

Backpack Buddies

locations along Texas waterways to clean up the environment. The program was founded in 1994 by the Houston-Galveston Area Council and Texas Commission on Environmental Quality and has grown to 14 sites across the Galveston Bay watershed.

MARSH MANIA EVENT Port Houston employees celebrated Earth Day by joining the Galveston Bay Foundation and dozens of other local volunteers for the 2017 Marsh Mania event. The nationally recognized Texas Parks and Wildlife project focuses on restoring marsh habitats.

Port Houston teams had a muddy good time as volunteers successfully planted more than 6,250 stems of cordgrass on the banks of the Dickinson Bayou. Volunteers often found themselves up to their knees in mud, but ultimately worked to create and restore nearly 27 acres of marshland.

The goal of the event is to encourage local citizens to become involved in hands-on wetlands restoration activities, while increasing awareness and appreciation of wetland habitats.

OYSTER REEF RESTORATION PROJECT Port Houston’s team joined Galveston Bay Foundation volunteers in July for the 2017 Oyster Reef Restoration Project. Port Houston enjoyed a solid turnout as 34 volunteers at the Sweetwater Bay Preserve in Galveston took turns bagging, carrying and stacking over 350 bags of recycled oyster shells along the designated oyster bar. Port Houston volunteers bagged and transported over five tons of oyster shells and created an impressive 50 feet of new oyster reef bars.

P O R T H O U S T O N 37

Oyster habitats are vital to the health of Galveston Bay, effectively filtering

PORT HOUSTON THANKSGIVING PROJECT

nutrients, fine sediments and toxins from the water column. A single

Port Houston helped spread holiday spirit by preparing and packaging

oyster can filter up to 50 gallons of water a day.

Thanksgiving meals for 22 families at the Houston International Seafarers’ Center. Families included both local community members and Port Houston staff affected by Hurricane Harvey.

ADOPT A BEACH CLEAN-UP

Port Houston employees participated in the project by donating funds to buy

Port Houston proudly partnered up with the Galveston Bay Foundation to

and cook turkeys, cooking side dishes and desserts and/or volunteering to

host one of the clean-up sites for the Texas General Land Office’s Adopt-

help package and deliver meal kits on Thanksgiving morning.

A-Beach event at Morgan’s Point Sept. 23.

Each of the families received a 15 pound turkey, mashed potatoes, More than100 community volunteers, including Port Houston employees,

green beans, stuffing, cranberry sauce, rolls, gravy and pie. Tablecloths,

came together to clean up over 4,500 pounds of trash and recyclables

utensils wrapped with festive fall bows and personalized cards that were

along a half a mile stretch of Texas shoreline. Port Houston’s environmental

created by employees’ children also were included.

department helped supply the additional trash and recycling bins.

This project was part of Port Houston’s strategic community outreach efforts.

This event took on special significance due to damage and flooding caused by Hurricane Harvey. The Adopt-A-Beach program focuses on efforts to raise public awareness and educate citizens about the source

“SHOEBOXES FOR SEAFARERS”

of debris, keeping Texas beaches clean and safe.

Port Houston continued the tradition of spreading holiday cheer by providing small gifts to visiting seafarers through the “Shoeboxes for Seafarers” program. The program, which has been in place for more than

BACKPACK BUDDY PROGRAM

40 years, is organized by the Houston International Seafarers’ Center.

At the Houston Food Bank Oct. 18, more than 50 employees worked to benefit the Backpack Buddy program.

Port Houston packaged and delivered more than 60 wrapped shoeboxes to the Center. Each box included personal products such as soap, socks,

In the aftermath of Hurricane Harvey, the program’s focus was on

shampoo and a toothbrush, as well as items like a deck of cards or

preparing special disaster backpacks, which are designed to assist

sunglasses. Boxes also contained special holiday greetings from Port

students and families deeply affected by the storm.

Houston team members.

Nearly 3,500 bags with supplies and hygiene products were created for

Port Houston’s focus on community is not confined to just volunteering.

underprivileged students in nearby schools.

The Food Bank’s Backpack Buddy program works in partnership with participating schools, school districts and other community partners to ensure that the food and personal items are distributed to school children every Friday to take home over the weekend.

“PARK TO PORT” BIKE RIDE Port Houston teamed up with Hermann Park Conservancy to host more than 600 riders at the annual “Park to Port” Bike Ride Oct. 7.

The 20-mile round trip guided riders from Hermann Park’s Bayou Parkland east along the Bayou Greenway trail to Brady’s Landing restaurant, located near the Turning Basin of the Houston Ship Channel.

Port Houston partners with the Conservancy yearly to sponsor the turnaround event, with snacks, drinks and music. Port Houston volunteered with riders and cheered them on as they began the return leg of the ride.

Proceeds from the ride benefit the Conservancy, a nonprofit organization responsible for maintaining and improving the park system.

38 C O M M U N I T Y F O C U S

P O R T H O U S T O N 39

Outreach SMALL BUSINESS AND MARITIME EDUCATION

SMALL BUSINESS IS BIG BUSINESS

MARITIME EDUCATION PROGRAM CONTINUES SUCCESS

Port Houston’s small business and maritime education outreach

Commitment to education is key to Port Houston, from inside the classroom

department participated in over 250 small business outreach events in

to the workplace and beyond. On an ongoing basis, Port Houston strives

2017. More than 1,000 local small business are registered in the port’s

to increase public awareness with students in the community regarding the

Small Business Development Program.

port and its role in the regional and national economy.

A total of 650 small business have graduated from Port University, a

The port has invested significantly in maritime education programs

program designed for local entrepreneurs focusing on gaining valuable

with solid partners to assure students have the opportunity to access

insight about port procurement opportunities, the language of contracts

maritime-based education and future employment opportunities in the

and lessons for success as a business owner. These workshops were

industry. In recent years, Port Houston has committed nearly $5 million

held in both the spring and fall of 2017.

dollars to the Port of Houston Partners in Maritime Education Program.

The Port of Houston Partners in Maritime Education Program has a

Port Houston held an Occupational Safety and Health Administration

primary focus to encourage area students to pursue career opportunities

(OSHA) Construction Safety workshop for small businesses at the port’s

in the maritime transportation or affiliated fields, including logistics, freight,

Executive Building April 3. Nearly 20 engineering and construction

security and environment.

professionals attended the event.

The benefits of the program include dual credit availability, experiences, In July, Port Houston’s small business department hosted a graduation

internships, college scholarship opportunities and admission to forums

reception for the Interagency Mentor Protégé Program 2017 class on

presented by experts in the maritime industry.

the M/V Sam Houston. With the guidance of local agencies, twenty-one protégés are now on the path to discovering new resources and taking their companies to new heights after completing the program.

Port Houston is a partner and sponsor of the program with several other

MORE EDUCATION INITIATIVES STRONG FOR PORT HOUSTON IN 2017

local agencies – the City of Houston, METRO, Houston First Corporation,

The Port of Houston Partners in Maritime Education Program had various

Houston Independent School District and Houston Community College.

outreach programs in 2017 to engage the community about maritime education initiatives.

Also in July, Port Houston welcomed more than 50 partners and transportation experts for a Registered Apprenticeship Program meeting

Port Houston staff and leadership participated at the “Maritime and

with the U.S. Department of Labor and TransPORTS.

Logistics Partners Symposium” at the Houston Pilots’ offices in Deer Park Feb. 7. The event provided organizations exposure to the maritime

TransPORTS is a U.S. Department of Labor national industry intermediary,

initiatives available for preparing for the next generation of leaders through

leading

apprenticeship

the Port of Houston Partners in Maritime Education Program. Community

programs in transportation and logistics with a focus on ports. The group

partners, industry representatives, high schools and colleges shared their

provides technical expertise, incentive funding and ongoing support to

workforce needs, required educational training and career opportunities.

the

development

of

nationally-registered

organizations looking to start their own apprenticeship programs.

Port Houston also partnered with various chamber of commerce Registered apprenticeship is a proven model of workforce development

organizations for the annual maritime educators’ boat tour aboard the

that combines on-the-job learning with related technical instruction to

M/V Sam Houston Feb. 23.

increase skill level, wages and career opportunities.

The port also hosted five graduation dinners for six local high schools and Hurricane Harvey took a toll on many Texans as flooding affected

sponsored the annual Youth and Maritime Logistics Expo at San Jacinto

homes and businesses and brought a demand for various recovery-

College’s maritime campus.

related services. Port Houston’s small business and education outreach department participated in several events around Harris County related to the storm to support recovery efforts.

40 O U T R E A C H

Recognition OF SERVICE

PRISCILLA K. BURROUGHS | Small Business | 11 years ALLISON COOPER | Credit | 16 years WILLIAM O. GREB III | BCT Maintenance | 24 years PHILIP J. KEMPTHORNE | Police | 13 years DEBRA E. LAWRENCE | BCT Terminal | 24 years ROBERTO G. NUNEZ | Police | 33 years DOROTHY A. PERKINS | Chief Commercial Officer Admin | 12 years GARY W. THACKER | M/V Sam Houston | 17 years MICHAEL G. USHER | Pilot Administration | 32 years

P O R T H O U S T O N 41

About

PORT HOUSTON

Port Houston is an economic engine that produces jobs and economic prosperity for the local and state economy. We are the proud sponsor of the Houston Ship Channel, and we facilitate and accommodate commerce and navigation. Port Houston strives to be America’s Distribution Hub for the Next Generation and we are ready for bigger things to come.

EDITORIAL STAFF: STAN SWIGART Director, Marketing and External Communications BILL HENSEL Manager, External Communications LACI THERIOT Digital Content Marketing Specialist DESIGN: JOHN MANLOVE MARKETING & COMMUNICATIONS PHOTOGRAPHY: CHRIS KUHLMAN CK Productions DAVID BRAY David Bray Photography ©2018 Port Houston All rights reserved

BO LD M O V E S 111 EAST LOOP NORTH | HOUSTON, TX 77029 | P.O. BOX 2562 | HOUSTON, TX 77252-2562 | 713.670.2400 | FAX 713.670.2429 | PORTHOUSTON.COM