Port of Houston Magazine - Spring 2015

SPRING

2015

THE PORT OF HOUSTON

Chairman Longoria:

Leading Into the Next Century

CONTENTS SPRING 2015

12 FEATURE CHAIRMAN LONGORIA: SETS COURSE FOR SECOND TERM

IN EVERY ISSUE 6 A Message from Executive Director Roger Guenther

8 The Manifest Port of Houston Authority News Highlights

34 Spotlight on Small Business Elaine’s Florist & Gift Baskets

Performance in 2014 16 PHA Hits Record

the Port Competitive 22 Keeping with a Capital C

Seeing More Balance 26 PHA Between Imports and Exports

30 Trade, Transportation & Education All at the Port of Houston

Port of Houston Authority The Port Delivers

EXECUTIVE OFFICE

Port of Houston Authority JANIECE LONGORIA Chairman

111 East Loop North, P.O. Box 2562, Houston, TX 77252-2562 Phone: 713-670-2400 Fax: 713-670-2429 Executive Director Roger D. Guenther Deputy Executive Director, Legal, and General Counsel Erik A. Eriksson

JOHN D. KENNEDY Commissioner

Deputy Executive Director, Finance and Administration Thomas J. Heidt Deputy Executive Director, Corporate Affairs Phyllis Saathoff Harris County Auditor Barbara J. Schott

DEAN E. CORGEY Commissioner

Harris County Treasurer Orlando Sanchez

FIELD OFFICES

Central & South America CLYDE FITZGERALD Commissioner

(excluding Brazil)

Brazil

Arturo Gamez Central & South America Representative Port of Houston Authority Avenida Aquilino De La Guardia y Calle 47 Ocean Business Plaza Building, Mezzanine Panama, Republic of Panama Tel.: +(507) 340-0205 Fax: +(281) 754-4647 Houston Access (713) 491-4607 Email: agamez@poha.com

John C. Cuttino Brazil Representative Port of Houston Authority Av. Paulista, 2300-Andar Pilotis Sao Paulo, SP Brazil, CEP: 01310-300 Tel.: +55 (11) 2847-4931 Fax: +55 (11) 2847-4550 Houston Access (832) 239-5076 Email: jcuttino@poha.com

THELDON R. BRANCH, III Commissioner

Asia Matthew Soloman Port of Houston Authority c/o Ben Line Agencies Email: msoloman@poha.com Tel: +84 838 256 148 x 147 Mobile: +84 903 943 886

STEPHEN H. DONCARLOS Commissioner

Head Office 200 Cantonment Road, #13-05 Southpoint, 089763 Singapore Tel.: +65 6420 9013 Fax: +65 6224 0163

Port of Houston Magazine’s editorial staff: Phyllis Saathoff, deputy executive director, corporate affairs | Lisa Ashley, director, corporate communications | Bill Hensel, manager, corporate communications | Edwin Henry, corporate communications specialist | Maggi Stewart, corporate communications specialist | David Bray, photographer | Chris Kuhlman, photographer | Esther de Ipolyi, contributor | Gilbreath Communications, Inc. This publication is not copyrighted and permission is given for the reproduction or use of any original materials, provided credit is given to the Port of Houston Authority. Additional information, address changes, extra copies, or advertising specifications may be obtained by writing to the Port of Houston Magazine.

ROY D. MEASE Commissioner

The Port of Houston Magazine is published by the Port of Houston Authority, P.O. Box 2562, Houston, Texas 77252-2562, and is distributed free to maritime, industrial and transportation interests in the United States and foreign countries.

Visit the Port of Houston Authority online www.portofhouston.com 4

Port of Houston Authority | Spring 2015

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ROGER THAT!

A MESSAGE FROM EXECUTIVE DIRECTOR

ROGER GUENTHER

Much was accomplished in 2014, but there is always more to do. And our initiatives for 2015 are already in motion.

We have a renewed emphasis on strategic planning for the Port Authority that will capture our goals, mission and vision for the future. With continued guidance and direction from our Port Commission and input from our staff and stakeholders, we will collectively define what success looks like for the Port Authority.

Another priority for 2015 is to explore and develop an even more diverse range of cargo, as well as additional trade lane services, to maintain our status as the leading port in the U.S. Gulf. n

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Port of Houston Authority | Spring 2015

Specifically, we are seeking opportunities for the shipment of refrigerated goods through our port. are also continuing preparations to accommodate We the influx of plastic exports over the next two to three years.

Although the East Asia trade lane has grown rapidly in recent years, we will continue to market Houston to attract further services to take advantage of the Panama Canal expansion.

The Port of Houston Authority will receive nearly $1.8 million in awards by the U.S. Environmental Protection Agency (EPA) for drayage truck projects to help reduce emissions from the nation’s existing fleet of diesel engines.

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e are positioned to be ready for trade opportunities W with Cuba. For years, our Trade Development Department has maintained relationships through the Texas Cuba Trade Alliance. We are closely monitoring the recent events unfolding regarding potential trade with Cuba. he Port of Houston is one of three ports in the T nation selected for a congressional study for potential improvements. The Port Authority will work with the federal government to implement recommended improvements to the Houston Ship Channel.

In addition, we will continue to determinedly advocate for funding of current maintenance dredging needs as well as future expansion requirements for growing commerce through the busiest waterway in the nation.

The year 2014 was the most successful year of the past century for the Port Authority, and last year’s momentum has enabled us to begin the year 2015 on a positive note.

Operating revenue for the first two months of the year is up 24 percent over last year. February’s operating revenue of $23.7 million is 32 percent higher than February 2014 and marks the 13th consecutive month that the Port Authority has surpassed the prior year’s monthly production.

These positive results build on what was a record 2014.

Last year, more than 37 million tons of cargo came across

the docks at Port of Houston Authority terminals, an increase of 5 percent.

The leading growth commodity for 2014 was steel, which in itself reflects a record 6.6 million tons crossing our docks, exceeding the previous record of 6.3 million tons.

The Port Authority set a record for tonnage in 2014, with 19.4 million tons.

These healthy results are vital to our continued success as we prepare for even greater growth and prosperity in the future and will contribute to, but not fully fund, a significant capital investment plan that includes new and redevelopment projects totaling more than $1 billion over the next five years.

The Port Authority will continue to modernize and improve its facilities to handle increased cargo fueled by population growth, an expanded Panama Canal, and growing customer demand along the Houston Ship Channel for generations to come.

I want to thank the Port Commission for its service and leadership; and our labor force, customers, users and community stakeholders for their partnership with us. I also want to thank Port Authority employees for their dedication to success.

We are extremely pleased with the significant achievements in 2014, we are excited about the future …and We Are Ready! n

Spring 2015 | Port of Houston Authority

7

THE

MANIFEST

NEWS HIGHLIGHTS

EPA AWARDS PORT OF HOUSTON AUTHORITY NEARLY $1,800,000 IN DERA GRANTS The Port of Houston Authority received nearly $900,000 as part of an award of more than $2.1 million by the U.S. Environmental Protection Agency (EPA) for three clean diesel projects to help reduce emissions from the nation’s existing fleet of diesel engines.

Funding for this grant is part of EPA’s Diesel Emission Reduction Act (DERA) Fiscal Year 2014 allocation, which includes engine replacements, repowers, and idle reduction technologies to clean up a variety of older diesel engines.

The EPA DERA grant funds, combined with a match of $900,000 from drayage truck owners, will be combined with a match of $900,000 from drayage truck owners and will replace 14 older drayage trucks (model years 1995–2003) with new 2010 EPACARB-compliant trucks with Class 8 engines.

“Reducing fuel costs and improving air quality are important roles in the fabric of port operations, economy

and air quality,” said Charlie Jenkins, Managing Director of Channel Development and Environmental Affairs.

“In partnership with H-GAC (the Houston-Galveston Area Council), the Port Authority continues to focus on environmental stewardship while maintaining the economic stimulus the port provides our regin and Texas.”

Note: The Port Authority was notified at press time that it was awarded a second DERA grant for a project of similar scope in the amount of $868,942 with a $1,680,142 match for a total project cost of $2,549,084.

PORT AUTHORITY RECERTIFIED FOR ENVIRONMENTAL STANDARDS The Port of Houston Authority received its fifth certification recently for International Organization for Standardization (ISO) of its Environmental Management System (EMS).

In 2002, the Port of Houston Authority became the first port authority in the United States with an EMS to meet those standards for environmental excellence.

The announcement of the latest certification by DNV-GL Business Assurance USA, Inc. was made during the February meeting of the Port Commission of the Port of Houston Authority.

Faith Beaty, president of DNV-GL Business Assurance USA, Inc., told the Port Commission the audit revealed no major or minor noncomforances.

Beaty said the audit “should give the community, regulators and stakeholders great confidence in the Port Authority’s commitment to environmental stewardship.” The EMS audit is conducted every three years.

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Port of Houston Authority | Spring 2015

Faith Beaty presents a plaque recognizing the ISO 14001 recertification to the Port Authority’s Environmental Affairs Department team.

The ISO 14001 certification standard is one of the most stringent and challenging in the environmental industry. The Port Authority is entering into its 13th year of using the EMS tool to enhance environmental compliance, resources protection and conservation at its terminals and facilities.

PORT AUTHORITY BRIEFS ELECTED OFFICIALS Several elected officials visited Port of Houston Authority facilities during February.

U.S. Rep. Brian Babin visited Bayport, which is in his district, February 18. He was hosted by Port Commission Chairman Janiece Longoria, Port Commissioner John D. Kennedy and Executive Director Roger Guenther. The congressman was briefed on federal policy issues, including dredging and transportation infrastructure.

Babin serves as a member of the Houston Committee on Transportation and Infrastructure, a critical panel for the port since it has jurisdiction over the U.S. Army Corps of Engineers and U.S. Department of Transportation.

U.S. Rep. Mark Veasey, who represents the Dallas-Fort Worth area, visited the Port Authority February 17 and was briefed by Port Commissioner Theldon Branch and Guenther.

Veasey is a member of the Armed Services Committee as well as the Science, Space and Technology Committee, in which he also serves on that panel’s Subcommittee on Energy.

State Rep. Gilbert Pena was briefed about the Port Authority and its initiatives by PHA Executive Director Roger Guenther and Commissioner Stephen DonCarlos. Pena and his staff also were given a rooftop tour of the Turning Basin Terminal from the Port Authority’s Executive Office Building.

U.S. Rep. Brian Babin, center, with (l-r) Executive Director Roger Guenther, Chairman Janiece Longoria and Commissioner John D. Kennedy

Above: State Rep. Gilbert Pena (center), flanked by staff members and Port Commissioner Stephen DonCarlos (right).

U.S. COAST GUARD, CBP BOTH HIGHLIGHTED FOR SERVICE

District Commander Rear Admiral Kevin S. Cook, Eighth Coast Guard District, Port Commission Chairman Janiece Longoria, U.S. Customs and Border Protection Area Port Director Dave Fluty.

The importance of the United States Coast Guard and U.S. Customs and Border Protection (CBP) was the focus of a special event in February, where the vital roles those federal agencies play was highlighted.

CBP’s Area Port Director Dave Fluty and Coast Guard Rear Admiral Kevin Cook, Commander of the Eighth District, both provided remarks during the event at Brady’s Landing.

Serving as master of ceremonies for the event and highlighting the essential functions provided by the agencies was Janiece Longoria, Chairman of the Port Commission of the Port of Houston Authority.

Chairman Longoria emphasized the critical nature of the Port Authority’s partnership with the Coast Guard and CBP. She said the port was able to become the successful economic engine it is today as a result of shared vision and teamwork with its partners.

Among the missions provided by the Coast Guard are marine safety, disaster relief, environmental protection and law enforcement. Customs and Border Protection takes a comprehensive approach to border management and control, combining customs, immigration, border security and agricultural protection.

Right: U.S. Rep. Mark Veasey

Spring 2015 | Port of Houston Authority

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MARINERS WORKING COLLABORATIVELY FOR IMPROVEMENTS Representatives of the Houston Pilots and operators of barges and other vessels plying the Houston Ship Channel met in late March to discuss navigation safety issues, including ways to increase communication.

The two-day session was held at the headquarters of the Houston Pilots organization March 26 and March 27.

Additional meetings are planned.

The seminar was supported by the Pilot Board Investigation and Recommendation Committee (PBRIC).

That committee is comprised of members from the Houston Pilots, the Port of Houston maritime industry, the Port of Houston Authority; and non-voting advisory members from the U. S. Coast Guard.

MAJOR PORT CUSTOMER CONSOLIDATES NEW OPS CENTER IN HOUSTON COSCO began weekly service to the Port of Houston Authority just two years ago and now has chosen Houston as home for the new operations center.

“We are pleased that COSCO has now chosen Houston for the consolidation of its new operations center, which anchors this company in Houston and has created additional jobs in our region,” Port Authority Executive Director Roger Guenther said.

Officials of COSCO, which is one of the world’s largest container carriers, have noted that Port of Houston Authority was chosen as the first port of call because of its progressive approach to cargo handling, ideal intermodal connections and the ability to turn a vessel in a minimum amount of time.

Container trade between Houston and Asia has been a major source of growth for the Port Authority in recent years.

THE MANIFEST spotlights news briefs exclusively from Port of Houston Authority, its customers, trading partners, and community stakeholders. Submit information in the form of a letter or press release via e-mail to mstewart@poha.com or via fax 713-670-2425.

The Port of Houston Magazine does not guarantee publication and reserves the right to edit submissions for content and style.

CHAIRMAN

LONGORIA

SETS COURSE

FOR SECOND TERM 12

Port of Houston Authority | Spring 2015

terminal. During the meeting, both Houston Mayor Annise Parker and County Judge Ed Emmett took note of the furious pace of work at the Turning Basin.

“There is a beehive of activity out there,” Mayor Parker said. She saluted Chairman Longoria and members of the Port Commission for the great results achieved during Longoria’s first term as Chairman of the Port Commission.

Emmett also thanked Longoria for her service to the Port Authority. “Clearly, the Port of Houston is one of the great ports in the world and has great leadership,” the county judge noted. “So a lot of that is attributed to you.”

Chairman Longoria thanked them both and quickly acknowledged her fellow Port Commissioners, as well as Executive Director Roger Guenther and the Port Authority staff.

“I am very proud of our team and it takes a team to execute the vision and to create the jobs and economic opportunity that we enjoy in our region,” she told those assembled. Longoria also acknowledged her appreciation for the support of the city and county.

As Chairman of the Port Commission of the

Port of Houston Authority, Janiece Longoria is all about vision. She’s all about partnership.

And she’s all about business, too.

The veteran port commissioner has set sail on her second term as commission Chairman after being reappointed during a special joint meeting of the Houston City Council and Harris County Commissioners Court on January 12. Harris County Precinct 2 Commissioner Jack Morman made the motion for her reappointment, which was unanimously approved.

This historic meeting took place for the first time at the Port Authority where the docks at the Turning Basin terminal were teeming with longshoremen unloading cargo and numerous 18-wheelers carrying cargo in and out of the

RECORD PERFORMANCE & HIGHLIGHTS

Chairman Longoria noted that a great deal has been accomplished during the two years since she was appointed to chair the Commission. “We had record performance in 2013,” she pointed out. “We beat those record results in 2014.”

Performance highlights include: • Record-setting total tonnage of 37.6 million tons, an increase of 5 percent over 2013 • Record-setting container tonnage of 19.4 million tons • Record-setting steel tonnage of 6.6 million tons • The second-highest tonnage recorded for grain exports with 2.3 million tons • The second-highest number of vessels visiting Port of Houston docks with 8,339 vessels Spring 2015 | Port of Houston Authority

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• Record operating revenue of $261 million, an increase of 13 percent over 2013 • Record net operating income of $39 million, reflecting 34 percent growth over 2013 • Record net income of $46 million, 4 percent higher than 2013 • Record total cash flow of $116 million, reflecting 12 percent growth Other accomplishments in 2014 included: • The Port Authority established an initiative to increase the import of refrigerated cargo to the Port Authority’s facilities. In 2014, a request for proposals was issued seeking interest in construction and operation of a refrigerated cargo facility on Port Authority property with ready access to the Bayport Container Terminal.

• The Port Authority participated in a variety of import pilot programs, including a fresh cut flower shipment in sea containers from Colombia and a shipment of navel oranges from South Africa. These programs were successful and will continue to grow.

• The Port Authority also established new value-added service for its oil and gas and other project shippers with an agreement reached with Barnhart Crane at City Dock 3, which includes an on-site 700-ton crane.

• The Port Authority joined the Texas Farm Bureau in an effort to develop Texas’ future agricultural leaders by organizing and hosting the bureau’s leadership forum at workshops held at the Port of Houston.

• The Port Authority’s “Trade Link” export promotion also was launched, which is an initiative that brings together the U.S. Commercial Service, U.S. Small

Business Administration, the Ex/Im Bank and local economic development offices with businesses in the region focused on exports.

In 2014, the Port Authority also initiated numerous agreements that strategically use real estate assets in support of cargo operations. For example, Enterprise Products Partners announced that it will construct an ethane export facility on the Houston Ship Channel. The company signed a long-term agreement with the Port Authority for use of the Port’s property adjacent to Enterprise’s existing terminal at Morgan’s Point.

The Port Authority also continued its role as the leading breakbulk port in the nation, and renewed its efforts to increase breakbulk operations. In 2014, the Port of Houston Authority hosted the Breakbulk Americas conference with record attendance of more than 5,000 participants.

It was announced during the conference that the Port Authority will again host this remarkable trade conference for 2015, and it is likely that because of its prominence on the national stage for breakbulk, the Port Authority and Houston will continue to be the venue of choice for this globally recognized conference and marine operations trade show.

TEAMWORK AND COLLABORATION As she frequently does, Chairman Longoria was quick to give credit for these record results to Roger Guenther and his staff. “We work together seamlessly. The Commission sets the policy and provides oversight and guidance.

Our world-class staff executes that policy, and I am very proud of what they have accomplished, and what they continue to do.”

Longoria also made note of the importance of partnerships at the meeting. She remarked that “we have

“ I am very proud of our team and it takes a team to execute the vision and to create the jobs and economic opportunity that we enjoy in our region.” cultivated and enjoyed great relationships with the Houston Pilots, the men and women of the ILA, our shippers and customers, our community stakeholders, our industry stakeholders.”

During her first term, Longoria created the Chairman’s Citizen’s Advisory Council, which provides an open line of communication between the Commission and various communities located in and around the port, and the Chairman’s Business Advisory Council for increased communication with industry stakeholders.

LOOKING AHEAD TO 2015 During her remarks following her reappointment, Chairman Longoria also looked ahead to the coming year, noting that “we are well-positioned to continue that performance in 2015.”

January’s financial results bore that out, as steel was up 35 percent and container cargo volume continued to strengthen with an upward trend in loaded import boxes. The Port Authority generated $7 million in net operating income and $12 million in cash flow, returns that will be necessary to help fund an aggressive capital

investment plan during the next several years. Under the guidance of Chairman Longoria and the Port Commission, the Port Authority expects to commit $275 million for various capital projects in 2015. More than $200 million will be invested at the container terminals for continued development at Bayport and modernization at Barbours Cut, and $35 million will be spent on improvements at the general cargo and bulk terminals. Other capital investments include channel development, port security, real estate and information technology projects.

Ongoing capital improvements are critical, particularly given the continued and rapid growth of business at Port Authority facilities. Chairman Longoria is optimistic that growth at Port of Houston facilities will continue “because of our strategic location reaching 144 million consumers within a thousand miles, our opportunity to capture additional import and export volumes through an expanded Panama Canal, and robust expansion of the petrochemical industry along the Houston Ship Channel.” She credits the Houston Ship Channel for meteoric regional growth and economic development since its inception in 1914, and believes that continued visionary leadership and partnership are essential “to assure that the second century of the Houston Ship Channel is as remarkable as the first.” n Spring 2015 | Port of Houston Authority

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PHA PERFORMANCE IN

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Port of Houston Authority | Spring 2015

HITS RECORD

6.6 l e te s f o s n to n o li il m .6 6 rd A reco An unprecedented amount of steel moving across the Port of Houston Authority’s docks in 2014 helped drive the organization’s fifth consecutive year of record performance.

Both cargo handling and financial performances in 2014 were strong and consistent.

The Port Authority moved more than 37 million tons of cargo in 2014 — an increase of 5 percent over 2013. A record 6.6 million tons of steel was moved last year. Steel was the leading commodity with a record 6.6 million tons moving through Port Authority facilities in 2014.

The next leading commodity was petcoke, with 3.28 tons — 21 percent more than 2013.

Meanwhile, a record 1.95 million TEUs also moved through the Port Authority’s container terminals at Barbours Cut and Bayport.

The Port Authority’s continued focus on efficiency and customer service overall is contributing to the ongoing increases in cargo and the expansion of business at Port Authority.

UNPRECEDENTED AMOUNT OF

Additionally, the Port Authority’s Foreign Trade Zone No. 84 realized a record year of activity in 2014 with five new authorizations — the most in its 30-year history. The five sites were Mitsubishi Caterpillar Forklift America Inc., Toshiba, Millet Duty Free, Westway Terminals and Sage V Foods. The zone also expanded its reach with the addition of Texas Triangle Park near College Station and Generation Park in Northeast Harris County.

For the first time in 2014, the Bayport Cruise Terminal had two cruise lines sail from its facility in Pasadena.

Norwegian Cruise Line’s return to Houston in October signaled the beginning of the new cruise season. And Princess Cruises returned for its second season with a new vessel, the Emerald Princess.

The firm Martin and Associates estimates that a single sailing season is projected to create nearly 200 jobs and provide $50 million in local economic impact.

On the financial side, the Port Authority generated a record $261 million in operating revenue, $39 million in net operating income and $116 million in cash flow. The $116 million will be invested in Port Authority capital projects.

L E S T E Spring 2015 | Port of Houston Authority

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2014REVIEW IN

PHA TOTAL TONNAGE (Millions of Short Tons)

40

Bulk Cargo

35

Gen. Cargo: Other

30

Gen.Cargo: Steel

25

Gen. Cargo: Containers

20 15 10 5 0

2010 2011 2012 2013 2014

Cargo Type (Short Tons) General Cargo: Containers General Cargo: Steel General Cargo: Other Total General Cargo Total Bulk Cargo*

TOTAL PHA TONNAGE

2010

2011

2012

2013

2014

17,001,892

17,735,140

18,590,102

19,124,618

19,400,477

2,721,085

4,299,929

5,483,595

4,656,258

6,579,048

1,085,195

1,351,826

1,204,062

975,727

874,552

20,808,172

23,386,895

25,277,759

24,756,603

26,854,077

10,520,109

10,162,463

9,781,604

11,156,656

10,766,310

31,328,281

33,549,358

35,059,363

35,913,259

37,620,387

41%

6.6 million tons of STEEL

higher than 2013

TOP CONTAINERIZED TRADING PARTNERS

IMPORTS China (PRC) 165,712 Germany 73,512 India 55,595 Italy 48,307 Brazil 44,945 EXPORTS Brazil 68,285 Belgium 64,778 China (PRC) 59,903 Turkey 39,305 Netherlands 35,325

OPERATING REVENUE Net Operating Income 14.8%

G&A Expenses 16.4%

Operating Expenses 68.8%

*Unaudited

A primary contributor to the Port Authority’s financial performance last year was its real estate lease operations, which realized net revenues of $6.36 million — 122 percent more than in 2013. Commercial real estate is one of the fastest-growing segments at the Port Authority.

One significant development involved Enterprise Product Partners LP, which signed a 30-year lease with the Port Authority to build the world’s largest refrigerated ethane export facility near Morgan’s Point. Lease agreements also were reached with Houston Fuel Oil Terminal Company, Oiltanking Partners, Texas Petroleum Group and LyondellBasell. n

OPERATING REVENUE (IN MILLIONS)

$280 $260 $240 $220 $200 $0 2012

2013

19.4 MIL A RECORD

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Port of Houston Authority | Spring 2015

2014

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DALLAS +1 DAY

24 days Yantian to Houston • Multiple direct all-water services via the Panama Canal • 7th largest US container port and #1 in US Gulf • 8,000 + TEU vessels handled • Strategic gateway for Texas and Central US • Extensive Intermodal Network • 45 FT channel deepening projects underway

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Port of Houston Authority | Spring 2015

To keep Houston’s port competitive and ready to accommodate an increase in post-panamax vessels, the Port of Houston Authority is tackling $275 million in capital improvements projects in 2015.

About 30 ongoing projects range from routine maintenance and repair— painting cranes, replacing asphalt and reinforcing structures — to larger construction and expansion projects, says Brock Lewis, P.E., chief construction manager.

Two projects alone at Barbours Cut Container Terminal make up the bulk of the budget. One entails $50 million for the purchase of four new dockside electric container cranes for wharf No. 1 at the terminal, the largest intermodal facility on the U.S. Gulf Coast. The new super post-panamax

ship-to-shore cranes departed in February from Konecranes in Korea and are expected to arrive at the Port Authority in early May. The Port Authority will be moving forward with the next phase of improvements at Barbours Cut wharf 2, noted Jeff Davis, Managing Director, Operations.

“The $30 to $50 million project will upgrade 1,000 feet of Wharf 2 to give it the capacity to support larger cranes and to service larger vessels,” Davis said.

A $12.8 million project will repave Terminal 4 Middle Yard at Barbours Cut, replacing 13.3 acres of concrete pavement to accommodate stacking of loaded containers.

An optical character recognition system at the entry gate at Barbours Cut is complete.

The $30-$50 million project will upgrade 1,000 feet of wharf 2 to give it the capacity to support larger cranes and to unload larger vessels.

Spring 2015 | Port of Houston Authority

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The Barbours Cut wharf expansions are part of a $700 million master plan to redevelop the terminal over the next decade.

The Barbours Cut wharf expansions are part of a $700 million master plan to redevelop the terminal over the next decade. They represent a small percentage of improvement activities to upgrade the entire port in anticipation of increased trade as the population grows and larger ships arrive via the Panama Canal expansion in 2016. “The Port Authority did not want to wait until the Panama Canal expansion project is complete, but rather do the work in advance of the anticipated boost in activity,� Davis said.

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Port of Houston Authority | Spring 2015

In February, the Port Commission also approved the purchase of nine new rubber-tired gantry cranes for the Bayport terminal. Projects in progress at the terminal, which first opened in 2007, include installing perimeter security cameras at Bayport Container Yard 2 and an additional 18-acre laydown area. A $23.8 million expansion of Container Yard 6 North at Bayport will construct about 21.5 acres of reinforced and roller-compacted (RCC), 18-inch concrete pavement. Using RCC can be more cost-effective, and it can be applied more quickly than conventional concrete.

The project also includes construction of trench drains, water and sanitary sewer mains, underground electrical distribution, high mast light poles, communication fiber and conduits and security fencing.

Dredging is now under way along the Port Authority’s container terminals to deepen and widen the channels.

Operating depth of those channels will be increased by five feet to match the 45-foot depth of the main channel.

Dredging at Barbours Cut began in July 2014, and the expanded channel is expected to be ready in May. Deepening and widening of the Bayport channel began in November and will be

finished well in advance of completion of the new Panama Canal locks, according to Director of Channel Development Mark Vincent.

At the Turning Basin, major projects include construction of a $2 million Marine Emergency Building.

The 3,000-square-foot facility combines fire truck bays, office space and living quarters and includes equipment storage and a communications room. A walkway provides direct access to a new floating fireboat dock.

Projects that are substantially complete at the Turning Basin include reconstruction of High Level Road from I-610 feeder to Gate 2 Road. n

More information on construction projects is available at http://www.portofhouston.com/business-development/capital-improvement-projects

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Port of Houston Authority | Spring 2015

]

PHA Seeing More

BALANCE Between Imports and Exports

The balance between imports and exports moving across Port of Houston Authority docks is narrowing significantly. That’s a positive development, as balanced trade at a port is attractive to shippers and ocean carriers.

While the amount of exports at the Port Authority has been relatively steady, the number of imports recently has been growing, particularly from Europe. That has changed the balance between imports and exports from roughly a 40/60 mix to becoming much more even — almost 50/50.

Spring 2015 | Port of Houston Authority

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Executive Director Roger Guenther noted there has been a recent spike of cargo on the Port Authority’s existing Asian services, including extra vessels calling. But he said increases have actually been widespread.

“Our sharp increases in container volume over recent months are not just from East Asia diversions from the West Coast,” Guenther reported Americas to the Port Commission at its March North Europe meeting. “But most trade lanes, including Africa/Middle East the East Coast of South America, the Med, Mediterranean and North Europe have seen substantial increases in export volume.”

Asia Imports to the U.S. from Europe have experienced growth Indian Subcontinent nationwide, but the effect has been particularly strong at the Other Port of Houston. In 2014, a total of $46 billion in European imports and exports passed through Houston. That represents a 35 percent increase over the past five years.

[

19.4

]

A record million tons of containerized cargo moved across Port Authority docks in 2014.

The containerized Trans-Atlantic trade was the Port Authority’s fastest growing trade region in 2014 and accounted for roughly 48 percent of the containers. The North Europe container trade lane grew 13 percent in 2014, virtually all due to an increase in imports.

One major reason is that since last July, the value of the U.S. dollar has grown roughly 30 percent against the euro, which has supported this rise in European imports.

So while a surge in imports across Port Authority docks is taking place, the amount of exports also is expected to increase in coming years. The shale oil and gas boom is increasing the demand for containerized shipping at the Port of Houston Authority. With the ongoing petrochemical industry expansion along the Houston Ship Channel, a new wave of plastics and chemical exports is anticipated in the 2016–2020 timeframe. In addition, the container terminals handle a significant volume of imports and exports of equipment and materials used in the production of shale oil and gas.

The Port Authority’s trade with East Asia continues to increase, and now makes up 25 percent of imports.

For exports alone, containers bound for Asia make up about 11 percent of the exports overall for the Port Authority. Some 30 percent of containers from Port 28

Port of Houston Authority | Spring 2015

Authority are bound for the Americas, followed by North Europe at 23 percent, Africa and the Middle East at 15 percent and the Mediterranean, 13 percent. About 4 percent go to the Indian subcontinent and 4 percent to other destinations.

A record 19.4 million tons of containerized cargo moved across Port Authority docks in 2014. And the container business remains Port Authority’s core producer of revenue.

“We have seen consistent growth in containers at the Port Authority for some time,” said Ricky Kunz, managing director of Trade Development and Marketing.

“We expect that to continue due to industry expansion and population growth.”

The Houston region already is number one in the United States for exports, having surpassed the New York region. Houston is the fourth-largest metro area in the country at 6.1 million people strong, and the population is projected to grow by 9.2 percent in just the next five years alone. A total of 25 Fortune 500 companies have their headquarters in Houston.

Throw in the expansion of the Panama Canal, which is supposed to be completed in 2016, and experts predict an uptick in both imports and exports in coming years.

The Port of Houston Authority could be a beneficiary.

LOADED IMPORTS

vs. LOADED EXPORTS

Port of Houston Container Terminals [Units: TEUs] 100,000 90,000 80,000

Loaded Imports

70,000

Loaded Exports

60,000 50,000

TAKEAWAY: The gap between loaded imports and loaded exports has been closing for some time

40,000 30,000 20,000 10,000 0 2010

2011

2012

2013

The Port of Houston is a key economic engine and major contributor to the Texas economy, which is the second largest state economy in the United States. Consider this: if Texas were a country, it would rank number 13 in the world economically, right behind Australia and ahead of Spain and Mexico.

For the Port of Houston overall, the leading export trading partners by tonnage are Mexico, 11 million; Brazil, 9.1 million, Netherlands, 4.78 million; Chile, 3.9 million; and Venezuela, 3.6 million.

Compared to many ports in the United States, the balance in trade between imports and exports stands out at the Port of Houston, since most ports import more than they export. Currently, the balance has narrowed to almost even. The PHA staff has made it a priority to increase import volumes and increase empty container availability for shippers.

One thing occurring currently is that the seascape for international maritime commerce is changing.

New alliances involving the biggest container carriers in the world have just recently been forged that could have an impact on ports. But just how significant an impact those new alliances could have remains to be seen, particularly since they just have begun operating in 2015.

Maersk Line and Mediterranean Shipping Co. several months ago unveiled their finalized east-west network for

2014

2015

their 2M Alliance, just months before the alliance is slated to begin operating.

The 10-year vessel-sharing agreement between the world’s two largest carriers was announced in July. That was after both carriers attempted to form the P3 Network with CMA CGM and were denied. Both Maersk and Mediterranean Shipping have a big presence at the Port of Houston.

Another recently approved alliance, called Ocean Three, is composed of carriers CMA CGM, United Arab Shipping Co. and China Container Shipping Line.

CMA GCM also has a big presence at the Port of Houston.

The Port Authority in recent years has continued to invest in its facilities and channels and is ready to handle larger vessels. n

Spring 2015 | Port of Houston Authority

29

All at the Port of Houston

Architect’s rendering of the San Jacinto College maritime education building

Business continues to grow at the Port of Houston, with $35 billion worth of infrastructure investments being made by businesses along the Houston Ship Channel.

Keeping up with this robust expansion puts a New San Jacinto College maritime education building currently under construction strain on the existing maritime workforce.

Amidst the many construction projects, a building is rising on a 10-acre site across the channel from the Bayport Container Terminal that should help ease the strain. This new 45,000-square-foot home for San Jacinto College’s maritime technology and technical training programs will bring these important education efforts closer to the industries that need it.

Spring 2015 | Port of Houston Authority

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The San Jacinto College recognized the growing need for well-trained mariners whether they were new entrants to the field or maritime workers needing continuing education to advance in their professions.

Coupled with the rapidly aging maritime workforce, the need for a variety of maritime education opportunities is great. The college found local industry very interested and supportive of increased local maritime training.

In 2010, San Jacinto leased a facility in Pasadena on Highway. 225 to house its courses that help mariners keep their Standards of Training Certification and Watchkeeping and U.S. Coast Guard certifications and licenses up to date through training. More than 100 students currently attend classes there at any one time.

On other campuses, San Jacinto offers courses for an associate of applied science in maritime technology, an associate of applied science in international business, maritime and logistics through partnerships with Texas Southern University and University of Houston, and a maritime administration program with an articulation agreement with Texas A&M University at Galveston.

“We hope to begin moving into the new building in November so that we can begin classes there in January 2016,” said Dr. Sallie Kay Janes, vice president of

continuing and professional development at San Jacinto.

“Construction is on schedule.”

In all, there will be 15 classrooms. The facility will house engineering simulators capable of modeling any challenge a maritime engineer might face, including hydraulic, electric, pump control, motor control, heating and air conditioning, and refrigeration.

The Houston Pilots’ $1.5 million three-bridge simulator will also move to the new Bayport facility and be a part of a 3,748-square-foot simulation suite, complete with instructor stations, debrief classrooms and development stations. The Houston Pilots’ partnership with San Jacinto allows the pilots to constantly sharpen their skills as well as prepare for new terminals or newsized vessels at the Port of Houston.

A full-mission engine room simulator may also be added in the future that can interact with the bridge simulators. This would greatly expand the realistic vessel management exercises to include deck and engineering officers and crew all in the same scenario with the ship pilot.

The new building also includes a training dock with lifeboats, davits, and fast rescue craft, and a separate industry dock for crew changes. Local maritime companies can use these facilities for vessel specific training as well as sea survival and life raft training.

Architect’s rendering of proposed new Houston Maritime Museum at the Turning Basin

San Jacinto’s maritime education initiatives and close working relationship with industry have captured national attention. Last summer, secondary and collegelevel STEM and CTE educators and guidance counselors gathered at the Port of Houston and other maritime industry facilities for a week through the SMART (Southeast Maritime and Transportation) Center’s Summer Maritime Transportation Institute. From as far away as Virginia, they came to see first-hand the maritime education programs. It was so successful that the group is returning this summer with more teachers and counselors who want to learn how to replicate this important workforce training effort.

Houston Maritime Museum Much of the challenge in recruiting students into maritime education programs at local high schools is the lack of awareness of the career possibilities at the port.

An important new addition on the Port of Houston Authority’s campus could soon change all that.

The Port Commission has approved a 30-year surface lease of approximately four acres of real property near the Turning Basin area to the Houston Maritime Museum for a new facility.

“This is an exciting day for the Houston Maritime Museum,” said Niels Aalund, chair of the museum’s board of trustees. “I speak on behalf of the Board of Trustees of the Houston Maritime Museum, the staff and all the donors and supporters. We’re very excited about this new chapter and the partnership with the Port of Houston. Relocating to the Ship Channel will allow us to fulfill the museum’s mission: to be Houston’s showcase of maritime heritage and commerce.”

The site includes the area that had been the pavilion for the M/V Sam Houston tour boat where visitors waited to board the vessel. Once the museum is built, visitors will access tours on the Sam by entering through the museum.

According to the new lease, the museum has one year to complete fundraising and begin construction. The new facility will contribute to maritime education efforts by targeting the kindergarten through eighth grade group and introducing them to the maritime world. Exhibits will show how the port was developed and what is its future. It will help young people understand the myriad of professions that make up the nation’s busiest port. n

A Bright Idea

The Ash Center for Democratic Governance and Innovation at the John F. Kennedy School of Government, Harvard University, recognized the Port of Houston Partners in Maritime Education as part of the 2015 Bright Ideas program. This year’s cohort includes 124 programs from all levels of government — school districts; county, city, state, and federal agencies; as well as public-private partnerships — that are at the forefront in innovative government action.

“Industry involvement has been key to success in the Port of Houston Authority’s maritime education program,” said Janiece Longoria, Chairman of the Port Commission. “At the Port of Houston, every industry stakeholder, from the U.S. Coast Guard to the barge operators, to the Houston Pilots were asked for their guidance and input as the program was developed and as it has progressed.

“In a short time, the maritime academy program in area high schools has become one of the premier maritime education efforts in the USA, and San Jacinto College is now building a maritime education campus at the Port of Houston,” said Longoria.

“The Bright Ideas program demonstrates that often seemingly intractable problems can be creatively and capably tackled by small groups of dedicated, civicminded individuals,” said Stephen Goldsmith, director of the Innovations in Government Program at the Ash Center. “As exemplified by this year’s Bright Ideas, making government work better doesn’t always require massive reforms and huge budgets. Indeed, we are seeing that, in many ways, an emphasis on efficiency and adaptability can have further-reaching effects than large-scale reforms.”

Spring 2015 | Port of Houston Authority

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SPOTLIGHT ON SMALL BUSINESS Business in Bloom emphasis on customer service In another life, Elaine Ousleyand quality of design.”

Nevarez worked in downtown Elaine’s started working Houston in the accounting with the Port Authority’s Small department of an international Business Development Office bank. When her department in 2003, designing centerpieces was transferred to Dallas in 1991, for its annual forum. Elaine’s she tried commuting for a while. currently works with PHA on Then she decided to put down arrangements for a variety of roots, as it were, and open up her occasions. Most recently, Elaine’s own business in the city she loved.

Elaine Ousley-Nevarez, Elaine’s Florist & Gift Baskets provided centerpieces for the Port Ousley-Nevarez didn’t have to of Houston Partners in Maritime Education’s scholarship look beyond her own neighborhood for a business that was fundraising event at the “Stories of a Workplace” exhibit at needed. Using her accounting skills and hiring one designer, the Julia Ideson Library. in June 1992 she opened Elaine’s Florist & Gift Baskets.

“We were very pleased with the colorful arrangements Twenty-three years and the acquisition of seven other florists that brightened each table with white, yellow, orange later, Elaine’s has blossomed into a flourishing business and purple gerbera daisies for this important event that with seven employees. It is also certified as a woman-owned supports maritime and logistics scholarships for local business with the Women’s Business Enterprise Alliance. students,” said Gilda Ramirez, managing director, small “We treat every order as if it’s coming from us personally business development. n or as if we’re the recipients,” she says. “We put a high

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