Presented by Texas Transportation Commissioner Jeff Moseley And TxDOT Maritime Division

Transcription

1 Texas Port Report June 2014 Presented by Texas Transportation Commissioner Jeff Moseley And TxDOT Maritime Division Working with others to provide safe and reliable transportation solutions for Texas

2 The State of Texas Ports A work in progress Maritime Division

3 TABLE OF CONTENTS LIST OF TABLES... iii LIST OF FIGURES... v EXECUTIVE SUMMARY... vi CURRENT TRENDS IMPACTING TEXAS PORTS... vi TEXAS S ROLE IN MARITIME TRADE... vii TEXAS PORT ASSETS... viii PORT AUTHORITY QUESTIONNAIRES... viii FINANCING OF PORT INFRASTRUCTURE... ix TOPICS FOR FUTURE CONSIDERATION... x SECTION 1 PURPOSE OF THE REPORT AND AN OVERVIEW OF TEXAS PORT FACILITIES... 1 CLASSIFICATION OF TEXAS PORTS... 2 REMAINDER OF THE REPORT... 7 SECTION 2 PORT ASSET MATRIX... 8 TERMINAL ASSETS... 8 NAVIGATIONAL ASSETS HIGHWAY ASSETS RAIL ASSETS INTERMODAL ASSETS CARGO HANDLING ASSETS STORAGE ASSETS MARKET ASSETS CONCLUSIONS SECTION 3 PORT QUESTIONNAIRES BARRIERS TO GROWTH PORT STRENGTHS BETTER UTILIZING THE GIWW VALUE OF THE PAAC AND OPPORTUNITIES FOR IMPROVEMENT VISIONS OF THE NEAR FUTURE AND HOW TXDOT CAN ASSIST VISIONS OF THE LONG-TERM FUTURE SUMMARY SECTION 4 PORT FINANCE PORT ACCESS ACCOUNT FUND TRANSPORTATION REINVESTMENT ZONE (TRZ) TEXAS MOBILITY FUND OTHER STATE AND FEDERAL FUNDING SOURCES WATER RESOURCES REFORM & DEVELOPMENT ACT (WRRDA) OF i

4 PORT FUNDING TOOLS IN OTHER GULF STATES SUMMARY SECTION 5 TOPICS FOR FUTURE CONSIDERATION BY THE TEXAS TRANSPORTATION COMMISSION SOURCES APPENDIX A OVERVIEW OF CURRENT MACROECONOMIC TRENDS AFFECTING TEXAS PORTS APPENDIX B UNDERSTANDING TEXAS S MARITIME TRADE APPENDIX C PORT PROFILES APPENDIX D GLOSSARY OF MARITIME TERMS ii

5 LIST OF TABLES Overview of Texas Ports in the TPA... 5 Terminal Assets at Texas Ports Navigational Assets at Texas Ports Highway Assets at Texas Ports Texas Ports Located in Rail Districts Rail Assets at Texas Ports Number of Loaded TEUs Handled at Texas Maritime Ports, Intermodal Assets at Texas Ports Cargo Handling Assets at Texas Ports Storage Assets at Texas Ports Summary of Market Assets for Texas Ports Respondents to TxDOT s 2014 TPA Questionnaire...32 Self-Identified Barriers to Growth at Texas Ports Self-Identified Port Strengths How to Better Utilize the GIWW Value of the PAAC and How It Can Be Improved Ports View of the Near Future and Opportunities for TxDOT s Assistance Vision of the Port in 20 Years and Its Service to the State of Texas Port Designations under the Water Resources Reform & Development Act of Top 10 Texas Exports: Top 10 Countries for Texas Exports: Volume of Intermodal Containers (TEUs) Handled at U.S. Gulf of Mexico Ports Landed Price of LNG at Select Locations around the World, November Total Maritime Tonnage Handled by State (Short Tons), Total Tonnage of Maritime Cargo Shipped (Short Tons), Total Tonnage of Maritime Cargo Received (Short Tons), Total Intrastate Maritime Tonnage Handled by State (Short Tons), Texas s Total Maritime Export Trade by Trading Partner (Short Tons), iii

6 Texas s Total Maritime Import Trade by Trading Partner (Short Tons), Destinations of Cargoes Handled at Texas Ports, Origins of Cargoes Handled at Texas Ports, Total Tonnage of Maritime Goods Originating from Texas, Total Tonnage of Maritime Goods Destined to Texas, Texas s Total Maritime Export Trade by Mexican Port (Short Tons), Texas s Maritime Exports to Mexico by Commodity, Texas s Maritime Trade with Mexico s Ports (Short Tons), Texas s Maritime Imports from Mexico (Short Tons), iv

7 LIST OF FIGURES Texas s Population Trends, Net Migration to Texas: Employment Growth in Texas: Annual Employment Change in Texas by Industry: Operating Gas Wells in Texas, Annual Natural Gas (Mcf) and Oil (Mbbl) Production in Texas, Tonnage of Cargo Transiting the Panama Canal and Originating from the Eastern United States (Long Tons), FY 2000-FY Tonnage of Cargo Transiting the Panama Canal and Destined for the Eastern United States (Long Tons), FY 2000-FY Destinations of Cargo Transiting the Panama Canal from U.S. Gulf Ports Tonnage of Cargo Transiting the Panama Canal and Destined for U.S. Gulf Ports (Long Tons), FY 2000-FY v

8 EXECUTIVE SUMMARY THE STATE OF TEXAS PORTS Texas ports are the state s gateways to the world. The state s port system moves many of the products we sell and the goods we buy to sustain and grow our economy. The impact of Texas ports is felt far beyond the Gulf Coast region. This is because Texas ports serve a myriad of economic activities, from energy exploration and production to manufacturing to agriculture to warehousing and distribution. These activities reach into every corner of the state from the largest metropolitan economies to the smallest Texas towns and rural areas and even to the individual household. Through Texas ports we ship the crops we grow, the products we manufacture, the food we eat, the energy we need for our vehicles, and countless other essential items we consume at home or use in business. Our ports are important investments that require ongoing maintenance and, as demand dictates, expansion. Despite their importance, Texas ports have maintained a relatively low-profile at the state level, because they have historically addressed their needs at the local level. However, as economic competition intensifies, many states are taking a more proactive role in supporting and positioning their ports to attract new industry. The purpose of this report is to familiarize the members and staff of the Texas Transportation Commission with the member ports of the Texas Ports Association (TPA), as well as to provide an overview of current issues, needs, and concerns among port administrators. The information presented in this report was gathered during a series of visits to member ports of the TPA between late-2013 and early-2014 by Texas Transportation Commissioner Jeff Moseley and staff from TxDOT s Maritime Division. Additional information was gathered from questionnaires distributed by TxDOT to TPA members, along with TPA members responding to other data requests from TxDOT. Supplemental sources of information included trade data from the U.S. Army Corp of Engineers (USACE) and the U.S. Maritime Administration (MARAD), as well as data from each port s website and the TPA s website. CURRENT TRENDS IMPACTING TEXAS PORTS As of mid-2014, Texas ports are operating within an environment of strong demand and new opportunities, much of which have been sparked by exploration and production in the energy industry. However, strong population growth and general economic expansion in Texas are also providing a firm underpinning to sustain this growth. On the horizon is the completed Panama Canal expansion, which is anticipated to be a positive contributor to the Texas economy and is expected to open in the next 18 to 24 months. Among these trends, the dramatic growth of oil and gas production is currently having the most significant impact on Texas ports. Ports in South Texas have seen a strong uptick in their tonnage handled as they move frac sand, pipes, machinery, and other cargoes related vi

9 to oil exploration and production in the Eagle Ford Shale. However, the impacts are not limited to these ports. The Port of Beaumont is handling large volumes of crude oil produced in Colorado and Wyoming and many private terminals are receiving oil and gas for refining or processing. Producers of natural gas are also looking to export through a number of new liquefaction facilities being planned along the Texas Gulf Coast. Additionally, billions of dollars of private investment is being made along the Houston Ship Channel to build petrochemical plants that will use the state s cheap and abundant natural gas to produce plastic resins for containerized export. TEXAS S ROLE IN MARITIME TRADE Texas s maritime activities have contributed greatly to the state s wealth, employment, and worker salaries. Within the maritime industry, Texas is among the nation s leading states, handling 15.8 percent of total U.S. cargo between 2007 and As the nation s leading export state, it is not surprising that Texas ports handled 20.1 percent of the nation s total export tonnage during this same period. Texas ports also received more than one-quarter (26.7 percent) of the total foreign tonnage handled in the United States. Put another way, the volume of maritime goods received by Texas ports and the state s private terminals was 65 percent larger than the volume that was shipped out. It is important to note that while Texas receives more goods than it ships, which implies a state trade imbalance, much of this tonnage enters into the petroleum refining process and is rendered into gasoline, diesel, jet fuel, and other petroleum products that are sold domestically and internationally. The refining process is a value-added activity that generates wealth for Texas, which is only possible due to the imports of feedstock. Similarly, chemicals are also imported to produce more sophisticated chemicals or products, which are then exported, often never going further inland than the Texas Coast. In short, the importing of goods into Texas ports is critical to the state s economy and provides the necessary inputs for value-added activities that generate wealth for the state rather than reduce it. Another important aspect of Texas s maritime trade is the volume of its intrastate movements, which occur mostly along the Gulf Intracoastal Waterway (GIWW). Texas leads the nation in the total volume of intrastate maritime cargo handled at million tons between 2007 and Texas s interstate maritime trade plays a smaller role. For example, less than 20 percent of the trade originating from Texas had a destination in another U.S. state between 2007 and This high volume of intrastate trade (along with interstate movements) is significant because every ton of cargo handled on Texas s waterways reduces or eliminates its need to utilize the state s road, rail, or pipeline networks. As a result, Texas s coastwise maritime trade plays a key role in managing congestion and reduces the need to build new transportation infrastructure. Additionally, many of the cargoes moved on water are hazardous materials and maritime vessels provide vii

10 the safest mode for their movement. Regardless of the origin or destination of the state s domestic maritime cargoes, TxDOT s role as the non-federal sponsor of the GIWW means it must closely follow the activities and needs along the waterway. During mid-2014, TxDOT will release a GIWW Master Plan, which will assist TxDOT with developing its plans, policies, and strategies over the coming years. Texas maritime trade is a key component of overall freight movement in the state. The findings of this report as well as the GIWW Master Plan will be incorporated in the state s Freight Mobility Plan. TEXAS PORT ASSETS With 11 deep draft ports and several shallow water ports that handle commercial cargo, Texas port infrastructure is geographically dispersed, significant in scale, and tailored to the needs of its customers. To better inform the members of the Commission on the characteristics of Texas ports, an infrastructure inventory of TPA members was developed. The original asset matrix created for this high level overview became so extensive that it was broken into eight components so it could be more easily understood. The eight components of the asset matrix are: Terminal assets; Navigational assets; Highway assets; Rail assets; Intermodal assets; Cargo handling assets; Storage assets; and Market assets. Despite their similarities, Texas ports differ so that no two ports are alike. In fact, Texas port directors emphasize their ports uniqueness with the saying, Once you have been to one Texas port, you have been to one Texas port. Although Texas s port network is resource rich, the sustained growth of the state s economy has placed heavy demands on port infrastructure. Many of the investments made in Texas ports were made decades ago and years of heavy use are taking their toll. Unfortunately, the replacement or expansion of this infrastructure will be neither quick nor cheap. PORT AUTHORITY QUESTIONNAIRES Earlier this year, TxDOT sent a questionnaire to TPA members to better understand the conditions and issues at their port. The administration of each port was asked to respond to questions around the various themes and their responses are summarized below: Barriers to Growth - Generally, the barriers reported by the ports could be grouped into four categories: the need to build port infrastructure to respond to growing demand; the need to replace infrastructure that is beyond its productive lifespan; the need for maintenance dredging of ship channels and the GIWW or channel viii

11 deepening or widening; and the need to build or replace landside infrastructure serving the ports. Weaved throughout the discussion of many of the ports responses was the need for additional funding sources. Port Strengths - The ports wide-ranging responses reflected the diversity of Texas ports, with regard to the services they offer, the value of their tenants, and their port and channel infrastructure. Better Utilizing the GIWW - All the responding ports viewed the GIWW as an important component of serving their existing customers. Some ports have reported sizeable increases of traffic on the GIWW that have been spurred by the oil and gas industry. Almost all of the ports identified improvements to the GIWW or maintenance dredging as very important. Most port authorities emphasized the need to continue maintenance dredging of the GIWW and to bring it down to its authorized depth of 12 feet. There was also some interest on developing a Marine Highway along the GIWW to encourage the shift of cargo from trucks to barges. Opportunities to Improve the Port Authorities Advisory Committee (PAAC) - Many ports urged TxDOT to use the PAAC less as a platform for disseminating information and more as a tool for coordinating and promoting the mutual agendas of TxDOT and Texas ports, as well as to promote the allocation of state funds for transportation infrastructure improvements outside and, possibly, inside the ports. How TxDOT Can Assist in the Near Future - The ports responses to this question varied a great deal. Continuing TxDOT s role as the developer of the state s highway infrastructure and maintaining good mobility was stated directly and indirectly. Many ports envisioned TxDOT s role as being a greater advocate for the port authorities interests. It was also suggested by some ports that TxDOT work with the PAAC and the TPA to encourage the Texas Legislature to fund the Port Access Account Fund established under Chapter 55 of the Texas Transportation Code. Visions of the Long-Term Future - Texas ports were optimistic about their future and the future of the Texas economy. As would be expected, most ports mentioned their current and future role in regional and statewide economic development, job retention, and job creation. Many of the ports also emphasized their desire to continue serving their existing, as well as, future customers. Another common theme in many of the responses was their future role in energy exploration, production, and transportation. This future includes roughly $50 billion of investment in petrochemical manufacturing along the Houston Ship Channel, as well as $30 billion along the Freeport Channel, that is happening now. Both Ports are members of the same Metropolitan Planning Organization (MPO), which will be tasked with planning for the growth that will surely follow this future investment. FINANCING OF PORT INFRASTRUCTURE Although most ports are subdivisions of the State of Texas, Texas ports have not historically received direct funding from the state for port infrastructure. The lack of state funding has meant that Texas ports have become largely self-sufficient, barring federal funds that are ix

12 usually targeted to channel dredging or homeland security. This self-sufficiency has also meant that ports have developed a strong sense of autonomy and cautiousness. During 2012, Texas ports spent in excess of $300 million of their own funds (through their revenues or bonding authority) on capital expenditures. In 2001, the Port Access Account Fund was created by the 77 th Texas Legislature to provide funds for Texas ports to finance security improvements, port infrastructure projects, and related studies. However, since 2001, the Texas Legislature has not appropriated funds to the Texas Port Access Account Fund. In comparison, other states along the Gulf of Mexico (with the exception of Alabama) are actively funding their ports to improve their competitiveness. Despite the lack of direct state funding, there are other potential financing tools available to ports and the local governments that support them. A Transportation Reinvestment Zone (TRZ) is a delineated, underdeveloped area, where a new transportation project is to be built. Generally TRZs allow a sponsoring entity to capture incremental tax revenue so it can be reinvested in a project designated within the zone. Another tool is the Texas Mobility Fund. Initially established only for highways, the 83 rd Texas Legislature expanded eligibility for the Texas Mobility Fund to ports. However, port eligibility is dependent on passage of the Constitutional amendment on the November 2014 ballot. On June 10, 2014 the President signed the Water Resources Reform & Development Act (WRRDA) of 2014, which was a bipartisan effort to address many of the funding shortfalls and inefficiencies that ports experience when developing projects. USACE studies for projects are now limited to three years in length. WRRDA also rectifies the allocation of the Harbor Maintenance Trust Fund (HMT) tax. One of the most important elements of the WRRDA is that it stops the redirection of funds collected specifically for the purpose of harbor maintenance. This change will occur incrementally, so that by FY 2025, 100 percent of the revenue collected from the HMT will go to that purpose. WRRDA will also allocate fixed percentages of the HMT Fund to ports with low tonnages ( emerging ports), energy intensive ports, and ports that have not received dredging funds over the past six years. TOPICS FOR FUTURE CONSIDERATION The sections below identify key areas for future investigation and consideration by the Texas Transportation Commission that were identified during the preparation of this report. Many of these topics were identified by the TPA members during their interactions with TxDOT, through the questionnaire of TPA members, and participation at a PAAC meeting held during March Explore Infrastructure Investment Opportunities Consider identifying categories of key infrastructure improvements for ports that TxDOT can assist with (such as road and rail access, overweight truck corridors, removal of at-grade rail crossings, x

13 xi inadequate air draft clearance, etc.) and request that ports submit competitive proposals to TxDOT for funding those projects. Provide Leadership for Texas s Dredging Needs As the state s transportation agency and the non-federal sponsor for the GIWW, Texas ports look to TxDOT to provide leadership for the state s dredging needs. This desired leadership is not necessarily related to funding dredging projects. Rather, Texas ports are looking for TxDOT to use its influence and take a proactive role in its relationship with the USACE to actively promote dredging projects along Texas ship channels and the GIWW. Port Infrastructure Funding - Texas is among a minority of U.S. coastal states that do not provide state funds for their ports, with Louisiana and Florida being the most active among Gulf ports. The most direct mechanism for providing funds for port improvements would be for the Legislature to obligate funds to the Port Access Account Fund, found in Chapter 55 of the Texas Transportation Code. While Texas ports would benefit from infrastructure funding, especially the smaller ports, the consensus is that they do not want new state funding for port infrastructure projects if the funds must come at the expense of TxDOT s traditional investment in landside transportation projects. Expanded funding for all the ports needs is the desired goal. Maintain a Transportation System Approach TxDOT s statutory and constitutional responsibility is to build and maintain the state s roadway network, but other transportation modes can also be a means to reducing congestion and improving mobility. Several Texas ports have expressed an interest in the development of a marine highway along the Texas segment of the GIWW, which could encourage more freight movements to occur along the GIWW and mitigate congestion along the state s roadway and railway networks at a relatively low cost and with fewer environmental impacts. Encourage Commodity Diversification at Texas Ports Texas s maritime trade is highly dependent upon the petrochemical industry for the cargoes it handles. While this specialization has unquestionably benefited Texas ports, it would also be prudent to encourage growth in other commodity markets so that natural market fluctuations have less impact on future cargo volumes. Strengthen Relations with Local Port Authorities and Administration - The Transportation Commission and TxDOT s staff are currently entering into a new era of coordination and collaboration with Texas port authorities. To advance these relationships, TxDOT must understand the port authorities autonomy, their need to remain profitable, and their unique competitive position, which includes intrastate competition. Pursue Further Study of Critical Maritime Issues While this report discusses a number of issues that are important to Texas ports, future topics for study include: detailed maritime trade analyses at the regional, country, or commodity level; opportunities for Public-Private Partnerships; and continued monitoring of critical macroeconomic and maritime industry trends.

14 SECTION 1 PURPOSE OF THE REPORT AND AN OVERVIEW OF TEXAS PORT FACILITIES Texas ports are the state s gateways to the world. The state s port system moves many of the products we sell and the goods we buy to sustain and grow our economy. The impact of Texas ports is felt far beyond the Gulf Coast region. This is because Texas ports serve a myriad of economic activities, from energy exploration and production to manufacturing to agriculture to warehousing and distribution. These activities reach into every corner of the state from the largest metropolitan economies to the smallest Texas towns and rural areas and even to the individual household. Through Texas ports we ship the crops we grow, the products we manufacture, the food we eat, the energy we need for our vehicles, and countless other essential items we consume at home or use in business. Our ports are important investments that require ongoing maintenance and, as demand dictates, expansion. Despite their importance, Texas ports have maintained a relatively low-profile at the state level, because they have historically addressed their needs at the local level. However, as economic competition intensifies, many states are taking a more proactive role in supporting and positioning their ports to attract new industry. The purpose of this report is to familiarize the members and staff of the Texas Transportation Commission with the member ports of the Texas Ports Association (TPA). This report s content should assist readers with developing a baseline understanding of the volume and types of maritime cargoes being handled at Texas ports, the ports existing infrastructure, and the current needs and concerns among port administrators. The report will also briefly review port funding mechanisms that are being utilized by other states in the Gulf of Mexico, as well as the State of Texas s current approach. While the membership of the TPA represents almost the entire volume of commercial maritime cargo handled at Texas s public ports, it should also be noted that a large volume of Texas s maritime cargo (primarily liquid bulk) is handled at the state s private terminals. These private terminals play a significant role in Texas s maritime industry and have a symbiotic relationship with the public ports. One way in which private terminals contribute directly to public ports is by providing revenue for their share of channel maintenance and dredging. This private sector contribution reduces the overall burden of these activities on the public ports. Another way private terminals assist is by generating significant activity in the Texas maritime industry. As a result, Texas s maritime industry has reached a scale where it can handle essentially every customer need that arises, which has attracted the interest of employers, shippers, and carriers from around the world. While, the state s public ports are the focus of attention within this report (with the exception of the Port of Texas City), TxDOT will continue to monitor, engage, and collaborate with the state s private terminals as necessary. The role of private-sector maritime terminals in the Texas economy cannot be overstated. 1

15 The data for this report were gathered during a series of visits to member ports of the TPA between the fall of 2013 and the spring of 2014 by Texas Transportation Commissioner Jeff Moseley and staff from TxDOT s Maritime Division. In addition to visiting Texas ports, TxDOT staff and Commissioner Moseley visited other maritime stakeholders on each tour in order to get a comprehensive view of the Texas maritime system. These stakeholders included the U.S. Army Corps of Engineers (USACE), the U.S. Coast Guard (USCG), county judges, city council members, and industry representatives. The first port visit of the tour was Port Freeport, which included a tour of the Brazos River Floodgates, led by staff from the USACE. The Brazos River Floodgates represent a challenging intersection along the GIWW due to the narrow width of the gates, the angle of alignment with the river, and a lack of mooring facilities that provide a safe point for barges to tie off. These issues will be further explained in TxDOT s GIWW Master Plan and Technical Report, which will be released during the summer of The ports included in this report also serve as the non-federal sponsor of their respective ship channels, with the exception of the Ports of Beaumont, Port Arthur and Orange. The Sabine Neches Navigation District (SNND) serves as the non-federal sponsor of the channels for these ports and the Sabine Neches Waterway. he tour included a visit with the SNND and a detailed tour of the 64-mile waterway that connects the three ports. Additional information was gathered from questionnaires distributed by TxDOT to TPA members, along with TPA members responding to other data requests from TxDOT. Supplemental sources of information included trade data from the USACE and the U.S. Maritime Administration (MARAD), as well as data from each port s website and the TPA s website. This report was prepared with the assistance of the Center for Economic Development and Research at the University of North Texas. CLASSIFICATION OF TEXAS PORTS The infrastructure characteristics of Texas ports differ widely based upon their geography, the economic characteristics of the market they serve, and their leadership s historic decisions and investments. Therefore, the uniqueness of each Texas port makes it difficult to classify them, but some generalized groupings are helpful for understanding their roles in supporting the Texas economy. The tables found on Pages 13 and 14 provide an overview of Texas ports and the sections below give a brief description of each field in the table: 1. Categorization The most common categorization of ports is related to channel depth. Ports that are served by a channel of 39 feet or deeper are termed deep draft ports, ports served by a channel 25 to 38 feet deep are categorized as medium draft, and those with a channel depth that is less than 25 feet are called 2

16 shallow draft ports. Generally, deep and medium draft ports handle both oceangoing and inland vessels (such as barges and tugs, etc.), while shallow draft ports are usually limited to inland vessels or offshore supply ships. In this document, we have created two other classifications. The first classification is based upon the volume of tonnage handled, with the ports divided into three groupings: Small Up to 1,000,000 tons annually Medium 1,000,000 to 10,000,000 tons annually Large More than 10,000,000 tons annually The second classification groups the ports according to the array of cargo handled. Ports that regularly handle a large variety of cargoes (e.g. breakbulk, dry bulk, intermodal (i.e. containerized), liquid bulk, roll on/roll off (RO/RO), etc.) are called comprehensive. Examples of a comprehensive port are the Port of Houston, the Port of Corpus Christi, and the Port of Beaumont. Ports that handle a smaller variety of cargoes, but usually in high volumes, are called specialized ports. An example of a specialized port would be the Port of Texas City, which almost exclusively handles very large volumes of liquid bulk cargoes. Similarly, the Calhoun Port Authority could be categorized as a specialized port, since it almost exclusively handles petroleum, chemicals, and bauxite. Niche ports handle a few cargo or vessel types and do not generally move large volumes of cargo. The Port of Palacios is one example of a niche port. It handles very little commercial cargo, but it is the home port of a large shrimping fleet and a tugboat and barge builder. The Port of Port Isabel is another example a niche port. Although it is a medium draft port, the Port of Port Isabel, primarily serves offshore supply ships and handles building materials. The final classification in this field summarizes the types of cargo handled at each port: breakbulk, dry bulk, liquid bulk, intermodal containers, offshore servicing, and fishing and shrimping. 2. Tonnage Handled The estimated annual tonnage handled at each port in short tons (i.e. 1 ton = 2,000 lbs.). It is important to note that the volume handled at an individual port often differs from federal maritime trade statistics, which often provide aggregated data for multiple public ports and private terminals as a single U.S. Customs port. U.S. Customs ports are geographical districts established under U.S. Customs Regulations to identify where goods enter and leave the United States. 1 While a Customs port may have a name such as Galveston the area within the Customs port extends beyond just the Port of Galveston. Typically, many private terminals are also included in this geographic area. U.S. Customs districts are aggregations of U.S. Customs ports. 1 U.S. Customs districts and ports are listed by name and code in Schedule D, Classification of U.S. Customs Districts and Ports for Foreign Trade Statistics. The geographic limits of each Customs district are published in the U.S. Customs Regulations. 3

17 3. Channel Draft The average, low-tide depth of the main ship channel serving a port is the channel draft. Auxiliary ship channels will often have shallower drafts. Because ship channels along the Texas coastline are constantly filling in with sand from the seafloor, the actual depth along the entire channel is constantly in flux and uneven. The natural process of sand flowing into the channel is often referred to in the port industry as shoaling and the practice of removing the sand is called dredging. The dredging of federally maintained ship channels in Texas, as well as the dredging of the GIWW, is performed by the USACE. 4. Ownership With the exception of the Ports of Texas City and Galveston, all ports in the TPA are public navigation districts of the State of Texas. The Port of Galveston is publicly-owned by the City of Galveston, while the Port of Texas City is private and jointly owned by the Union Pacific Railroad and the BNSF Railroad. Texas s private terminals are owned by a multitude of firms. 5. Estimated Annual Economic Impact The estimated annual economic impacts of a port s activities are significantly driven by the assumptions used when preparing the analysis. For example, in some cases, the economic impacts represent only the activities that occur within a port s gates, while in other instances, the values represent the impact of the entire maritime industry within a region, including private terminals. Therefore, readers should be cautioned against comparing the figures of one port against another, without being familiar with the full range of assumptions that were made during each study (information that is not provided in this report). It should also be noted that the estimates of economic impacts were not prepared as part of this study and, in most cases, the economic impact studies were sponsored by the port. 6. Specialties The final column of the table lists the primary cargoes handled at each port or other significant maritime activities. 4

18 Overview of Texas Ports in the TPA Port Categorization Tonnage Handled Channel Draft Ownership Estimated Annual Economic Impact Specialties Port of Orange MD, S, N, BB 94,504 x 30 Public $1,900,000 g Paper products, lay berthing, vessel construction and repair. Port of Beaumont D, M, C, BB, DB 3,080,231 b 40 Public $122,000,000 f Military equipment, forest products, steel, bulk grain, crude oil, project cargo, potash, and aggregate Port of Port Arthur D, SM, SP, BB 341,751 e 40 Public $128,000,000 f Forest products, iron and steel, dry bulk, bagged and bailed cargoes, military cargo, and project cargo. Port of Texas City D, L, SP, LB 78,000,000 x 45 Private $919,500,000 g Crude oil, refined petroleum products, and Port of Galveston Port of Houston Port Freeport D, M, C, CR, DB, BB, IM D, L, C, IM, BB, DB, LB, CR D, M, C, DB, BB, IM chemicals 4,786,576 d 45 Public $3,060,700,000 e Cruise ships, bulk grains, windmills, fresh fruits, livestock, machinery, vehicles, paper products, agricultural equipment, liquid bulk, and project cargo. 35,825,450 a 45 Public $178,504,000,000 e Consumer goods, plastics, iron and steel, iron/steel products, fertilizers, beverages, cereals and cereal products, stone, plaster, cement, vehicles, etc. 24,537,964ᵇ 45 Public $17,944,500,000 e Project cargo, clothing, fresh fruits and vegetables, rice, paper goods, plastic resins, aggregate, autos, windmill components. Categorization Key: D = Deep draft; MD = Medium draft; S = Shallow draft; SM = Small, M = Medium; L = Large; C = Comprehensive; SP = Specialized; N = Niche; BB = Breakbulk; DB = Dry Bulk; LB = Liquid Bulk; IM = Intermodal Containers; CR = Cruise; OF = Offshore Servicing; FS = Fishing and Shrimping Only includes tonnage handled at the port. Does not include nearby, unaffiliated facilities, such as private terminals. May include economic impacts from nearby, unaffiliated terminals. Note: Dates: a Calendar Year (CY) 2013; b Fiscal Year (FY) 2013; c CY 2012; d FY2012; e CY 2011; f CY 2005; g CY 2004; x year not available. 5

19 6 Overview of Texas Ports in the TPA (Continued) Port Categorization Tonnage Handled Channel Draft Ownership Estimated Annual Economic Impact Specialties Port of Palacios S, SM, N, FS 0 12 Public $41,223,913 h Shrimping, vessel construction and repair Calhoun Port Authority MD, M, SP, LB, 4,572,765 d 36 Public $7,000,000,000 g Liquid and dry bulk chemicals, fertilizers, DB petroleum products, and bauxite Port of Victoria S, SM, SP, LB, 5,288,199 x 12 Public $6,600,000,000 e Chemicals, grains, rice, cotton, liquid and DB dry fertilizers, sand, and gravel Port of West Calhoun S, SM, N N/A 12 Public N/A N/A Port of Corpus Christi D, L, C, LB, DB, 89,454,480 a 45 Public $13,120,800,000 e Crude oil, fuels and other petroleum BB products, bauxite, alumina, dry bulk, grain, chemical, breakbulk, and military cargoes. Port of Port Mansfield S, SM, N 5,230 e 3 Public $11,324,814 f Recreational fishing, scrap metal Port of Harlingen S, SM, N, DB, 900,000 x 12 Public $19,349,446 f Liquid fertilizer, sand, aggregates, fuel, LB raw sugar, cotton, sorghum, and corn. Port of Port Isabel MD, S, N, DB, 50,000 x 36 Public $85,600,000 f Offshore servicing, concrete, sand, and OF aggregate Port of Brownsville D, M, SP, BB, 5,536,689 c 42 Public $2,024,900,000 e Steel, fuels, waxes, lubricants, limestone, DB, LB, OF, FS asphalt, minerals, grains, bauxite, scrap metal, electrical poles, windmill components, etc. Categorization Key: D = Deep draft; MD = Medium draft; S = Shallow draft; SM = Small, M = Medium; L = Large; C = Comprehensive; SP = Specialized; N = Niche; BB = Breakbulk; DB = Dry Bulk; LB = Liquid Bulk; IM = Intermodal Containers; CR = Cruise; OF = Offshore Servicing; FS = Fishing and Shrimping Only includes tonnage handled at the port. Does not include nearby, unaffiliated facilities, such as private terminals. May include economic impacts from nearby, unaffiliated terminals. Note: Dates: a Calendar Year (CY) 2013; b Fiscal Year (FY) 2013; c CY 2012; d FY2012; e CY 2011; f CY 2005; g CY 2011; x year not available Note: Port Mansfield did not handle any commercial cargo between 2007 and 2010; N/A denotes data not provided or available.

20 7 REMAINDER OF THE REPORT The next section of this report provides an overview of a port asset matrix (i.e. a summary table), which will help readers understand the capabilities, infrastructure, and equipment present at each port. Section 3 summarizes findings of returned questionnaires from TPA membership. Section 4 provides a brief overview of Texas port finance options, including a survey of the port finance activities of other states along the Gulf of Mexico. Finally, Section 5 offers a list of topics for future consideration by the Commission. The appendices of this report provide an overview of the major macroeconomic trends or factors that are currently influencing activities at Texas ports, along with a state-level analysis of Texas s maritime trade flows, as they relate to tonnage, commodities, and trading partners.

21 SECTION 2 PORT ASSET MATRIX With 11 deep draft ports and several shallow water ports that handle commercial cargo, Texas s port infrastructure is geographically dispersed, significant in scale, and tailored to the needs of its customers. To better inform the members of the Commission on the characteristics of Texas ports, this section will provide an infrastructure inventory of TPA members. The original asset matrix created for this high level overview became so extensive that it was divided into eight components so it would be more easily understood. The eight components of the asset matrix are: terminal assets, navigational assets, highway assets, rail assets, intermodal assets 2, cargo handling assets, storage assets, and market assets. The sections below will give a collective overview of the assets at Texas ports and the accompanying tables will provide specific information for each port, according to the criteria inventoried. TERMINAL ASSETS As discussed in Section 1, there is a great deal of diversity among Texas ports, in terms of the tonnage and the types of cargo handled. Most of the waterborne cargo that moves through Texas ports is liquid bulk material, which is primarily handled at private terminals that lie outside of the publicly-owned facilities (but rely upon channels maintained by the public ports and the USACE). However, there are some notable exceptions to this observation, such as the Port of Corpus Christi and the Calhoun Port Authority. Usually, these privately-owned terminals connect directly to refineries or petrochemical plants and require relatively little terminal infrastructure and space, compared to dry cargo terminals. The majority of the state s public port infrastructure, however, concentrates on dry cargoes, in the forms of dry bulk, breakbulk, project cargo, military equipment, intermodal containers, and RO/RO. Terminal assets at Texas ports were inventoried under five categories: dry bulk docks (which also include RO/RO and project cargo docks), liquid bulk docks, container docks, cruise ship docks, and the total linear feet of berthing space. Among the Texas ports, the Port of Houston has the largest number of dry cargo facilities followed by the Ports of Galveston and Brownsville. It is interesting to note that though the Port of Port Arthur often handles a significant volume of dry bulk and project cargo, it only has five dry cargo facilities. The Port of Texas City, the state s only privately-owned port, is also the state s largest liquid bulk port, followed by the Port of Corpus Christi, which serves adjacent petroleum refineries and petrochemical facilities. Within the entire port facility, the Port of Corpus Christi has 12 2 Throughout this report, the use of the term intermodal refers to containerized cargoes that can be easily transferred between modes. 8

22 liquid bulk docks. The Calhoun Port Authority serves petrochemical facilities near the port and further afield through a local pipeline network while the Port of Brownsville handles various fuels and lubricants with its liquid bulk docks. Despite its vast size and the immense petrochemical industry along the Houston Ship Channel, the Port of Houston has only one liquid bulk dock. The many visible liquid bulk terminals along the Houston Ship Channel are privately-owned. There are three Texas ports that regularly handle intermodal containers: the Ports of Houston, Freeport, and Galveston. The Ports of Freeport and Galveston receive containerized cargo via regularly scheduled refrigerated produce carriers. The Port of Houston receives scheduled calls from containerships operated by various domestic and international carriers. At a smaller scale, the Port of Orange recently completed a facility for handling containers-on-barge (COB) and the Port of Brownsville has handled COB in the past, but neither port has a regularly scheduled service at present. The intermodal assets at Texas ports will be discussed in greater detail, later within this chapter. Three Texas ports have cruise ship docks, (as of June 2014) the Port of Galveston has served as a home port for ships from Carnival Cruise Lines since 2000 and for Royal Caribbean cruise lines since The Port of Houston, which built its cruise terminal near its Bayport container facility in 2008, began servicing its first cruise ships from the Princess Cruise Line during fall During 2014, the Port of Houston will also become a home port for the Norwegian Cruise Line. The Port of Corpus Christi s cruise terminal, built in 2000 to attract a service, has since been repurposed into a successful event center. Although the total linear feet of berth space is not directly correlated with the amount of cargo handled at each port, it is somewhat indicative for dry cargoes. As would be expected the Port of Houston has the greatest amount of berth space followed by the Ports of Corpus Christi and Galveston. Smaller shallow draft ports, like the Ports of Victoria and Harlingen, have much shorter linear berth lengths due to their handling of GIWW barges that are smaller length overall (LOA). 9

23 10 Terminal Assets at Texas Ports Terminal Assets Dry cargo Liquid bulk Container Cruise ship Total linear feet docks docks docks docks of berths Port of Orange ab -- 2,725 Port of Beaumont ,829 Port of Port Arthur ,102 Port of Texas City N/A Port of Galveston ,832 Port of Houston ,964 Port Freeport ,800 Port of Palacios N/A Calhoun Port Authority ,301 Port of Victoria ,150 Port of West Calhoun N/A Port of Corpus Christi b 14,761 Port of Port Mansfield ,000 Port of Harlingen ,000 Port of Port Isabel ,250 Port of Brownsville ,685 a Container-on-barge; b The port was not providing this service when this document was being prepared (June 2014). Note: N/A denotes no data available or provided

24 NAVIGATIONAL ASSETS The navigational attributes of ports have become increasingly critical to their real and perceived viability. The importance of navigability has been especially influenced by falling federal expenditures for channel maintenance dredging and growing ship size, starting in the late-1990s. The announcement of the Panama Canal expansion has also caused the leadership of many ports to question if they have sufficient channel draft. To serve a fullyloaded post-panamax containership (i.e. a ship that is too large for the current set of locks) a port needs to have a channel depth of at least 50 feet (the ship s air draft can also be an issue). At present, the deepest ship channels in Texas are 45 feet, which serve the Ports of Houston, Galveston, Texas City, Freeport, and Corpus Christi. The shallow draft ports of Palacios, Victoria, and Harlingen have 12-foot drafts. The Port of Port Mansfield, which has not received maintenance dredging from the USACE for a number of years due to its lack of commercial cargo and commercial cargo tonnage, currently, has about a 3-foot draft which limits its use to small recreational boats. Channel width varies by port and those with a deeper channel do not necessarily have more width. The key element to channel width is that there is sufficient capacity for the amount of ship traffic on the channel, including the ability of vessels to pass each other safely. In the case of the Houston Ship Channel, there are also barge shelves, which are shallower channels adjacent to and on either side of the main channel. The barge shelves allow the slower moving barge traffic to operate freely, while the main ship channel is open to handle the larger and faster ocean-going vessels that call on the various terminals. Most Texas ports have unlimited air draft, which means their ship channel does not have an overhead obstruction, such as a bridge or power lines. A port s air draft is relevant if overhead obstructions prevent a vessel from calling on a terminal. Currently, five deep draft ports have air draft limitations. Following the planned replacement of the Harbor Bridge, the air draft of the Corpus Christi ship channel will be approximately 200 feet. Even the shallow draft Ports of Harlingen and Victoria can be limited by the size of tugs and small vessels that can call on those two ports, just like the larger ports, due to bridge height. As with channel width, the width of the turning basin is significant if it is insufficient to handle the dimensions of the ships that want to call on the port. Larger ports may have several turning basins, so that vessels can be turned quickly and depart. A port s distance to sea can be a factor in its competitiveness. Ports that require long transits between the entrance of its ship channel and the port are generally more expensive to call on because of the longer steaming times. However, many cargoes handled at Texas ports are tied to specific markets or facilities and so longer steaming times may not influence the port of call. Additionally, if the ship s cargo must be drayed to its final destination and the port is closer, the marginal cost per mile is lower for cargo on a piloted 11

25 ship than the same cargo hauled by a truck. Therefore, a port s distance from sea may influence where it is landed in some cases and in others may have little or no influence. 12

26 Navigational Assets at Texas Ports Navigation Assets Channel Channel Turning basin Distance to blue-water Air Draft (ft.) Depth (ft.) Width (ft.) width (ft.) (statute miles) Port of Orange Port of Beaumont , Port of Port Arthur Port of Texas City 45 1,200 Unlimited 1, Port of Galveston 45 1,200 Unlimited 1,400 9 Port of Houston Unlimited a N/A 61 Port Freeport Unlimited 1,190 8 Port of Palacios Unlimited 1, Calhoun Port Authority Unlimited 1, Port of Victoria , Port of West Calhoun 12 N/A N/A N/A N/A Port of Corpus Christi , Port of Port Mansfield Unlimited Port of Harlingen , Port of Port Isabel Unlimited 1,000 6 Port of Brownsville Unlimited 1, a Air draft restrictions at the Port of Houston vary according to terminal. For example, the Port of Houston s Barbours Cut and Bayport terminals have unlimited air draft, while the Port of Houston s Turning Basin Terminal has an air draft of 135 feet. Note: A statute mile is the typical measurement of a mile on land, which is 5,280 feet. A nautical mile is 6,075 feet. Note: Ports with a distance to sea followed by a plus sign denotes shallow draft channels that end at the GIWW and are bordered to the east by a barrier island. Note: N/A denotes no data available or provided. 13

27 HIGHWAY ASSETS Landside access, particularly roadway access, is critical for many ports. Since the market area for most ports is local, trucks are the only reasonable transportation mode to move many goods between the port and their origin or destination. Even in the best case, the local movement of cargo by truck (called a drayage trip) is the most expensive part of any shipment proportional to the distance travelled. Ports located in regions with significant traffic congestion make truck drayage trips even more expensive. Roadway congestion often occurs on the local roads that connect a port to the local transportation network, particularly around a port s entry gates, where trucks and their drivers wait in lines to enter, submit paperwork, and pass through inspection points. Collectively, the bottlenecks often found closest to a port are referred to as last mile issues. Some frequently observed last mile issues around ports include inadequate roadway capacity (especially for heavy volumes of commercial traffic), deteriorated and uneven pavement surfaces, inadequate turning radii, poor traffic signalization, and insufficient signage or markings. Most Texas ports are located within five miles of a four-lane highway. The only deep water port in Texas that is not within five miles of a four-lane highway is the Calhoun Port Authority. There are two other deep draft ports that are not within one mile of a four-lane highway, which are the Ports of Orange and Port Arthur. Several of the shallow draft ports are not within five miles of a four-lane highway. Most of Texas s deep and medium draft ports are within one or five miles of a U.S. interstate highway. The exceptions are the Ports of Port Arthur, Freeport, the Calhoun Port Authority, and Port Isabel. The Port of Port Arthur is a U.S. Strategic Port and handles a large volume of bulk and project cargo that moves by truck. Port Freeport is Texas s second largest container port and handles a large amount of project cargo that travels by truck. Both ports would benefit from closer proximity to a controlled access freeway connecting them to the U.S. interstate system. None of Texas s shallow draft ports is within five miles of a U.S. interstate highway. Regardless of location, Texas ports may be served by roadway infrastructure that needs additional improvements to meet existing demand and to minimize or eliminate safety hazards. In urban areas, congestion created by passenger vehicles complicates the operating environment for commercial vehicles and additional capacity or the separation of vehicles is desirable to improve safety and traffic flow. There are also locations where port users need overweight corridors to move heavy loads or to reduce the number of truck trips. To date, the Texas Legislature has established four oversized/overweight corridors to serve ports. 3 These corridors have been established to serve the Ports of Corpus Christi, Brownsville, Freeport, and Victoria. Once a corridor is enacted by the Legislature and signed by the Governor, the Texas Transportation 3 These corridors can be found in Chapter 623 of the Texas Transportation Code. 14

28 Commission prepares a written agreement with the sponsoring local agency. The agreement is based upon prior discussions between TxDOT and the local agency to determine the location of the corridor, the permit fee amount, etc. Under these agreements, the local agency issues the oversize/overweight permits to users and collects fees to cover the maintenance cost of the corridor, since overweight trucks wear pavement more quickly. Importantly, the local agency (i.e. the port) takes full responsibility for the corridor s maintenance. If the oversize/overweight permit fees are inadequate to cover the additional maintenance costs, the port must make up the difference. Therefore, the most logical locations for oversize/overweight corridors are roadway segments where there would be sufficient volumes of permitted loads to fully cover the additional maintenance costs. Once the administrative rules of the corridor are adopted by the Texas Transportation Commission, the agreement is signed. The oversize/overweight commercial vehicle corridor connecting the Port of Brownsville to bridges on the Texas-Mexico border provides a good example of how these tools can be effectively used by ports. The Port of Brownsville plays an important role in Mexican manufacturing as the port of entry for steel ingots, bars, rolled steel, etc. Commercial trucks can purchase an oversize/overweight permit to carry cargoes from the Port of Brownsville to the Gateway International Bridge (via SH 48/SH 4) and the Veterans International Bridge at Los Tomates (via US 77/US 83 and SH 48/SH 4). These permits allow trucks up to the legal weight limit for Mexican trucks, which is 125,000 pounds. Dimensionally, the combined vehicle and load cannot exceed 12 feet in width, 15.5 feet in height, and 110 feet in length. Finally, improved roadway access to ports can provide opportunities for land development and local economic development, if they provide access to land that was previously inaccessible to the port. For example, the recently constructed SH 550 in Cameron County provides access to undeveloped land owned by the Port Brownsville that can be used for future development opportunities. In short, the importance of roadway infrastructure to ports cannot be overstated and there are many desired roadway improvements among the ports. Supporting landside highway infrastructure needs is TxDOT s most effective and direct manner for assisting Texas ports and it is also a mechanism that is most closely aligned with the agency s current statutory and constitutional limitations on spending. 15

29 16 Highway Assets at Texas Ports Highway Assets Within 1 mile of Within 5 miles of Within 1 mile of a controlled Within 5 miles of controlled Oversize/Overweight 4-lane highway 4-lane highway access roadway access roadway Corridor Port of Orange -- X -- X -- Port of Beaumont X X X X -- Port of Port Arthur -- X -- X -- Port of Texas City X X X X -- Port of Galveston X X X X -- Port of Houston X X X X -- Port Freeport X X X Port of Palacios Calhoun Port Authority Port of Victoria -- X X Port of West Calhoun Port of Corpus Christi X X X X X Port of Port Mansfield Port of Harlingen X X Port of Port Isabel X X Port of Brownsville X X X X X

30 RAIL ASSETS Landside access to rail is a significant component of Texas s freight transportation network. With the exception of the Port of Port Isabel, all of Texas s deep water ports have access to rail. Among the three shallow draft ports reviewed in this report, only the Ports of Victoria and Harlingen had access to rail. Most Texas ports with rail access are served by more than one Class I railroad. Receiving service from more than one Class I railroad within the port is desirable, since rail rates may be lower than those ports without competition. Notably, the Port of Port Arthur and Port Freeport are the only two deep water ports that are served by one carrier (Kansas City Southern and Union Pacific, respectively). It should also be noted that agreements between the railroads usually allow rail cars to be interchanged between Class 1 railroads, if it is necessary for the cargo to reach its final destination. Many Texas ports are served by port terminal railroads, which have the responsibility of interfacing with the Class I railroads. Port terminal railroads are common carriers which ensure that trains are interchanged efficiently between the terminals and the Class I railroads and that all users are treated fairly. The most extensive port terminal railroad is the Port Terminal Railroad Association (PTRA) that operates along the Houston Ship Channel. The PTRA serves more than 220 customers from seven rail yards and maintains 154 miles of track and 20 bridges. 4 It was first formed in 1924 and is owned and operated by the Port of Houston Authority and the three Class I railroads. The Port of Brownsville s terminal railroad is called the Brownsville & Rio Grande International Railroad and it serves port traffic, as well as interchanges with the Kansas City Southern Mexico Railroad at the Brownsville & International Matamoros Bridge. Not all port terminal railroads are operated fully or partially by their port. Two of the port terminal railroads (the Corpus Christi Terminal Railroad, the Galveston Railroad) are owned and operated by the private firm Genesee & Wyoming, Inc. The Calhoun Port Authority is the only port switched by a short line railroad, the Point Comfort and Northern Railroad, which is also owned by Genesee & Wyoming. The Port of Orange Terminal Railway switches for the Port of Orange. The Port of Beaumont does not have terminal railroad, but uses Trans-Global Solutions, Inc. as an industrial switching contractor. Many Texas ports are located within a rail district, which were created by the Texas Legislature to help local governments prevent railway abandonments or to invest in rail infrastructure for economic development purposes. Rural Rail Transportation Districts have the ability to sell bonds, collect usage fees, and exercise eminent domain, but they do not have taxing authority. The Gulf Coast Rail District (GCRD), which does not meet the criteria of a Rural Rail District, was formed by Harris County, the City of Houston, and Fort Bend County under authority granted by the Texas Legislature. Efforts by the GCRD to address rail congestion in the Houston region provide indirect benefits to all the ports in and around its 4 A rail yard is a system of tracks where trains can organize cars without regard to a schedule (Armstrong, 1998). Rail yards usually consist of a series of parallel tracks and switches. 17

31 jurisdiction by dealing with issues that create inefficiencies throughout the regional rail network. Texas Ports Located in Rail Districts Port Port of Texas City Port of Galveston Port of Houston Port Freeport Calhoun Port Authority Port of West Calhoun Port of Corpus Christi Source: TxDOT, Jurisdiction Galveston County Rural Rail District Galveston County Rural Rail District Gulf Coast Rail District Gulf Link Rural Rail District Calhoun County Rural Rail District/ Gulf Coast Rural Rail District Calhoun County Rural Rail District Nueces County Rural Rail District/ San Patricio Rural Rail District Most of Texas s larger ports that handle bulk materials have the ability to work a unit train within the port. However, Port Freeport and the Calhoun Port Authority are exceptions. The Port of Texas City, which is jointly owned by the UP and the BNSF can access rail yards outside of the port for breaking up and forming trains. Two types of rail infrastructure that are useful to ports but not included in the Rail Assets matrix below are rail loops and rail on dock. A rail loop is a rail siding that connects to a main track with connectors on both ends. Rail loops of sufficient length can be used so that one train can move off the main track to allow another train to pass, which increases the efficiency of a track (Jackson, 2006). Rail on dock allows trains to pull alongside a vessel at berth and cargoes can be loaded directly from the ship onto the train and vice-versa. Finally, a number of Texas ports provide storage for rail cars on a fee-basis. This practice allows ports to profit from underutilized rail infrastructure and provides a useful service to rail users. 18

32 Rail Assets at Texas Ports Rail Assets No. of Class I Short Line Terminal Within a Rail Can Handle Unit Rail Car Railroads Railroad Railroad District Train Within Port Storage Port of Orange 2 X X -- X -- Port of Beaumont X -- Port of Port Arthur X X Port of Texas City 2 -- X X Port of Galveston 2 -- X X X X Port of Houston 3 -- X X X X Port Freeport X Port of Palacios X Calhoun Port Authority 2 X -- X Port of Victoria Port of West Calhoun X Port of Corpus Christi 3 a -- X X X X Port of Port Mansfield Port of Harlingen Port of Port Isabel Port of Brownsville 3 ab -- X -- X X a Union Pacific provides direct service to the port or direct service via a terminal operator. BNSF has trackage rights on Union Pacific track and can also provide service to the port. b The Kansas City Southern de Mexico (KCSM) provides rail service into Mexico from the Port of Brownsville. KCS can only provide direct domestic rail service by traversing Mexico on KCSM track. 19

33 INTERMODAL ASSETS The Ports of Houston, Freeport, and Galveston are the three ports in Texas that regularly handle intermodal containers. The table below shows the number of twenty-foot equivalent units (TEUs) handled within each customs district, which may include private terminals outside of the publicly-owned ports. The Houston custom s district clearly handled the vast majority of Texas s containers with 95.3 percent of the market share or almost 1.5 million TEUs. It should be noted that MARAD s figures appear to only account for loaded containers, since the Port of Houston s estimates for the number of loaded TEUs handled during 2012 aligns relatively close to the figure below. There were more than 440,000 empty TEUs handled at the Port of Houston during 2012 and additional empty containers were handled at Port Freeport and the Port of Galveston. Number of Loaded TEUs Handled at Texas Maritime Ports, 2012 Rank Customs Port TEUs Share of Total 1 Houston 1,494, % 2 Freeport 60, % 3 Galveston 12, % Total 1,567, % Source: MARAD, As would be expected, based upon the volume of TEUs handled, the Port of Houston has the most extensive intermodal container infrastructure in Texas. Between its original Barbours Cut facility and its newer Bayport container terminal, the Port of Houston has 12 berths for containerships, with room for expansion. The Port of Houston also has 26 container cranes and among those, 12 cranes that are of Post-Panamax size (of which three are Super Post- Panamax sized cranes). Port Freeport utilizes a Gottwald Mobile Harbor Crane with an attached device called a spreader for lifting and moving intermodal containers. Using this equipment, the port s workers are adept at moving a significant number of containers per hour. Container vessels calling on Port Freeport may also use shipboard cranes that assist with or handle the loading and unloading. Port Freeport will be receiving two Post-Panamax ship-to-shore cranes in July 2014 and they will be operational by September The Port of Galveston relies entirely upon shipboard cranes to discharge and load containers at the port. Each of the three ports maintains storage and marshalling yards within the port. The Port of Houston has large storage and marshalling yards at both of its container facilities. Within these yards, containers are received, stacked, sorted, and sent out. Rubber tire gantry (RTG) cranes stack and sort the containers within the yard, while yard hustlers (essentially stripped down semi-trucks equipped with an attached chassis) move the containers 20

34 between the ships and the RTGs. The yard hustlers may also service the intermodal rail yard within the Port of Houston s Barbours Cut facility. At that rail yard, containers are often moved using reach stackers, which are a cross between a forklift and a truck-mounted crane with an attached spreader. For origins and destinations outside of the port, full-size semitrucks bring and pick-up the intermodal containers at the port. Containers that move over the road sit upon a trailer chassis that locks the container in place. At the ports of Freeport and Galveston, containers are not stacked but placed directly onto their trailer chassis. Texas s container facilities are especially important to TxDOT, since each intermodal container that is not handled at the intermodal rail yard at Barbours Cut, typically generates one or two truck trips. Finally, in addition to ocean-going vessels, many Texas ports have an interest in servicing barges that carry intermodal containers. Called Container-on-Barge (COB), the use of COB has the potential to reduce the number of truck trips carrying goods on Texas highways. Various Texas ports, such as Brownsville, Beaumont, Port Arthur, Orange, and Victoria have been long-time proponents of COB. The Port of Brownsville even hosted a COB service for a short period. The Port of Orange recently completed construction of a facility capable of handling COB and the Port of Victoria started construction of a COB-capable facility during Nonetheless, despite the potential transportation network, environmental, and cost benefits of COB, many shippers have been reluctant to adopt a service for various reasons including (Kruse and Hutson, 2010): The service is not cost-competitive with truck or rail; Difficulty chartering vessels; and Under capitalization makes the service unreliable when there is equipment failure. Another potential problem, that has been previously cited, is the inability of a COB service to maintain shipping schedules. 21

35 22 Intermodal Assets at Texas Ports Intermodal Assets Containership service Containership Berths Total Container Cranes Post-Panamax Cranes Wheeled Storage Regular/Reefer Port of Galveston X 1 -- a -- Yes/Yes Port of Houston X Yes/Yes Port Freeport X b Yes/Yes a The Port of Galveston uses shipboard cranes to discharge and load the vessel. b Port Freeport anticipates these cranes will be operational September 2014.

36 CARGO HANDLING ASSETS Given the enormity of the oil refinery and petrochemical complex located along the Texas coastline, it is not surprising that a significant portion of the state s maritime trade consists of liquid bulk cargoes. In addition to crude oil and chemicals, other liquid bulk cargoes include gasoline, distillates, fertilizers, lubricants, and molasses. As was noted earlier, a large proportion of this liquid bulk cargo is handled at Texas s privately-owned terminals, although vessels access these private terminals using public shipping channels. In fact, there are no liquid bulk docks at the Ports of Orange, Port Arthur, or Port Freeport. There is only a single liquid bulk dock at the Port of Houston and one other at the Port of Galveston, which again attests to the extensive array of liquid bulk port infrastructure owned and operated by the private sector. The Port of Beaumont has recently added a liquid bulk dock that has equipment for transloading crude oil from rail to barge. The one port with a large complement of liquid bulk facilities (21 liquid bulk docks) is the Port of Texas City and it is privately owned. Moving down to the mid to lower Texas Coast, liquid bulk docks in public ports become more common. The Port of Corpus Christi has 12 liquid bulk docks (as noted earlier) and the Calhoun Port Authority has 9 liquid bulk docks. Some of these ports are able to access local or intrastate/interstate pipeline networks. All Texas ports have facilities to handle dry bulk materials. With the exceptions of shallow draft ports and the Port of Texas City and the Calhoun Port Authority, all Texas ports have heavy-lift cranes that can be used to move bulk goods and project cargo (e.g. large vehicles, electrical generators, oil field equipment, etc.). Some shallow draft ports are equipped with automated belt conveyor systems for handling bulk materials. Many Texas ports also have RO/RO ramps, which are used to load or discharge vessels loaded with any wheeled cargo from automobiles to farm equipment to military tanks. There have even been ferry services to Mexico and Central America that have operated from Texas ports, but these services are no longer in service. 23

37 24 Cargo Handling Assets at Texas Ports Terminal Assets Access to Liquid bulk handling Access to local Heavy lift Roll On/Roll intrastate/interstate equipment pipeline network cranes Off ramp pipeline network Port of Orange Port of Beaumont X X X Port of Port Arthur X X Port of Texas City X X X Port of Galveston X - - X X Port of Houston X X X X X Port Freeport -- X X X -- Port of Palacios Calhoun Port Authority X -- X -- X Port of Victoria X X Port of West Calhoun X X Port of Corpus Christi X X X X X Port of Port Mansfield Port of Harlingen X X Port of Port Isabel X X Port of Brownsville X N/A N/A X -- Note: N/A denotes data not provided or available.

38 STORAGE ASSETS Outdoor storage areas are an important part of a port s operations, not only for the staging and marshalling of the cargoes loaded or unloaded from the ship, but also because many port customers use the port as a short-term warehouse. Ports have a combination of paved and unpaved areas that are assigned for storage. Paved areas are often concrete and are capable of handling heavy loads, like project cargo (e.g. power plant generators, oil field equipment, etc.). Unpaved storage areas are land usually improved with a road base so that the surface can handle both the weight of the cargo and the moving equipment. Six Texas ports have elevators and four of those are for public use. The Port of Beaumont s elevator is leased and not available for public use and the elevator within Port Freeport is owned by a tenant and used for rice. Grain elevators at Texas ports are capable of rapidly handling large volumes of agricultural commodities. Most facilities can handle cargoes dropped into ground hoppers from trucks or rail cars, which are then conveyed into the elevator. The Port of Houston s grain elevator has a 6.2 million bushel capacity (leased and operated by Louis Dreyfus, therefore, not available for public use) and it can receive up to 30 trucks per hour and 20 rail cars per hour. Grains can be loaded into the elevator at a rate of 120,000 bushels per hour. The Port of Corpus Christi has the next largest elevator with a capacity of 5.0 million bushels (leased and operated by ADM Growmark). In general, there is a lack of elevator storage capacity at Texas ports, which limits export and import opportunities for producers, customers, and the ports. Four Texas ports have cold storage facilities. The largest facility is located at the Port of Houston s CARE terminal and is 200,000 square feet in size. The Port of Corpus Christi built a 100,000 square foot refrigerated warehouse that is capable of cooling down to -10 degrees Fahrenheit. The Port of Galveston has a 65,000 square foot facility that is used for the fresh fruits and vegetables it crossdocks at the port. 5 Port Freeport has a 40,000 square foot cool storage facility that is also used for crossdocking bananas, other fresh fruit, and fresh vegetables. In the case of Port Freeport, the refrigerated warehouse is primarily used to protect produce during its transfer from refrigerated containers to refrigerated trucks, rather than being used for longer term storage. Refrigeration units mounted on the truck trailers keep the produce chilled once crossdocking is complete. These units may operate using plug in electricity or with a diesel generator. Some cargoes require covered storage prior to shipment or after being unloaded from the vessel. These cargoes may be stored temporarily in dockside wharves, transit sheds or longer term in port warehouses. All of Texas s deep water ports have covered storage. Collectively among its various terminals, the Port of Houston maintains the most space with 5 Cross-docking refers to the unloading of cargoes from refrigerated intermodal containers and placing them in refrigerated van trailers. Cross-docking allows the refrigerated intermodal containers to be returned to the vessel more quickly and reduces the overall number of truck trips. 25

39 2,872,900 square feet of transit sheds, wharves, and warehouses followed by the Port of Beaumont. Even some of the state s shallow draft ports maintain covered storage, such as the Port of Victoria with 24,300 square feet of storage. 26

40 Storage Assets at Texas Ports Storage Assets Paved outdoor Unpaved outdoor Elevator Cold Storage Transit sheds and storage (ac.) storage (ac.) (bushels) (sq. ft.) warehouses (sq. ft.) Port of Orange ,000 Port of Beaumont ,500, ,000 Port of Port Arthur ,400 Port of Texas City -- N/A Port of Galveston 23 N/A 3,000,000 65, ,530 Port of Houston ,200, ,000 2,872,900 Port Freeport Unknown 40, ,000 Port of Palacios N/A Calhoun Port Authority ,000 Port of Victoria 3 N/A ,000 Port of West Calhoun N/A N/A Port of Corpus Christi 100> N/A 5,000, , ,333 Port of Port Mansfield -- N/A Port of Harlingen Port of Port Isabel N/A -- Port of Brownsville N/A 65 3,000, ,065 Note: N/A denotes data not provided or available 27

41 MARKET ASSETS The next table shows some of the unique market assets of Texas ports, which include designation as a U.S. Military Strategic Port, having a cruise terminal, being located within an air quality attainment area or a Foreign Trade Zone (FTZ), and having developable land for future port expansion or port customers. Each of these attributes is considered desirable and provides additional opportunities for ports to expand their cargo volumes. Three of Texas s ports are among the 17 U.S. ports within the National Port Readiness Network. These ports are the Ports of Beaumont, Port Arthur, and Corpus Christi, with largest volume of military cargo in the United States handled at the Port of Beaumont. Stationed at each port are representatives from 10 federal agencies that oversee the secure transport of U.S. military equipment and personnel. These agencies include the U.S. Maritime Administration (MARAD), the USACE, the Surface Deployment and Distribution Command (SDDC - led by the U.S. Army s 842 nd Transportation Battalion), the U.S. Coast Guard (USCG), the Military Sealift Command (MSC), the U.S. Army Forces Command (USFORSCOM), the U.S. Transportation Command (USTRANSCOM), and the U.S. Army Installation Management Command (MARAD, 2014). Most of the military equipment that went through Texas ports during the Iraq War and the War in Afghanistan arrived and departed by rail, unlike the Persian Gulf War when most equipment travelled to and from the ports by truck. Nonetheless, Texas ports handling military cargoes do receive some truck trips related to military deployments. Some Texas ports even receive military cargo by air, such as the Port of Beaumont and the Port of Corpus Christi, where helicopter squadrons have been flown in with multiple helicopters landing simultaneously on the dock, in order to be loaded aboard Large Medium Speed RO/ROs (LMSR). Repatriated and damaged equipment also returns and many of the damaged vehicles are sent to the Red River Army Depot in Texarkana, which specializes in repairing them. There are two Texas ports with active passenger cruise terminals. The Port of Galveston has been a major departure point for the U.S. cruise industry, serving as home port for cruise ships from the Carnival and Royal Caribbean cruise lines. During 2012, approximately 863,000 cruise ship passengers and crew embarked and debarked from the Port of Galveston 6. When the ships turn, a large number of passengers embark and debark the vessel, which generates a significant amount of traffic on roadways surrounding the port. These port calls also generate a large number of commercial vehicles that supply and service the ship. The Port of Houston began hosting Princess Cruises during 2013 and will begin serving the Norwegian Cruise Line from its Bayport Cruise Terminal starting in According to the Port of Houston, Princess Cruises and the port hosted more than 78,000 passengers during the 2013 Sailing Season. 6 Galveston s 2012 count of cruise ship passengers reflected an increase over recent years, but was below the 2007 peak, when 1.2 million passengers and crews embarked and debarked at the port. The growing volume suggests that improving economic conditions are encouraging higher passenger volumes. 28

42 The availability of a Foreign Trade Zone (FTZ) is a significant factor in the decision making for many firms that are considering relocation to Texas. Texas has 32 designated and approved Foreign-Trade Zones (FTZ). Most Texas ports are located within approved FTZ boundaries. FTZs are geographic areas approved by the federal government and can allow special U.S. Customs and Border Protection (CBP) procedures for importing and exporting goods. Companies that are approved for FTZ designation are able to defer U.S. Customs duties until the cargo enters the commerce of the United States and defer quota charges on goods that are being re-exported. Approved companies can also reduce or defer duties on imported goods. Many companies that manufacture a finished product using imports, with a lower duty rate than the combined duty rate of its components may be approved to pay a reduced duty rate. Some companies may also be able to take advantage of special CBP procedures. Ports can work with local and state economic development organizations to offer FTZ benefits for prospective companies looking for incentives that will benefit their business. Port Isabel is the only deep-draft port in Texas that is not in an FTZ and the Port of Victoria is the only shallow-draft port (among those discussed in this report) that is within a FTZ (Foreign Trade Zones Board, 2014). Finally, many of Texas s port authorities or navigation districts have large amounts of land that could be used for future development, although not all the owned land is necessarily developable. The Brownsville Navigation District is the largest landowner with approximately 40,000 acres followed by the Port of Corpus Christi, which owns 22,000 acres. Many of the ports along the upper Texas Coast have more limited acreage. The Port of Houston has 907 acres of land to develop within its Bayport facility and another 1,100 acres of developable land on Pelican Island. The Port of Galveston has 300 acres on Pelican Island, while the Port of Beaumont owns 600 acres of developable land. Among the shallow draft ports, the Port of Victoria is the most land-rich with 1,800 acres, followed by the Port of Palacios with 729 acres. 29

43 30 Summary of Market Assets for Texas Ports Market Assets U.S. Military Strategic Port Operational Cruise Terminal Within an Air Quality Attainment Area Within a Foreign Trade Zone (FTZ) Available Land for Development (acres) Port of Orange X X 150 Port of Beaumont X -- X X 600 Port of Port Arthur X -- X X 70 Port of Texas City X 140 Port of Galveston -- X -- X 300 Port of Houston -- X -- X 2,007 Port Freeport X 7,723 Port of Palacios X Calhoun Port Authority X X 137 Port of Victoria X X 1,800 Port of West Calhoun X Port of Corpus Christi X -- X X 22,000 Port of Port Mansfield X -- 9 Port of Harlingen X Port of Port Isabel X Port of Brownsville X X 40,000 Note: The Hardin, Jefferson, and Orange County airshed, which contains the Ports of Beaumont, Orange, and Port Arthur, was once designated as nonattainment. It is currently considered in attainment maintenance, which means that it regularly maintains the same air quality standards as those locations that are within attainment.

44 31 CONCLUSIONS Despite their commonalities, Texas ports differ so that no two ports are alike. In fact, Texas port directors emphasize their ports uniqueness with the adage, Once you have been to one Texas port, you have been to one Texas port. Although Texas s port network is resource rich, the sustained growth of the state s economy has placed heavy demands on port infrastructure. Many of the investments made in Texas ports were made decades ago and years of heavy use are taking their toll. Unfortunately, the replacement or expansion of this infrastructure is neither quick nor cheap. It is also important for Texas ports to have the flexibility to diversify their assets, so they may be prepared for future activities. This flexibility allows the ports to adapt to unanticipated market shifts. As an example, the Port of Victoria fortuitously added a liquid dock, prior to the booming activity of the Eagle Ford Shale. As a result, the port was able take advantage of this opportunity and currently handles more than 1 million barrels of crude oil per month. Section 4 will discuss some of the existing and current needs for updating the assets at Texas ports.

45 SECTION 3 PORT QUESTIONNAIRES Last year, TxDOT sent a questionnaire to TPA members to better understand the conditions and issues at their port. Specifically, TxDOT s questions focused on understanding the concerns that each port identifies as hindering its ability to meet its goals, as well as to better understand each port s strengths and market position. Another key purpose of the questionnaire is to identify opportunities where TxDOT might be able to provide assistance to the ports, particularly as their needs relate to landside issues. To date, TxDOT has received 11 responses with the respondents listed in the table below. Respondents to TxDOT s 2014 Questionnaire TPA Member Response Port of Orange -- Port of Beaumont X Port of Port Arthur X Port of Texas City -- Port of Galveston -- Port of Houston X Port Freeport X Port of Palacios X Calhoun Port Authority X Port of Victoria X Port of West Calhoun -- Port of Corpus Christi X Port of Port Mansfield -- Port of Harlingen X Port of Port Isabel X Port of Brownsville X BARRIERS TO GROWTH The first question of the questionnaire focused on issues that were preventing the port from reaching its desired operational performance. The question was stated as: Question #1: What currently is not working in your port that hinders efficient operations (this could be regulatory, operations/logistics, etc.)? Generally, the issues reported by the ports could be grouped into four categories: the need to build new port infrastructure to respond to growing demand; the need to replace 32

46 infrastructure that is beyond its productive lifespan; the need for maintenance dredging of ship channels and the GIWW or channel deepening or widening; and the need to build or replace landside infrastructure serving the ports. Weaved throughout the discussion of many of the ports responses was the need for additional funding sources. As noted, several ports identified the need to build new infrastructure to respond to growing market demand, improve operational efficiencies, and replace aging infrastructure. The Port of Beaumont identified the need to replace several aged docks, wharves, and cargo handling facilities within the foreseeable future. The Port of Port Arthur is planning a $31 million berth expansion project, but has not identified all the funding sources needed to move forward. The Port of Corpus Christi cited the need for new barge fleeting and mooring areas to meet existing and future demand. At present, barges are waiting as far as 50 miles from their eventual dock assignment, due to the lack of sufficient mooring locations. As the volumes of crude oil, refined petroleum products, and frac sand grow to service the Eagle Ford Shale play, the Port of Corpus Christi expects its problems to worsen. The Port of Brownsville reported the need for a new liquid dock that will cost between $10 and $12 million. The Ports of Port Isabel and Brownsville both reported the need to replace or repair aged dock infrastructure and both ports expressed concerns about funding these projects. The need for maintenance dredging, channel deepening, or channel widening was frequently cited by the responding ports. The Port of Corpus Christi detailed the need for widening of the Corpus Christi Ship Channel to allow two-way traffic in some areas, as well as deepening the channel so vessels could fully utilize their capacity. Another identified improvement was the dredging of barge shelves along the channel in the Upper and Lower Corpus Christi Bay. Barge shelves, which exist along the Houston Ship Channel, allow barges to operate outside of the main ship channel, leaving it open for larger, ocean-going vessels. The Ports of Houston and Corpus Christi also expressed frustration with the USACE s regulatory/permitting/planning process for dredging projects. The Port of Corpus Christi stated the difficulties of these processes have limited its ability to respond to private-sector port customers. Furthermore, the USACE was said to be developing new policies/regulations/real estate requirements that will further complicate current and planned dredging projects. The Ports of Harlingen and Brownsville stressed the need to maintain channel depths in the GIWW and their respective channels. Many ports identified specific highway and rail infrastructure projects that needed funding. The Ports of Beaumont and Port Arthur each identified rail projects that are eligible to be built with Congestion Mitigation & Air Quality Improvement (CMAQ) funds. The Port of Beaumont project is a rail overpass to access its Orange County facility, which will have a major crude oil terminal. The overpass would prevent trains serving the Orange County terminal from conflicting with rail operations on other nearby tracks. The Port Arthur project is a rail reliever that would also be eligible for CMAQ funds. The questionnaire s 33

47 respondents also listed a number of roadway projects that would improve the efficiency of their ports. The Port of Port Arthur identified the need to modify or replace the SH 82 Bridge, which crosses the ship channel serving the Ports of Port Arthur, Beaumont, and Orange. The Port of Corpus Christi identified a number of potential roadway projects. Two of the projects would improve access at the port s La Quinta terminal, through a reversal of ramps on SH 35 and with a grade separation of US 181 at the La Quinta terminal s main entrance. A third roadway project identified by the Port of Corpus Christi was the widening of the SH 181 Bridge as it crosses the Rincon Canal. The supports for the current bridge are placed in the canal and prevent the simultaneous passage of two barges. A roadway improvement suggested by the Port of Port Isabel was the construction of a new port access road, which would allow trucks to avoid traversing through an adjacent neighbourhood. Finally, the Port of Houston identified the lack of funding, to expand the hours of operation for U.S. Customs and Border Protection agents, as an impediment to trade. Self-Identified Barriers to Growth at Texas Ports Respondent Port of Beaumont Port of Port Arthur Port of Houston Response 1. Major repair or replacement for several docks, wharves, and other cargo handling facilities. 1. Need funding for rail reliever route through CMAQ program. 2. Funding for local match, if the Water Resource Development Act of 2013 is enacted. 3. Modification or replacement of SH 82 Bridge. 4. Need funding for $31 million berth expansion project. 1. The USACE is receiving an insufficient allocation of funding from Congress to fulfil its mission to maintain authorized channel depths and widths. This situation is affecting the types of vessels that can use the Houston Ship Channel and it also affects how the vessels are loaded. 2. The Port of Houston is using its own funds to deepen and widen federally authorized channels, so that the port can remain competitive in the global marketplace. 3. The USACE is not able to permit dredge material placement areas quickly enough to keep pace with the need to dredge the ship channels. 4. U.S. Customs and Border Protection needs additional resources to operate at night and during weekends to keep up with the flow of commerce. 34

48 Self-Identified Barriers to Growth at Texas Ports (Continued) Respondent Port of Freeport Port of Palacios Calhoun Port Authority Port of Victoria Port of Corpus Christi Port of Harlingen Port of Port Isabel Port of Brownsville Response 1. Navigational modifications needed before Phase Three of channel deepening can proceed. 2. Single service rail with limited capacity which hinders investing in additional rail infrastructure. 1. Customer industry conditions and limited customer diversity. No response. 1. Add capacity to existing rail spur. 1. Channel widening to allow two-way traffic in some locations or reduce piloting fees. 2. Channel deepening so vessels can fully utilize their capacity and reduce port calls. 3. Need for barge fleeting areas to serve existing and future traffic. 4. Widen the US 181 channel crossing at the Rincon Canal to permit two-way barge traffic to and from the Rincon Industrial Park. 5. Add barge shelves to ship channel in the upper and lower bay. 6. Difficulties with the regulatory/permitting/planning process with the USACE. 7. SH 35 ramp reversals to serve future SH 35 entrance to La Quinta property. 8. Grade separation of La Quinta Gateway s primary entrance from US 181 to serve future truck and rail traffic. 1. Urgently need maintenance dredging of channel to maintain current barge drafts. 1. Need to upgrade or replace aged dock structures. 2. Improved port access so a port tenant does not have to bring cargo through existing residential neighbourhoods. 1. New liquid cargo dock is needed. 2. Dock repairs needed for existing dry bulk and liquid docks. 3. Maintaining channel depths in GIWW and ship channel. PORT STRENGTHS After identifying their barriers, ports were asked to identify their strengths, responding to the following question: Question #2: What are your port s strengths, what is working well? 35

49 The ports wide-ranging responses reflect the diversity of Texas ports, with regard to the services they offer, their tenants, and their port and channel infrastructure. Self-Identified Port Strengths Respondent Port of Beaumont Port of Port Arthur Port of Houston Port of Freeport Response 1. Strong and stable management with support from the community and loyal customers. 2. Stable workforce. 3. Diversified client base, without dependence upon any one customer. 4. Recently completed major railroad improvements in the Jefferson County facilities. 5. New rail and roadway improvements at the Orange County facility. 6. Largest military cargo port in the world. Excellent relationship with the U.S. Army Surface Deployment and Distribution Command. 1. One of the most modern breakbulk cargo ports in the Gulf of Mexico. 2. Less than two hours sailing time to the Gulf of Mexico. 3. Located along a section of the Sabine-Neches Waterway with a 40-foot draft, which is also a segment of the GIWW. 4. On-dock rail and service by Kansas City Southern Railroad. 5. RO/RO dock and a U.S. Military Strategic Port. 1. The Port of Houston has become the largest foreign cargo port in the United States and the second largest in overall tonnage. 2. The port s competitive advantages are its ties to the energy industry s infrastructure, its proximity to a major population center, and its role as a low-cost link within the supply chain. 3. The Port of Houston has key partnerships with many of the 150 different entities located along the Houston Ship Channel. 4. The Port of Houston has strong relationships with the USACE, which has assisted the port with maintaining and improving the Houston Ship Channel 5. The Port of Houston has a strong partnership with the Class 1 railroads that operate the Port Terminal Rail Association (PTRA). 1. Ranked 21 st port in the U.S. in terms of international trade. 2. New 800 berth which is currently the deepest operational berth in the gulf at Purchased two state of the art ZPMC container cranes that are capable of handling Panamax class container ships 36

50 Self-Identified Port Strengths (Continued) Respondent Port of Palacios Calhoun Port Authority Port of Victoria Port of Corpus Christi Port of Harlingen Port of Port Isabel Port of Brownsville Response 1. Port is home to Texas s largest shrimping fleet. While the industry has come under intense pressure, the Palacios fleet has been stable. 2. Home to a successful barge and push boat manufacturing facility. 3. Developing other parts of the port to diversify tenant base. 1. The port is able to get vessels in and out without them incurring demurrage. 1. Ability to adapt quickly to customer needs and support customer s project development needs. 1. One of the deepest draft ports in the Gulf of Mexico and one of the few in the nation with a draft authorization of 52 feet. 2. Transit time from open water to cargo dock less than three hours and the channel is generally uncongested. 3. Well-maintained and modern waterfront facilities which includes one of the strongest multipurpose docks in the area able to handle large and extra heavy cargo. 4. Ideally positioned to take advantage of the Eagle Ford Shale Play. 5. Available land for future development, such as storage tanks, plants, or waterfront facilities. 1. Port is able to efficiently and effectively handle 90 percent of fertilizers and 70 percent of gas products in South Texas. 2. Low operating expense (overhead and staff costs). 3. Good relationship with Navigation District board. 1. Port is able to effectively serve deep and shallow draft vessels and their cargoes. 2. Returning to its previous importance as an off-shore platform service port. 3. RO/RO ferry ramp with a history of ferry service. 1. Only deep water port directly on the U.S.-Mexico border. Active in crossborder trade/transhipment. 2. Overweight truck corridor to Mexico. 3. The port has 40,000 acres of developable land. BETTER UTILIZING THE GIWW The third question posed to the ports related to facilitating the use of the GIWW and was stated as follows: Question #3: Please describe how the GIWW serves your port, if it all. opportunities for improvement in how the waterway can better serve? Are there 37

51 All the responding ports viewed the GIWW as important component of serving their existing customers. The Port of Houston called the GIWW vital for its operations, while the Port of Port Isabel called the GIWW essential for bringing in new customers. In the case of the shallow water ports, namely the Ports of Victoria, Palacios, and Harlingen, the GIWW is literally essential, since none of the ports are connected to the Gulf of Mexico by a ship channel. The Ports of Beaumont and Corpus Christi reported a jump in traffic on the GIWW that has been spurred by the oil and gas industry. In the case of the Port of Beaumont, it has been the shipping of crude oil to refineries in Southeast Texas. For the Port of Corpus Christi, it has been in the form of shipping crude oil from the Eagle Ford Shale play to refineries, shipping locally refined products, and receiving frac sand. Many of the smaller ports receive refined petroleum products from the larger ports, which use the GIWW. Almost all of the ports identified improvements to the GIWW or maintenance dredging as very important. The most common response emphasized the need to continue maintenance dredging of the GIWW and to bring it down to its authorized depth of 12 feet. One suggestion offered by the Port of Corpus Christi was that TxDOT should work with the USACE to increase the number of dredge placement areas to insure that there will be sufficient capacity over the long-term. A more urgent concern was the need for more barge mooring areas around the Lydia Ann Channel. The Port of Harlingen made some additional, important suggestions including the straightening of a bend in the GIWW at the Queen Isabella Memorial Causeway. On September 15, 2001, a barge struck the causeway and partially collapsed it, killing eight motorists. The Port of Harlingen also encouraged TxDOT to keep the GIWW s mooring areas clear and to remove abandoned barges. The final set of suggestions involved TxDOT s policies or activities toward the GIWW. The Port of Brownsville encouraged TxDOT to develop a Marine Highway along the GIWW to encourage the shift of cargo away from trucks to barges. Finally, the Port of Corpus Christi suggested that TxDOT facilitate and support the activities of private companies that seek to develop plans that involve the GIWW. 38

52 How to Better Utilize the GIWW Respondent Port of Beaumont Port of Port Arthur Port of Houston Port of Freeport Port of Palacios Calhoun Port Authority Port of Victoria Response 1. Historically, the Port of Beaumont had not used the GIWW a great deal, but with the new crude oil facility at its Orange County terminal, it will be used to send oil to refineries in southeast Texas. 2. Most of the previous use of the GIWW was for the movement of small vessels from nearby shipyards and project cargo for local construction projects. 3. TxDOT should provide incentives so that shippers will have option of using a Container-on-Barge service. 1. The GIWW provides barge access to the port. 2. TxDOT should work to insure that the GIWW be dredged and maintained to its federally authorized depth. 1. The GIWW is vital to the success of the Port of Houston. It connects the port to other Texas ports, ports along the Gulf of Mexico, and ports along the Mississippi Valley. 2. Five times as many tows (125,000) transited the Houston Ship Channel as did deep draft vessels. Many of these tows utilized the GIWW. 3. The GIWW needs additional barge moorings, replacement of outdated flood control and locking structures, and modernizing the antiquated bridges that traverse it. 1. Barge traffic is anticipated to dramatically increase. 2. Various corporate partners use the GIWW for barge movement. 1. The GIWW provides access to the port to recreation and commercial vessels. 2. TxDOT should work to insure that the GIWW be dredged and maintained to its federally authorized depth. 1. All barge traffic at the port uses the GIWW. Maintaining the GIWW at its authorized depth would reduce the costs to shippers who cannot fully load their barges. 1. The GIWW is essential to the Port of Victoria s existence. 2. TxDOT should work to insure that the GIWW be dredged and maintained to its federally authorized depth, including performing the maintenance dredging itself. 39

53 How to Better Utilize the GIWW (Continued) Respondent Port of Corpus Christi Port of Harlingen Port of Port Isabel Port of Brownsville Response 1. The GIWW serves outbound crude oil from the Eagle Ford Shale play and inbound frac sand and locally refined outbound products. 2. The GIWW also serves other dry bulk and liquid bulk commodities, as well as building materials and industry equipment. 3. TxDOT should consider performing dredging maintenance to keep the GIWW at a 12 foot draft 4. TxDOT should be evaluating methods to increase the dredge placement areas for dredge materials from the GIWW to insure long-term channel maintenance. 5. There is a desperate need for fleeting and mooring areas along the GIWW, especially around the Lydia Ann Channel. 6. Facilitate and support private partners and industries that seek to make improvements. 1. Barges regularly traverse the GIWW to reach the Port of Harlingen. 2. Straighten bend in GIWW at the Queen Isabella Memorial Causeway, which led to a barge hitting the causeway and partially collapsing it. Eight people died in that incident. 3. TxDOT should work to insure that the GIWW be dredged and maintained to its federally authorized depth. 4. Keep the GIWW and mooring areas clear of abandoned barges. 1. The GIWW is key in some of the port s plans to bring in new customers. 2. GIWW needs more frequent maintenance dredging. The current draft is significantly less than the authorized 12 feet, which makes barge less competitive with trucks. 1. TxDOT should develop a Marine Highway to encourage cargoes to shift from truck to water. 2. A Texas Marine Highway Program should be incorporated into the State s Freight Mobility Plan VALUE OF THE PAAC AND OPPORTUNITIES FOR IMPROVEMENT The next question asked the ports about the value of the Port Authority Advisory Committee (PAAC) and how it could be more responsive to meeting the needs of ports. The question asked was: Question #4: Please describe how the Port Authority Advisory Committee (PAAC) serves your port, if at all. Are there opportunities for improvement in how the committee can better serve? 40

54 Most of the responses to this question urged TxDOT to use the PAAC less as a platform for disseminating information and more as a tool for coordination and promoting the mutual agenda of TxDOT and Texas ports, as well as to promote the allocation of state funds for port improvements. This sentiment was expressed more directly by the Ports of Port Arthur, Harlingen, and Brownsville. Three of the ports (the Ports of Beaumont, Palacios, and Corpus Christi) encouraged the PAAC and TxDOT to work together to find funding for the Port Access Account Fund, which was created by the Texas Legislature under Chapter 55 of the Texas Transportation Code. The Port of Brownsville made a similar recommendation, but pointed to the Texas Mobility Fund as a potential funding source. The Port of Brownsville also encouraged TxDOT to allow the PAAC to assist with project and program development for projects that link the ports to Texas s transportation network. Value of the PAAC and How It Can Be Improved Respondent Port of Beaumont Port of Port Arthur Port of Houston Port of Freeport Port of Palacios Calhoun Port Authority Port of Victoria Port of Corpus Christi Response 1. Work with TxDOT to obtain funding for the Port Access Account Fund, which was established in Chapter 55 of the Texas Transportation Code. 1. The PACC should expand its opportunities beyond just the reporting of information 2. The PAAC could participate in the process of allocating available funds to ports 1. The PAAC has provided some worthwhile services to the Port of Houston and Texas ports overall. 2. It primarily serves as a conduit for information between the port community and TxDOT to communicate needs and develop a better understanding of the movement of freight in Texas. 1. The PAAC helps each port understand the other ports better 2. Helps facilitate discussions with other ports regarding the last mile port highway connector issues and freight mobility via all modes. 1. Encouraged funding of the Port Access Account Fund. Identified several port infrastructure projects that could benefit from these funds. 1. The PAAC needs to make a greater effort to include the smaller ports in its discussions. 1. The Port of Victoria is not a member of the PAAC, but trusts that its efforts benefit all Texas ports. 1. The PAAC provides a forum for meeting with TxDOT and discussing infrastructure needs as they relate to ports. 2. Work with TxDOT to obtain funding for the Port Access Account Fund, which was established in Chapter 55 of the Texas Transportation Code. The Port of Victoria has since become a member of the PAAC to represent Texas s shallow draft ports. 41

55 Value of the PAAC and How It Can Be Improved (Continued) Respondent Port of Harlingen Port of Port Isabel Port of Brownsville Response 1. The Port receives regular communications that inform the staff on the PAAC s activities, but it does not view them as being particularly valuable. 2. The PAAC should seek more input from ports that are not in the PAAC. 3. There was more communication and input when the PAAC was initially formed than there is now. The PAAC was also more active in its advocacy for Texas ports during the early period. No response. 1. Uncertain if the PAAC has provided many benefits to Texas ports, although the situation appears to be slowly improving. 2. PAAC can assist TxDOT with project and program development that link the port with other elements of the state s transportation network. 3. Can assist with supporting program changes to the state s Mobility Fund [specifics not provided in the comment, but assumedly to support the development of port and landside infrastructure] 4. Work to advocate for transportation infrastructure funding in coordination with the mutual goals of TxDOT and the ports. VISIONS OF THE NEAR FUTURE AND HOW TXDOT CAN ASSIST The final portion of the questionnaire asked ports about their visions of the future. The first of two questions focused on the ports view of their near-term future and how TxDOT might be able to assist them with achieving their goals. The question was: Question #5: What would you like to see for the near future of your port and how can TxDOT play a role in achieving that goal(s)? The ports responses to this question varied a great deal. Several ports identified new projects that they were trying to develop and needed funding assistance. A number of these projects and suggestions would fall under TxDOT s purview or could be moved forward with TxDOT s assistance. Another role the ports envisioned for TxDOT was to be a greater advocate for their interests. The Port of Beaumont, for example, suggested that TxDOT work with the PAAC and the Texas Ports Association (TPA) to encourage the Texas Legislature to fund the Port Access Account Fund established under Chapter 55 of the Texas Transportation Code. 42

56 Ports View of the Near Future and Opportunities for TxDOT s Assistance Respondent Port of Beaumont Port of Port Arthur Port of Houston Response 1. Suggests TxDOT work with the PAAC and the Texas Ports Association to obtain funding for the Port Access Account Fund, which was established in Chapter 55 of the Texas Transportation Code. 1. The near-term construction of Berth 6 ($31 million project) and other infrastructure projects. 2. Needs TxDOT to include CMAQ funding for the port s rail reliever project and other projects in the region. 3. Needs TxDOT s assistance with landside connectivity projects that would help the port serve export-oriented customers. 1. The Port of Houston s role as the lowest-cost link in the supply chain is critical to its competitiveness and growth. 2. It is critical that the public sector facilitate the movement of goods by the private sector between transportation modes. This facilitation means supporting established or developing freight corridors that minimize impacts to overall regional mobility. Port of Freeport 1. TxDOT, along with the Governor s Office of Economic Development, could assist the ports by developing a state or regional rail policy. 2. TCEQ could assist in addressing the non-attainment issue so future economic development is not handicapped. 3. More emphasis should be placed on port connector routes, including a possible southern connector route around Houston for I-69 that allows Port of Palacios connectivity for port MPO members to the interstate network. 1. The Port is working towards a balance of fishing fleets and new commercial development. 2. It is attempting to develop some of its available land. 3. In addition to shallow draft port s use of the GIWW, TxDOT should focus on helping these ports become support terminals for larger ports as they become busier. 4. The port needs assistance with constructing a rail spur to the UP line in Blessing. Calhoun Port Authority Port of Victoria 1. There is a need for an oversize/overweight truck corridor between the port and Formosa Plastics. 1. TxDOT should develop a state-wide freight policy which insures maximum freight efficiency without straining existing traffic loads on Texas roadways. 43

57 Ports View of the Near Future and Opportunities for TxDOT s Assistance (Continued) Respondent Port of Corpus Christi Port of Harlingen Port of Port Isabel Port of Brownsville Response 1. Continue working with Texas ports to identify critical needs that will benefit the state-wide freight transportation system and the ports. 2. Continued collaboration with TxDOT s Freight Advisory Committee to develop the Texas Freight Mobility Plan. 3. Fully develop the IH 69 corridor from Laredo to Corpus Christi 4. Reconstruct the Nueces Bay Causeway at Rincon Canal to be higher and wider to improve the operating conditions for barges. 5. Construct the SH 35 ramp reversal and US 181 grade separation for improved access to the La Quinta terminal. 1. Want to continue serving its customers in South Texas and expand its customer base to new businesses. 2. A more concerted effort by TxDOT to educate Congress and the USACE on the importance of keeping the GIWW dredged to its authorized depth. 1. Construct a new entrance to the port that avoids existing neighborhoods. 2. Develop an overweight corridor along the new entrance road to SH 48 and along SH 48 into the Port of Brownsville. 1. Wants TxDOT to advocate the funding of channel deepening projects for the Port of Brownsville and other Texas ports with proposed channel deepening projects. 2. TxDOT can educate state and federal government on the importance of Texas ports to the state s economy. VISIONS OF THE LONG-TERM FUTURE The final question of the survey asked ports to visualize their port over 20 years and its contribution to the Texas economy. The question was posed as: Question #6: How do you envision your port in the next 20 years and how will it serve the State of Texas? In their responses, Texas ports were optimistic about their future and the future of the Texas economy. As would be expected, most ports mentioned their current and future role in regional and statewide economic development, job retention, and job creation. Many of the ports also emphasized their desire to continue serving their existing, as well as, future customers. Another common theme in many of the responses was their future role in energy exploration, production, and transportation. The Port of Houston pointed to the $50 billion of new investment in petrochemical manufacturing along the Houston Ship Channel. The Ports of Victoria and Corpus Christi highlighted their role in oil and gas exploration and 44

58 production in the Eagle Ford Shale play. The Port of Victoria took the somewhat prescient (or perhaps better defined as experienced ) view that it would be necessary to position the port for new types of customers after the Eagle Ford Shale boom winds down. Further south, ports saw their importance in supporting the industries that build oil exploration and production platforms and equipment (Port of Corpus Christi), as well as providing offshore support services (Ports of Port Isabel and Brownsville). The Port of Harlingen was the only port to mention the possible movement of freight related to the opening of the Mexican oil industry to foreign investment. This very significant change in Mexico s historic position towards foreign investment in its petroleum industry could have a positive impact on the Texas economy. Many ports visualized that their facilities would have updated or new port infrastructure and that the channels serving their ports would be deepened. Some of these ports also envisioned new landside infrastructure. 45

59 Vision of the Port in 20 Years and Its Service to the State of Texas Respondent Port of Beaumont Port of Port Arthur Port of Houston Port of Freeport Port of Palacios Calhoun Port Authority Response 1. The port will develop its property in Orange County for intermodal use. 2. Existing wharves in Jefferson County will be replaced with state-of-the-art cargo handling facilities. 3. The port will continue to be an employment and economic development generator in the state. 1. The port will continue to be viable and grow over the next 20 years, creating jobs and economic development in Texas. 2. Further deepening of the ship channel 3. Need for additional land, as well as road and rail infrastructure due to demand. 1. The key factors that have historically driven the port s success will be drivers in the future: energy infrastructure; the efficient movement of cargo; and population growth. 2. The current investment of approximately $50 billion in petrochemical manufacturing facilities along the Houston Ship Channel will generate jobs and business for the port for many years into the future. These investments are expected to be completed within a few years. 1. Will continue to pursue our preferred role as a land lord than an operating port. 2. Continue to offer expertise in international business and transportation to all types of clients. 1. Located near multiple, large population centers, the port s future opportunities are both commercial and recreational. 2. The port will continue to serve its customers and Matagorda County taxpayers by maintaining and developing safe navigation and marine facilities. This goal will be achieved in an efficient and cost-effective manner that stimulates economic development and the retention and creation of jobs. 3. The port seeks to operate in an environmentally sustainable manner, while encouraging responsible growth and good-paying jobs for its residents. 1. The port will become a major hub for the petrochemical industry and will continue to earn revenue and create new jobs for Texas. 46

60 Vision of the Port in 20 Years and Its Service to the State of Texas (Continued) Respondent Port of Corpus Christi Response 1. The port will have the deepest channel in the Gulf of Mexico at 52 feet. 2. A new Harbor Bridge will be constructed with over 200 feet of clearance. 3. The port will have a modern rail network with a rail yard that has 14 miles of parallel track and siding. 4. The outer harbour will be where the largest off-shore platforms in the world are constructed and deployed from. 5. The La Quinta multipurpose terminal will be built and handle a large volume of containers every year. 6. The port will continue to handle its traditional cargoes of steel, military equipment, crude oil, petroleum products, and liquefied natural gas. 7. The port will continue to be a major generator of jobs and economic activity to the region, particularly as it relates to serving the Eagle Ford Port of Harlingen Shale play. 1. Continue to function as an economic engine for the region, handling fuels, lubricants, and construction materials for the local economy. 2. Continue exporting the region s production of sugar, feed grains, and cotton. 3. Possibly supply Mexico s petroleum industry with materials and equipment as it opens to foreign investment. 4. Continue supporting free trade with Mexico via the Los Indios Free Trade International Bridge. The port anticipates that the export of fertilizers and Port of Port Isabel Port of Brownsville petrochemicals to Mexico will continue to grow. 1. Will continue servicing the offshore oil and gas industry, as well as offshore wind power industry. 2. Become a regional hub for energy and job creation 3. Will construct new port facilities on surrounding land to serve its customers, particularly to support offshore energy production. 1. The port will continue to grow as a major transhipment center handling petroleum products, liquefied natural gas, propane gas, bulk commodities, and containers. 2. The port will be a logistical center for offshore logistical support for oil exploration and production in the Gulf of Mexico. 3. The port will attract major development to its available land. 4. The port will handle high-value cargo to its cargo mix. 5. The port will be a major employment center in the region. 47

61 SUMMARY Overall, as stated earlier, Texas ports are optimistic about their future and the future of the State of Texas. Texas currently finds itself in the fortunate position as being the economic powerhouse of the United States. This strength has, in no small way, been driven by the expansion of the state s energy sector and the exploitation of new energy resources. While the economy is prosperous, Texas ports are eager to move forward with infrastructure improvements to their berths, docks, and storage facilities. Many ports are also keenly interested in deepening their ship channel and every port is concerned about maintenance dredging along the GIWW. Texas ports continue to look to state government to appropriate funds to the Port Access Account Fund, which could be used for many needed projects, but at a minimum, they want TxDOT to maintain its traditional role supporting landside access. Section 4 will discuss port financing issues and opportunities in greater detail. 48

62 SECTION 4 PORT FINANCE Although most ports are subdivisions of the State of Texas, Texas ports have not historically received direct funding from the state for port infrastructure. The lack of state funding has meant that Texas ports have become largely self-sufficient, barring federal grants that are usually targeted to homeland security improvements and federally funded dredging of ship channels. This self-sufficiency has also meant that ports have developed a strong sense of autonomy and cautiousness. During 2013, Texas ports spent in excess of $300 million of their own funds (through revenues or bonding authority) on capital expenditures. The one indirect form of state-funded support that Texas ports have historically received has been in the form of landside roadway investments made by TxDOT. And, over time, the accumulated value of these landside projects has been very significant. Nonetheless, the lack of state funds for other port needs has generated frustration among some Texas ports, especially because there is a mechanism in place to address the issue but there have been no appropriations by the Texas Legislature. At the federal level, a few Texas ports have been successful with their efforts to acquire funds to partially pay for port infrastructure improvements and it is hoped that the recent enactment of the Water Resources Reform & Development Act of 2014 will provide additional funding sources to ports for channel dredging and maintenance. PORT ACCESS ACCOUNT FUND The Port Access Account Fund (PAAF) was created by the 77 th Texas Legislature to provide funds for Texas ports to finance security improvements, port infrastructure projects, and related studies. Specifically, Chapter 55 of the Texas Transportation Code allows money appropriated to the PAAF to be spent on: 1. Construction or improvement of transportation facilities within the port; 2. Dredging or deepening channels, turning basins, or harbors; 3. Constructing or improving wharves, docks, structures, jetties, piers, storage facilities, cruise terminals, or any other facility that is needed or can be used for transportation or economic development; 4. Construction or improvement of facilities for port security; 5. The acquisition of cranes or other mechanized equipment for moving cargo or passengers in international commerce; 6. The acquisition of land for port purposes; 7. The acquisition, improvement, enlargement, or extension of existing port facilities; and 8. Environmental protection through studies to obtain environmental permits or by acquiring or improving dredge spoil sites. 49

63 The selection of projects to be funded from the Port Access Account Fund is to be based upon a review of submitted projects by TxDOT in consultation with the PAAC. Together, their recommendations are sent to the Texas Transportation Commission, which makes the final decision on funding. The primary criterion for ranking the projects for selection is their estimated economic benefit. Since its creation in 2001, the Texas Legislature has not appropriated any funds to the Port Access Account Fund. TRANSPORTATION REINVESTMENT ZONE (TRZ) Due to the lack of direct funding, some Texas ports are beginning to explore other funding mechanisms offered by the state. During the 83 rd Texas Legislature, ports were made eligible to use Transportation Reinvestment Zones (TRZ) as a funding tool. A TRZ is a delineated, underdeveloped area, where a new transportation project is to be built. Generally TRZs allow a sponsoring entity to capture incremental tax revenue above a baseline year to be reinvested in a project designated within the zone. It is assumed that tax revenues will increase due to infrastructure projects, so that the revenue increase can be appropriated to pay for the cost of new infrastructure. TRZs may be set up by a county or a city. A TRZ must also be deemed underdeveloped and the proposed project must: 1) promote public safety; 2) facilitate the improvement, development, or redevelopment of property; 3) facilitate the movement of traffic; and 4) enhance the local entity s ability to sponsor transportation projects. Several ports are exploring the use of this tool. The Ports of Beaumont and Port Arthur, along with the Sabine Neches Navigation District, have created TRZs, as has the Port of Brownsville. TEXAS MOBILITY FUND Created by the 77th Texas Legislature, the Texas Mobility Fund is a revolving fund that issues bonds secured by future revenues so that transportation projects can be built more quickly. In the 83rd Session, the Texas Legislature passed language, subject to the passage of a constitutional amendment, allowing the Texas Mobility Fund to finance port improvements. With this in mind, the Sabine Neches Navigation District has requested a loan from the Texas Mobility Fund to assist with paying the non-federal portion of the deepening project for the Sabine Neches waterway. OTHER STATE AND FEDERAL FUNDING SOURCES There are other state and federal funding sources that could be used to fund new transportation infrastructure. Below is a partial listing of available programs: 50

64 Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grants TIGER grants are funded through a competitive selection process that has allocated $4.1 billion, since 2009, for projects that promise to achieve critical national objectives and have a significant impact on the Nation, a region, or a metropolitan area. Successful projects are also expected to have a state or local match (historically 2:1). To date, over $400 million of TIGER money has been allocated to port projects across the United States. There have been three portrelated TIGER grants awarded in Texas over the life of the program: 1. Brownsville Navigation District In 2012, $12,000,000 was awarded for the construction of a 600-foot cargo dock to expand marine highway container operations. 2. Port of Corpus Christi In 2012, $10,000,000 was awarded to build a rail siding. 3. Port of Houston In 2013, $10,000,000 was awarded to the Port of Houston to extend the Bayport Terminal wharf from 3,300 feet in length to 4,000 feet in length. Regional Mobility Authority (RMA) RMAs are political subdivisions of the state created by the Legislature. RMAs have bonding authority and can finance, design, construct, operate, maintain, expand or extend transportation projects. The projects undertaken by RMAs may be tolled or non-tolled, but as a matter of practice all RMA roadway projects to-date have been tolled. Cameron County is the only county in the state with an RMA that also has maritime ports (Ports of Brownsville, Port Isabel, and Harlingen). Transportation Development Credits States receive federal transportation development credits for investment in toll facilities (excluding maintenance, debt service, and returns to investors). Three-quarters of these credits are assigned to the MPO where the project occurred and the remaining quarter is assigned to the Texas Transportation Commission to use around the state of Texas. Transportation Development Credits can be used meet federal matching requirements for a project but they do not convert into actual monies that can be used to pay for a project s construction. WATER RESOURCES REFORM & DEVELOPMENT ACT (WRRDA) OF 2014 On June 10, 2014 the President signed the Water Resources Reform & Development Act (WRRDA) of 2014, which was a bipartisan effort to address many of the funding shortfalls and inefficiencies that ports experience when developing projects. Some of the major actions of this important piece of legislation include: 51

65 Requires an Assessment of the GIWW The USACE is required to conduct an assessment of the operations and maintenance needs of the GIWW. This assessment was specifically requested by TxDOT and the Texas Delegation. Authorizes Channel Improvement Projects Authorizes the final feasibility studies for two Texas navigation projects. The first navigation project is the Sabine Neches Waterway which has an estimated cost of $1,114,040,000 with a $748,070,000 federal contribution. The second navigation project is Freeport Harbor with a total estimated cost of $239,300,000 and a federal contribution of $121,000,000. The WRRDA also authorizes project modification to the Corpus Christi Ship Channel project, which has a total estimated cost of $353,231,000 and a federal contribution of $182,582,000. Streamlines Regulatory Requirements USACE studies for projects are now limited to three years in length. Prior to this limit, it was not uncommon for project studies to require years for completion. Multiple divisions and the hierarchy of the USACE must now view studies concurrently rather than sequentially. The process of studies has been consolidated and duplicative analyses have been eliminated. All of these actions are expected to expedite project implementation and reduce expenditures during the preparation of the studies, as well as reduce the opportunity costs related to delays. Expands Funding Opportunities WRRDA allows various tools to assist ports with funding projects. Examples include limited credit for local agencies that carry out operations and maintenance on authorized navigation projects. It also establishes a Water Infrastructure Public Private Partnership Program modelled on the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Supports Underserved, Emerging Ports WRRDA requires that not less than 10 percent of the allocated funds be directed towards emerging harbors between FY 2015 and FY Emerging harbors are defined as those that handle less than 1 million tons of cargo annually. The remaining portion of funding is to be allocated to high use and moderate use harbors. High use harbors are defined as 10 million tons or more of cargo annually. Moderate use harbors are defined as more than 1 million tons but less than 10 million tons annually. In addition to the 90/10 percent split, the USACE must authorize 5 percent of the funding to Underserved Harbors, which are defined moderate use or emerging harbors maintained at less than authorized dimensions for six fiscal years. 52

66 Port Designations under the Water Resources Reform & Development Act of 2014 HIGH USE HARBORS Name Short Tons Port of Houston 238,185,582 Port of Beaumont 78,515,010 Port of Corpus Christi 69,001,357 Port of Texas City 56,721,627 Port of Port Arthur 30,618,123 Port Freeport 22,084,551 Port of Galveston 11,618,368 Calhoun Port Authority 11,589,123 MODERATE USE HARBORS Name Short Tons Port of Brownsville 5,600,977 Port of Victoria 4,517,632 EMERGING PORTS Name Short Tons Port of Harlingen 800,000 Port of Orange 732,450 Port of Port Isabel 120,000 Rectifies Allocation of the Harbor Maintenance Trust Fund Tax One of the most important elements of the WRRDA is that it stops the reallocation of funds collected specifically for the purpose of harbor maintenance. This change will occur incrementally so that by FY 2025, 100 percent of the revenue collected from the Harbor Maintenance Tax (HMT) will go to that purpose. Provides Discretionary Funding WRRDA authorizes discretionary appropriations of $50 million per year between FY 2015 and FY 2018 for qualifying ports designated as donor or energy transfer ports (split equally), with the potential to extend these appropriations through FY A donor port is defined as one that collects at least $15 million in HMT annually and received less than 25% of the collected HMT back in the last five fiscal years and handled more than 2 million TEUs during FY 2012 (unfortunately, the Port of Houston falls short of this threshold). An Energy Transfer Port is a port that is subject to the HMT under CFR 19 Section at which energy commodities (petroleum products, natural gas, coal, bio fuels, wind and solar energy components) comprised greater than 25% of all commercial activity by tonnage in FY2012 and through which more than 40 million tons of cargo were transported 53

67 during FY Among the public ports, the Ports of Houston, Corpus Christi, Texas City, and Beaumont meet these criteria. PORT FUNDING TOOLS IN OTHER GULF STATES While the Texas Legislature has not appropriated funds to the Texas Port Access Account Fund, other states along the Gulf of Mexico are actively funding their ports to improve their competitiveness. The sections below provide a summary of the various programs that are available to ports in Louisiana, Mississippi, and Florida. Alabama, like Texas, does not provide any state funds to its ports (despite operating the Port of Mobile under the Alabama Ports Authority) and expects their ports to be completely self-sufficient. Louisiana The state of Louisiana is Texas s closest competitor for existing business and has two statefunded port development programs, which are described below: Port Construction and Development Priority Program - This program is open to all public port authorities in Louisiana when considering a new capital project. A wide variety of projects may be funded through this program, as long as they are maritime-related and have an immediate economic impact. Feasibility projects must be submitted in order to request funds with approved projects able to receive up to $15 million over three years and the ports must be willing to pay for engineering costs and 10 percent of construction costs. Additionally, projects must have a Rate of Return on the state s investment of at least and a cost-benefit ratio greater than 1.0. In order to be approved, recommended projects must be submitted to the House and Senate Committees on Transportation, Highways, and Public Works to be approved and sent to the Louisiana Legislature for funding. During 2012, $19.7 million was appropriated to projects in this program. Delta Regional Authority States Economic Development Assistance Program - Participating member states, local governments, public bodies, and non-profit entities of the DRA are eligible for the SEDAP program (private/for-profit entities are ineligible for this program). Additionally, any entities owing federal debt are not eligible for funds until the debt has been paid in full. Four funding categories are available through the program: basic public infrastructure in distressed counties; transportation infrastructure for the purpose of economic development and growth; business development; and job training or employmentrelated education. Mississippi Of the 16 public ports in Mississippi, only two are directly controlled by the state while 14 are operated under various governance structures at the city or county level. Several programs are available to these ports to fund capital improvement projects. However, the overall funds available to ports each year is fairly limited. 54

68 Multimodal Transportation Capital Improvement Program Fund - This program was enacted by the Mississippi Legislature in 2000 as a funding mechanism for short line railroads, public airports, mass transit, and ports. No specific annual amount is deposited to the fund in a given year but, historically, approximately $10 million per annum is appropriated by the Mississippi Legislature (Wagner et al, 2009). Of the deposited amount, 38 percent may be utilized by the ports for approved projects. No local match is required to access funds derived from this program, but all funds allocated to a project must be spent in that calendar year and cannot be carried over to the following year. As of 2005, $26.6 million had been funded through this program of $67.3 million requested. Intermodal Connector Improvement Program - The Intermodal Connector Improvement Program (which is dedicated to roadways, access roads, marshalling areas, etc.) is administered by the Mississippi Department of Transportation from the federal funds that generally reflect the Department s multi-year construction schedule. To date, the ports have received approximately $14 million of these federal funds. (Wagner et al, 2009) Port Revitalization Revolving Loan Program - The Mississippi Development Authority provides low-interest loans through the Port Revitalization Revolving Loan Program. These loans, made available to public port authorities, are meant to aid capital improvement projects which promote commerce and economic growth in Mississippi. The loans are not to exceed $750,000 and have a 3% interest rate with a 10-year pay-out period. Alabama The Alabama Ports Authority administers all public ports in the State. According to a report prepared by Wagner et al. (2009), the Ports Authority does not receive any support from the State of Alabama. Alabama s ports are dependent on their own revenues in order to fulfill monetary obligations for operations and capital spending. Florida Florida s state legislature has established several funding programs available to its ports. Available funds vary from year to year, with an additional $50 million awarded in The four main programs identified by Wagner et al. (2009) are: Florida Ports Financing Commission Loan Program - This program provides access to bonds for capital projects by the Florida Seaport Transportation and Economic Development Council that are accepted by the Florida Ports Financing Commission. The funds are made available through the sale of bonds that are then loaned to accepted port projects. Repayment of the bonds is drawn solely from funds generated by motor vehicle registration fees to pay debt service. This program resulted in a $25 million annual expenditure on the debt service. 55

69 Florida Seaport Transportation and Economic Development Program - Florida makes $15 million available annually for capital improvement projects at its ports, with $8 million dedicated by law and $7 million in additional funding from FDOT s annual budget. Funds are only awarded with a match on approved projects and for projects that are consistent with a port s master planning documents. A wide variety of projects are eligible for these funds: transportation facilities; harbor dredging or deepening; construction or rehabilitation of docks, wharves, or other maritime facilities; acquiring Vessel Tracking Systems; container cranes; land acquisition; environmental protection projects; seaport intermodal access projects which are part of the five-year Florida Seaport Mission plan; and transportation facilities not part of the DOT work program. Limits on use of this fund are set at $7 million in a given year and $30 million during any 5-calendar year period for a single port (Wagner et al, 2009). State Infrastructure Bank - This option for financing capital projects is generally used in conjunction with other funding mechanisms. The SIB is a revolving loan and credit enhancement program that consists of three accounts: 1) a federally funded account derived from federal and state-matched funds; 2) a state funded account derived from state funds and bond proceeds; and 3) an emergency account for declared state emergencies that would also be funded by state monies and bond proceeds. For projects drawn from the federally funded account, all requirements of SAFTEA-LU must be followed. State funded projects are limited to transportation facility projects on the State Highway System or that provide for enhanced mobility or intermodal connectivity with the state s transportation system, airports, seaports, rail facilities, and other facilities that increase the movement of people, cargo, and freight. Repayments to the SIB are required to begin within 5 years of project completion or when the project is open to traffic, whichever is later. Repayment cannot exceed 30 years from first payment (Wagner et al, 2009). FDOT District Intermodal Funds - Discretionary funds for intermodal projects are available to ports within each FDOT district. Intermodal funds generally require a 50/50 match (Wagner et al., 2009). SUMMARY Although Texas ports are thriving under current conditions, the lack of state funding for port infrastructure improvements and equipment is increasingly being viewed as a concern by many Texas ports (although this view is not unanimous). With the exception of Alabama, other states along the Gulf of Mexico are providing meaningful state funds to their ports and these funds are improving their competitiveness. Given the growing competition between states for new jobs and job retention, it is conceivable that current funding disadvantage for Texas ports will one day have tangible consequences. 56

70 SECTION 5 TOPICS FOR FUTURE CONSIDERATION BY THE TEXAS TRANSPORTATION COMMISSION It is generally recognized by the Texas maritime industry that this is a golden age. Texas ports have been buoyed by the state s remarkable demographic and economic growth over the past two decades, the sustained and intensifying pace of globalization, and the current boon in the oil and gas industry that was sparked by the widespread use of hydraulic fracturing. Even the impacts of the severe Recession were handled by Texas ports with fewer consequences than were experienced by ports in many other regions of the nation. As a result, cargo volumes have been strong and many Texas ports are dealing with the desirable concerns related to accommodating growing demand. But, alongside the positive, there is also an ongoing recognition of the need to deepen ship channels and maintain the GIWW, as well as to replace aging infrastructure and equipment at many ports. If Texas ports do not have the facilities (docks, warehouses, channel depth, etc.) to handle future cargo growth, then the cargo will move through ports in neighboring states, resulting in a loss of jobs, revenue and economic output. TxDOT s renewed commitment to Texas ports provides an opportunity to support their growth by providing targeted assistance to build, expand, or upgrade existing roadway infrastructure, supporting the continued dredging of the GIWW (as its non-federal sponsor) and the state s ship channels, and, possibly, to provide other forms of assistance that will improve ports competitiveness. The current golden age cannot be taken for granted. As the state s transportation agency, TxDOT s role is to coordinate the efficient movement of goods across all modes, despite statutory and constitutional requirements that mostly limit its activities to the state s highway system. Nonetheless, TxDOT can still be an effective enabler of Texas ports by improving landside access and representing the overall interests of the Texas s freight transportation network. In some instances, this representation could be as simple as legitimizing the needs of individual ports as they interact with federal agencies that provide project funding. In other cases, it could require providing technical expertise or even considering requests for funding support, if the legal framework is in place. It is also important to recognize that macro-level trends such as the growing national economy, the Panama Canal expansion, and the shale oil and gas boon are among the major driving forces behind growing port demand, but they are explanations not solutions. The practical solutions for handling new demand are what the ports and TxDOT must be deal with at a localized level and, sometimes, even at the micro-level, such as a road, a railroad, a channel, a terminal, a dock, or a piece of equipment. The sections below identify key areas for future investigation and consideration by the Texas Transportation Commission that were identified during the preparation of this report. Many 57

71 of these topics were identified by the ports through their interactions with TxDOT and previously described questionnaires and their participation at a PAAC-hosted workshop held in March Explore Investment Opportunities for Landside Infrastructure Consider identifying categories of key infrastructure improvements for ports that TxDOT can assist with under its current constitutional and statutory limitations (such as overweight truck corridors, removal of at-grade rail crossings, air draft clearance, etc.) and request that ports submit competitive requests to TxDOT for funding those projects. Among the suggested improvements, overweight truck corridors are frequently mentioned by the ports as an asset that would make them competitive with other ports outside of Texas, since it would allow shippers to move goods with fewer truck drays and promote the development of distribution centers. Additionally, there are needed transportation improvement projects around the state that would assist Texas ports with moving goods to and from markets. These projects should also be given additional consideration. Provide Leadership for Texas s Dredging Needs Many of Texas s deep water ports are pursing permits or funding to widen or deepen their ship channel. At the same time, many in the maritime industry are very concerned about the USACE s lack of resources to maintain the GIWW at its authorized depth. As the state s transportation agency and the non-federal sponsor for the GIWW, Texas ports are looking to TxDOT to provide leadership for the state s dredging needs. This desired leadership is not necessarily related to the State of Texas funding for dredging projects. Rather, Texas ports are looking for TxDOT to use its influence and take a proactive role with the USACE to actively promote dredging projects along Texas port channels and GIWW. Although direct funding of needed dredging project or even performing dredging itself are options, most dredging experts see these solutions as creating new problems for USACE, TxDOT, and Texas ports. Transportation System Approach TxDOT s statutory and constitutional focus is to build and maintain the state s roadway network, so it is natural that roadway concerns dominate its attention. But, improving freight mobility for other transportation modes can also be a means of meeting one of TxDOT s key responsibilities, particularly as these other modes mitigate congestion by maintaining or increasing their share of freight movements. The role that Texas ports have in handling intrastate freight movements, as discussed in Appendix B, is critical to avoiding even greater congestion on Texas highways. Several Texas ports have expressed an interest in the development of a marine highway along the Texas segment of the GIWW. A marine highway along the Texas Coast could be used to encourage an even greater volume of freight movements to occur along the GIWW, which would help to mitigate congestion along the state s roadway and railway networks at a relatively low cost. 58

72 Encourage Commodity Diversification at Texas Ports Texas s maritime trade is highly dependent upon the petrochemical industry for the cargoes it handles. While this specialization has unquestionably benefited Texas ports, it would also be prudent to encourage growth in other commodity markets so that natural market fluctuations have less impact on cargo volumes. Rather than attempt to directly influence the types of commodities handled at Texas ports, any strategy would likely focus on taking advantage of new opportunities and may require additional support from the State of Texas. Strengthen Relations with Local Port Authorities and Administration - The Commission and TxDOT s staff are currently entering into a new era of coordination and collaboration with Texas s port authorities, so they must be cognizant of the inevitable autonomy issues that can arise when working with another entity of the state. Port administrators are particularly aware of these issues, since they alternately desire to work closely with TxDOT and work closely with and respond to the port commission that has authority over them. Additionally, because ports engage in revenue generating activities that occur within an environment that has high capital expenditures and an environment that is intensely competitive, their administrators must constantly mitigate the risks of participating in any program, by ensuring that the port s needs or ambitions are met and its risks rewarded. This approach differs from most other public agencies, which are expected to provide services to the public that would not be otherwise available. Put another way, most public agencies do not actively compete against other state agencies to provide the same or similar service to the public. However, this is what Texas ports do. TxDOT will be most effective in supporting Texas ports, if it engages them with a nuanced understanding of this unique relationship. Port Infrastructure Funding - Texas is among a minority of U.S. coastal states that do not provide state funds for their ports. Within the Gulf of Mexico, Louisiana and Florida are especially active at providing state funding. Although Texas ports have been able to compete thus far by annually investing hundreds of millions of dollars of their own money, competition with ports in states that do provide financial support raises the stakes. The most direct mechanism for providing funds for port improvements would be for the Legislature to obligate funds to the Port Access Account Fund, found in Chapter 55 of the Texas Transportation Code. Funding to ports could be allocated by categories, so that each port has an opportunity to receive funding relative to its size or function. Examples of these categorizations can be found in the table in the introductory section (e.g. small, medium, large, comprehensive, specialized, niche, etc.). Pursue Further Study of Critical Maritime Issues While this report has covered a number of issues that are important to Texas ports, many of the topics require more detail for planning and policy purposes, while others have yet to be studied. Examples of future studies that would benefit the Commission, TxDOT s Maritime Division, and Texas ports include: detailed maritime trade analyses at the region, country, or commodity level; research into the 59

73 opportunities for Public-Private Partnerships; implementing intelligent transportation systems (ITS) around ports; and continued monitoring of macroeconomic and maritime industry trends. 60

74 SOURCES American Association of Port Authorities AAPA Seaports of the Americas 2014 Membership Directory. Naylor, LLC: Gainesville, FL. Armstrong, John H The Railroad - What It Is, What It Does: The Introduction to Railroading 4 th ed. Simmons-Boardman Books, Inc.: Omaha, NE. Calhoun Port Authority Calhoun Port Authority Website. Calhoun Port Authority Annual Financial Report For the Year Ended June 30, Foreign Trade Zones Board Frequently Asked Questions. Jackson, Alan A. (2006). The Railway Dictionary (4th ed.). Sutton Publishing Ltd.: United Kingdom. Kruse, J.C. and N. Hutson NCFRP 5: North American Marine Highways. Transportation Research Board, National Academies: Washington, D.C. Martin Associates The Local and Regional Economic Impacts of the Port of Beaumont and Port Arthur. Lancaster, PA The Local and Regional Economic Impacts of the Port of Brownsville. Lancaster, PA The Local and Regional Economic Impacts of the Port of Corpus Christi. Lancaster, PA. PA The Local and Regional Economic Impacts of Port Freeport. Lancaster, The Local and Regional Economic Impacts of the Port of Galveston. Lancaster, PA The Local and Regional Economic Impacts of the Port of Houston Lancaster, PA. Port of Beaumont Port of Beaumont Website. 61

75 Port of Brownsville Port of Brownsville Website. Port of Corpus Christi Port of Corpus Christi Website. Port Freeport Port Freeport Website. Port of Galveston Port of Galveston Website. Port of Harlingen Authority Port of Harlingen Authority Website. Port of Houston Authority Port of Houston Authority Website. Port Isabel-San Benito Navigation District Port Isabel-San Benito Navigation District Website. Port of Orange Port of Orange Website. Port of Palacios Matagorda County Navigation District No Port of Palacios Website. Port of Port Arthur Port of Port Arthur Website. Port of Port Mansfield Willacy County Navigation District Port of Port Mansfield. Port of Texas City Port of Texas City Website. Port of Victoria Port of Victoria website. Port of Victoria June 2013 Newsletter. Vol. 1, Issue 1. Siegesmund, P. et al Guide to the Economic Value of Texas Ports. Report P1. Center for Transportation Research, University of Texas at Austin: Austin, TX. Texas Ports Association Texas Ports Association Website. U.S. Maritime Administration (MARAD) National Port Readiness Network. 62

76 63 Wagner, D. A., J Cocchiara, and J.M. Orlesh Jr Report on State Financial Assistance for Capital Improvements at Public Ports in the United States. The Ports Association of Louisiana.

77 APPENDIX A OVERVIEW OF CURRENT MACROECONOMIC TRENDS AFFECTING TEXAS PORTS 64

78 INTRODUCTION Freight transportation trends are inherently driven by macroeconomic factors at the regional, national, and global level and Texas s maritime ports are no exception to this rule. As of mid-2014, Texas ports have been operating within a period of strong demand and new opportunities, much of which have been sparked by exploration and production in the energy industry. However, strong population growth and general economic expansion in Texas have also provided a firm underpinning to sustain this growth. On the horizon is the completed Panama Canal expansion, which is anticipated to be a positive contributor to the Texas economy and is expected to open in the next 18 to 24 months. STATEWIDE ECONOMIC TRENDS The stability and growth of the Texas economy during the nationwide economic turmoil of 2008 and its aftermath is so highly touted that it is often referred to as a miracle. While the state s robust economic landscape is certainly worthy of accolades, the reason for its health and future growth is more than just a miraculous event, it is the result of positive trends in population, employment, production, and trade among other things. To better understand the state s economy as a whole and its future direction, a closer look at these positive trends is warranted. Population helps drive any economy. A state s residents need housing, goods, and services; while, at the same time, these residents are also become an important ingredient, as both employees and founders of the companies providing those items in the state and beyond. The last two decades have seen a steady upward trend in population migration flows from both within the country and internationally. 65

79 Texas s Population Trends, Sources: U. S. Census Bureau and the Real Estate Center at Texas A&M University, In absolute numbers, Texas led the nation between July 1, 2012 and July 1, 2013 adding 387,000 residents while coming in third in terms of rate of growth, only falling behind an oilboom fueled North Dakota and Washington D.C. (Young, 2013). While population growth is helping to drive the Texas economy, a closer look at that growth offers insight into future trends for the economy and the state. The dynamics of the state s population growth have shifted over the past few decades. Where the population flows are originating speaks to the fact that Texas is not just a popular destination for international migration largely from Mexico and Central America but increasingly a top location for residents of other states. A mix of increased border security after the September 11, 2001 terrorist attacks and nationwide economic crises in 2001 and in 2008 have resulted in a steady decline in international migration from a high of almost 160,000 in 2001 to 64,187 in 2013 (Snyder, M, 2008 and Gilmer and Hopper, 2001). At the same time, the ability of Texas to foster a diversity of industry, the boon in energy due to hydraulic fracturing and rising energy prices, and comparatively affordable cost-of-living combined to make the state an increasingly attractive relocation spot for domestic migration hitting a high of 232,616 in 2006 and remaining above 100,000 in the following years save for 2010 (Thompson, 2010). 66

80 Net Migration to Texas: Sources: U. S. Census Bureau; Real Estate Center at Texas A&M University The state s population growth is forecasted to continue for several decades. Using a conservative formula to estimate future trends, the Office of the State Demographer suggests Texas will be home to just over 41 million residents by 2050 (Potter and Hoque, 2013). The steady influx of new residents detailed here has been met with expanding employment opportunities. While many other states still struggle with replacing jobs lost to the economic crisis in 2008, Texas continues to add them at a quickening pace. By 2011, the state returned to pre-recessionary employment levels, by 2012, it surpassed them. 67

81 Employment Growth in Texas: Sources: Bureau of Labor Statistics and the Federal Reserve Bank of Dallas, The state s diverse economy is responsible for this steady rise in employment. Much like Texas transformation into an urbanized state with continuing connections to its rural past, the Texas economy has grown to add industries like health and education, business services, and information services to the state s traditional industries of energy and agriculture. With the state s economy and associated employment spread out across many industrial sectors, Texas was able to weather the 2008 economic crisis with the success of some sectors compensating for the underperformance of others. For example, examining job growth by industrial sector between 2010 and 2013 illustrates how positive gains in energy and mining occupations helped balance losses in sectors like construction and information services. There are signs of the state s economy slowing down with only the information services and government sectors registering growth in employment from 2012 to 2013, while other sectors flattened or experienced losses (Phillips and Slijk, 2014). Despite these losses and generalized cooling, Texas remains a leader in job growth falling behind only North Dakota and Florida in 2013 and the state s varying industrial sectors are forecasted to grow during 2014 (Phillips and Slijk, 2014). 68

82 Annual Employment Change in Texas by Industry: Note: Not all industries included; percentages do not total 100. Sources: Bureau of Labor Statistics and Federal Reserve Bank of Dallas, The strength of the Texas economy not only encompasses the state, but extends beyond its borders engaging with other economies internationally. Texas is the leading export state in the country (Wright, no date). The nature of the state s international trade is diverse and facilitated by the state s extensive border ports-of-entry, maritime ports, and airport infrastructure. The export of petroleum products dwarfs other offerings from Texas in terms of value, but the list of products exported encompasses everything from electronics to propane. 69

83 Top 10 Texas Exports: Rank Description 2012 Value 2013 Value 2012 % Share 2013 % Share % Change 1 Petrol Oil Bitumous Mineral (Not Crude) Etc Nt Bio $34,282 $36, Lt Oils, Preps Gt=70% Petroleum/Bitum Nt Biod $19,777 $21, Parts & Accessories For Adp Machines & Units $6,731 $9, Processors And Controllers, Integrated Electronic $4,644 $4, Civilian Aircraft, Engines, And Parts $4,955 $4, Machines for the Recept./Convers./Transmis./Regen. of Voice/Image $5,085 $4, Propane, Liquefied $2,471 $4, Parts For Boring Or Sinking Machinery, NESOI $4,881 $4, Acyclic Ethers (Excluding Diethyl Ether) NESOI $2,909 $2, Parts And Accessories of Motor Vehicles, NESOI $3,815 $2, Note: Value in millions of dollars based on 2013 dollar value Source: U.S. Census Bureau The countries of Mexico and Canada are the leading destinations for Texan products and account for almost 45 percent of its export trade. While a significant proportion of NAFTA export trade occurs as surface trade (i.e. moves by land modes such as truck, rail, or pipeline), another significant share moves over water. The remaining 55 percent of Texas s trade is with countries that require moving cargoes by maritime vessels or airplanes, exclusively. Top 10 Countries for Texas Exports: Rank Country 2012 Value 2013 Value 2012 % 2013 % Share Share % Change 1 Mexico $94,456 $100, Canada $23,853 $25, Brazil $10,036 $10, China $10,306 $10, Netherlands $9,612 $9, South Korea $7,781 $7, Colombia $5,629 $7, Singapore $6,387 $5, Venezuela $6,943 $5, Japan $4,673 $5, Note: Value in millions of dollars based on 2013 dollar value Source: U.S. Census Bureau,

84 ENERGY PRODUCTION AND EXPLORATION The emergence of gas as a primary export item for Texas is mirrored by other petroleum products produced by the state and distributed internationally. This specifically impacts Texas in light of the state s port infrastructure, which is struggling to keep up with an energy boon speculated to last well into the future (Blackmon, 2013 and Murtaugh, 2014). Although the increased domestic production of oil and gas has caused imports to taper off the last few years at the Houston-Galveston Customs District, this decline is more than offset by sharply higher exports of oil and gas largely due to the high productivity of the Eagle Ford Shale oil and gas play in South Texas (Jordan, 2013). To place this boon and its impact on ports in the Gulf into perspective, the managing director of the Port of Corpus Christi notes that in his 27 years of employment at the port, the volume of activity in the last two years has outstripped activity in the prior 25 years combined (Murtaugh, 2014). The number of active natural gas production wells in Texas has steadily risen since 1990, with an increase of more than 40,000 wells between 2000 and 2010 alone (compared with about 10,000 new wells between 1990 and 2000). As of 2012, there were an estimated 102,218 active natural gas wells in the State. Combinations of horizontal drilling and hydraulic fracturing have led to this dramatic growth of natural gas and oil production in several regions of the state. Texas is also benefiting from the oil production activities located in other areas of the United States. The Port of Beaumont, for example, handles oil produced in Colorado and Wyoming. The port s recently completed terminal receives crude oil via rail tank car and then transloads the oil into barges that carry it to a refinery. These types of transloading activities are growing because new production from hydraulic fracturing is occurring in locations that lie outside of the nation s existing oil pipeline network and the process of building new pipelines has become very slow or uneconomical. 71

85 Operating Gas Wells in Texas, , , ,218 (2012) 90,000 Operating Wells 80,000 70,000 60,000 50,000 40, Source: Railroad Commission of Texas, The production of natural gas and crude oil has risen sharply to match the increase in drilling. Between 1990 and 2004, natural gas production was variable, resulting in a modest overall increase, despite the constantly growing number of wells. However, starting in 2005, production volumes grew dramatically from 5.7 billion Thousand Cubic Feet (Mcf) to 7.5 billion Mcf in 2009, due to high oil prices and the widespread practice of hydraulic fracturing. Gas production volumes fell during the following years, but were still greater than 7.1 billion Mcf during The reversal of declining Texas crude oil production has been even more remarkable. From 1990 to 2007, Texas s crude oil production fell by almost half to 336,222 thousand barrels (Mbbl) annually. However, during the two-year period between 2010 and 2012, crude oil production increased from 356,911 Mbbl to 533,141 Mbbl or by nearly 50 percent. The driving force behind this growth was the Eagle Ford Shale in South Texas, which produces a very light, sweet crude oil. 72

86 Annual Natural Gas (Mcf) and Oil (Mbbl) Production in Texas, ,000,000, ,000 7,500,000, , ,000 7,000,000, ,000 6,500,000, ,000 6,000,000, , ,000 5,500,000, ,000 5,000,000, ,000 Natural Gas (Mcf) Oil (Mbbl) Source: Railroad Commission of Texas, The dramatic growth of oil and gas production has had a significant impact on Texas ports. Ports in South Texas have seen a strong uptick in their tonnage handled as they move frac sand, pipes, machinery, and other cargoes related to oil exploration and production in the Eagle Ford Shale. However, the impacts are not limited to these ports. The Port of Beaumont is handling large volumes of crude oil produced in Colorado and Wyoming and many private terminals are receiving oil and gas for refining or processing. Producers of natural gas are also looking to export the vast quantities of natural gas that is being produced and a number of new liquefaction facilities are being planned along the Texas Gulf Coast. PANAMA CANAL EXPANSION Among all the potential factors that could affect future cargo volumes at Texas ports, the expansion of the Panama Canal has arguably generated the most interest and speculation. While the current expansion of the Panama Canal is expected to increase the volume of cargoes handled at Texas s maritime ports, most of the public narrative has focused on handling imported goods, primarily goods imported from Asia (mostly China) and largely for consumer markets. However, this interpretation does not necessarily reflect how the Panama Canal expansion might affect Texas ports. To start, the predominance of tonnage transiting the canal flows from the Atlantic Ocean to the Pacific Ocean, as opposed to the 73

87 Pacific Ocean to the Atlantic Ocean. It should be noted that the commodity flows on this corridor are dominated by low-value bulk goods. In the case of higher value goods, such as breakbulk, RO/RO, and containerized goods, the contraflow is heavier. More specifically, among the cargoes transiting the canal from the eastern United States, exports with origins or destinations at ports in the region outweigh imports (measured by tonnage) by approximately a 2:1 margin. Gulf Coast ports, which include Texas ports and ports in other states along the Gulf of Mexico, ship approximately three-quarters of the westbound cargo transiting the Panama Canal. On the import side, Gulf ports receive approximately one-third of all imports destined for the eastern United States. Tonnage of Cargo Transiting the Panama Canal and Originating from the Eastern United States (Long Tons), FY 2000-FY ,000 Long Tons of Cargo (in Thousands) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Gulf Ports South Atlantic Ports North Atlantic Ports Great Lakes Ports Other U.S. Ports Source: Panama Canal Authority,

88 Tonnage of Cargo Transiting the Panama Canal and Destined for the Eastern United States (Long Tons), FY 2000-FY ,000 60,000 Long Tons of Cargo (in Thousands) 50,000 40,000 30,000 20,000 10,000 0 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Gulf Ports Great Lakes Ports North Atlantic Ports South Atlantic Ports Other U.S. Ports Source: Panama Canal Authority, Among the cargoes handled at U.S. Gulf ports and transiting the Panama Canal, most of the export trade is with countries in Asia. However, trade with western Latin America has grown significantly. Trade between U.S. Gulf ports and countries in the Pacific grew between FY 2008 and FY 2012, while exports to Asia from Gulf ports were roughly the same in FY 2012 as they were in FY

89 Destinations of Cargo Transiting the Panama Canal from U.S. Gulf Ports (Long Tons), FY 2000-FY ,000 60,000 Long Tons of Cargo (in Thousands) 50,000 40,000 30,000 20,000 10,000 0 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Asia South America Central America West Coast Canada Oceania United States Source: Panama Canal Authority, The trends for goods imported into Gulf ports through the Panama Canal are also interesting. Noticeably, the overall volume of trade peaked during FY 2006, which was likely a result of the housing bubble. However, once the bubble burst, historic trade patterns reestablished themselves so that in FY 2012, the total tonnage of goods imported into the U.S. Gulf through the Panama Canal was roughly the same as it was during FY Throughout this period, Asian countries were the primary source of imports for Gulf ports, followed by the western coast of South America. Unlike exports, Central America and Mexico did not contribute a major share of the import commodities transiting the Panama Canal. It is also important to note that these data do not show a historic trend towards increasing cargo volumes with Asia through the canal, despite a greater interest in all-water services to the Atlantic Coast ports during this same period. This would imply that the Panama Canal s added capacity will not lead to a significant and immediate increase in import volumes. On the other hand, within these aggregate trends, individual ports have seen significant changes. The Port of Houston, for example, had virtually no direct all water cargo to and from Asia, before During 2013, the volume of containerized trade on the corridor was approximately 300,000 TEUs. The Port of Houston expects this trade volume to grow further once the Panama Canal expansion is complete. However, the impacts of the Panama Canal expansion are not expected to be uniform. A few ports will likely experience noticeable increases in related cargo tonnage but many are likely to see little or no impact. Other factors that could affect the future flow of trade are the pricing of rail transportation from Pacific Coast ports, congestion within the Pacific Coast ports, and transit tolls charged by the 76

90 Panama Canal Authority. Its current toll rates are already causing some carriers to shift to the Suez Canal to remain profitable. Tonnage of Cargo Transiting the Panama Canal and Destined for U.S. Gulf Ports (Long Tons), FY 2000-FY ,000 Long Tons of Cargo (in Thousands) 25,000 20,000 15,000 10,000 5,000 0 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Asia South America Central America Oceania United States Canada Source: Panama Canal Authority, Intermodal Containers During 2011, Texas ports handled more than two-thirds of the loaded twenty-foot equivalent units (TEUs) in the Gulf of Mexico. The Houston, Texas Customs Port, which contains the Port of Houston s container terminals, handled almost 1.42 million loaded TEUs or percent of the U.S. Gulf market. The next largest volume of containers was handled in the New Orleans custom district (307,121 TEUs or percent, overall), followed by the customs districts of Gulfport, Mississippi (182,865 TEUs, 8.45 percent) and Mobile, Alabama (107,939 TEUs, 4.99 percent). Texas s other customs districts with container ports were Freeport, which handled 51,533 (2.38 percent) during 2011 and Galveston, which handled 13,955 TEUs or 0.65 percent of the U.S. Gulf ports market share. 77

91 Volume of Intermodal Containers (TEUs) Handled at U.S. Gulf of Mexico Ports Rank Port District Share 1 Houston, TX 1,416,745 1,374,437 1,255,153 1,346,309 1,418, % 2 New Orleans, LA 258, , , , , % 3 Gulfport, MS 171, , , , , % 4 Mobile, AL 68,379 75,310 87,546 82, , % 5 Freeport, TX 59,837 56,201 57,689 57,230 51, % 6 Panama City, FL 42,382 37,448 31,141 29,023 33, % 7 Tampa, FL 26,686 31,080 38,706 31,122 25, % 8 Galveston, TX 6,228 7,718 8,542 10,922 13, % Source: U.S. Maritime Administration, Given that Texas is already the primary origin and destination for containerships in the Gulf of Mexico, it is generally expected that the Panama Canal expansion will have a positive overall impact on intermodal container volumes at Texas ports. However, most industry experts see it as unlikely that the largest containerships (say 12,000 to 13,000 TEU containerships) would immediately call upon the U.S. Gulf Coast. On the other hand, it is likely that ships in the 8,000 to 10,000 TEU range will traverse the canal and call on the Port of Houston. In fact, some ships in the 6,000 to 8,000 TEU range already call on the port. Although these vessels would require a 50-foot draft, if they were fully loaded, when they call on the Port of Houston, they are lighter (i.e. not utilizing the entire TEU capacity of the ship) and the vessel can be safely navigated within a 45-foot channel. It is unlikely that the largest ships that can traverse the canal will call on Texas ports because it is less economical to operate them partially loaded. But, even if the infrastructure was in place, industry experts believe the population of the Port of Houston s hinterlands are simply too small to justify a call. On the other hand, if there was frequent and seamless intermodal rail connectivity between the Port of Houston and the Dallas-Fort Worth region, some industry experts believe the Port of Houston might reach the critical threshold to encourage the largest containerships to call. Another concurrent trend is the likely development of one or more transhipment centers in the Caribbean Sea, once the Panama Canal expansion is complete. Much akin to a hub-and-spoke system for passenger air carriers, the transhipment centers would receive the largest containerships, offload their boxes, and then transfer the containers to smaller vessels that would call upon U.S. ports. Not every container would go through a transhipment center, since there will continue to be timesensitive cargoes that will need direct service, but some unknown share of containers is likely to be transported within this new system, which will lower operating costs for carriers but increase transit times for shippers. 78

92 Agricultural Products Over the long-term, the Panama Canal expansion is expected to have a positive impact on Texas s agricultural exports. The expanded canal is expected to lower trans-pacific transportation costs, due to carriers using larger bulk ships for carrying agricultural commodities to Asia. These lower costs will make Texas s agricultural producers more likely to remain competitive with lower-cost nations like Argentina and Brazil. However, it is not anticipated that the canal expansion will sufficiently lower the price of Texas s agricultural commodities so that lower-cost producers in other areas of the world will be unable to compete in Asian markets. As global population and income levels grow, the demand for agricultural products will increase and the Panama Canal will provide Texas producers with a cost-effective corridor for reaching these consumers. It is also possible with the Panama Canal expansion and service by larger dry bulk ships that some agricultural commodities being directed to Pacific Coast for export will be redirected to closer Gulf Coast ports. This redirection of trade would also create positive and visible benefits to Texas ports. Liquefied Natural Gas The Panama Canal Expansion is expected to offer new opportunities for the export of natural gas produced in the United States and many in the maritime industry expect that LNG will become a major commodity transiting the canal. At present, only 8.8 percent of the world s fleet of LNG carriers are capable of transiting the canal, due to dimensional limitations, but this figure will increase to approximately 88 percent of the fleet after the expansion. However, the canal is not the only constraint to LNG exports. Another significant constraint is the lack of liquefaction facilities needed to chill natural gas to a liquid for export. At present, there is only one approved LNG export terminal (Sabine Pass) in the U.S. Gulf, which is currently (2014) under construction and located in Cameron Parish, Louisiana (near the Texas border). According to the Federal Energy Regulatory Commission (FERC), four new LNG export terminals have been proposed in Texas. Locations in Freeport, Corpus Christi, Lavaca Bay, and Sabine Pass may all see new LNG liquefaction plants cable of preparing natural gas for export to foreign markets. There are also potential liquefaction sites in Brownsville and Ingleside, as of March, Another significant constraint that must be confronted is the legal limitations to exporting petroleum products, which requires special permits or future amendments to existing laws. Despite the current constraints on LNG exports, the extraordinary profit potential for LNG exporters suggests that appropriate pressure will be placed upon lawmakers and regulators to allow it to happen. The table below shows the landed price of LNG around the world against the price in Lake Charles, Louisiana. The landed price of LNG in Asia and Latin America was roughly five times higher than in the United States during November 2013 and the landed price in Europe was roughly three times higher. 79

93 Landed Price of LNG at Select Locations around the World, November 2013 Location Price ($US/MMBtu) Lake Charles, LA - USA $3.15 Altamira, Mexico $16.40 Rio de Janeiro, Brazil $14.65 Bahia Blanca, Argentina $15.65 Korea $15.65 China $15.65 Japan $15.25 United Kingdom $10.66 Belgium $10.40 Source: Federal Energy Regulatory Commission, POTENTIAL OUTCOMES AND WILDCARDS The current optimism in the Texas port industry is expected to be affirmed over the near- to medium-term. Although the U.S. economy is growing once again, its performance is likely to continue lagging behind historic trends. However, Texas s economy, driven by its population growth, entrepreneurial environment, and the coinciding boon in the petroleum industry, is expected to fare well. The continued exploration and production of shale gas and crude oil will support the state s economy directly and indirectly, by encouraging manufacturers who use natural gas for energy and as a feedstock to locate or expand here. However, like every energy boon before it, the current level of activity will eventually come to an end and the state s economic activity that is based upon energy production will contract as a result. However, in the meantime, there have been very significant investments by the petrochemical industry that total in the billions of dollars, particularly along the Houston Ship Channel. These investments, which will produce plastic resins for manufacturers around the world, are expected to produce long-term jobs and wealth, even if there are downward pressures on oil prices. In addition to creating employment at the petrochemical plants, these new resins will generate a large volume of containerized export cargo that must be drayed to the Port of Houston and placed upon outgoing vessels. These activities will create additional jobs in the Houston region and drive the demand for containership capacity. The most likely outcome of the Panama Canal Expansion on Texas ports is that trade will grow to coincide with population and economic growth. Additionally, coinciding events, such as the investment in petrochemical manufacturing along the Houston Ship Channel that was triggered by the shale gas boon in the United States, will create new cargoes that will transit the canal and that will take advantage of its expanded capacity. Additionally, LNG exports offer an example of the canal expansion providing an opportunity to open new export markets for a commodity that does not currently have adequate transportation infrastructure to effectively compete. The opportunity for significantly increasing the volume 80

94 of intermodal containers due to shifting trade routes is less certain, since there are multiple routes for containerized goods from Asia to reach the Texas market and many carriers will likely implement hub-and-spoke systems, which will allow the largest vessels to avoid the Atlantic and Gulf Coast ports, where they may find it more difficult to operate profitably. However, some cargoes will be more time-sensitive and will travel on the larger containerships, and these vessels might call on a Texas port (most likely the Port of Houston). After the Panama Canal s expansion is complete, larger vessels calling on Texas ports will not be limited to just containerships. It is expected that bulk carriers will also begin using larger ships, which may result in equal or greater volumes of cargoes moving through Texas ports but with fewer ship calls. Regardless of the type of ship used, larger ships will likely require Texas ports to make some improvements to port infrastructure and channels to remain competitive. Even as shippers and carriers attempt to plan for and take advantage of the Panama Canal expansion, there are various countervailing trends that work against it as a corridor. For example, the rerouting of cargo away from Pacific Coast ports to Gulf Coast ports assumes that the railroads (namely Union Pacific Railroad and the BNSF Railroad) will not alter their rates to be competitive with the expanded Panama Canal. It is widely understood that the railroads are not currently operating at their lowest possible price. Instead, the railroads will likely lower costs to compete against all-water services. On the other hand, long-distance trucking, will likely be impacted by new Hours of Service rules, which will increase the costs of bringing cargoes to Texas from Pacific Coast ports by truck. At the same time, the ocean carriers will likely struggle with the problem of overcapacity, due to their past purchases of large vessels, which could lower shipping costs but also create financial instability within the carrier industry. Many of the factors that make it difficult to predict the impacts of the Panama Canal s expansion are events that are not anticipated. One recent example is an unexpected delay in the expansion project, due to contractor underbidding. During early 2014, the contractor briefly left the work site until a compromise was reached on additional compensation. These construction delays have extended the project by roughly a year and the consequences will likely have a much further reach than just the Panama Canal Authority. Any private-sector firm or public port that has invested in infrastructure or equipment related to the Panama Canal s expansion is at risk of paying a penalty, if they are forced to carry additional capacity they cannot use until the expanded canal opens. Other examples of unpredictable factors are the risk of drought in the United States, which affects agricultural output, and variability in the price of natural gas. Either of these events could affect the westbound flow of goods through the canal and both of them are highly relevant to Texas. Even remote geopolitical events like the crisis in Ukraine could affect the canal and Texas s economy, if the U.S. government adopts policies to route LNG exports to Europe to counter Russia s influence over the region, instead of to other markets with higher prices. 81

95 Ultimately, the flow of cargoes will follow where the vessels can go and this simple fact underscores the necessity for Texas ports to maintain adequate channel depth and sufficient port infrastructure to meet current and future market demand, SOURCES Blackmon, D. (2013, March 13). The blessing that is the Eagle Ford Shale. Forbes. Federal Energy Regulatory Commission LNG. Gilmer, R. W. and Hopper, T. K. (2001). Houston business: A perspective on the Houston economy. Federal Reserve Bank of Dallas, Houston Branch. Houston, TX. Jordan, A. (2013, Third Quarter). Along Texas Gulf, exports pick up as oil imports decline. Southwest Economy. Federal Reserve Bank of Dallas. Dallas, TX. Murtaugh, D. (2014, April 10). Eagle Ford s exports spur boom at Port of Corpus Christi. Bloomberg. Panama Canal Authority Transit Statistics. Phillips, K. R. and Slijk, C. (2014, October). Texas to remain a top state for job growth in Southwest Economy. Federal Reserve Bank of Dallas. Potter, L. B. and Hoque, N. (2013, January). Texas population projections: Office of the State Snyder, M. (2008, December 3). Census: U.S. citizens, not immigrants, lead Texas growth. Houston Chronicle. Texas Railroad Commission Production Data. 82

96 Thompson, D. (2010, July 31). How Texas is dominating the recession. The Atlantic: Cities. therecession/60721/ U.S. Census Bureau Foreign Trade Division USA Trade Online. U.S. Maritime Administration U.S. Department of Transportation U.S. Waterborne Foreign Container Trade by U.S. Customs Ports. istics.htm. Wright, B. World trade makes Texas a global player. The Texas Economy. Texas Comptroller of Public Accounts. Austin, TX. Young, M. E. (2013, December 30). Texas population increase leads U.S. in latest estimates. The Dallas Morning News. 83

97 APPENDIX B UNDERSTANDING TEXAS S MARITIME TRADE 84

98 INTRODUCTION It is well known that Texas is the United States largest exporter of goods by value and, perhaps less well known, Texas is also the United States second largest importer. As a result, Texas s public ports and private terminals play a critical role in the state s and nation s economy. This chapter will provide a better understanding of this role by analyzing trade patterns using data collected from U.S. Customs records and reported by the USACE. Specifically, this chapter will provide an overview of maritime trade flows between Texas and other domestic and foreign trading partners, based upon data from the USACE s Waterborne Commerce of the United States statistics. Since the USACE data does not distinguish individual port authorities or private terminals, the data will be aggregated and reported at the state level. A NATIONAL LEADER IN MARITIME TRADE Texas is among the nation s leading states in maritime trade, handling 15.8 percent of total U.S. cargo between 2007 and This volume ranked Texas second nationally and only slightly behind Louisiana, which handled 15.9 percent of total U.S. maritime tonnage. In terms of the actual weight, Texas s ports and private terminals handled 2.39 billion tons of maritime cargo, compared to Louisiana s 2.41 billion tons. Texas maritime trade was more than twice the volume of third-ranked California, which handled 1.09 billion tons between 2007 and Total Maritime Tonnage Handled by State (Short Tons), Rank Commodity Name Total Tonnage Share of Total 1 Louisiana 2,412,161, % 2 Texas 2,392,392, % 3 California 1,091,900, % 4 New Jersey 757,849, % 5 Washington 581,146, % 6 Illinois 573,302, % 7 Florida 531,258, % 8 Ohio 500,983, % 9 Pennsylvania 467,624, % 10 Kentucky 464,756, % Subtotal Top Ten 9,773,371, % TOTAL TONNAGE 15,164,978, % Source: U.S. Army Corp of Engineers, 2014, Texas ranked second among all U.S. states for tonnage shipped to foreign destinations between 2007 and 2011, with million tons handled or 20.1 percent of the total tonnage shipped. Louisiana, which handles a large share of the nation s agriculture exports, 85

99 ranked first overall with million tons or almost 22.0 percent of the national total. For cargo shipped to a domestic destination Texas ranked fifth in the nation, at million tons or approximately 5.6 percent of the national total. Louisiana was again ranked first with million tons or 21.9 percent of total volume shipped. Following Louisiana, for total domestic tonnage shipped, were Illinois (13.0 percent), Kentucky (7.5 percent), and West Virginia (6.5 percent). Total Tonnage of Maritime Cargo Shipped (Short Tons), FOREIGN CARGO SHIPPED Rank Commodity Name Total Tonnage Share of Total 1 Louisiana 579,684, % 2 Texas 532,025, % 3 California 295,079, % 4 Washington 247,191, % 5 Virginia 214,001, % 6 New Jersey 91,897, % 7 Florida 88,833, % 8 Maryland 79,199, % 9 Georgia 78,439, % 10 Oregon 77,095, % TONNAGE TOP TEN 2,283,443, % TOTAL TONNAGE 2,651,871, % DOMESTIC CARGO SHIPPED Rank Commodity Name Total Tonnage Share of Total 1 Louisiana 449,149, % 2 Illinois 418,598, % 3 Kentucky 241,961, % 4 West Virginia 210,152, % 5 Texas 179,827, % 6 Alaska 171,724, % 7 New Jersey 163,697, % 8 Minnesota 134,916, % 9 Wisconsin 103,593, % 10 Michigan 102,412, % Tonnage Top Ten 2,176,029, % TOTAL TONNAGE 3,211, % Source: U.S. Army Corp of Engineers, 2014, 86

100 Texas s ports and terminals led the nation for the tonnage of foreign cargo received between 2007 and 2011, at 1.25 billion tons. This volume accounted for more than one-quarter (26.7 percent) of the total foreign tonnage handled in the United States. Texas received more than twice the foreign tonnage of California (605.5 million tons) and roughly 2.5 times the volume of foreign cargo received at Louisiana s ports. Texas s share of domestic cargo received was lower, however, roughly one-tenth (124.9 million tons) of its received foreign cargo volume. The state ranked eighth overall with Louisiana ranked first with million tons. Total Tonnage of Maritime Cargo Received (Short Tons), FOREIGN CARGO RECEIVED Rank Origin Total Tonnage Share of Total 1 Texas 1,249,868, % 2 California 605,535, % 3 Louisiana 531,970, % 4 New Jersey 358,771, % 5 Other 263,447, % 6 Pennsylvania 177,945, % 7 Florida 164,906, % 8 Washington 113,674, % 9 New York 107,068, % 10 Mississippi 106,715, % SUBTOTAL 3,679,899, % TOTAL TONNAGE 4,685,499, % DOMESTIC CARGO RECEIVED Rank Origin Total Tonnage Share of Total 1 Louisiana 625, % 2 Ohio 284, % 3 Florida 231, % 4 Indiana 228, % 5 Tennessee 152, % 6 Pennsylvania 141, % 7 Kentucky 130, % 8 Texas 124, % 9 Washington 113, % 10 Michigan 103, % SUBTOTAL 2,138, % TOTAL TONNAGE 3,211, % Source: U.S. Army Corp of Engineers, 2014, 87

101 An important aspect of Texas s maritime trade is the volume of its intrastate movements. Texas leads the nation in the total volume of intrastate maritime cargo handled at million tons between 2007 and This high volume of intrastate trade (as well as maritime trade shipped to and received from other states) is significant because every ton of cargo handled on Texas s waterways reduces or eliminates the need to utilize the state s road, rail, or pipeline networks. As a result, Texas s coastwise maritime trade plays a key role in managing congestion and reduces the need to build new transportation infrastructure. Additionally, many of the cargoes moved on water are hazardous materials and maritime vessels provide the safest mode of transportation. Total Intrastate Maritime Tonnage Handled by State (Short Tons), Rank U.S. State Total Tonnage Share of Total 1 Texas 305,726, % 2 Louisiana 225,760, % 3 Kentucky 92,489, % 4 Alabama 71,886, % 5 California 66,598, % 6 Pennsylvania 59,631, % 7 Illinois 58,532, % 8 West Virginia 55,264, % 9 Michigan 50,298, % 10 Washington 48,847, % 1,035,031, % TOTAL TONNAGE 1,405,050, % Source: U.S. Army Corp of Engineers, 2014, Texas s Foreign Maritime Trade Texas s maritime exports between 2007 and 2011 totalled million tons. 7 The top ten export markets received just over half (50.3 percent) of those goods or million tons. Mexico was Texas s most important maritime export trading partner, receiving 87.2 million tons during this period or 16.4 percent of the total tonnage handled. Brazil was the second largest trading partner with 38.3 million tons and the Netherlands ranked third with 30.2 million tons. The remaining countries of the top ten were dispersed around the world in Europe, Latin America, Asia, and Africa. 7 The total volumes of export and import trade reported in the first four tables of this appendix are slightly higher than the values reported in the remaining tables. Both sets of tables are based upon the same data source from the USACE, but the USACE reports the data differently between the two products, which accounts for the discrepancies. 88

102 Texas s Total Maritime Export Trade by Trading Partner (Short Tons), Rank Destination Total Tonnage Share of Total 1 Mexico 87,209, % 2 Brazil 38,268, % 3 Netherlands 30,208, % 4 China 18,377, % 5 Nigeria 17,874, % 6 Colombia 16,174, % 7 Spain 15,798, % 8 Italy 15,556, % 9 Chile 14,690, % 10 Panama 14,200, % Subtotal Top Ten 268,359, % Grand Total 533,334, % Source: U.S. Army Corp of Engineers, The next table shows which countries are Texas s primary sources of maritime imports, which are less diversified than the recipients the state s exports. The top ten countries that shipped Texas s imports sent over 900 million tons of cargo or almost 72.0 percent of the total 1.2 billion tons of foreign import cargo handled at Texas ports between 2007 and Mexico is Texas s largest exporter with million tons of cargo imported between 2007 and Overall, Mexico accounted for almost one-fifth of all of Texas s maritime imports. The unknown category ranked second with million tons of cargo. This category includes cargoes that originated on the high seas. While it is not intuitive that a large volume of cargo handled at Texas ports would originate on the high seas, port calls by lightering tankers are a common occurrence. 8 Given that 94.5 percent of the cargo in this category is crude oil and that 93.9 percent of that cargo was handled on the high seas of the Gulf of Mexico, this is a plausible explanation of the data. Venezuela was the third largest exporter to Texas ports, sending million tons of cargo, which accounted for almost 14.0 percent of Texas s total maritime imports. Among the top ten exporters to Texas between 2007 and 2011, crude oil accounted for the majority of their exports to the state (in terms of tonnage), with the exception of Brazil and Trinidad. Overall, imports of crude oil accounted for 85.6 percent of the imports from Texas s top ten exporters between 2007 and When all maritime imports from all nations are accounted, crude oil was 71.8 percent of the total volume of imports. Fortunately for Texas highways, the vast majority the state s petroleum cargo is handled by Texas s maritime and pipeline networks, until the final 8 Lightering tankers are the vessels that off-load crude oil from the very large crude carriers (VLCC) that bring their cargo to Texas from around the world. Because the channel drafts at Texas ports cannot accommodate large oil tankers, the cargoes are off-loaded onto smaller tankers in deep water and then brought to shore. 89

103 product is distributed by truck. In fact, a significant share never goes inland from the Texas Coast, either as a raw material or a finished product. Texas s Total Maritime Import Trade by Trading Partner (Short Tons), Rank Origin Total Tonnage Share of Total Percent Crude Oil 1 Mexico 249,524, % 86.82% 2 Unknown 207,658, % 94.49% 3 Venezuela 175,145, % 93.05% 4 Saudi Arabia 60,068, % 94.92% 5 Algeria 48,267, % 80.78% 6 Nigeria 42,592, % 91.55% 7 Colombia 36,896, % 86.45% 8 Brazil 33,310, % 30.74% 9 Trinidad 26,333, % 26.52% 10 Russia 21,385, % 53.68% Subtotal Top Ten 901,182, % 85.60% Grand Total 1,252,044, % 71.76% Source: U.S. Army Corp of Engineers, Texas s Domestic Maritime Trade Despite the large volume of ship and barge traffic along the Texas Coast, it is somewhat surprising that less than 20 percent of the trade originating from Texas had a destination in another U.S. state between 2007 and More than one-half (51.5 percent) of goods shipped from Texas ports had a foreign destination and approximately 30 percent of shipped goods were destined to ports within Texas. Among U.S. states, Louisiana and Florida were the most frequent destinations of cargoes shipped from Texas, receiving 6.9 percent and 5.4 percent of shipped goods, respectively. Alabama received just over 1 percent of goods shipped from Texas and all other U.S. states and territories have less than 1 percent of the total market share. 90

104 Destinations of Cargoes Handled at Texas Ports, Rank Destination Total Tonnage Share of Total 1 Foreign 523,898, % 2 Texas 305,726, % 3 Louisiana 69,766, % 4 Florida 55,150, % 5 Alabama 10,324, % 6 Canada 8,126, % 7 Illinois 5,373, % 8 Indiana 4,467, % 9 South Carolina 3,847, % 10 Arkansas 3,098, % Subtotal Top Ten 989,779, % TOTAL TONNAGE 1,017,578, % Note: Canada is the only country identified separately in this database. Source: U.S. Army Corp of Engineers, 2014, The origin of goods received at Texas ports had an even smaller contribution from other U.S. states. Almost three-quarters of cargo received at Texas ports had a foreign origin. Goods originating from other Texas ports accounted for 18.2 percent of the total volume of cargo received. Louisiana was Texas s largest domestic trading partner with 81.1 million tons or 4.8 percent of the total tonnage received between 2007 and Texas ports next largest domestic trading partner was Alabama with 0.46 percent 7.7 million tons, behind Canada s 9.2 million tons. 91

105 Origins of Cargoes Handled at Texas Ports, Rank Commodity Name Total Tonnage Share of Total 1 Foreign 1,240,694, % 2 Texas 305,726, % 3 Louisiana 81,051, % 4 Canada 9,173, % 5 Alabama 7,724, % 6 Mississippi 7,424, % 7 Virgin Islands 6,319, % 8 Illinois 4,819, % 9 Missouri 2,571, % 10 Kentucky 2,228, % Subtotal Top Ten 1,667,733, % TOTAL TONNAGE 1,680,539, % Note: Canada is the only country identified separately in this database. Source: U.S. Army Corp of Engineers, 2014, Trade by Commodity More than 1.0 billion tons of goods originated from Texas ports and private terminals between 2007 and 2011 but there was relatively little diversity in these commodities. More than one-half of the total tonnage shipped from Texas ports during this period (or approximately million tons) was petroleum products (such as gasoline, diesel, lubricants, etc.). Chemicals (but not fertilizers) were the second largest commodity group with million tons (24.8 percent of the total). Food and food products were the third largest commodity shipped at 90.5 million tons or 8.9 percent of all goods. Collectively, these top three goods accounted for almost 90 percent of all maritime goods shipped from Texas. 92

106 Total Tonnage of Maritime Goods Originating from Texas, Rank Commodity Name Total Tonnage Share of Total 1 Petroleum products 570,932, % 2 Chemicals, excluding fertilizers 251,823, % 3 Food and food products 90,509, % 4 Crude petroleum 29,296, % 5 Unknown or not elsewhere classified products 16,086, % 6 Manufactured goods 15,721, % 7 Sand, gravel, shells, clay, salt, and slag 9,559, % 8 Non-ferrous ores and scrap 9,206, % 9 Primary metal products 7,873, % 10 Iron ore, iron, and steel waste and scrap 7,671, % 11 Chemical fertilizers 4,505, % 12 Primary non-metal products 2,427, % 13 Coal, lignite, and coal coke 1,281, % 14 Lumber, logs, wood chips, and pulp 682, % TOTAL TONNAGE 1,017,578, % Source: U.S. Army Corp of Engineers, 2014 The volume of maritime goods received by Texas s ports and private terminals was 65 percent larger than the volume that was shipped out. More than 900 million tons of crude oil was shipped to Texas, as was million tons of petroleum products. The third largest category was chemicals, excluding fertilizers, which accounted for almost 8.8 percent of the incoming goods handled. Together, these three commodities accounted for approximately 88.4 percent of the maritime goods received at Texas s ports and private terminals. It is important to note that while Texas receives more goods than it ships, which implies a state trade imbalance, much of this tonnage enters into the petroleum refining process and are rendered into gasoline, diesel, jet fuel, and other petroleum products that are sold domestically and internationally. 9 The refining process is a value-added activity that generates wealth for Texas, which is only possible due to imports of feedstock. Similarly, chemicals are also imported to use in the production of more sophisticated chemicals or products, which are then exported. In short, the importing of goods into Texas ports is critical to the state s economy and provides the necessary inputs for its value added activities that generate wealth for the state rather than reducing it. 9 According to the U.S. Energy Information Administration, one barrel of crude oil (42 gallons) makes 19 gallons of gasoline, 11 gallons of diesel, 4 gallons of jet fuel, 2 gallons of liquefied petroleum gas, and 9 gallons of other products. The sum of products exceeds the input of oil because other inputs are added during the refining process. 93

107 Total Tonnage of Maritime Goods Destined to Texas, Rank Commodity Name Total Tonnage Share of Total 1 Crude Petroleum 911,031, % 2 Petroleum Products 425,623, % 3 Chemicals excluding Fertilizers 148,828, % 4 Primary Metal Products 44,954, % 5 Non-Ferrous Ores and Scrap 42,374, % 6 Sand, Gravel, Shells, Clay, Salt, and Slag 35,324, % 7 Unknown and Not Elsewhere Classified Products 21,078, % 8 Primary Non-Metal Products 14,323, % 9 Manufactured Goods 13,057, % 10 Food and Food Products 12,985, % 11 Chemical Fertilizers 6,608, % 12 Lumber, Logs, Wood Chips, and Pulp 2,799, % 13 Iron Ore, Iron, and Steel Waste and Scrap 1,072, % 14 Coal, Lignite, and Coal Coke 474, % TOTAL TONNAGE 1,680,539, % Source: U.S. Army Corp of Engineers, 2014, TEXAS S MARITIME TRADE WITH MEXICO While it is common knowledge that Mexico is Texas s largest trading partner, the importance of this relationship extends beyond surface trade (i.e. truck and rail shipments) along the Texas-Mexico border. Mexico was also Texas s most important maritime trading partner between 2007 and There are 40 commercial cargo ports in Mexico along the Gulf of Mexico, the Caribbean, and the Pacific Ocean. More than half of Mexico s ports handled cargo with an origin or destination in Texas between 2007 and 2011, although the vast majority of the cargo was handled at a small number of ports. This section will provide a brief overview of maritime cargo flows between Texas and Mexico. Origins and Destinations of Texas s Export Trade with Mexico Between 2007 and 2011, 87.2 million tons of maritime cargo was exported to Mexico. The ten Mexican ports with the most trade accounted for 98.5 percent of the total and the top four ports accounted for 83.5 percent. The Mexican port of Tuxpan, located in the Mexican state of Veracruz was the recipient of the largest share of Texas s maritime exports (30.7 percent), followed by the Port of Veracruz (20.9 percent), Pajaritos (also in the city of Coatzacoalcos, Veracruz with 17.4 percent). Abryos, a Pacific Coast port, was the fourth largest recipient of Texas s exports to Mexico and received 12.6 million tons of cargo, while two other Pacific Coast ports (Lazaro Cardenas and Manzanillo) rounded out the top 10 94

108 destinations for Texas s maritime exports but collectively only accounted for 1.6 percent of the total market. Texas s Total Maritime Export Trade by Mexican Port (Short Tons), Rank Mexican Port Total Tonnage Share of Total 1 Tuxpan 26,791, % 2 Veracruz 18,223, % 3 Pajaritos 15,202, % 4 Abryos 12,606, % 5 Coatzacoalcos 7,245, % 6 Progreso 2,489, % 7 All Other Mexico East Coast Region Ports 1,050, % 8 Altamira 914, % 9 Lazaro Cardenas 715, % 10 Manzanillo 680, % Subtotal Top Ten 85,919, % Grand Total 87,209, % Source: U.S. Army Corp of Engineers, The next table shows that Texas s exports to Mexico were highly concentrated in refined petroleum products, chemicals, and agricultural products. The top 10 export commodities accounted for 98.6 percent of all goods exported to Mexico. Refined fuels, such as gasoline and jet fuel, accounted for slightly more than one-third of exports, while chemicals accounted for more than one-fifth of exports and the combined volume of agricultural products was 16.4 percent of the total. 95

109 Texas s Maritime Exports to Mexico by Commodity, Rank Commodity Name Total Tonnage Share of Total 1 Gasoline, Jet Fuel, Kerosene 29,161, % 2 Other Chemicals and Related Products 18,565, % 3 Distillate, Residual & Other Fuel Oils; Lube Oil & Grease 11,394, % 4 Petroleum Pitches, Coke, Asphalt, Naptha and Solvents 8,186, % 5 Corn 5,737, % 6 Barley, Rye, Oats, Rice and Sorghum Grains 4,651, % 7 Wheat 3,927, % 8 Petroleum Products NEC 3,026, % 9 Other Agricultural Products; Food and Kindred Products 672, % 10 Iron Ore and Iron & Steel Waste & Scrap 634, % Subtotal 85,958, % Total All Commodities 87,209, % Source: U.S. Army Corp of Engineers, 2014, Texas ports imported almost 250 million tons of cargo from Mexican ports between 2007 and Sixty percent of this cargo originated at the Cayo Arcas Terminal, which is an offshore oil terminal approximately 84 miles into the Bay of Campeche. The second and third largest origins were the Port of Pajaritos located in Coatzacoalcos and the Port of Coatzacoalcos, which are both located in the Mexican state of Veracruz. The Port of Cozumel Island was the origin of 15.5 million tons (6.2 percent of total tonnage) of maritime goods from Mexico, while the Port of Dos Bocas in the Mexican state of Tabasco, exported 13.5 million tons (5.4 percent of total imports). 96

110 Texas s Maritime Trade with Mexico s Ports (Short Tons), Rank Mexican Port Total Tonnage Share of Total 1 Cayo Arcas 149,810, % 2 Pajaritos 32,108, % 3 Coatzacoalcos 23,716, % 4 Cozumel Island 15,466, % 5 Dos Bocas 13,542, % 6 All Other Mexico East Coast Region Ports 9,446, % 7 Altamira 1,833, % 8 Veracruz 1,710, % 9 Lazaro Cardenas 922, % 10 Acapulco 222, % Subtotal 248,780, % Grand Total 249,524, % Source: U.S. Army Corp of Engineers, Almost 87 percent of Texas s maritime imports from Mexico, between 2007 and 2011, consisted of crude oil. The next largest commodity was sand, gravel, stone, rock, limestone and soil, which collectively made up approximately 6.2 percent of the total volume of imports. The third and fourth ranked maritime imports were fuels and distillates (like diesel), which together accounted for roughly 5.0 percent of all imports. Collectively, these four groups of commodities accounted for 98.0 percent of all goods imported from Mexico between 2007 and Texas s Maritime Imports from Mexico (Short Tons), Rank Texas Waterway Total Tonnage Share of Total 1 Crude Petroleum 216,626, % 2 Sand, Gravel, Stone, Rock, Limestone, Soil, etc. 15,388, % 3 Gasoline, Jet Fuel, Kerosene 8,192, % 4 Distillate, Residual & Other Fuel Oils; Lube Oil & Grease 4,334, % 5 Primary Iron and Steel Products (Ingots,Bars,Rods,etc.) 1,717, % 6 Other Chemicals and Related Products 1,169, % 7 Petroleum Pitches, Coke, Asphalt, Naptha and Solvents 1,134, % 8 Other Agricultural Products; Food and Kindred Products 327, % 9 Building Cement & Concrete; Lime; Glass 175, % 10 Petroleum Products NEC 114, % Subtotal Top Ten 249,181, % Total All Commodities 249,524, % Source: U.S. Army Corp of Engineers, 2014, 97

111 CONCLUSIONS The review of maritime trade data provided in this chapter demonstrates the prominent role of the state s public ports and private terminals in the national economy. Texas s maritime activities have contributed greatly to the state s wealth, economic output, employment, and worker income. This role is especially true within the petroleum and chemical industries, where raw and intermediate products are imported and then refined or processed into products that are shipped to the remainder of the United States and throughout the world. However, within the strength in these industries, there is also a strong reliance. A long-term movement towards a more diversified commodity mix would make Texas s maritime system more resilient. Texas s well-developed intrastate maritime network (i.e. its ports, ship channels, and the GIWW) play an important role in preventing greater congestion on Texas s highways and the state s rail network. Additionally, the movement of hazardous materials on maritime vessels has created fewer safety risks to the general public. As mentioned earlier in this report, the GIWW will be discussed in detail by a companion document that is scheduled to be released by TxDOT in mid Finally, the trade analysis in this chapter demonstrated that Mexico s importance to the Texas economy extends well beyond trade along the Texas-Mexico border. Mexico is Texas s largest maritime trading partner for both imports and exports, providing critical feedstock into the state s petrochemical industry and a market for agricultural products. As Mexico opens its petroleum industry to foreign investment, there are prospects for an even stronger relationship between the two economies. SOURCES U.S. Army Corp of Engineers Foreign Cargo. U.S. Army Corp of Engineers State to State and Region to Region Commodity Tonnages. U.S. Army Corp of Engineers Waterborne Commerce of the United States. U.S. Army Corp of Engineers State Tonnages. 98

112 99 APPENDIX C PORT PROFILES

113 PORT AT-A-GLANCE Port of Orange Orange, TX Legal Name: Orange County Navigation and Port District Draft: Deep 2011 Cargo Tonnage: 94,504 (All commodity types in tons) Annual Economic Impact: $1.9 million (in 2004) Background The port is located on the Sabine-Neches waterway and is linked to the Golden Triangle ports which include the Port of Port Arthur, Beaumont and Orange an area that has become strategically more important to Texas ports growth since It has handled an annual tonnage of around 800,000 since 2001 and traditionally has acted as a successful landlord port, complementing activities at larger ports on the Sabine- Neches channel. It is also used for lay berthing. Orange County Navigation & Port District 1201 Childers Road Orange, Texas (409) Port Director Gene Bouillion Commissioners Jerry Hughes President Jimmy Smith Vice President Keith Wallace Secretary/Treasurer John Young Barbara Winfree Governing Body Port of Orange is a navigation district and political subdivision of the state of Texas. The port is governed by 5 commissioners, elected on staggered 4-year terms by voters in the district. Revised 08/2013

114 Assets The Port is the mechanical, electrical repair, and fabrication of ocean-going barges of the type used to service deep water Gulf oil rigs A total of 2,300 feet of docking space at a depth of 30 feet Four (4) berths with a grain elevator and bagging facility Eight (8) warehouses Used by MARAD to service, repair, and maintain the military ready reserve fleet Orange County Navigation & Port District 1201 Childers Road Orange, Texas (409) Port Director Gene Bouillion Commissioners Jerry Hughes President Jimmy Smith Vice President Keith Wallace Secretary/Treasurer John Young Barbara Winfree Governing Body Port of Orange is a navigation district and political subdivision of the state of Texas. The port is governed by 5 commissioners, elected on staggered 4-year terms by voters in the district. Revised 08/2013

115 PORT AT-A-GLANCE Port of Port Arthur Port Arthur, Texas Legal Name: Port of Port Arthur Navigation District of Jefferson County, Texas Draft: Deep US Port Ranking: 14 th in total tonnage (U.S. Customs Port Ranking) 221 Houston Avenue Port Arthur, Texas (409) Executive Port Director Floyd Gaspard Secretary/Treasurer of the Board 2011 Total Tonnage: 30.3 tons¹ 1,183 Vessel Calls (annual) including barge/tug calls Commissioners Linda Turner Spears President John Comeaux Vice President Morris Albright Raymond Johnson Annual Economic Impact: $128.0 (in millions) Of that, $11.1 million went to state and local taxes and $31.6 million went to custom receipts Top Commodities Imports Steel Slabs Forest Products Project Cargo Misc. Steel Exports Forest Products Petroleum Coke Steel Pipe Project Cargo Mark Underhill Governing Body Port of Port Arthur is a political subdivision of the state of Texas. A Port Commission composed of five at-large elected commissioners governs the Port. Jobs Jobs Total Direct 1,509 Induced 1,132 Indirect 192 Related 3,

116 PORT PROFILE Port of Port Arthur Port Arthur, TX The Port of Port Arthur is situated directly on the Gulf Intracoastal Waterway (GIWW) and only 19 miles from the Gulf of Mexico. Port Arthur s strategic location on the GIWW provides easy barge transportation on the U.S. inland waterway system to cities along the Mississippi, Ohio, Arkansas, and Tennessee, Missouri and Illinois Rivers plus its many tributaries. Panamex size vessels began taking advantage of the ports new 2000 terminal expansion for lay berthing. Port Arthur has emerged as a major break-bulk port for forest products, project cargo, steel and military redeployments. Port Arthur s principal trading partners include South America, the European Continent, United Kingdom, Mediterranean Area, Middle East and Mexico. Assets Two Class 1 Rail lines Kansas City Southern and Union Pacific Contains 3,104 feet of docks 48,000 square meters of shed storage and over 68,000 square meters of open asphalt-paved storage The Port is served by three wharf rail tracks with 150-car capacity, two shed tracks with 80-car capacity and six storage yard tracks with 140-car capacity 221 Houston Avenue Port Arthur, Texas (409) Executive Port Director Floyd Gaspard Secretary/Treasurer of the Board Commissioners Linda Turner Spears President John Comeaux Vice President Morris Albright Raymond Johnson Mark Underhill Governing Body Port of Port Arthur is a political subdivision of the state of Texas. A Port Commission composed of five at-large elected commissioners governs the Port. Connectivity Direct access to interstate highway system Rail and truck service to all points within the United States, Canada and Mexico. Barge service to cities along the Gulf Intracoastal Waterway and the Mississippi, Missouri, Illinois, Ohio and Tennessee River Systems. 1.

117 PORT AT-A-GLANCE Port of Beaumont Beaumont, Texas Legal Name: Port of Beaumont Navigation District Of Jefferson County, Texas US Port Ranking: 7 th in total tonnage (U.S. Customs Port Ranking) Short Tonnage (Millions) Total Trade: 69,483,539 short tons Foreign Trade (46.7) Domestic Trade (22.6) Draft: Deep 400 Vessel Calls (annual) including barge/tug calls 1225 Main Street Beaumont, TX (409) Port Director & CEO David C. Fisher Commissioners C.A. Pete Sheldon President At-Large Lee E. Smith Vice President Georgina Guillory Secretary-Treasurer Pat Anderson Annual Economic Impact: $122.2 million $11.6 million in state and local taxes and $23.3 million in federal taxes Imports Forest Products Steel Project Cargo Aggregate Jobs Top Commodities Jobs Exports Bulk Grain Forest Products Potash Project Cargo Total Direct 970 Induced 730 Louis M. Broussard, Jr. Governing Body Port of Beaumont is a navigation district and political subdivision of the state of Texas. The port is governed by six commissioners, elected on staggered six-year terms by voters in the district. Principal Trading Partners Brazil, Canada, Iraq, Russia, China, Chile, Peru, Norway and Nigeria Service Area Midwest and Western United States, Texas, Mexico and Canada Indirect 165 Related 1,865 Revised 08/2013

118 PORT PROFILE Port of Beaumont Beaumont, TX The Port of Beaumont is a large cargo port located approximately 84 miles east of Houston in Jefferson County. It is accessible from the Gulf Intracoastal Waterway through the Sabine-Neches ship channel. One major advantage of the location of the Port of Beaumont is that it is connected with the U.S. inland waterways. Using these paths, water-transported cargo traveling through the Port of Beaumont can be delivered to Minneapolis, Chicago, St. Louis, Kansas City, Louisville, Omaha, and Memphis. The Port of Beaumont includes layberths for ships of the Maritime Administration as well as various facilities to accommodate the international and U.S. products that pass through the port. Assets Port facilities include more than 620,000 square feet of covered storage space alongside nine berths and more than 80 acres of open-air storage Roll-On/Roll-Off Ramp, immediately downstream from Harbor Island Marine Terminal 3.5-million-bushel-capacity grain elevator and dry bulk cargo facilities Rail-to-ship bulk transfer facility; ship loading rate: 10,000 metric tons/day Connectivity Connected with the U.S. inland waterways Three Class 1 railroads BNSF, Kansas City Southern, Union Pacific Connected to five (5) highways 1225 Main Street Beaumont, TX (409) Port Director & CEO David C. Fisher Commissioners C.A. Pete Sheldon President At-Large Lee E. Smith Vice President Georgina Guillory Secretary-Treasurer Pat Anderson Louis M. Broussard, Jr. Governing Body Port of Beaumont is a navigation district and political subdivision of the state of Texas. The port is governed by six commissioners, elected on staggered six-year terms by voters in the district. Principal Trading Partners Brazil, Canada, Iraq, Russia, China, Chile, Peru, Norway and Nigeria Service Area Midwest and Western United States, Texas, Mexico and Canada Revised 08/2013

119 PORT AT-A-GLANCE Port of Houston Houston, Texas Legal Name: Port of Houston Authority Draft: Deep 111 East Loop North Houston, Tx (713) US Port Ranking: 1 st in U.S. in foreign waterborne tonnage and 2 nd in U.S. in total tonnage¹ (U.S. Customs Ports Ranking) Port Executive Director Roger Guenther Foreign Trade in TEUs in Short Tonnage (Millions)² Import Export Total Trade Value: 22.9 MIL tons valued at $53.5 BIL 208,000ᶾ Barge and Vessel Calls (annual) Commission Members Janiece M. Longoria Chairman John D. Kennedy Dean E. Corgey Clyde Fitzgerald Theldon R. Branch, III Stephen H. DonCarolos Roy D. Mease Annual Statewide Economic Impact: $178.5 BIL Direct Jobs: 53,952 Induced Jobs: 71,065 Indirect Jobs: 49,835 Exports Resins & Plastics Chemicals & Minerals Machinery, Appliances & Electronics Food & Drink Automotive Steel & Metal Fabrics Incl. Raw Cotton Top Commodities (In ranking order) Imports Food & Drink Hardware & Construction Material Machinery, Appliances & Electronics Steel & Metals Chemicals & Minerals Retail Consumer Goods Furniture Governing Body Governed by a board of seven commissioners and selected by governmental entities within Harris County, the port commissioners set policy and provide guidance to the Port Authority staff. Commissioners serve staggered two-year terms. 1. Port of Houston Authority Website: 2. Port of Houston Foreign Trade Containerized Cargo Statics Report, 2013,

120 PORT PROFILE Port of Houston Houston, Texas The Port of Houston is a 25-mile-long complex of diversified public and private facilities located just a few hours by ship from the Gulf of Mexico. The port is consistently ranked 1 st in the United States in foreign waterborne tonnage; 1 st in U.S. imports; 1 st in U.S. export tonnage and 2 nd in the U.S. in total tonnage. It is also the nation s leading breakbulk post, handling 65 percent of all major U.S. project cargo. The Port of Houston Authority is the sponsor of the Houston Ship Channel which is 45 feet deep and 530 feet wide. The Port of Houston is made up of the public terminals owned, managed and leased by the Port of Houston Authority, and the 150-plus private industrial companies along the 52-mile long Houston Ship Channel. 111 East Loop North Houston, Tx (713) Port Executive Director Roger Guenther Commission Members Janiece M. Longoria Chairman John D. Kennedy Dean E. Corgey Clyde Fitzgerald Theldon R. Branch, III Stephen H. DonCarolos Roy D. Mease Governing Body Governed by a board of seven commissioners and selected by governmental entities within Harris County, the port commissioners set policy and provide guidance to the Port Authority staff. Commissioners serve staggered two-year terms. 1. Port of Houston Authority Website: 2. Port of Houston Foreign Trade Containerized Cargo Statics Report, 2013,

121 Assets Home to a $15 billion petrochemical complex, the largest in the nation and second largest in the world. Largest Texas port with 46% of market share by tonnage and 95% market share in containers by total TEUs in 2013 Connectivity The Port is located in the 4 th largest city in the US. The Port has access to numerous local and state highways as well as two major interstate corridors. There are 3 Class 1 Railroads The Port is home to the most extensive port terminal railroad, the Port Terminal Railroad Association (PTRA) that operates along the Houston Ship Channel. The PTRA serves more than 220 customers from seven rail yards and maintains 154 miles of track and 20 bridges. The Port is in the Gulf Coast Rail District which works to address rail congestion in the Houston region. Potential Improvements to Infrastructure The Port is beginning work on a channel improvement project at the Port Authority's two container terminals that will deepen the channels from 40 feet to 45 feet, making it match the depth of the Houston Ship Channel. o The project will also widen or realign the channels by up to 100 feet to better accommodate larger ships. o The Port Authority is funding the $68 million project at its sole cost to ensure the channel improvements are available as soon as possible to better accommodate larger container ships in preparation of the opening of the expanded Panama Canal in East Loop North Houston, Tx (713) Port Executive Director Roger Guenther Commission Members Janiece M. Longoria Chairman John D. Kennedy Dean E. Corgey Clyde Fitzgerald Theldon R. Branch, III Stephen H. DonCarolos Roy D. Mease Governing Body Governed by a board of seven commissioners and selected by governmental entities within Harris County, the port commissioners set policy and provide guidance to the Port Authority staff. Commissioners serve staggered two-year terms. 1. Port of Houston Authority Website: 2. Port of Houston Foreign Trade Containerized Cargo Statics Report, 2013,

122 PORT AT-A-GLANCE Port of Galveston Galveston, Texas Legal Name: Board of Trustees of the Galveston Wharves Draft: Deep US Port Ranking: 4 th busiest cruise port¹ 40 th in total tonnage (U.S. Customs Port Ranking) Ranked #41 (2011) in tonnage which was a 52.1% increase from the previous year.¹ 2011 Total Tonnage: 7,358,869 tons² Ranked #3 in U.S. Cruise Industry Welcomed 863,000 passengers and crew (2012)ᶾ Annual Economic Impact: $3,060,700,000 BIL⁵ Import Wind power equipment Agricultural equipment Machinery Vehicles Fertilizer products Lumber Products Military-related cargos Top Commodities: Export 944 (2010)⁴ Vessel Calls (annual) including barge/tug calls 3,326 Direct Jobs 3,794 Induced Jobs Bulk grains Containers Machinery Vehicles Linerboard and paper Carbon Black Light fuels 123 Rosenberg Ave. Galveston, TX (409) Port Director Michael Mierzwa Board of Trustees Benjamin F. Holland, Jr. Chairman Edward Walsh, III Vice Chairman Members Gerald Sullivan Mayor James Yarbrough Richard Devries John A. Smecca Albert Shannon Governing Body The Board of Trustees of the Galveston Wharves (Port of Galveston), a body politic and corporate, is comprised of seven trustees who are appointed by the Galveston City Council. One member of the Board of Trustees is an ex-officio representative of the City Council. The Board of Trustees of the Galveston Wharves fully manages, controls, maintains and operates Port improvements and facilities owned by the city of Galveston. 1. U.S. Department of Transportation Website, waterways 2. Texas Ports Capital Program report, page Galveston Cruise Industry On A Successful Course, Houston Chronicle, Stanton, Robert, July 19, 4. Port of Galveston website 5. Martin Associate Economic Impact Report on Texas Ports Sponsored by Texas Port Association, Guide to the Economic Value of Texas Ports, Center for Transportation Research The University of Texas at Austin, Dec. 2008e Presentation given at Panama Canal Stakeholder. Working Group Meeting. POHA, Bayport Container Terminal, Houston, Texas. August 27, [Slide number 21]

123 PORT PROFILE Port of Galveston Galveston, Texas The Port of Galveston is located at the mouth of Galveston Bay along the Upper Texas Coast in Galveston County. Associated by the public as port terminal for cruises, it has historically handled containerized cargo, dry and liquid bulk, break-bulk, roll-on/roll-off cargo, and refrigerated and project cargo. Commodities arriving at the port are often destined for Galveston County, Harris County, Fort Bend County, Brazoria County, the state of Texas, as well as Texas neighboring states and the United States Midwest region. The ports international trading partners include Mexico, Guatemala, Panama, Columbia, Venezuela, Brazil, Dominican Republic, Spain, Italy, Egypt, Israel, Turkey, Bulgaria, Belgium, England, Germany, Saudi Arabia, United Arab Emirate, Kuwait, Singapore and China.⁶ 123 Rosenberg Ave. Galveston, TX (409) Port Director Michael Mierzwa Board of Trustees Benjamin F. Holland, Jr. Chairman Edward Walsh, III Vice Chairman Members Gerald Sullivan Mayor James Yarbrough Richard Devries John A. Smecca Albert Shannon Governing Body The Board of Trustees of the Galveston Wharves (Port of Galveston), a body politic and corporate, is comprised of seven trustees who are appointed by the Galveston City Council. One member of the Board of Trustees is an ex-officio representative of the City Council. The Board of Trustees of the Galveston Wharves fully manages, controls, maintains and operates Port improvements and facilities owned by the city of Galveston. 1. U.S. Department of Transportation Website, waterways 2. Texas Ports Capital Program report, page Galveston Cruise Industry On A Successful Course, Houston Chronicle, Stanton, Robert, July 19, 4. Port of Galveston website 5. Martin Associate Economic Impact Report on Texas Ports Sponsored by Texas Port Association, Guide to the Economic Value of Texas Ports, Center for Transportation Research The University of Texas at Austin, Dec. 2008e Presentation given at Panama Canal Stakeholder. Working Group Meeting. POHA, Bayport Container Terminal, Houston, Texas. August 27, [Slide number 21]

124 Assets Significant Roll-on/Roll-off (RoRo) operation and its matured profile of RoRo operations. Vigorous cruise line port terminal. Proximity to the Port of Houston and Texas City 123 Rosenberg Ave. Galveston, TX (409) Connectivity Situated 50 miles south of Houston and at the entrance of the Galveston-Texas City- Houston Port Complex located in Galveston Bay. Ground accessibility via IH 45, Gulf freeway Has two Class 1 rail companies, Union Pacific (UP) and Burlington Northern & Santa Fe (BNSF) with switch yards immediately adjacent to the Port s West End Potential Improvements to Infrastructure Improvements needed to ensure adequate rail capacity in Class One manifest yards and main lines to and from the ports to handle increases in exports and imports.⁷ Adequate maintenance dredging of channels to ensure consistent authorized depths, and construction to provide additional deepening to maximum feasible depths to controlling drafts at the expanded Panama Canal.⁵ First Mile and Last Mile highway and roadway connectors to reduce congestion and improve port productivity. ⁵ Pelican Island Project o Desalination plant o A 3000-megawatt cogeneration facility that uses biomass to produce electricity at a cost of 3.5 cents/kilowatt o A four-lane vehicular bridge from Galveston to Pelican Island o A new railroad bridge and a railroad switching yard. Port Director Michael Mierzwa Board of Trustees Benjamin F. Holland, Jr. Chairman Edward Walsh, III Vice Chairman Members Gerald Sullivan Mayor James Yarbrough Richard Devries John A. Smecca Albert Shannon Governing Body The Board of Trustees of the Galveston Wharves (Port of Galveston), a body politic and corporate, is comprised of seven trustees who are appointed by the Galveston City Council. One member of the Board of Trustees is an ex-officio representative of the City Council. The Board of Trustees of the Galveston Wharves fully manages, controls, maintains and operates Port improvements and facilities owned by the city of Galveston. 1. U.S. Department of Transportation Website, waterways 2. Texas Ports Capital Program report, page Galveston Cruise Industry On A Successful Course, Houston Chronicle, Stanton, Robert, July 19, 4. Port of Galveston website 5. Martin Associate Economic Impact Report on Texas Ports Sponsored by Texas Port Association, Guide to the Economic Value of Texas Ports, Center for Transportation Research The University of Texas at Austin, Dec. 2008e Presentation given at Panama Canal Stakeholder. Working Group Meeting. POHA, Bayport Container Terminal, Houston, Texas. August 27, [Slide number 21]

125 PORT AT-A-GLANCE Port Freeport Freeport, TX Legal Name: Port Freeport Tonnage (Millions) Draft: Deep US Port Ranking: 21 st in foreign tonnage 30 th in total tonnage (U.S. Customs Port Ranking) Domestic Total (public and private) 2012 Total Container Cargo: 2,100,000 Twenty-foot Equivalent Units (T.E.U.s)¹ 3, ,000 50, W. Second St. Freeport, TX (972) Executive Director Glenn Carlson Commissioners Bill Terry Chairman Ravi K. Singhania Vice Chairman John Hoss Secretary Shane Pirtle, P.E. Assistant Secretary Thomas S. Perryman Vessel Calls (annual) including barge/tug calls Truck Traffic (annual) public/private Railcar Transits (annual) public/private Paul Kresta Governing Body Annual Economic Impact: $17.9 billion Top Commodities: Imported Aggregate Chemicals Clothing Crude Foods LNG Paper goods Resins Windmills Exported Autos Chemicals Clothing Foods Paper goods Resins Rice LNG 13,362 Direct Jobs 27,656 Induced Jobs Port Freeport encompasses approximately 85 percent of Brazoria County, Texas. The Port Commission is comprised of six members. Five positions represent a specific geographic area, and one position is at-large. Each Port Commissioner serves a term of six years. 1. Texas Ports Capital Program Report,

126 PORT PROFILE Port Freeport Freeport, TX Brazoria County is one of Texas' most fertile agricultural areas, one of the nation's most successful commercial fishing ports, and one of the region s more prolific fuel and mineral areas. The primary economic bases of the county include chemical manufacturing, petroleum processing, offshore production maintenance services, diversified manufacturing, biochemical and electronic industries, commercial fishing and agriculture. In addition, the area's deep-water channel and port facilities, sports fishing services and tourism are major components of the county's economic base. Assets Port Freeport land and operations currently include 186 acres of developed land and 7,723 acres of undeveloped land, 14 operating berths (public and private docks), a 45-foot deep Freeport Harbor Channel and a 70-foot-deep berthing area. Future expansion includes building a 1,300-acre multi-modal facility, two multi-purpose 1,200-foot berths on 50 feet of water and two dockside 120,000 square-foot transit sheds. Connectivity Port Freeport is conveniently accessible by rail, waterway and highway routes. There is direct access to the Gulf Intracoastal Waterway, Brazos River Diversion Channel, State Highways 36 & 288 and rail service provided by the Union Pacific Railroad. Union Pacific Railroad (UPRR) and the Port are focused on improving rail service and capacity to and from the Port. 1. The replacement of the swing bridge in downtown Freeport across the old Brazos River and improvements to the primary rail corridor between the Port and the Angleton switching yards were completed in 2011 by the UPRR. 2. New port multi-modal facilities could include up to three new rail lines each approximately 5,000 feet long, providing service enhancements related to both the Parcel 25 and the new Velasco Terminal. These investments will significantly improve capacity for Port clients, service by UPRR and is necessary to accommodate the increase in rail shipments. 200 W. Second St. Freeport, TX (972) Executive Director Glenn Carlson Commissioners Bill Terry Chairman Ravi K. Singhania Vice Chairman John Hoss Secretary Shane Pirtle, P.E. Assistant Secretary Thomas S. Perryman Paul Kresta Governing Body Port Freeport encompasses approximately 85 percent of Brazoria County, Texas. The Port Commission is comprised of six members. Five positions represent a specific geographic area, and one position is at-large. Each Port Commissioner serves a term of six years. 1. Texas Ports Capital Program Report,

127 Current and Future Projects Channel improvements. 1. Widening of the Channel is moving forward with construction to begin in early 2014, and has been locally funded. 2. Deepening the Channel to 55 feet is advancing as well, with a key U.S. Army Corps of Engineers report that was released in January 2013 signifying the completion of the ten year feasibility study. The next steps will be the pre-engineering design and funding which is anticipated to be completed in three years. A new 22 acre truck queuing area is being planned. Plans call for an environmentally friendly off-road parking/staging area for trucks entering the Port and surrounding industrial facilities. It will be located south of State Highway 36 in close proximity to the Port entrances. It is anticipated that the Port will apply for Federal grant funds to offset a portion of the project cost. 200 W. Second St. Freeport, TX (972) Executive Director Glenn Carlson Commissioners Bill Terry Chairman Ravi K. Singhania Vice Chairman John Hoss Secretary Shane Pirtle, P.E. Assistant Secretary Thomas S. Perryman Paul Kresta Governing Body Port Freeport encompasses approximately 85 percent of Brazoria County, Texas. The Port Commission is comprised of six members. Five positions represent a specific geographic area, and one position is at-large. Each Port Commissioner serves a term of six years. 1. Texas Ports Capital Program Report,

128 PORT AT-A-GLANCE Port of Palacios Palacios, Texas Legal Name: Matagorda County Navigation Dist. #1 Draft: Shallow 2009 Cargo Tonnage: 15.1 million (All commodity types in tons)¹ Annual Economic Impact: $41.2 MIL² 541 Direct Jobs 43 Induced Jobs 1602 Main Street P O Box 551 Palacios, Tx Phone: (361) Top Commodity Shrimping industry Chairman Ted R. Bates, Jr. Vice Chairman Victor L. Eggemeyer Secretary Jimmy E. Neeley Commissioner Bryan L. Fields Commissioner Greg T. Seaman Port Director Debbie Morris Governing Body The Port of Palacios is governed by 5 member panel of elected commissioners. 1. Texas Ports Capital Program, Page Texas Port Association website: 3. Guide to the Economic Value of Texas Ports, Center for Transportation Research The University of Texas at Austin, Dec. 2008, page Texas Ports Capital Program, pg. 24

129 Background The Port of Palacios is located on the Upper Gulf Coast approximately 110 miles south of Houston in Matagorda County. Traditionally, Palacios chief industry has been shrimpingᶾ. Fishing, tourism and shipbuilding, including barges, tugs and commercial and recreational boats of various sizes and configurations are increasing. The Port also provides a safe harbor for commercial fishermen from the three counties around Matagorda Bay Matagorda, Jackson and Calhoun counties.⁴ Assets The Port has over 130 commercial fishing boats which operate from the four turning basins at the Port and are affiliated with the fish houses located at the Port Fish houses and commercial boats employ approximately 400 people. Properties also included with the Matagorda County Navigation District #1 are the Texas State Marine Education Center, Bay Side RV Park, Brooking-Hays Yacht Harbor Subdivision 4 turning basins with 13,000 linear feet of dock space 2 recreational marinas with 55 slips Currently own over 800 acres of developable land Connectivity Currently there are no major direct shipments of import/export cargos from Palacios and no Class 1 railroad connections 1602 Main Street P O Box 551 Palacios, Tx Phone: (361) Chairman Ted R. Bates, Jr. Vice Chairman Victor L. Eggemeyer Secretary Jimmy E. Neeley Commissioner Bryan L. Fields Commissioner Greg T. Seaman Port Director Debbie Morris. Governing Body The Port of Palacios is governed by 5 member panel of elected commissioners. 1. Texas Ports Capital Program, Page Texas Port Association website: 3. Guide to the Economic Value of Texas Ports, Center for Transportation Research The University of Texas at Austin, Dec. 2008, page Texas Ports Capital Program, pg. 24

130 PORT AT-A-GLANCE Calhoun Port Authority Point Comfort, Texas Legal Name: Calhoun Port Authority Draft: Deep 2009 Cargo Tonnage: 3,194,255 tons² (All commodity types in tons) Annual Economic Impact: $ 2 BILᶾ 5,300 Direct Jobs 4,590 Induced Jobs Top Commodity Chemicals Fertilizers Petroleum Products Bauxite 2323 FM 1593 South Point Comfort, Texas (361) Port Board Randy L. Boyd. Board Chairman H.C. Tony Wehmeyer, Jr. Board Secretary Shields A. Tony Holladay, Sr. Dell R. Weathersby J.C. Melcher, Jr. Aron Luna Port Director Charles R. Hausmann, CPA Governing Body The Port Authority is governed by a Port Board made up of six members elected from districts within Calhoun County. The Port Director and a full-time professional staff are responsible for port management and day-to-day operations. The Port Authority serves as the local non-federal sponsor of the Matagorda Ship Channel which extends 24 miles from the Point Comfort turning Basin to the Gulf of Mexico.¹ 1. Calhoun Port Authority website: 2. Texas Ports Capital Program, pg. A Calhoun Port Authority website,

131 Background The Port of Port Lavaca-Point Comfort, governed by the Calhoun Port Authority, serves as a gateway to world markets for the Texas Mid-Coast Region. The port plays a vital role in supporting Texas chemical manufacturing industries and in building a stable economic foundation for Calhoun County. It is served by the Matagorda Ship Channel and the Gulf Intracoastal Waterway. Primary cargos handled are chemicals, petrochemicals, aluminum ore and agricultural fertilizer. A key part of this mix is very high value chemicals produced by area industries and sold for export to markets around the world.¹ Assets Three liquid cargo facilities Dry bulk dock that went into full operation in It can handle bulk carriers up to 740 ft. in length. The cargo handling system includes a spiral conveyor unloading tower that travels on dock rails to access each cargo hold and feed a continuous conveyor system that extends to nearby industrial sites Connectivity Direct highway access to US Hwy 59, US Hwy 87, SH 35 and SH 172 Served by the Point Comfort and Northern Railway, a short line railroad which connects to the Union Pacific main line at a point 20 miles north of the Port s main harbor 2323 FM 1593 South Point Comfort, Texas (361) Port Board Randy L. Boyd. Board Chairman H.C. Tony Wehmeyer, Jr. Board Secretary Shields A. Tony Holladay, Sr. Dell R. Weathersby J.C. Melcher, Jr. Aron Luna Port Director Charles R. Hausmann, CPA Governing Body The Port Authority is governed by a Port Board made up of six members elected from districts within Calhoun County. The Port Director and a full-time professional staff are responsible for port management and day-to-day operations. The Port Authority serves as the local non-federal sponsor of the Matagorda Ship Channel which extends 24 miles from the Point Comfort turning Basin to the Gulf of Mexico.¹ 1. Calhoun Port Authority website: 2. Texas Ports Capital Program, pg. A Calhoun Port Authority website,

132 PORT AT-A-GLANCE Port of West Calhoun Long Mott, Texas Legal Name: Draft: Shallow West Side Calhoun County Navigation District 402 South Main Street Seadrift, Texas (361) Chairman Jack Campbell, Jr. Secretary Teddy Hawes Background The West Side Calhoun County Navigation District (the District) was formed on July 8, 1946 and was approved for $125,000 bond issue for the building of the barge Canal. The District operates the Port of West Calhoun, which is linked to the Gulf Intracoastal Waterway via the Victoria Barge Canal. Port facilities include berths for commercial seafood productions and oil and gas exploration. The waterway is also used for barge shipments of industrial products including petroleum coke and chemicals.¹ 1. Texas Port Association Website:

133 PORT AT-A-GLANCE Port of Victoria Victoria, Texas Legal Name: Victoria County Navigation District Draft: Shallow 1934 FM 1432 Victoria, Texas (361) Executive Director Paul Skip Kaup 5,711² Vessel Calls (annual) including barge/tug calls 228,205 bbls crude Railcar Transits (annual) public/private Commissioners Robby Burdge Chairman Elton Calhoun Vice Chairman Claud Jacobs Secretary Kevin Krueger Annual Economic Impact: $6.6 BIL (2011) - Of the $6.6 BIL, $1.5 BIL is direct business revenue and the remaining $5 BIL is the value of the output to the State of Texas due to cargo moving via the port. These numbers do not include the Eagle Ford Shale.¹ Induced Jobs: 21,000 Robert Loeb Governing Body The Victoria County Navigation District (Port of Victoria) is comprised of five members appointed by Victoria County Commissioners Court. Commodities Chemicals Petrochemicals, Frac Sand Crude Oil Liquid Fertilizers Dry Fertilizers Grain Aggregates 1. Port of Victoria, Texas Newsletter, June 2013, Volume 1, Issue 1, 2. Port of Victoria Website:

134 PORT AT-A-GLANCE Port of Victoria Victoria, Texas The Port of Victoria is located approximately 80 miles northeast of Corpus Christi and recent expansions should significantly increase the tonnage operated by the port. The Port serves all other ports along the Inland Waterway System within the United States. The main products traded at the port include chemicals, petrochemicals, sand, gravel, grain, project cargo, fertilizers and frac sand FM 1432 Victoria, Texas (361) Executive Director Paul Skip Kaup Commissioners Robby Burdge Chairman Elton Calhoun Vice Chairman Claud Jacobs Secretary Kevin Krueger Robert Loeb Assets New Industrial Park with multi-modal access Center for the chemical, construction and steel fabrication and agribusiness industries offering access to all transportation modes. New lighting system that allows for 24-hour operations Foreign Trade Zone Governing Body The Victoria County Navigation District (Port of Victoria) is comprised of five members appointed by Victoria County Commissioners Court. Connectivity The turning basin area is situated on over 2,000 acres Rail spur with rail serviced provided by Union Pacific Railroad with track agreements with Union Pacific, Kansas City Southern and BNSF Potential Improvements to Infrastructure Container on barge service is being planned. 1. Port of Victoria, Texas Newsletter, June 2013, Volume 1, Issue 1, 2. Port of Victoria Website:

135 PORT AT-A-GLANCE Port Corpus Christi Corpus Christi, TX Legal Name: Port of Corpus Christi Authority US Port Ranking: 5th Largest in U.S. for tonnage Draft: Deep 222 Power Street Corpus Christi, TX (361) Executive Director John LaRue 6,072 Vessel Calls (annual) including barge/tug calls 2012 Cargo Tonnage: 78,806,189 (All commodity types in tons) Cargo: Heavily focused on bulk, specifically petroleum Commissioner s Mike Carrell Chairman Richard Borchard Vice Chairman Al Jones Secretary Barbara Canales Judy Hawley Annual Economic Impact: $13.1 billion Direct Jobs 13,746 Induced Jobs 16,767 Indirect Jobs 15,607 Top Commodities Tonnage Figures for 2012 All tonnages are given in short tons Commodity Tons Petroleum 65,367,343 Dry Bulk 7,939,684 Grain 2,578,847 Chemical 1,966,012 Liquid Bulk 554,336 Robert Kostelnik Charles Zahn Governing Body The Port Commission is comprised of seven members, each serving a staggered term of three years. Three commissioners are appointed by the Corpus Christi City Council, three commissioners are appointed by the Nueces County Commissioners Court, and one is appointed by the San Patricio County Commissioners Court. Break Bulk 390,967 Revised 07/2013

136 PORT PROFILE Port of Corpus Christi Corpus Christi, TX The Port Corpus Christi has been generating business and jobs in South Texas for 86 years. Strategically located on the western Gulf of Mexico, Port Corpus Christi is the fifth largest port in the United States in total tonnage. The Port provides a straight, 45 deep channel and quick access to the Gulf of Mexico and the entire United States inland waterway system. The Port of Corpus Christi Authority district boundaries encompass all of Nueces and San Patricio counties. 222 Power Street Corpus Christi, TX (361) Executive Director John LaRue Commissioner s Mike Carrell Chairman Richard Borchard Vice Chairman Al Jones Secretary Barbara Canales Judy Hawley Robert Kostelnik Charles Zahn Governing Body The Port Commission is comprised of seven members, each serving a staggered term of three years. Three commissioners are appointed by the Corpus Christi City Council, three commissioners are appointed by the Nueces County Commissioners Court, and one is appointed by the San Patricio County Commissioners Court. Assets The Port offers more than 125 acres of open storage and fabrication sites, heavy lift capabilities, more than 295,000 sq. ft. of covered dockside storage as well as a cold storage facility. Port Corpus Christi operates Foreign Trade Zone #122, encompassing 25,000 acres with four active, general-purpose zones and 14 subzones. Revised 07/2013

137 Connectivity The Port has on-site and direct connections to three Class-I railroads, BNSF, KCS and UP, and direct, vessel-to-rail discharge capabilities through Corpus Christi Rail Terminal. The Joe Fulton International Trade Corridor provides direct access to Interstate 37 and Highway 181. Nueces River Railyard - June 2012 the U.S. DOT awarded a $10 million TIGER grant for the port s first phase of construction of the Nueces River Railyard (NRRY) 1. When complete the NRRY will include an 8,000 ft. unit train siding and a four ladder track interchange yard totaling 15,400 track feet, enough space for over 335 rail cars 2. Scope of work consists of construction of a 6 track rail interchange yard, service road, drainage infrastructure, wetlands mitigation site, bike trail, light relocation, fencing and railcar AEI readers 3. Contract awarded June 11, 2013 with a winning low bid of $12,658,040 Current and Future Projects Completion of the La Quinta Trade Gateway 1. Construction contract awarded in October 2012 for dredging of the channel extension and its expected finish date is July 2013 La Quinta Road/Bridge Project 1. Scope of work includes construction of a new two-lane access road beginning at the Gulf Compress, cross the Green Lake drainage ditch, then generally run along the east side of the property near the recently constructed dredge material placement area and terminate near the shoreline bluff 2. Contract was award in April 24, 2013 in the winning low bid of $3,465, Others Items of Interest New Port Commissioner, Barbara Canales, officially sworn in June 21, Power Street Corpus Christi, TX (361) Executive Director John LaRue Commissioner s Mike Carrell Chairman Richard Borchard Vice Chairman Al Jones Secretary Barbara Canales Judy Hawley Robert Kostelnik Charles Zahn Governing Body The Port Commission is comprised of seven members, each serving a staggered term of three years. Three commissioners are appointed by the Corpus Christi City Council, three commissioners are appointed by the Nueces County Commissioners Court, and one is appointed by the San Patricio County Commissioners Court. Revised 07/2013

138 PORT AT-A-GLANCE Port of Harlingen Harlingen, TX Legal Name: Port of Harlingen Authority Draft: Shallow (12 ) U.S. Port Ranking by Tonnage Barge Activity n/a Inbound Outbound Port Tonnage 900,000 tons (est.) Barge Traffic 218 Container Traffic 1 n/a Transit Activity 2 Port of Harlingen Authority P.O. Box 2646 Harlingen, TX (956) Port Director (acting) W.G. Butch Palmer, Jr Alan Johnson Chairman Alejandro Hinojosa, Sr Secretary Bryan Duffy Commissioner Governing Body The Port of Harlingen Authority is a navigation district and political subdivision of the state of Vessel Calls (annual) Truck Traffic (annual) Railcar Transits (annual) Texas. The Authority is including barge/tug calls public/private 3 public/private 4 governed by a Port Commission composed of Economic Impact (2006) 5 three elected commissioners. Economic Value ($ Millions): $19.3 State and Local Taxes ($ Millions) Total Jobs: 88 Direct Jobs: 40 Total Taxes: $0.4 Principal Trading Partners Top Commodities 6 Mexico Liquid Fertilizer Sand Aggregates Imported Gasoline Diesel Ethanol Raw Sugar Cotton Sorghum Exported Corn Service Area South Texas and northern Mexico 1 U.S. Army Corps of Engineers, Waterborne Commerce of the United States, Part 5, National Summaries, (CY2011) 2 Mirna Del Castillo, Port of Harlingen activity during FY 2012 (personal communication via e mail, September 9, 2013) 3 Cement (686) and liquid fertilizer (253) represent the commodities transported most from barge to trucks at the Port of Harlingen (FY2012). 4 Liquid fertilizer is the commodity transported most from barge to rail at the Port of Harlingen (FY2012) P1, Guide to the Economic Value of Texas Ports, Center for Transportation Research, Texas Ports Association, Port of Brownsville (profile), Accessed: September 6, 2013 Revised 09/2013

139 PORT PROFILE Port of Harlingen Harlingen, TX The Port of Harlingen is a shallow draft barge port located in the geographic center of the lower Rio Grande Valley four miles east of the city of Harlingen, Texas. The Port exports 100 percent of the sugar produced in the Rio Grande Valley. And, the Port imports critical Valley resources, such as 90 percent of fertilizer used by South Texas farmers and 70 percent of the refined petroleum products for the South Texas region. 7 The Port is connected to the Gulf Intracoastal Waterway by means of the Harlingen Channel. The Harlingen Channel extends from the Gulf Intracoastal Waterway 25 miles west of Mile 646 and is supplied by the Arroyo Colorado, a fresh water source. 8 Assets 650' (195m) general dry/liquid cargo wharf 100' (30m) dry bulk wharf Five smaller docks (50' X 25' or 7.5m X 15m) located near the turning basin and extend into the Harlingen channel Over 150 acres of open storage Source: TxDOT Connectivity Nearby several inland ports of entry into Mexico within Brownsville/Los Indios area Barge lines serve the Port via the Gulf Intracoastal Waterway (GIWW) Intermodal railroad services offered by Union Pacific (UP) Harlingen Channel, the waterway of the Port, is maintained to 120 feet wide by 12 feet deep Air freight service available at the Valley International Airport (Harlingen, Texas) Current and Future Projects 9 Project Description Estimated Cost (FY 13) Estimated Cost (FY 14) East Dock Refurbishment $1,000,000 $0 Security Enhancements (Federally Funded) $130,000 $0 TOTAL $1,130,000 $0 7 Port of Harlingen website as of September 10, Port of Harlingen Tariff #006 as of September 3, 2013, content/uploads/2012/10/port of Harlingen.pdf 9 Texas Ports Capital Program, Texas Department of Transportation, page A 5 Revised 09/2013

140 PORT AT-A-GLANCE Port of Port Isabel Port Isabel, TX Legal Name: Port of Isabel/San Benito Navigation District Draft: Deep (36 ) U.S. Port Ranking by Tonnage n/a Port of Port Isabel 250 Industrial Drive Port Isabel, TX (956) Vessel Activity Deep Water Shallow GIWW Shallow Other Port Director Steve Bearden Board of Commissioners Victor Barrera Chairman Port Tonnage 50,000 tons (est) Barge Traffic 85 Container Traffic n/a M.R. Garcia II Secretary Transit Activity n/a Vessel Calls (annual) Truck Traffic (annual) Railcar Transits (annual) including barge/tug calls Economic Impact (2006) 2 Robert Ostos Asst. Secretary Governing Body The Port of Isabel/San Benito Navigation District is governed by a Board of Commissioners consisting of three elected officials. public/private public/private These commissioners serve four-year terms on a staggered basis. Economic Value ($ Millions): $85.6 State and Local Taxes ($ Millions) Total Jobs: 948 Direct Jobs: 605 Total Taxes: $2.7 Top Commodities 1 Imported Concrete Sand Aggregate Exported n/a Service Area Mexico, Central and South America and United States 1 Steve Beardon, Port Director at Port Isabel/San Benito Navigation District estimates 2012 Port activity (personal communication via e mail, September 11, 2013) P1, Guide to the Economic Value of Texas Ports, Center for Transportation Research, 2008.(CY2006) Revised 09/2013

141 PORT PROFILE Port of Port Isabel Port Isabel, TX The Port of Isabel is a deep water port that serves oil service vessels, various seafood processers, concrete manufacturers, and boat construction and repair companies. The Port is adjacent to the City of Port Isabel and the Town of South Padre Island. Waters interfacing with the Port include the Brownsville Ship Channel, Gulf Intracoastal Waterway (GIWW), Gulf of Mexico and Port Isabel Channel. 3 About 200 people worked the manufacturing sector in 2006, which is responsible for over 50 percent of the revenues from businesses dependent on the Port. The shrimping sector employed roughly 300 during the same period. 4 In 2007, the Port Isabel-San Benito Navigation District (PISBND), Canal and Navigation Commissioners changed the strategic direction from servicing cargo and cruise ships to attracting offshore oil and gas industries. As a result, SubSea 7 (headquartered in London, England UK) built onsite a $40 million pipeline fabrication spool-base. 1 Source: TxDOT Assets 726 acres of waterfront land Storage: 45 acres open 5 docks (2 cargo, 1 roll-on/roll-off, 2 oil) 1,150 feet of deepwater docks 2,100 feet of deepwater frontage available Connectivity Nearby several inland ports of entry into Mexico within Brownsville/Los Indios area Barge lines serve the Port via the Gulf Intracoastal Waterway (GIWW) Controlling depth is 150 feet wide by 36 feet deep with a Turning Basin of a 1,000 feet wide by 36 feet deep No railroad services offered Air freight service at the Brownsville/South Padre Island International Airport Current and Future Projects Project Description Estimated Cost (FY 12) Estimated Cost (TBD) Repair High Dock $750,000 $0 Cruise Dock Rehabilitation (oil dock conversion) $600,000 $0 Dock Rehabilitation (two additional oil docks) $0 $1,200,000 TOTAL $1,350,000 $1,200,000 3 Port Isabel/San Benito Navigation District, website as of September 11, An Analysis of the Value of Texas Seaports in an Environment of Increasing Global Trade, Center for Transportation Research, Revised 09/2013

142 PORT AT-A-GLANCE Port of Brownsville Brownsville, TX Legal Name: Brownsville Navigation District Draft: Deep (42 ) U.S. Port Ranking by Tonnage 1 #67 (U.S. Customs Port Ranking) Port of Brownsville 1000 Foust Road Brownsville, TX (956) Tonnage (millions) Domestic Foreign Inbound Foreign Outbound Port Director and CEO Eduardo A. Campirano Board of Commissioners Sergio Tito Lopez Chairman 2012 Port Tonnage 5,536,689 tons Barge Traffic 707 Container Traffic 2 n/a Transit Activity 3 1,100 41,000 27,194 Vessel Calls (annual) including barge/tug calls Economic Impact 4 Truck Traffic (annual) public/private Railcar Transits (annual) public/private Economic Value ($ Millions): $2,024.9 State and Local Taxes ($ Millions) Total Jobs: 21,590 Direct Jobs: 4,373 Total Taxes: $134.1 Direct Taxes: $13.4 Top Commodities 5 Steel slab Hot and cold roll Steel plate Imported Steel beams (billets) Iron ore Petro products Lubricants Steel products Petro products Lubricants Exported Iron ore 1 U.S. Army Corps of Engineers, Waterborne Commerce of the United States, Part 5, National Summaries, (CY2011) Carlos R. Masso Vice-Chairman Martin C. Arambula Secretary John Reed Asst. Secretary Ralph Cowen Asst. Secretary Governing Body The Brownsville Navigation District is governed by a Board of Commissioners consisting of five elected officials. These commissioners serve fouryear terms on a staggered basis. Principal Trading Partners Mexico, Central/South America, China, Korea, Japan, Germany, Belgium, Russian and Brazil Service Area Mexico, Central and South America and United States 2 U.S. Army Corps of Engineers, U.S. Waterborne Container Traffic by Port/Waterway in 2011, (CY2011) 3 Comprehensive Annual Financial Report (CAFR), Finance Dept. Brownsville Navigation District, (CY2012) 4 The Local and Regional Economic Impacts of the Port of Brownsville. Martin Associates, (CY2011) 5 Texas Ports Association, Port of Brownsville (profile) as of September 6, 2013 Revised 09/2013

143 PORT PROFILE Port of Brownsville Brownsville, TX The Port of Brownsville is located at the southernmost tip of Texas at the end of a 17-mile channel that meets the Gulf of Mexico at the Brazos Santiago Pass. The Port sustains a vital ship recycling industry that works on 80 percent of the ships recycled in the U.S. 6 During 2012, Keppel AmFELS employed 2,400 to repair mobile drilling rigs and platforms. More than 50 percent of the direct revenue is generated by the oil rig and ship repair operations. In terms of total revenue, scrap generates the greatest revenue impact followed by petroleum products. Barge and bunkering operations generate the second largest local revenue impact, followed by trucking operations. Assets Approximately 40,000 acres of land Storage: 13 acres covered, 65 acres open 18 docks (12 cargo, 4 oil, 1 liquid, 1 bulk) Foreign-Trade Zone (FTZ) #62 7 Source: TxDOT Connectivity Nearby several inland ports of entry into Mexico within Brownsville/Los Indios area Barge lines serve the Port via the Gulf Intracoastal Waterway (GIWW) Entrance Channel is 250 feet wide by 42 feet deep with a Turning Basin of 1,200 feet wide by 36 feet deep Intermodal railroad services offered by Brownsville & Rio Grande Int l Railroad (BRG) Air freight service at the Brownsville/South Padre Island International Airport Current and Future Projects 8 Project Description Estimated Cost (FY 13) Estimated Cost (FY 14) Deepening and Widening Feasibility Study $650,000 $500,000 Lift Station Improvements $60,000 $0 Water Tank Rehabilitation $1,033,000 $982,000 New Infrastructure (FY13, Dock No. 16) 9 $20,500,000 $0 Improvements to Docks, Warehouses and Cargo Laydown $3,502,000 $26,038,000 Areas (FY14, Oil Dock No. 6) Port Security Improvements $3,986,000 $0 Rail Improvements $2,200,000 $0 TOTAL $31,931,000 $27,520,000 6 News Release #: MARAD 03 13, Maritime Administrator Matsuda Tours Port of Brownsville, Dated: March 4, Foreign Trade Zone #62 operations during CY 2012 ranked nationally at #11 and #1 in Merchandise Received and Exports activity, respectively, according to the 74 th Annual Report of the Foreign Trade Zones Board to the Congress of the United States, Appendix C, August Texas Ports Capital Program, Texas Department of Transportation, page A 5 9 Dock No. 16 construction partially funded by a $12 million federal TIGER (MARAD) grant in FY 2012 to expand Port container operations. Revised 09/2013

144 APPENDIX D GLOSSARY OF MARITIME TERMS 100

145 Air Draft Distance from surface of the water at mean high tide to the highest point of a vessel. Air draft can also reference the clearance of an overhead obstruction. Barge A large, flat-bottomed boat used to carry cargo from a port to shallow-draft waterways. Barges have no locomotion and are pushed by towboats. A single, standard barge can hold 1,500 tons of cargo or as much as either 15 railroad cars or 60 trucks can carry. A barge is 200 feet long, 35 feet wide and has a draft of 9 feet. Barges carry dry bulk (grain, coal, lumber, gravel, etc.) and liquid bulk (petroleum, vegetable oils, molasses, etc.). Berth (v.) To bring a ship to a berth. (n.) The wharf space at which a ship docks. A wharf may have two or three berths, depending on the length of incoming ships. Breakbulk cargo Non-containerized general cargo stored in boxes, bales, pallets or other units to be loaded onto or discharged from ships or other forms of transportation. (See also: bulk and container.) Examples include iron, steel, machinery, linerboard and wood pulp, Bulk cargo Loose cargo (dry or liquid) that is loaded (shovelled, scooped, forked, mechanically conveyed or pumped) in volume directly into a ship s hold; e.g., grain, coal and oil. Buoys Floats that warn of hazards such as rocks or shallow ground, to help ships maneuver through unfamiliar harbors. Channel Draft The average, low-tide depth of a ship or barge channel. Container A box made of aluminum, steel or fiberglass used to transport cargo by ship, rail, truck or barge. Common dimensions are 20' x 8 x 8' (called a TEU or twenty-foot equivalent unit) or 40' x 8' x 8', called an FEU. Variations are collapsible containers, tank containers (for liquids) and "rag tops" (open-topped containers covered by a tarpaulin for cargo that sticks above the top of a closed box). In the container industry, containers are usually simply called boxes. 101

146 Container chassis A piece of equipment specifically designed for the movement of containers by highway to and from container terminals. Container crane Usually, a rail-mounted gantry crane located on a wharf for the purpose of loading and unloading containers on vessels. Container terminal A specialized facility where ocean container vessels dock to discharge and load containers, equipped with cranes with a safe lifting capacity of tons, with booms having an outreach of up to 120 feet in order to reach the outside cells of vessels. Most such cranes operate on rail tracks and have articulating rail trucks on each of their four legs, enabling them to traverse along the terminal and work various bays on the vessel and for more than one crane to work a single vessel simultaneously. Most terminals have direct rail access and container storage areas, and are served by highway carriers. Deep water Deep water channels are defined as having depth of 35 feet or greater. Dock (verb) - To bring in a vessel to tie up at a wharf berth. (One parks a car, but docks a ship.) (noun) - A dock is a structure built along, or at an angle from, a navigable waterway so that vessels may lie alongside to receive or discharge cargo. Sometimes, the whole wharf is informally called a dock. Draft The depth of a loaded vessel in the water taken from the level of the waterline to the lowest point of the hull of the vessel; depth of water, or distance between the bottom of the ship and waterline. Drayage Transport by truck for short distances; e.g. from wharf to warehouse. Dredge (noun) A waterborne machine that removes unwanted silt accumulations from the bottom of a waterway. (verb) The process of removing sediment from harbor or river bottoms for safety purposes and to allow for deeper vessels. 102

147 Dry bulk Minerals or grains stored in loose piles moving without mark or count. Examples are potash, industrial sands, wheat, cotton, sugar, soybeans, and peanuts. Elevator A complex including storage facilities, computerized loading; inspection rooms and docks to load and unload dry bulk cargo such as grain or green coffee. Fleeting The area at which barges, towboats and tugs are berthed until needed. The operation of building or dismantling barge tows. Foreign Trade Zone (FTZ) Known in some countries as a free zone, a foreign trade zone (FTZ) is a site within the USA (in or near a U.S. Customs port of entry) where foreign and domestic goods are held until they ready to be released into international commerce. If the final product is imported into the U.S., duties and taxes are not due until the goods are release into the U.S. market. Merchandise may enter a FTZ without a formal Customs entry or the payment of Customs duties or government excise taxes. In the zone, goods may be: stored; tested; sampled; repackaged or re-labeled; cleaned; combined with other products; repaired or assembled, etc. Gantry crane Track-mounted, shoreside crane utilized in the loading and unloading of breakbulk cargo, containers and heavy lift cargo. General cargo Consists of both containerized and breakbulk goods, in contrast to bulk cargo. See: breakbulk, container, bulk, dry bulk). General cargo operations produce more jobs than bulk handling. Gulf Intracoastal Waterway (GIWW) The GIWW is a 1,300-mile waterway along the U.S. Gulf of Mexico that stretches from St. Marks, Florida to Brownsville, Texas. The Texas segment of the GIWW is 423 miles in length and begins at the Sabine River and ends at Port Isabel, linking the state s deep and shallow draft ports, as well as its private terminals. The GIWW is authorized by Congress to be maintained at a width of 125 feet and a depth of 12 feet. 103

148 Heavy lift Very heavy cargoes that require specialized equipment to move the products to and from ship/truck/rail/barge and terminals. This "heavy lift" machinery may be installed aboard a ship designed just for such transport. Shore cranes, floating cranes and lift trucks may also adapted for such heavy lifts. Home port Port from which a cruise ship loads passengers and begins its itinerary, and to which it returns to disembark passengers upon conclusion of voyage. Sometimes referred to as "embarkation port" or "turn around port." Hostler (or hustler) A tractor, usually unlicensed, for moving containers within a yard. An employee who drives a tractor for the purpose of moving cargo within a container yard. Intermodal The movement of cargo on two or more transportation modes. The term intermodal can also refer to moving goods in a standardized metal container that is easily transferred between ships, rail, and trucks. Long ton A long ton equals 2,240 pounds. Marshalling yard This is a container parking lot, or any open area where containers are stored in a precise order according to the ship loading plan. Containers terminals may use a grounded or wheeled layout. If the cargo box is placed directly on the ground, it is called a grounded operation. If the box is on a chassis/trailer, it is a wheeled operation. Mean low water (MLW) Lowest average level water reaches on an outgoing tide. Mean high water (MHW) Highest average level water reaches on an outgoing tide. Mooring dolphin A cluster of pilings to which a boat or barge ties up. Niche A narrow specialization. In the context of ports, a niche port is one that serves a specialized type of cargo or client, such as the offshore oil field services industry. 104

149 Ocean carrier Diesel-fueled vessels have replaced the old steamships of the past, although many people still refer to modern diesel ships as steamships. Likewise, the person who represents the ship in port is still often called a steamship agent. On-dock rail Direct shipside rail service. Includes the ability to load and unload containers/breakbulk directly from rail car to vessel. On-terminal rail Rail service and trackage provided by a railroad within a designated terminal area. Public-Private Partnership (P3) A contractual agreement between a public agency and a private sector entity to deliver and/or finance transportation projects. Port Authorities Advisory Committee (PAAC) A seven-member committee appointed by the Texas Transportation Commission to provide a forum for exchanging information between Texas ports and the Commission. The PAAC provides the Commission with port-specific information and perspective that assists with the development of department policy. The PAAC s membership includes one representative from the Port of Houston, three representatives from the upper Texas Coast ports, and three representatives from the lower Texas Coast ports. The PAAC was established under Section of the Texas Transportation Code. Pilot A licensed navigational guide with thorough knowledge of a particular section of a waterway whose occupation is to steep ships along a coast or into and out of a harbor. Local pilots board the ship to advise the captain and navigator of local navigation conditions (difficult currents; hidden wrecks, etc.). Port of call Port at which cruise ship makes a stop along its itinerary. Calls may range from five to 24 hours. Sometimes referred to as "transit port" and "destination port." (See also: home port) Project cargo The materials and equipment to assemble a special project overseas, such as a factory or highway. 105

150 Rail yard A rail terminal at which occur traditional railroad activities for sorting and redistribution of railcars and cargo. RO/RO or ro/ro Short for roll on/roll/off. A ro/ro ship is designed with ramps that can be lowered to the dock so cars, buses, trucks or other vehicles can drive into the belly of the ship, rather than be lifted aboard. A ro/ro ship, like a container ship, has a quick turnaround time of about 12 hours. Rubber-Tired Gantry (RTG) A traveling crane used for the movement and positioning of containers in a container field. RTG's may also be used for loading and unloading containers from rail cars. Shallow Draft Shallow draft channels are defined as being less than 25 feet deep. Shoaling The gradual build-up of sand and other sediment in ship channels due to ocean currents and waves. Short ton A short ton equals 2,000 pounds. Lifting capacity and cargo measurements are designated in short tons. Spreader A device for lifting containers by their corner posts. The spreader bar on a container crane is telescopic to allow it to lift containers of various lengths. TEU Abbreviation for Twenty-foot Equivalent Unit. Texas Ports Association (TPA) A trade organization that promotes the collective interest of Texas ports and their ability to compete with ports outside of Texas. Transit shed The shed on a wharf is designed to protect cargoes from weather damage and is used only for short-term storage. Warehouses operated by private firms that house goods for longer periods. 106

151 Transhipment The unloading of cargo at a port or other location where it is then reloaded, sometimes into another mode of transportation, for transfer to its final destination. Tugboat Strong v-hull shaped boat used for maneuvering ships into and out of port and to carry supplies. Large ships are too powerful to pull up to the wharf on their own power. The ship cuts its power and lets the tug nudge it in. Generally barges are pushed by towboats, not tugs. Twenty Foot Equivalent Unit (TEU) A unit of measurement equal to the space occupied by a standard twenty foot container. Used when stating the capacity of container vessel or storage area. One 40 ft. Container is equal to two TEU's. Unit Train A train of a specified number of railcars, perhaps 100, which remain as a unit for a designated destination or until a change in routing is made. U.S. Army Corp of Engineers (USACE) The federal agency responsible for permitting and maintaining federally-funded channels. The USACE also is responsible for building, maintaining, and operating locks along the GIWW. Vessel operator A firm that charters vessels for its service requirements, which are handled by their own offices or appointed agents at ports of call. Vessel operators also handle the operation of vessels on behalf of owners. Weights and Measures/Measurement ton: 40 cubic ft or one cubic meter Net ton/short ton 2,000 lbs Gross ton/long ton 2,240 lbs Metric ton/kilo ton 2,204.6 lbs Cubic meter cubic ft. 107

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