X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

HOUSTON-The $100.5 million contract recently awarded for construction of a new 1,330-foot wharf at the Port of Houston’s recently inaugurated Bayport Container Facility marks not just an unexpected acceleration of the agency’s development schedule but also another stage in the ascension of Gulf Coast and East Coast ports in general. Since a work stoppage at the ports of Los Angeles and Long Beach left hundreds of ships stranded a few miles offshore in 2002, an increasing number of retailers and suppliers have attempted to diversify the entry points for imported goods to ensure a steady flow of merchandise and parts to their customers.

“With the West Coast work stoppage, distributors began to see the downside of having everything brought to a single location,” explains James T. Edmonds, chairman of the Port of Houston. “A problem at that location could disrupt the entire supply chain for weeks at a time. As a result, you’re seeing large distribution centers being built in Houston and other non-West Coast ports and creating new growth opportunities.”

According to Edmonds, the growth of container shipping at the port has accelerated to 12% to 13% annually, up from about 4% a few years ago. When port officials began planning the 1,200-acre Bayport facility in 2002, they expected a 60-acre staging area in first phase, originally slated for completion in 2006 but delayed more than a year due to environmental issues, would be sufficient to handle projected container trade growth. But shortly after going into construction, volume had increased so sharply they expanded staging area contract to 110 acres.

By the time Bayport’s first terminal was opened to traffic in February of this year, Edmonds says administrators had already begun laying groundwork for Phase II, more than two years ahead of the original schedule. Phase I had been expected to ease the burden on the port’s 30-year-old facility at Barbour’s Cut, which had been operating at 150% of capacity. But less than half a year later, Barbour’s Cut is already back at more than 100% of capacity. “We probably can’t build fast enough,” says Edmonds.

The port chair anticipates further growth acceleration from the $5 billion widening of the Panama Canal. Construction on the project began last September and completion is scheduled for 2012. The widening will double the canal’s cargo capacity and allow ships as wide as 160 feet to go through. Currently the locks cannot accommodate ships wider than 110 feet. Consequently, today’s largest ships coming from Asia have no choice but to dock on the West Coast. With more and more shippers switching to the larger vessels, that has given West Coast ports a decided advantage. But once the canal is widened, notes Edmonds, that advantage will be lost. He says about 13% of the port’s business currently arrives via the Panama Canal and estimates the percentage will double once the canal is widened.

The port, however, is not staking future growth entirely on landing larger ships from Asia. Trade with Latin America is also a major source of custom. “We have long considered Latin America a prime growth area for us,” Edmonds tells GlobeSt.com. “We do trade missions every year to Mexico, which is our largest trading partner. We do $6 billion to $8 billion of trade annually with Mexico, about 25 million tons of cargo.” Brazil is also a major trading partner, he adds.

Cargo from Latin America does not just enter the port via ship, he emphasizes, noting that of the average 13,000 truck crossings a day in Laredo, 85% are heading into the Port of Houston. In addition, he continues, Mexican distributors often contract with the port to offload cargo destined for Northern Mexico because the facility is both closer and more efficient that Mexico’s own ports.

Unlike the majority of US ports, where imports account for the bulk of business, exports dominate in Houston, with the ratio about 60% to 40% in favor of exports. With US export trade growing due to the fall of the dollar, Edmonds says the port is poised to gain more than it loses in today’s challenging economic environment. An intermodal terminal is included in future phases of Bayport, which he believes will make the facility even more attractive to retailers and distributors. He notes the $190 million-a-year agency has a long list of additional capital improvement projects that include better rail infrastructure, new docks, upgrades to existing facilities, ship channel maintenance and environmental initiatives. “We’re in position to take advantage of changes in the global supply chain,” he states. “Even with the economic downturn, our business is growing at a rapid pace.”<p

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.