You wouldn’t think the country has been skirting along the fragile edge of an economic downturn by looking at business at many of the large Gulf ports. Although container import growth isn’t back to a pre-recession pace, surging export demand lifted volume last year at many major load centers to levels last seen in 2008 before the onset of the global recession.
That shouldn’t be entirely a surprise: The balance between inbound and outbound cargo at Gulf ports historically has tipped toward exports. But the scale of the outbound gains is of a different order, with demand from overseas markets fueled this year by the growth of emerging markets in Central and South America and by the decline in the U.S. dollar exchange rate.
Now the region is standing by for vessel services to meet the change in oceanborne supply chains. Although carriers that serve Gulf ports have reshuffled their services in and around the Gulf, they’re waiting for stronger growth of U.S. imports to introduce new container services, especially from Asia.
Three Gulf ports — Houston, Mobile, Ala., and Tampa, Fla. — are jointly marketing to Asian carriers as gateways to the fast-growing growing population and industrial centers in the South. Their efforts haven’t borne fruit yet, although they have elicited interest and visits to the ports.
This could change this year if the steep losses carriers suffered last year force them into some kind of consolidation of services in Gulf services, or indeed, among the carriers themselves.
“The industry is probably going through another shakeout this year, and I think we’re going to see more partnering, more mergers and more companies get together if they are going to not only survive, but also be profitable,” said Richard Wainio, CEO of the Tampa Port Authority. “We think some of the changes or mergers going forward could turn out to be a blessing in disguise for the Gulf, and Tampa in particular.”
He said carriers hesitating to expand or start new services could team up to share the risks and the costs associated with new services. “It makes it more likely that you’re going to see a major carrier or two, if they do it together, come into the Gulf this year and start to serve Tampa, Mobile and Houston.”
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He said Tampa is in discussion with several carriers about new services, and while nothing is concrete yet, something could develop “maybe later this year.”
Although carriers serving Gulf ports haven’t started new services, they are deploying post-Panamax ships on services from Europe and the Mediterranean to reduce their slot costs. The ports routinely handle calls by smaller post-Panamax ships with capacities in the range of 8,000 20-foot equivalent units.
The four largest Gulf container ports — Houston, Mobile, New Orleans and Tampa — have completed most planned container terminal expansions, and are working on infrastructure projects that will help them prepare for the larger volume of containers they expect following the opening of the Panama Canal’s larger new locks in 2014. Their harbors aren’t deep enough to handle the largest post-Panamax ships of 12,500 TEUs that will be able to transit the canal, but the ports expect more container volume from transshipment ports in the Caribbean.
“Our bread is still buttered on a north-south axis, and we are still waiting for an all-water service from Asia,” said Gary LaGrange, president and CEO of the Port of New Orleans. “But a lot of the people we talk to are talking to us about their vision of the Suez Canal rivaling the Panama Canal because of the growth of Southeast Asia, Vietnam in particular.”
Container throughput at New Orleans jumped 14 percent in 2011 year-over-year, setting a record for the second consecutive year. “A lot of that is due to the new 10-year agreement we signed with Mediterranean Shipping and Ceres (Terminals) last year to operate half of the Napoleon Container Terminal,” LaGrange said. “Under that agreement, MSC agreed to look at New Orleans as a load center, so we are trying to create additional container terminal space as fast as we can.”
The terminal recently put into operation two 100-foot-gauge gantry cranes that can reach across 19 containers, compared with the capacity of 13 to 15 containers across for older 50-foot-gauge cranes.
The port recently won a $17 million federal TIGER grant to build a dockside intermodal rail terminal at the Napoleon terminal. “That should lend itself to our overall game plan of moving from 40 percent rail and 60 percent truck to just the opposite,” LaGrange said. The new rail ramp, which will start construction soon, will connect the port to all six Class I railroads via the short line New Orleans Public Belt Railroad.
In addition to the growth from MSC, CMA CGM introduced a call last year that connects the port with other Gulf and Caribbean ports. “That service connects us to their hub in Kingston, which is the missing link we’ve been seeking for a long time,” LaGrange said.
Hapag-Lloyd calls at the port on a service from Europe, and Maersk Line calls with a service connecting with Mexico and Central America.
At the Gulf’s biggest container port, the Port of Houston Authority is working on a $1.75 billion plan to expand container capacity at its two terminals to meet the changing market.
The authority will build out the remaining half of the planned Bayport container port over the next five to seven years. Bayport now has annual container capacity of 1.1 million to 1.2 million TEUs. The original design for the completed projects was 2.4 million TEUs, but the port plans to be able to raise that to 3 million TEUs by continuing “densification.”
The next step at Bayport is building a permanent gating system that would include an overpass and underpass road. The port is working on flyover entrances into Bayport so trucks will be able to come straight off I-146 into a two-mile, four-lane access road that eventually will have six lanes leading right into the new gates. “They are under construction and should be done by early fall,” said Leonard Waterworth, who became the port authority’s interim executive director on Jan. 30.
A second project is the refurbishment of the port’s older container terminal at Barbour’s Cut. “It has served the trade well for 30 years, but we need to replace those four 50-foot-gauge cranes with 100-foot-gauge cranes and increase the load capacity,” Waterworth said. “The marker we’ve put on the wall is to have at least one wharf fully operational by the fall of 2014 in anticipation of whatever changes the Panama Canal brings.” The port expects strong volume growth to continue regardless of what happens after the Panama Canal expansion because of the growth of the greater Houston region. The greater metropolitan area has a population of 6 million that is forecast to double by 2030.
The Port of Mobile finished 2011 with 15 percent growth in its container throughput, to 169,282 TEUs, far outdistancing general U.S. trade, thanks to the influx of business at the 3-year-old APM Terminal.
“We started the year with four liner services and gained two additional calls by MSC and Zim, so we’re up to six weekly calls,” said Jimmy Lyons, director and CEO of the Alabama State Port Authority. “The new calls are going to Mexico and Central America, which have great promise because of the near-shoring of manufacturing.”
Mobile has completed most of its major infrastructure work and is focusing on some improvements in its turning basis that will enable it to accommodate larger ships.
Tampa’s infrastructure improvements are on the landside as the Florida port tries to leverage its existing ties to retailers and warehouse operators to upgrade the city identity as a distribution center.
By the end of next year, Tampa will complete its I-4 Expressway connector, including an elevated bypass truck lane connecting the Port of Tampa’s main access point directly with the Interstate Highway system. The other big project is the Tampa Gateway Rail project, which will bring on-dock rail to the port’s container terminal by this summer.
Tampa’s container trade finished 2011 with little or no growth and no new liner services. “We’re disappointed in the fact we haven’t had more growth, given the fact that Zim started a couple of new services to Mexico and Brazil last year, but we haven’t seen the volumes we expected on those trades,” Wainio said.
He believes volume will grow in tandem with the population growth of the region. “We have a slow recovery,” he said, “but there are still signs of recovery.”