The Port of Houston is considering developing a third terminal or an inland port to deal with expected container volume growth over the next two decades. The need for additional space comes as Houston hopes to begin funding a multi-year channel widening project by next year.
Rohit Saxena, director of facility planning for the Port of Houston Authority, said during a presentation last week the port is “exploring opportunities for development of a new coastal terminal and a new inland intermodal terminal.”
Houston is only now looking for available land for one or both projects, which would likely open after 2040 depending on how the port’s container volumes grow, chief port infrastructure officer Rich Byrnes told JOC.com
“Our plan is to stay comfortably ahead of the demand curve with capacity additions as needed,” Byrnes said.
The projects are part of Houston’s upcoming 20-year plan on how it will deal with cargo growth. Saxena said the 20-year plan is close to complete and will be submitted to the port’s board of commissioners for approval in November.
The potential for a third container terminal is part of a building boom for container ship capacity along the US Gulf Coast, thanks to lower labor and land costs.
The small coastal town of Plaquemines, Louisiana, is studying whether it will build a 1,000-acre greenfield terminal that could handle ultra-large container ships.
Further north, dredging will start in 2022 to bring the Mississippi River’s depth to 50 feet, allowing New Orleans to handle ships up to 14,000 TEU in size. Alabama’s Port of Mobile will also eventually be able to handle 14,000 TEU vessels as it starts a 50-foot dredging project late this year.
Houston, which accounts for 70 percent of container volume in the US Gulf, saw laden TEU volumes hit a bit over 1 million TEU in the first five months of 2019, a 14 percent gain over the same period in 2018, according to PIERS, a sister company of JOC.com within IHS Markit. In the first five months of 2020, laden TEU at Houston stood above 1.01 million, slightly better than 2019 volumes and the only top 10 port to register volume growth for 2020 through May, according to PIERS.
Funding needed for widening project
Byrnes declined to say what the port’s long-range growth forecasts are. But given its already big role in oil exports, and growing container business, the port will need to start quickly on another project to widen the lower half of the Houston Ship Channel from 530 feet to 700 feet.
The $1 billion widening project is designed to allow two-way traffic of larger container vessels and oil tankers. In 2019, the Port Authority limited vessels longer than 1,100 feet to transiting the channel once per week in only one direction due to safety concerns over wakes from two-way traffic.
“We can’t really wait any longer” for the widening project, Byrnes said. “We do need to expand the size of the Houston Ship Channel to continue to support growth.”
Congress is expected to provide funding for the US Army Corps of Engineers to start its portion of the dredging project this December through passage of the Water Resources Development Act.
The federal share of dredging covers the first 11 miles of the channel. The port is now working out how it will fund the next 13 miles.
Houston energy exporters sought to have the port issue bonds backed by vessel fees to pay its share of the dredging. But the Port of Houston said that would leave it exposed in the event of reduced volumes.
Lori Brownell, an engineer for the port and the head of the channel improvement project, said Houston still hopes to get its portion of the funding in place soon so it can start preliminary work needed to get the dredging finished by 2024. It is in talks with a group of energy exporters, known as the Coalition for a Fair and Open Port, over how they can share the costs of the project.
“We are hoping to start in 2021,” Brownell said. “We are really compressing the schedule with our accelerated time frame.”
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