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Texas - Global Logistics-Driven Investment


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A view of three different sets of opportunities for Texas to capitalize on logistics-driven investment attraction,

A view of three different sets of opportunities for Texas to capitalize on logistics-driven investment attraction,

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  • 1. Global Logistics - Potential for Texas Economic Development Texas Economic Development Council Spring Meeting - Sugar Land April 28th, 2011 Global Logistics Development Partners Jonathan Red Adam Wasserman Dr. Arnie Maltz
  • 2. Texas – Investor’s Perspective
    • From an investor perspective, we see Texas as an
    • increasingly interesting proposition
    • Large relatively wealthy market
      • Major production and consumption regions
    • Significant & growing foreign trade (#1 state - export value)
    • Seen as business-friendly
    • Access to key international markets
      • - Seaports - Air Cargo Airports - Class 1 Rail
    • Proximity to Mexico
      • Large, fast growing market with land bridge connectivity
    • Central US location
    Global Logistics Development Partners
  • 3. The State of Global Logistics
    • Global cargo movement is evolving – market and geo-political
      • Input costs – Oil
      • New Infrastructure (eg. Panama Canal)
      • Shifting markets
      • Congestion at pinch-points
      • Business competition not sitting idle
      • Public Policy
    • Results
      • Supply chains react
      • Investment patterns evolve
      • Some of this is quite obvious and some very incremental
      • Investors are following the trends
    Global Logistics Development Partners
  • 4. Global Logistics and Texas
    • Key Trends – Maritime
    • Import trade - dominated by Asia to US (West Coast)
    • Some trending toward supply chain diversification
    • Aspirations for more cargo at Gulf Coast ports
    • Increased focus on Latin America (north-south routes)
    • The economic downturn has changed the game
    • Ports and logistics hubs becoming critical cogs in the supply chain
      • Not simply terminals for cargo movement
      • Value-add centers
      • Distribution hubs
  • 5. Global Logistics and Texas
    • Key Trends – Rail
    • Massive investments in rail infrastructure
    • Increased efficiency
    • North-south routes becoming more important
    • Intermodal activity is the driver
  • 6. Texas Transport Infrastructure
    • As comprehensive as any other state
    • 16 member seaports ranging from Orange in the north to Brownsville in the south.
    • 41 Short Line Railroads serving regional customers
    • 11 Interstate Highways covering over 3700 miles of roadway
    • World-Class Air Cargo handling Facilities and nationally recognized Alliance Airport
    Global Logistics Development Partners
  • 7. Economic Contribution of Texas Seaports and Railroads
    • Texas Ports
    • Over 500 million tons (GIWW 73 million tons)
    • 1 million jobs
    • $48 billion in personal income
    • $135 billion in total economic benefit
    • Texas Railroads
    • Over 335 million tons
    • 18,000 jobs
    • $1.1 billion in personal income
    • Orig. or term 25% of rail movements in TX
    • Serve 11,500 customers/facilities
    Global Logistics Development Partners
  • 8. Texas 3 Very Different Logistics & Trade Products
  • 9. Rail Interconnections & Intermodal Capability
    • All Short Line Railroad connects with at least one of the three Class 1’s:
    • - UP
    • - BNSF
    • - KCS
    • 12 Texas ports have Class 1 Rail Service. UP is the number one connector
    Global Logistics Development Partners
  • 10. Texas Port Region
    • Various ports with various strengths
    • Service to international/domestic markets
    • Ports want cargo, revenue and vessel calls
    • Port marketing is all about international trade
      • How well do you know what is going on “inside the gate” at the port in your region?
      • How well do you know the opportunities down the line, how many of the short line’s customers are your port’s customers?
      • How do you add value to the process in your area?
    Global Logistics Development Partners
  • 11. The Outlook-Panama Canal Widening
    • Import cargo traffic for Texas, Mid-South, Midwest may be diverted from LA/Long Beach
      • Assumes adequate Gulf port facilities
      • North-South highway linkages will be important
      • I-35 Corridor may see additional traffic
    • Exports to Asia - another source of increased freight from & through TX vs. west to California
  • 12. Texas Inland Region
    • Large “domestic” Texas markets
    • Great multi-modal story
    • Strategic geography
      • How well do you know the customers of your short line railroad?
      • How well do you know the opportunities down the line, how many of the short line’s customers are port’s customers?
      • How do you add value to the process in your area?
    Global Logistics Development Partners
  • 13. Texas Border Region
    • Mexico Trade Rebounds
    • 2010 Trade up 25.5% over 2009
      • Imports $259B (up 26.5%)
      • Exports $110B (up 24.5%)
    • Three Texas ports account for 65% of
    • US/Mexico Trade
      • Laredo 38%
      • El Paso 19%
      • Pharr 9%
    Global Logistics Development Partners
  • 14. Texas Border Region - International Border Global Logistics Development Partners
  • 15. Texas Border Region The Fuel Cost Factor
    • As fuel costs increase, companies are
    • re-evaluating supply chain elements
    • Effects:
      • More rail out of Mexico and further into the U. S.
      • Premium on efficient facilities to smooth import and export process
    • Fuel costs will make Mexico more attractive for manufacturing vs. Asia
    Global Logistics Development Partners
  • 16. Texas Border Region The Outlook-Near Shoring
    • Anecdotal reports of repatriation from China
    • Possible labor source as U. S. ages
    • Infrastructure improvements in Mexico are happening, but slowly
    Global Logistics Development Partners
  • 17. Texas Border Region Regulatory Factor: The Outlook for Mexican Truck Drivers in the US
    • Mandated by NAFTA although bitterly fought by some US interests
    • Modest participation from Mexican carriers, initially (29 signed up for pilot of 2007-2009).
    • May have the effect to move goods handling away inland to other logistics and manufacturing and distribution points
      • Potential for “LandPort” development 150-500 miles from the border
    • Could improve economics of US manufacturing with Mexican suppliers
  • 18. Case Study Example
    • Brownsville & Rio Grande Intl Railroad
    • 33 miles connecting Port of Brownsville with the UP and trackage rights to BNSF
    • Connects with the UP in Olmito near Harlingen
    • 54 listed customers
    Global Logistics Development Partners
  • 19. Brownsville Rio Grand Customers
    • Amfels, Inc. Angelo International Texas Recycling, Brownsville, TX Brownsville Gulfside Warehouse, Brownsville, TX Brownsville Navigation District BP Marine Americas Brownsville Machine Shop Brownsville Refinery ChemUSA Corporation U. S. Clay Commercial Metals CTC North America Dix Shipping, Brownsville, TX Duro Paper Bag Co. Brownsville, TX Frontier Services G B Freight Forwarding General Forwarding Gulf Stream Marine Greenbriar Leasing, Lake Oswego, TX Gulf Facilities, Brownsville, TX Gulf Port Services, Inc. Gulmar, Brownsville, TX Interfab Interlube Corporation, Brownsville, TX INSCO International Shipbreaking International Commodities
    Global Logistics Development Partners Inter-Transfer, Inc., Brownsville, TX Itapco-Border Terminal, Brownsville, TX) Itapco-Brownsville Terminal) Transmontagne Itapco-Tejano Terminal) Mobile Mining & Minerals Co. Open Sesame Commodities, Inc. Parker & Company Plitt Crane Service Premier Services Port Elevator, Brownsville, TX Petro Liquids Corporation, Brownsville, TX Chem USA Public Utilities Board R. M. Walsdorf Company Roll & Hold RTS International Satellite I, Inc. Schaefer Stevedoring Statia Terminals, Brownsville, TX - Transmontagne South Texas Grain, Brownsville, TX Southern Wood Products Texas International Railway, McAllen, TX TOF Corporation Transforma Marine, Brownsville, TX Westway Trading, Brownsville, TX Tranco Rail Services
  • 20. Harlingen Rail Connection
    • Rio Valley Switching Company-UP
    • Connects Harlingen to Border Pacific RR in Mission, Texas (41 miles)
    • 175 customers
    Global Logistics Development Partners
  • 21. The Reach
    • Brownsville Rio Grande RR to the UP near Harlingen. 33 Miles, 54 customers
    • Harlingen Switching Railroad 41 miles to Mission, Tex. 175 customers. Connects to Border Pacific International Railroad
    • Border Pacific Railroad extends 31 miles to Rio Grande City
    Global Logistics Development Partners
  • 22. Port of Brownsville
    • Deep Water Port with substantial land holdings
    • Nearest MX port to the south is Altamira
    • Principal Imports: steel products, iron ore
    • Principal Exports: steel products, petroleum products, lubricants and grain
    • With over 200 customers of the three short line railroads does the description of the Port of Brownsville’s cargo highlights sound like it reflects the market?
    Global Logistics Development Partners
  • 23. Connecting the (Geographic) Dots
    • Many organizations involved in this example: port, businesses, railroads, state and local governments, and all the economic development groups between Brownsville and Rio Grande City.
    • Many issues, physical capability the railroad’s, costs, track availability
    Global Logistics Development Partners
  • 24. EDO’s Taking the Initiative
    • Reality:
    • Responsibility to ‘join-up” various elements resides nowhere
    • Little Washington role or resources
    • DoT’s and DoC’s
    • Governments are out of cash
    • We could learn from success - successful places that have integrated infrastructure planning and economic development
    Global Logistics Development Partners
  • 25. Key Role for EDO’s
    • Action:
    • EDO’s have the unique opportunity to be regional “quarterback” between all the players.
    • Texas has a unique market and setting that can prove to be a trailblazer in the US
    • .
  • 26. EDO Opportunity
    • Steps for EDO’s:
      • Understand global > local logistics patterns
      • Identify the logistic supply chains
      • Be strategic about key target segments
      • Partner with transport-logistics industry
      • Create necessary products
        • - property assets
        • - logistics assets
    Global Logistics Development Partners
  • 27. Taking Advantage
    • What is needed
      • Money: Capital for infrastructure improvement and expansion
      • Stable security and immigration situation on the border
      • Highway improvements
      • Cultural awareness and cooperation to improve border operations
      • Some attention to sustainability issues
  • 28. About GLDP
    • Investment advisory firm specializing in emerging multi-modal logistics hubs:
      • Maritime – Inland - Air
    • Clients: public and private sector
    • Public-private partnerships
    • Our emphasis is on delivery; advisory is means to an end
    • Senior professional expertise in
      • Market analytics - Supply Chain Management
      • Economic development - Infrastructure planning
      • Business attraction - Project delivery-finance
      • Global logistics - Ports/terminals management
      • Site Selection
    Global Logistics Development Partners
  • 29.
    • Thank you.
    • Global Logistics Development Partners
    • appreciates the opportunity to meet you .
    • Adam Wasserman
    • 623 341 0602
    • [email_address]
    • Jonathan Red
    • 504 214 3081
    • [email_address]
    Global Logistics Development Partners