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Former Port of Houston Exec Director Tom Kornegay details the Port's impact on Houston's economy in this 9/2012 presentation to Houston Economic Summit

Former Port of Houston Exec Director Tom Kornegay details the Port's impact on Houston's economy in this 9/2012 presentation to Houston Economic Summit

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  • 1. Houston 20/20:Building the Economy of Tomorrow Infrastructure & Business H. Thomas Kornegay, PE, PPM Kornegay & Company, LLC Maritime Consultant
  • 2. Brief History Port of Houston 1900 Storm USACE completed channel construction 1914 First Port Director – Col. Benjamin Casey Allin III HCHSC Navigation District formed 1921 Port Terminal Railroad formed 1924 First Container Move April, 1956
  • 3. Port Commission Seven Members Serve 2 year terms Serve without compensation Can be reappointed
  • 4. Staff Present Director – Col. Leonard Waterworth About 600 employees Largest departments are Security, Maintenance, Fire Protection and Accounting Container Terminals are operated by PHA, all other facilities are operated by private companies
  • 5. Facilities City Docks Container Terminals Grain Elevators JacintoPort Southside Bulk Plant
  • 6. Private Facilities  Petroleum Based  General Cargo  Grain Elevator
  • 7. Economic ImpactThe impacts are measured for the year 2011Four types of impacts are measured:• Jobs• Employee earnings• Business revenue• State and local taxes
  • 8. Economic ImpactREVENUE/ECONOMIC PHA FACILITIES PRIVATE TOTAL TERMINALSOUTPUT ($ Millions)Direct Business Revenue $3,627.7 $9,716.2 $13,343.8Local Purchases $1,236.1 $3,310.7 $4,546.7Related Users Output $110,571.4 $50,042.6 $160,614.0TOTAL $115,435.2 $63,069.4 $178,504.5
  • 9. Economic Impact PHA FACILITIES PRIVATE TERMINALS TOTALSTATE ANDLOCAL TAXES($ Millions)Direct $83.30 $148.60 $231.90Re-spending/LocalConsumption $245.20 $437.60 $682.80Indirect $43.30 $115.90 $159.10Related User Taxes $2,186.10 $1,205.40 $3,391.50TOTAL $2,557.90 $1,907.40 $4,465.30
  • 10. Economic ImpactJobs PHA Private TotalDirect 19,767 34,186 53,952Induced 25,468 45,597 71,065Indirect 13,548 3,6287 49,835Related Users 592,501 25,9467 851,968TOTAL 651,284 375,537 1,026,820
  • 11. Economic Impact
  • 12. Economic ImpactPERSONAL INCOME 2011 2006 Change($ Millions)Direct $2,936 2,834 $102Re-spending/Local $8,643 7,449 $1,194ConsumptionIndirect $2,014 3,148 ($1,134)Related User Income $42,930 25,835 $17,096TOTAL $56,523 39,265 $17,258
  • 13. Economic ImpactSTATE AND LOCAL 2011 2006 changeTAXES($Millions)Direct, Induced, $1,074 1,262 ($189)IndirectRelated Users $3,391 2,428 $963TOTAL $4,465 3,691 $774
  • 14. Federal Channel Constructed and Improved by USACEPort Authority is the Local Sponsor Share Cost Furnish ROW and DMDARecently Improved by Deepening to 45 feetMaintenance is the Main Issue WRDA 1986
  • 15. WRDA 1986 The non-Federal share of navigation project costs increased dramatically with WRDA-86. 10 percent for projects with depths of less than 20 feet 25 percent for projects between 20 and 45 feet deep 50 percent for projects over 45 feet deep At completion the non-Federal sponsors must pay an additional 10 percent cash (No Change) no overall net loss of the Nations remaining wetlands base
  • 16. Harbor Maintenance Trust Fund The Harbor Maintenance Trust Fund was created in 1986 to provide a stable long-term source of funding to pay maintenance costs in federally maintained harbors. The tax is imposed on users of the system, particularly shippers of goods passing through those harbors. The revenues total as much as $1.3-1.6 billion annually. Uncommitted balance in the Trust Fund continues to grow, reaching $6.1 billion at the beginning of FY12
  • 17. Houston Ship Channel DredgingOperations and Maintenance Allocation for FY 2010 $24,189,000 Allocation for FY 2011 18,798,000 Allocation for FY 2012 17,831,000 President Budget FY 2013 19,701,000 Amount That Could Be Used for FY 2013 $33,174,000
  • 18. The Panama Canal and the HSC wereboth completed in 1914.The dimensions of the original PanamaCanal locks are:1000 ft long, 110 ft wide & 41 ft deepThe dimensions of the new addition:1400 ft long, 180 ft wide & 60 ft deep
  • 19. Type 2004 2005 2006 2007 2008 2009 % Ch. 2004-09Tanker 19,316 20,118 21,231 21,724 20,907 19,641 1.7Product 11,572 12,217 13,282 13,277 12,662 11,815 2.1Crude 7,744 7,901 7,949 8,447 8,245 7,826 1.1Container 18,279 18,542 19,591 19,863 18,735 18,206 -0.4Dry Bulk 11,631 11,406 12,508 11,040 10,363 8,587 -26.2Ro-Ro 5,317 5,663 6,318 6,077 5,964 4,951 -6.9Vehicle 3,065 3,652 4,182 4,084 4,102 3,336 8.8Gas 916 969 961 917 769 704 -23.1LNG 173 203 213 202 171 201 16.2Combo 459 414 334 235 180 135 -70.6General 3,967 3,935 4,054 3,948 3,660 3,336 -15.9All Types 59,885 61,047 64,997 63,804 60,578 55,560 -7.2Source: Maritime Administration
  • 20.  The New Lane will allow larger vessels to traverse the canal in one way traffic through the new locks. This is NOT a doubling of the locks or the lanes as some advertisements have insinuated It MAY be a doubling of the Volume by Weight and may more than double the Value of the cargo traversing the canal.
  • 21. “If one were to ask 10 experts to give you their opinion regarding the impact of the opening of the third set of new, improved, and larger Panama Canal locks (effectively slated for 2015), they would likely receive 10 different, well thought, thorough prognostications.” -John Larkin, Stifel Nicolaus
  • 22. Assuming a 2014 panamax version vessel sailsPanama at max draft of 50’, it’ll arrive east coastports at about 48.5’, more or less. There will be fuelburn, further lightening the vessel, but that may beoffset by ballast intake. 48.5’ paints a challengingpicture for most USEC portsContinued-source: Bruce Cashon, Ceres Terminals Inc.
  • 23. Max draft is typically calculated based on 14 tons/teu.eastbound typical cargo weighs in much lighter – in the 9-10tons/teu range.Taking the likely scenario – a new panamax vessel sailing Panama at46’- 48’ (TFW) would arrive USEC ports in the 44.5’ - 46.5’ range.Again, it’ll probably be less given actual cargo weights.Unlike carriers, who’s assets are mobile, terminal operators and Portsare committed to a location, which is a conspicuous risk element.source: Bruce Cashon, Ceres Terminals Inc.
  • 24. Ships will continue to get biggerShippers and carriers need gateway (port) options -- Expanded Panama Canal increases the optionsContainer trade will continue to grow long-termPhysical capacity expansion of ports has anupward limit (EC & GC ports have more expansion capabilities)Port productivity is key to ability to handle long term container trade growth (Houston has proven they have the ability to increase productivity to the second highest in the world—at increased cost)Source: world shipping council
  • 25. Today—NOCan we be ready in time—YESWe need to get the container terminal channels deepened.The Terminals are readyThe Equipment is ready

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