Houston 20/20:Building the Economy of Tomorrow Infrastructure & Business H. Thomas Kornegay, PE, PPM Kornegay & Company, LLC Maritime Consultant
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
Port Commission Seven Members Serve 2 year terms Serve without compensation Can be reappointed
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
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 $17,258
Economic ImpactSTATE AND LOCAL 2011 2006 changeTAXES($Millions)Direct, Induced, $1,074 1,262 ($189)IndirectRelated Users $3,391 2,428 $963TOTAL $4,465 3,691 $774
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
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
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
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
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
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.
“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
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.
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.
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
Today—NOCan we be ready in time—YESWe need to get the container terminal channels deepened.The Terminals are readyThe Equipment is ready