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

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 Impact
The impacts are measured for the year 2011
Four types of impacts are measured:
• Jobs
• Employee earnings
• Business revenue
• State and local taxes

8. Economic Impact
REVENUE/ECONOMIC PHA FACILITIES PRIVATE TOTAL
TERMINALS
OUTPUT ($ Millions)
Direct Business Revenue $3,627.7 $9,716.2 $13,343.8
Local Purchases $1,236.1 $3,310.7 $4,546.7
Related Users Output $110,571.4 $50,042.6 $160,614.0
TOTAL $115,435.2 $63,069.4 $178,504.5

9. Economic Impact
PHA FACILITIES PRIVATE TERMINALS TOTAL
STATE AND
LOCAL TAXES
($ Millions)
Direct $83.30 $148.60 $231.90
Re-spending/Local
Consumption $245.20 $437.60 $682.80
Indirect $43.30 $115.90 $159.10
Related User Taxes $2,186.10 $1,205.40 $3,391.50
TOTAL $2,557.90 $1,907.40 $4,465.30

10. Economic Impact
Jobs PHA Private Total
Direct 19,767 34,186 53,952
Induced 25,468 45,597 71,065
Indirect 13,548 3,6287 49,835
Related Users 592,501 25,9467 851,968
TOTAL 651,284 375,537 1,026,820

11. Economic Impact

12. Economic Impact
PERSONAL INCOME 2011 2006 Change
($ Millions)
Direct $2,936 2,834 $102
Re-spending/Local $8,643 7,449 $1,194
Consumption
Indirect $2,014 3,148 ($1,134)
Related User Income $42,930 25,835 $17,096
TOTAL $56,523 39,265 $17,258

13. Economic Impact
STATE AND LOCAL 2011 2006 change
TAXES
($Millions)
Direct, Induced, $1,074 1,262 ($189)
Indirect
Related Users $3,391 2,428 $963
TOTAL $4,465 3,691 $774

14. Federal Channel Constructed and Improved by USACE
Port Authority is the Local Sponsor
Share Cost
Furnish ROW and DMDA
Recently Improved by Deepening to 45 feet
Maintenance 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 Nation's 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 Dredging
Operations 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 were
both completed in 1914.
The dimensions of the original Panama
Canal locks are:
1000 ft long, 110 ft wide & 41 ft deep
The dimensions of the new addition:
1400 ft long, 180 ft wide & 60 ft deep

19. Type 2004 2005 2006 2007 2008 2009 % Ch. 2004-09
Tanker 19,316 20,118 21,231 21,724 20,907 19,641 1.7
Product 11,572 12,217 13,282 13,277 12,662 11,815 2.1
Crude 7,744 7,901 7,949 8,447 8,245 7,826 1.1
Container 18,279 18,542 19,591 19,863 18,735 18,206 -0.4
Dry Bulk 11,631 11,406 12,508 11,040 10,363 8,587 -26.2
Ro-Ro 5,317 5,663 6,318 6,077 5,964 4,951 -6.9
Vehicle 3,065 3,652 4,182 4,084 4,102 3,336 8.8
Gas 916 969 961 917 769 704 -23.1
LNG 173 203 213 202 171 201 16.2
Combo 459 414 334 235 180 135 -70.6
General 3,967 3,935 4,054 3,948 3,660 3,336 -15.9
All Types 59,885 61,047 64,997 63,804 60,578 55,560 -7.2
Source: 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.

29. “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

30. Assuming a 2014 panamax version vessel sails
Panama at max draft of 50’, it’ll arrive east coast
ports at about 48.5’, more or less. There will be fuel
burn, further lightening the vessel, but that may be
offset by ballast intake. 48.5’ paints a challenging
picture for most USEC ports
Continued-
source: Bruce Cashon, Ceres Terminals Inc.

31. Max draft is typically calculated based on 14 tons/teu.
eastbound typical cargo weighs in much lighter – in the 9-10
tons/teu range.
Taking the likely scenario – a new panamax vessel sailing Panama at
46’- 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 Ports
are committed to a location, which is a conspicuous risk element.
source: Bruce Cashon, Ceres Terminals Inc.

32. Ships will continue to get bigger
Shippers and carriers need gateway (port) options -- Expanded Panama
Canal increases the options
Container trade will continue to grow long-term
Physical capacity expansion of ports has an
upward 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

33. Today—NO
Can we be ready in time—YES
We need to get the container terminal channels
deepened.
The Terminals are ready
The Equipment is ready