Transportation costs are a critical component to expansion and relocation projects, both in terms of being able to competitively deliver components and materials to the manufacturer or industrial facility as well as export finished product to overseas customers. Port locations clearly have huge advantages over non-port locations in their ability to offer the most competitive supply chain costs.

Port locations on the U.S. Gulf Coast are poised to bring additional cost savings to manufacturers looking to import and export in the coming years when the Panama Canal expansion project is complete, which is expected by 2014. Simultaneously, ports will bring additional economic development activity to their regions and states.

Ports along the Gulf Coast have been preparing for the Canal expansion for the past several years.

“Almost everything we do in some way relates to the Canal expansion,” says Wade Elliott, senior director of marketing at the Tampa Port Authority http://www.tampaport.com. “It will have significant implications for the Gulf region.”

Historically, Gulf of Mexico ports have not been given priority compared with Atlantic or Pacific ports when it comes to direct container service, Elliott says. With the Panama Canal expansion and ocean carriers looking for new cost-savings opportunities and large, underserved markets, Gulf ports present a huge opportunity.

As a way to attract their share of direct container businesses, the ports of Tampa, Houston, and Mobile have formed the Gulf Coast Advantage, an alliance to attract all-water services direct from Asia via the Panama Canal.

The three ports serve distinct, complementary services. In terms of container business, Houston exports more than it imports; Tampa imports more than it exports; and Mobile is balanced but is also complementary because its cargo includes large machine and automotive parts. The primary objective of the alliance is to develop a service where inbound and outbound ships have itineraries at all three ports.

 

A major gateway to the world

From a cargo- and freight-moving perspective, the Port of Houston http://www.portofhouston.com is a centralized location for shipments to and from an area that encompasses east of the Rockies, west of the Ohio Valley, and south from Canada.

“Based on our location, we have emerged as a major gateway for Asia, Europe, Africa, the Caribbean, and Latin America,” says John A. Moseley, general manager, trade development, at the Port of Houston Authority. “We handle any type of cargo.”

Upgrades, enhancements, and expansions happen almost continuously at the Port of Houston. The Port of Houston Authority approves about $1 billion for capital expenditure projects every five years.

The port has two container terminals—Bayport and Barbours Cut—and improvements happen at both on an ongoing basis.

Bayport is one of the most modern terminals in North America, having opened in 2007. “[Bayport] further positioned us as the largest container port in the U.S. Gulf and one of the largest in North America,” Moseley says. The layout of the terminal is designed to handle 3 million twenty-foot equivalent units (TEUs).

With the delivery of nine super post-Panamax cranes and 11 more planned for the future, Bayport has the ability to handle 12,000 TEU ships. Bayport currently receives 8,100 TEU vessels from Europe (nearly twice the size of what can pass through the Panama Canal today).

Bayport is being built in phases, as demand dictates, Moseley says. It is expected to be completed within the next five to 10 years.

Barbours Cut is also being constantly upgraded and enhanced, Moseley notes. That makeover will continue during the next three years to ensure it maintains modern facilities. New post-Panamax cranes also are slated for delivery at Barbours Cut container terminal.

The Port of Houston is working to deepen and widen the channels of its container terminals to accommodate even larger ships that are expected to arrive fully laden after the expansion of the Panama Canal.

 

Central Florida’s economic engine

Overall, the Gulf region has been one of the fastest-growing parts of the U.S. Florida is part of that growth. In less than 18 months, Florida is expected to pass New York as the third most populous state in the country, according to the U.S. Census Bureau. The Tampa-Orlando I-4 corridor is at the epicenter of that growth, and Central Florida has the largest concentration of distribution centers in the state.

The Port of Tampa is one of the largest economic engines for that growth, responsible for about $8 billion in revenue and 100,000 jobs, Elliott says. The port handles about 40 percent of all cargo tonnage that moves inbound and outbound through Florida.

The port is also one of the nation’s most diversified operations, with resources to handle bulk, general cargo, and breakbulk project cargo.

The Tampa Port Authority has expanded the port’s container terminal during the past five years. The terminal currently includes 2,800 feet of berth length, three rail-mounted container gantry cranes, and a 100-ton mobile harbor crane, all on a 43-foot deepwater channel. The terminal is currently at 40 acres, and there is land set aside to increase that acreage to 160 as demand dictates.

Part of the reason for the container terminal investment is to allow the Port of Tampa to increase trade opportunities with Latin America and Asia as a result of the Panama Canal expansion.

“We realized that we had a significant volume of containerized traffic right in our backyard that was being sent to more distant ports, either in South Florida or elsewhere on the East Coast,” Elliott says.

The Tampa Port Authority is in the middle of a $320 million, five-year capital infrastructure improvement program (including the expansion of the container terminal).

A dedicated truck ramp that leads directly from the port to Interstate 4 will be completed this year. It is part of a substantial highway project in Central Florida.

Tampa Gateway Rail Project, a joint initiative between the Port of Tampa and CSX http://www.csx.com, will result in the first on-dock, multi-purpose-unit train facility in the state of Florida, extending the port’s reach through CSX’s network along the Eastern Seaboard. The port expects to complete the project this year.

 

Port activity translates into economic activity

Port Freeport http://www.portfreeport.com, located about one hour south of Houston,supports local economic development agencies in their effort to attract expansion projects. “We work closely together,” says Phyllis Saathoff, managing director at Port Freeport. “When one element is successful, we’re all successful.”

During the past seven years, Port Freeport has generated more than $1.4 billion in investments. “More investment translates into new business opportunities,” Saathoff says. “They generate economic development for the entire region.”

The port has about 1,400 acres of land, environmentally mitigated and ready for expansion projects. An additional 7,500 acres is available for either developed facilities or raw land, and all land is accessible by water, highway, and rail.

Among its strengths, Port Freeport has the capability to handle large project cargo shipments. Since 2007, it has handled the import and export of wind turbines, which require special capabilities because of their large size. Most vessels arrive with the necessary crane equipment, but Port Freeport has a mobile harbor crane that can handle the shipments, Saathoff says.

Port Freeport has spent $60 million during the past three years to upgrade facilities, improve transportation links (highway and rail), and develop inland projects. During the next 10 years, the port expects to spend an additional $300 million to $500 million.

Future projects include:

Continued construction of the Velasco Terminal:The first phase of construction began in 2007. It is designed to handle new containerized and breakbulk cargo activity. Eventually, there will be 2,400 linear feet of berth space at the terminal.

The port’s vision is to have a container terminal capable of handling up to 800,000 TEUs annually, Saathoff says.

Logistics:Construction of a multimodal facility with five-unit trains of capacity. Union Pacific serves the port, and the company has spent more than $14 million during the past two years to upgrade bridge facilities to accommodate an anticipated increase in activity.

 

A port for the region

Many ports characterize themselves as “regional ports.” But their definition of “regional” doesn’t go much beyond the metro areas they reside in.

But the Mississippi State Port Authority at Gulfport http://www.shipmspa.com is truly a regional port. Not only does Gulfport serve as the port for the state of Mississippi, but on many occasions, it serves as the port for the states of Arkansas, Tennessee, Kentucky, and points beyond. “Our impact goes beyond our borders,” says Donald R. Allee, executive director and CEO at the Mississippi State Port Authority at Gulfport. “We are an economic engine for the region. Our focus is to bring more maritime commerce through Gulfport.”

Gulfport is the third busiest container port in the Gulf of Mexico, behind Houston and New Orleans. Its strength, according to Allee, is its location. Not only can companies serve the Gulf region, but also the middle one-third of the U.S., including the city of Chicago. “It is an attractive market to serve,” Allee points out.

Gulfport has grown significantly since its days of being primarily an agricultural port. In recent years, the growth has been facilitated, in part, by the growing diversity of industry in the state of Mississippi. Toyota’s new facility in Blue Springs, Miss., near Tupelo, manufactures the Corolla. Production is for the U.S. market, but state officials hope that Toyota eventually manufactures automobiles in Mississippi for export markets.

The NASA John C. Stennis Space Center has given the state a base from which to grow a high-tech-industry sector.

To help draw more manufacturers to locate operations in the state, Gulfport offers tax incentives for Mississippi-based companies that utilize Mississippi ports. “We have a strong program that encourages the use of Mississippi ports,” Allee notes.

More than six years after Hurricane Katrina, when all 10 docks were knocked out, Gulfport is in the midst of a $570 million restoration project. The port has rehabbed the docks to ensure they are bigger, better, and stronger, Allee maintains. Between 400,000 square feet and 450,000 square feet of covered storage space has been restored. Prior to Katrina, Gulfport had nearly 700,000 square feet, and Allee says the port will continue to build warehouse space as needed.

In addition, the elevation of the port is being raised to 25 feet above sea level to prevent damage from a storm surge similar to what occurred during Katrina.

“We’re preparing for the future Katrina or other weather event,” Allee says. “We are trying to mitigate the effect of the storm.” In the event of a future Katrina-like event, Allee adds, “We want to be back up and running in days—not weeks or months.”

Also during the past six years, Gulfport has had to deal with the BP oil spill and the continued impact of the economic recession. Through it all, Gulfport has been able to maintain its high ranking in container volume. It is not letting these events hamper their future plans.

“We’re not sitting on our hands waiting for the global economy to recover,” Allee says. “We’re growing our port by at least one-third. We’re investing in our future.” wt