| Code: 74343 |

TIN news:   Because of its global nature, Houston is a city where local conditions are influenced by worldwide trends. Oil prices–ever the result of Middle East turmoil–can be the difference between a citywide boom or mass layoffs. Strife throughout Latin America or Asia can spur waves of immigration. And tight land use regulations along America’s East and West Coasts have caused young professionals to flood Houston’s cheaper housing market. The latest example of this global imprint will be the Panama Canal expansion.
In 2006, the Panamanian government, backed by voter referendum, authorized the expansion of its famous canal. As part of a $5.5 billion project, contractors will widen the waterway, thicken the walls, install new locks, and pursue further modernization. The project will enable room for the New Panamax ships, which can carry 13,000 standard shipping containers–or TEUs–rather than the normal 5,000. This project, which is 96% complete, and expected to open early next year, will double the canal’s capacity.
Such a monumental shift is destined to alter trade routes, creating winners and losers in the global cargo race. One winner should be greater Houston, whose industrial giants, led by the Port of Houston, might beat out West Coast competitors in attaining foreign goods. As Port of Houston executive director Roger Guenther recently explained to me in a sit-down interview, the Panama Canal has already connected Houston to two prominent global regions. Houston area manufacturers both receive and ship goods, via the canal, from several Latin American countries, namely those down South America’s western coast. And it connects Houston with east Asian powerhouses like China, Japan, South Korea, and the Philippines. Guenther explained that Houston-area factories, which are clustered along an industrial stretch of over 50 miles from the east end of downtown to the Gulf Coast, tend to export raw materials to those countries. The foreign factories then use said materials to assemble products, shipping them back to Houston, where they are transported to stores for consumers.
“When we talk about the trade with Asia through the Panama Canal,” explained Guenther, “the things that are coming in are the consumer goods…and the things that are being exported through Houston and going through the canal are the things that are used to make those consumer goods. So from toys to garments to household goods, you name it, are coming in through the Panama Canal from Asia, and the things that are going out can be cotton, agricultural-type [products], petrochemical-related products [like] polyethylene and those types of plastics.”
Guenther said that an estimated quarter of the Port’s container business comes from Asia, and expects 5-6% annual growth in trade for the next few years. The Panama Canal expansion will factor into this, and like other U.S. ports, the Port of Houston has responded with its own self-expansion. After interviewing Guenther, I was given a tour of the grounds by a site manager, and learned of three major recent changes. The first is that the port has dredged parts of the adjacent bay to accommodate those bigger New Panamax ships; the second is that loading docks are being expanded to provide more container room; and the third is that they have already installed new cranes of over 300 feet to pick cargo off the top of the boats.
The ironic thing is that, just over a decade ago, the Asia-Panama-Houston route was barely used. Many of the Asian goods that were made or consumed by Houstanians used to be shipped through West Coast ports like Los Angeles, San Francisco, Portland and Seattle. Imports that arrived would then be transferred onto freight trucks or rails that navigated through the U.S. heartland.
But in 2002, there was an 11-day work stoppage on all 29 West Coast ports, when unionized labor went on strike to demand better pay and halt the implementation of labor-reducing technologies. This stoppage caused certain larger companies with Asian factories to lose hundreds of millions of dollars. In response, companies began looking for alternative routes, and stumbled upon the Panama Canal, as a way to connect with ports in New Orleans, Mobile, Miami, Savannah, and Houston. With time, these companies began to see the advantages of this route, especially the one going into business-friendly Houston.
The first thing these companies realized was that the cost of moving goods by boat is cheaper than by land, so if Asian-based companies are delivering goods throughout Texas, it would be more cost-effective to sail to Houston, even if the route is physically longer. Secondly, loose land use regulations have made Houston one of the nation’s fastest growing metro areas, meaning incoming goods can be sold to an increasingly large and wealthy consumer market. Thirdly, Texas is more accepting of oil production, especially compared to California, where fracking and offshore drilling are discouraged. There is ample pipeline infrastructure around the Houston area, making gas abundant and cheap, and thus helping companies who rely on it to manufacture their products. And fourthly, labor relations are better in Houston. While several West Coast ports have suffered from strikes even in the years since the 2002 fiasco, Port of Houston workers haven’t gone on strike since the 1970s.
As a result, the Port of Houston is, along with similarly-situated ports, growing faster than West Coast ports. According to 2015 data by the Journal of Commerce, Houston is among the nation’s 10 fastest growing ports for both imports and exports. The other cities making up both lists are overwhelmingly on the East and Gulf Coasts, while Seattle was the only West Coast one that cracked the top 10. On the day that I visited, the Port of Houston was celebrating, for the first time in its history, the 2-millionth TEU to pass through in a year. The port ranks 2nd in the U.S. in total tonnage, and this figure will likely grow with the new infrastructure.
Of course, the Port represents only a fraction of the industry in Houston. Drive east along Pasadena Freeway to the Gulf, and you will witness the seemingly endless tanks and refineries that sprawl across the metro’s eastern portion. Many plots are owned by major companies like Kinder Morgan and Valero, and the stuff being made includes minerals, chemicals and machine products. As with the port, the Panama Canal’s expansion will likely open these companies to new goods and customer bases, or just the same ones in greater quantity. And that will further grow a metro that already has enormous momentum.

Send Comment

Latest news The most viewed news The most popular topics
Book introduction Magazine introduction Transportation weekly

Multimedia