Project 0-5068: Planning for Container Growth in the Houston Ship Channel and other Texas Seaports

Project Closeout and Preliminary Conclusions

Center for Transportation Research08/29/2006

Project Scope Analyze current state of container

handling practices in Texas Predict growth in future container

volumes Isolate strategies to better manage

growth Predict impact on port and

landside infrastructure

Presentation Format Summary of First Year Findings Goals for Second Year Report Second year conclusions

Background Container Forecast Port Studies POHA rail system analysis Houston Road Corridors and Trucking operations Distribution Center Network

Summary

Summary of Findings: 5068-1 Described factors driving container growth in Texas Described major rail corridors in and around

Houston Summarized needed improvements for intermodal

rail corridors serving Texas Recommended against construction of a facility

akin to the Alameda corridor for the Houston area Recommended greater redundancy for container

port infrastructure Described readiness of alternative ports such as

Corpus and Brownsville to handle containers in future

Recommended strategies for improving rail corridors in Brownsville and Beaumont.

Goals for Second Year Report Predict container growth rates for the

port of Houston complex. Analyze other port projects for handling

increased container volumes such as Texas City, Galveston and Freeport

Continue analysis of needed improvements in rail system in and around Houston

Examine Port of Houston Rail System

Goals for Second Year (continued) Examine road corridors used for container

movements in the Houston area and examine whether planned improvements will be sufficient to handle demand

Comment on external effects of container growth on Texas population centers including potential environmental justice concerns

Examine funding options for improving intermodal movements

Identify fatal flaws in existing plans for intermodal improvements

Study role of the existing and future inland port / distribution center network in driving and steering container growth.

Background for Container Growth Estimates Status of the global shipping market Trends in port and ship capacity

- 10,000 TEU vessels will be delivered in 2007

- Rapid expansion of Port Capacity in China. - India attempting to overcome infrastructure deficit

Improvements in ship and port technologies are coupled with new processes that could help to manage growth- Crane double cycling- Automation

Container Forecasting Literature Review

Shallow body of existing work Statistical methods generally failed to predict trade

growth of past 2 decades Many organizations have abandoned long-term container

forecasting Development of container trade database

Texas ports, economic data, PIERS, USACE, MARAD etc. Consultation with Port of Houston Statistical Analysis Survey of qualitative factors with the potential to affect

container trade Panama Canal, West Coast congestion, feasibility of Suez

Route etc.

Container Growth at the Port of Houston

Each bar represents the total annual TEUs handled. The dotted lineis the moving average while the solid line is an exponential trend line.

Port of Houston compared to selected large container ports (2005)

Port of Long Beach: 6,709,818 Port of New York and New Jersey:

4,792,922 Port of Seattle: 2,087,929 Port of Houston: 1,584,100

Asian trade has increased to nearly a fifth of all container trade at POH - in only three years.

Chinese trade has exploded - and dwarfs that of other Asian nations at Port of Houston

13.14%21.24%

21.24%

49.90%

Chinese trade now accounts for a large - and increasing - proportion of yearly container growth at POH

If current trends continue, the POH will grow to the current size of today’s largest ports

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1999-2004 Grow th Rate (7%) 4% Average Annual Grow th

10% Average Annual Grow th

Long Beach

New York/New Jersey

Seattle

Container growth projected statistically as a function of population and port market share

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1999-2004 Grow th Rate (7%) 4% Average Annual Grow th

10% Average Annual Grow th0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1999-2004 Grow th Rate (7%) 4% Average Annual Grow th

10% Average Annual Grow th Regression Model

Long Beach

New York/New Jersey

Seattle

Conclusions All methods of analysis project POH breaking 2 million by 2010. If

today’s growth rates continue, at least 3 million by 2015 and 4 million by 2020

POH has shown the ability to adapt their practices to demand in excess of their capacity. They will be able to handle these volumes as Bayport comes online – up to a point. Other ports will likely increase their container business.

Other Texas container ports will grow their container businesses. Port Freeport, others planning for this

Chinese trade is seriously altering the composition of POH container trade, and accounting for a rapidly increasing share of the port’s container growth. When this trend will ebb is unclear; Will Wal-Mart’s China imports continue to grow? Will other retailers locate distribution centers near the Port? Right now, answers to these questions are unclear although they are key questions in projecting the rate of container growth.

Directions for the Future

Methodology could be enhanced in 0-5538 forecasting task General Equilibrium Modeling

An extension of the impact modeling USAGE-ITC (our national impact model) in

conjunction with GTAP (a global trade model)

This approach has been used successfully to forecast container flows in Japan

Future Container Facility –Texas City Stevedore Services of America (SSA) plans to

construct a container terminal on Shoal Point dredge disposal island

Complications with landside access: No on-dock rail Engineering scheduled for completion this month

with bids for construction scheduled to be issued shortly thereafter

SSA is allowing a 30 month construction window: several engineering constraints not present at Bayport

Phase I completion in the first quarter of '09. Capacity of 4500 TEU’s per acre, 150 acre yard. Expect initial volume of 300,000 TEU Attempting to partner with a steamship line

Update: La Quinta at Corpus Christi Discussed in detail during first year

report As of August 2006, Port projects the first

phase of the terminal to open in 2009 with initial volume of 140,000 TEU

Port would need to generate $83 million dollars of revenue after agreement is finalized with Dragados at the end of 2006.

Potential for Galveston Containerization Used by POHA in the past as an overflow

facility Existing container yard has been abandoned

with no current plans to resume service: complications with landside access

Hutchinson Port Holdings interested in redeveloping piers 36 through 41 as a container facility.

Would use BNSF switching yard Future plans may call for container facility on

Pelican Island.

Plans at Freeport Facility currently sees substantial

volumes of containers of refrigerated cargo: 65-75% bananas.

Port projects 18% annual growth for the next few years.

Has sufficient depth to accommodate a more diverse fleet of container vessels.

Landside connections to Houston may be a constraint if the road is not expanded

The Port Terminal Railroad Assoaciation (PTRA) System

Initial Findings

Options to Improve Conditions

Draft Recommendations and Costs

Study Focus

Internal Rail Port Services and Market Demand Intermodal’s real prospect and lanes Cash cows from the bulk and chemical traffic

Access problems to and from the port’s main door that inhibit port have negative impact on internal port railway efficiency

Three sections that need small specific improvements

Internal port railway capacity problems Two sections that need improvement

Initial Findings

Pasadena to Harrisburg & Manchester Jct single track restricts train movements

Barbours Cut approach and yard already at capacity

Single track access to the north restricted between port access door and Englewood Yard

Track at capacity to the west and NW via Rosenberg

Impacts directly on Barbours Cut biggest customer Track at capacity to the south via BNSF & Hobby

airport area

Options to Improve Conditions

Recommendations consistent with last year’s report Train delay is the major cost

Also the major railway benefit if fixed Train caused delays to highway commerce and the

traveling public from restricted railway port approach with long slow moving trains is also the major public cost

Also the major public benefit if fixed A few rail passing siding additions and some limited

double track will bring the benefits (and railway operating savings)

Draft Recommendations

Two to three sidings along the Union Pacific main line between the port entrance near Harrisburg Jct, and Rosenburg to the suburban southwest of Houston

Not for more trains but for holding trains out of harms way while speeding up contracted train movement to the port

Two sidings and improved junction along the BNSF Alvin/Houston approach corridor

Improves both port access and Corpus Christi corridor flows Add second main track north towards Englewood Yard out of

the port near Manchester jct. Add double track 2nd track

Between Manchester Jct area and Pasadena Add second main track within the Strang branch r-o-w to

reach the new Port of Houston container facility Add train handling capability at Barbours Cut

Cost Estimates

Total Under $50 Million

$15 to $20 Million for port approach sidings $10 to $15 million for Englewood double

track Balance for the doublestack and Pasadena

doublestack improvements No estimate yet for Strang branch container port access

Road Corridor Connections to POHA Truck container movements from the

POHA depend on several key road corridors including Barbours Cut Blvd, SH 146, SH 225 and 610 in order to access local distribution centers and rail yards.

Report addresses planned improvements in each of these corridors.

Barbours Cut Blvd Current deteriorated condition of county owned road

slows down truck traffic and can damage cargo. County began the project and transferred to TxDOT

after receiving a federal earmark. Construction slated to begin in August of 2007 and

finish in July of 2009 Will replace jointed concrete with 12 inch thick CRCP Timing will allow Bayport to serve as a relief valve if

access to Barbours Cut becomes impaired due to construction.

Port plans to simultaneously install a traffic light at the corner of BCB and Broadway to replace off duty police officers currently manning four-way stop.

Actuated system would speed traffic flow

Improvements to SH 146 Critical corridor for accommodating future container growth. Links Barbours Cut to SH 225 will become even more important

once Bayport opens. Also links Barbours Cut and Bayport to Cedar Crossing industrial

park. Current major investment study calls for capacity expansions to

meet expected growth of between 60% to 100% through 2022. More robust forecast may be necessary due to expected

container growth Study did not cover the whole of SH 146, only the section

linking Texas City to La Porte Would provide 6 general purpose freeway lanes with frontage

roads for the segment of the corridor linking red bluff road to Fairmont parkway

Construction is expected to begin in 2010 with full buildout by 2020.

Improvements to SH 225 Primary corridor for trucks transporting containers

from Barbours Cut to rail yards or distribution centers and for those making intercity deliveries.

Most sections of the roadway are still significantly under capacity

Plans call for no significant expansion of the mainlanes through the study horizon.

TxDOT plans on eliminating the left hand exit bottleneck that causes congestion where 225 meets 610.

TxDOT considered but rejected for the time being options such as no build, truck only toll lanes, HOV, and commuter rail.

Examination of Drayage at POHA To Houstonians, container growth at the

port will be manifested in the form of more trucks on the roadways.

Important to learn more about delay patterns and routes chosen by drivers

Need for more information on drayage fleet. Port does not keep detailed information

about truck operations outside port gates.

Survey of Dray Drivers at POHA Survey was designed to examine

demographics, working conditions, truck and route characteristics.

Data could be used to improve port operations or help TxDOT plan for landside improvements

Survey conducted at Barbours Cut gates in first week of June and collected 103 responses.

Survey Results

On average, drivers work 55 hours per week Average dray length is 46 miles Average number of trips to the port per day is

3.2 75% own their own truck Almost 90% belong to a trucking company Drive on average 60,000 miles per year Substantial variation truck mileage profile with

largest cluster between 600-900 thousand miles.

Houston Dray Fleet Age Profile

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10.0%

15.0%

20.0%

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100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1,000

Over1,000

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Addressing Neighborhood Environmental Justice Concerns

Improving the PTRA will carry environmental benefits for surrounding communities

UP to replace road and yard switching locomotives though TERP grant

Other opportunities to mitigate emissions and noise related to container movements

Dray fleet could be modernized through CMAQ and TERP Grants

Port has improved the emissions of yard equipment

Houston Distribution Centers Distribution centers in Houston classified as small-box

(under 100,000 sq ft), mid-box (100,000-400,000) big-box 400,000 -1,000.000, Mega-Box over 1 M.

Often used to consolidate freight that can be part of transnational shipments

Can either be owned and operated by a shipper, leased and operated by a shipper, or leased by a shipper and operated by a third party logistics provider

Can be strictly for distribution, a combination of distribution center/warehouse, or a container freight station

DC’s in the Houston Area Import distribution centers in the Port of Houston

area are predominantly privately owned facilities and are operated by a third party logistics provider.

Many are located near the city center Location decisions for new DC’s based on road and

rail access, land value and productivity. Some smaller container freight stations generate

comparatively high numbers of truck trips and VMT Examples: 200,000 sq ft CFS produces 4 million annual

VMT in the Houston area Next slide shows location of some Houston DC’s

Cedar Crossing

Major growth areas for new DC’s. Located in Chambers county:

Home to the enormous (4M sq ft) Walmart DC.

Could make greater use of barge dock facilities after opening of Bayport and Shoal Point.

Conclusions – Container Growth

In the next two decades, Texas should expect to see robust growth in maritime containers.

This trend is driven by economic and population growth, the growth of maritime trading partners, and technological advances in intermodalism

Despite significant challenges ahead, it appears that Texas will have adequate capacity to handle this growth and will have an advantage over competing regions

Conclusions – Rail issues Rail efficiency remains a weak link with

several problems specific to the region Proposed system of grade separations

would significantly improve Houston system velocity and would broaden the customer based for rail intermodal shipments leaving Houston.

Improvements to Houston rail network and PTRA are being driven primarily by non-containerized commodities.

Conclusions –Road Corridors Successful rehabilitation of Barbours Cut

Blvd is critical and will require careful planning to avoid construction related bottlenecks

SH 146 master plan should be periodically re-evaluated based on container growth Barbours Cut, Bayport and Texas City

SH 225 improvements should be sufficient for handling expected growth rates

Conclusions – Dray and Distribution Center Network

Improving dray operations a key strategy for improving overall port efficiency

Understanding the function of distribution centers is key to projecting impacts of containers on the road network.