The U.S. Gulf port also expects to benefit from continuing population migration to Texas and the expansion of Panama Canal, which is scheduled to be completed in April 2016.
The Port of Houston expects strong growth in container traffic in the next few years, speakers said last week at a conference sponsored by the Containerization and Intemodal Institute.
The U.S. Gulf port will benefit from a projected boom in plastic resin exports, population growth in Texas, and the opening of the larger locks in the Panama Canal next year, said Ricky Kunz, chief commercial officer for the Port of Houston Authority.
“Today our container traffic is stronger than it has even been,” said Kunz. “One reason is the surge in resin exports that the port is expecting to see beginning in the fourth quarter of next year and ramping up through 2020. We are talking about hundreds of thousands of TEU that will be produced in this area.”
Vanessa Talbot, global sales and optimization planning manager for plastics and resins at ExxonMobil Chemical, said her company is expanding its Baytown, Texas complex and expects exports of polyethylene resin pellets to increase six-fold from about 50 containers a day to over 300 containers a day in 2017 or 2018.
The chemical industry has grown at an annual rate of 5.4 percent since 1990, much faster than world GDP at 2.6 percent or energy at 1.8 percent. That growth is expected to continue, fueled by a growing middle class globally, urbanization, and the desire for more sustainable products, according to Talbot.
Middle class consumers are the key market for the chemical and plastics industry, she explained. Citing figures from the Brookings Institute, she said while overall population is expected to grow from about 7 billion in 2010 to 8.5 billion by 2040, the middle class is expected to more than double in the same period from 2 billion to 5 billion.
“That’s great news from a petrochemical and consumer demand standpoint,” she said, with much of that growth coming from China, India, Latin America, the Middle East and Africa.
While the strategy of ExxonMobil in the past has been to locate production facilities close to where demand is, she said that is changing, and that the boom in natural gas production has made U.S. plastic more competitive.
“If you look at the petrochemical business, the basic building block of most of our materials for consumer products is something called ethylene, and you can get that by a crude-based feed called naphtha or a gas based feed called ethane,” she said. “When you look historically, the cost of the feedstocks has been very comparable, but it’s really changed in the last five years or so.”
The production of natural gas using hydraulic fracturing and horizontal drilling of shale “has made North America extremely competitive from a feedstock standpoint,” she said. “Ethane as a source of feedstock is much more competitive than the crude based feedstocks.”
Kunz said the population of Texas is now 26 million and the number of persons moving to the state each day is about 1,000 on average, creating a need for consumer goods imports and manufacturing exports.
Kunz added that while the Panama Canal is not going to produce a tidal wave of cargo coming to Houston, it will produce “continued, incremental growth” for the port.
“We are still forecasting somewhere between five and six percent growth on average in our container trade for several years down the road.”
In the first nine months of this year, the Port of Houston saw an increase in container trade of 15 percent. The port actually had 30 percent growth in the first half of the year, primarily because of the congestion that developed at West Coast ports during the contract talks between the International Longshore and Warehouse Union and their employers.
Kunz said the port was able to handle that surge in cargo because of its investment in container terminals.
“We were ready, just like we are ready for the surge that is coming down the road.”
Europe and Mediterranean is the largest trade lane for container traffic at the Port of Houston, accounting for 39 percent of imports and 35 percent of exports, said Kunz.
Container services to and from the Far East were non-existent in Houston a dozen years ago, but now account for 31 percent of import and 14 percent of export container volumes, he added. It is the port’s fastest growing trade lane today.
South America is the next largest lane accounting for 11 percent of imports and 23 percent of exports.
Kunz said there is a lot of “disinformation” about whether the Port of Houston will have an adequate supply of containers for resin exports, saying that the port has about 200,000 empty containers moving out of the area each year.
“When the resins need boxes in the future, beginning in the fourth quarter of next year, we’re ready,” he said.
In the past few years, the Port of Houston has prepared itself for larger containerships, dredging the approach channels that connect the 45-foot federal channel with the port’s Barbours Cut and Bayport container terminals. The channel to Barbours Cut has already been deepened to 45 feet, and the Bayport channel deepening will be completed in the second quarter of next year.
The port is investing $700 million over the next decade on the Barbours Cut Terminal, upgrading it to handle larger ships. For example four superpost-panamax cranes have been installed and the port commissioners recently authorized expansion of the wharf by 1,000 feet and the addition of three more superpost-panamax cranes over the next 18-24 months.
At the Bayport terminal, the Port of Houston is planning to spend about $1 billion on improvements over the next decade.
Port of Houston projects growth from booming plastic resin exports
