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

1. Project 0-5068: Planning for Container Growth in the Houston Ship Channel and other Texas Seaports Project Closeout and Preliminary Conclusions Center for Transportation Research 08/29/2006

2. 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

3. 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

4. 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.

5. 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

6. 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.

7. 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

8. 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.

9. 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.

10. 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

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

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

13. Chinese trade now accounts for a large - and increasing - proportion of yearly container growth at POH 49.90% 21.24% 21.24% 13.14%

14. If current trends continue, the POH will grow to the current size of today’s largest ports Long Beach New York/New Jersey Seattle

15. Container growth projected statistically as a function of population and port market share Long Beach New York/New Jersey Seattle

16. 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.

17. 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

18. 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

19. 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.

20. 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.

21. 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

22. The Port Terminal Railroad Assoaciation (PTRA) System • Initial Findings • Options to Improve Conditions • Draft Recommendations and Costs

23. 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

24. 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

25. 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)

26. 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

27. 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

28. 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.

29. 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

30. 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.

31. 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.

32. 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.

33. 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.

34. 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.

35. Houston Dray Fleet Age Profile

36. 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

37. 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

38. 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

40. 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.

41. 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

42. 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.

43. 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

44. 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.