The world’s second-largest petrochemical port in Houston may command 75% of all US polyethylene exports, but expected growth in international shipments as a slew of new ethane crackers and associated derivative units start coming online this year has US ports a thousand miles or more away gearing up to nab a piece of the action.
Last month Georgia’s Port of Savannah increased its ship-to-shore crane total to 26 — one more than the 25 at the Port of Houston’s Bayport and Barbour’s Cut terminals — with the arrival of four new post-Panamax cranes that cost about $15 million each. Resin packagers and distributors, such as New Jersey-based A&R Bulk-Pak and Mobile, Alabama-based SeaPac Inc., are setting up operations at or near the Port of Charleston in South Carolina. The Port of New Orleans also is adding post-Panamax cranes, resin packaging capacity and taking empty containers from Memphis shipped via barge on the Mississippi River to add loading capacity for exporters.
Barge companies and container services also are working to position equipment at like-minded ports.
In 2015 Seacor AMH started moving containers on barges on the Tennessee-Tombigbee Waterway, which connects the Tennessee River to Alabama’s Tombigbee River that empties into Mobile Bay, home to the Port of Mobile. Nearly a year ago the company started providing the same service between Baton Rouge and the Port of New Orleans, largely to ease trucking bottlenecks that complicate current polyvinyl chloride (PVC) exports and accommodate expected export growth.
Resin is a “huge part of our conversations” about growth, Port of New Orleans director of marketing Janine Mansour said at a recent energy conference in Houston.
Increasingly, petrochemical industry players from shippers to port officials to logistics companies say the Port of Houston’s chemical traffic is congested. The largest US petrochemical port includes the 52-mile Houston Ship Channel, home to the second-largest petrochemical complex in the world and second only to Rotterdam in the Netherlands. Traders and shipbrokers expect congestion — and costly holdups — to increase as more ships compete for berths and battle inefficiencies.
Traffic has already increased. US PE exports rose 22.6% in 2015 compared to 2014, according to American Chemistry Council data, and 2016 is expected to surpass 2015’s total.
Brian Wyly, director of global logistics for Ascend Performance Materials, a Houston-based chemical, fiber and plastics manufacturer and supplier, said challenges include getting the right container to the right berth at the right time and aligning port and plant operating hours. He said Ascend has been shipping “heavy volume” out of New Orleans and Mobile, thanks to moving empty containers via barge to those ports.
“That is actually our strategy — to go to uncongested ports,” Wyly said.
John Moseley, senior director of trade development for the Port of Houston, bristles at suggestions that the port is congested. He said during a recent tour of the port’s container terminals that they are ready for the next resin export wave, with wharf and crane upgrades and dock additions in progress, a new resin packaging facility slated to open by the end of 2017, expansion of port gate hours this summer and room to expand rail operations.
He said the port has 8,000 to 10,000 empty containers on site, ready to be loaded, at any given time. A sharp 30% to 40% bump in import volume in the summer of 2015, when a labor strike idled much activity at otherwise bustling Los Angeles and Long Beach ports in California, had “no impact on our lines,” Moseley said.
“When you have a Wal-Mart or an Exxon here, they’re not going to accept anything less than perfection in your operations,” he said, referring to Exxon’s Baytown and Mont Belvieu chemical manufacturing and Wal-Mart’s 4.2 million square-foot distribution center in Baytown.
Congested or not, Houston’s proximity to 40% of US petrochemical capacity is an obvious advantage. According to US Customs, the Port of Houston handled 75% of all waterborne polyethylene exports in 2015. Los Angeles/Long Beach came in second at 10%, followed by New Orleans at 7%, and the rest in Freeport, Texas, New York and elsewhere.
“Freight will always find the most cost effective way to move,” Moseley noted.
Still, competitors expect their efforts to bear at least some fruit.
“We understand the first choice will be the closest port when it comes to exports,” said Greg Van Brunt, regional sales manager of trade development for the Georgia Port Authority. “But there will come a time when it reaches critical mass and others can step in.”