Texas Rail Advocates
Dick Schiefelbein
January 26, 2007

Good afternoon.

Why is the Port of Houston Authority here at a rail conference?

Why is the Port Authority a member of the Texas High Speed Rail and Transportation Corporation?

Why did the Port Authority co-sponsor two studies of roadway/rail interaction in the Houston region?

Why?

The short answer is that a port cannot expect to be or to remain successful without efficient inland transportation.

For nine decades, trucks – and before them, horse-drawn wagons – could do the job because the Port’s hinterland market was generally Texas and part of Oklahoma, all destinations within easy and effective truck reach, often with overnight delivery.  Rail played a limited role in moving port cargoes, although it has always dominated in transportation of the chemicals and plastics produced by the industries located along the Houston Ship Channel.

But now, the nature of port business is changing.  We have seen exponential growth in imports from China.  This cargo, like the Japanese cargo before it, comes into the United States at West Coast ports and is transported by rail to Midwest and East Coast markets.  But, the West Coast port areas are stressed by the endless growth in container cargoes from the Far East.  Even as new and expanded port facilities are built, the southern California roadway system is challenged to handle the volumes.

The large retailers, who drive the flow of this cargo, are seeking to use additional ports to handle part of their increasing traffic flows.  Sending cargoes through these additional ports won’t divert the cargoes now being handled through the West Coast ports; it won’t even reduce the volume growth at the West Coast ports to moderate levels.  The retailers are looking for additional traffic lanes for their cargoes as high volumes challenge their primary lanes.

This change affects Texas in several ways.

If you had asked as recently as four years ago whether a container ship would ever come into Houston and discharge its complete load, the answer would have been “No.”  Ships routinely stop at multiple ports in the US, off-loading the part of their load destined to the regional market around each port and picking up containers from that market for foreign destinations.  Now, every week a ship completely unloads its 3,000 containers at the Port of Houston.  All of these containers are destined to a single retailer’s distribution center in the Houston area.  Empty containers are loaded onto the ship for its return to China.

We expect this type of all-water Far East service to increase at the Port of Houston.  The expansion of the Panama Canal, which was approved by the Panamanian voters last month, will be completed in 2015 – that’s only eight years from now.  The expansion will allow the larger containers ships that cannot fit in the current locks to reach the Gulf of Mexico and Houston.

We will need large-scale, effective inland transportation to take the containers from these ships to markets beyond Texas – thus, the Port Authority’s concern about rail issues and about the interaction of increased rail shipments and the communities around the Port.

The Port Authority anticipates a need to transport substantially more containers by rail in the 10 to 15 year horizon.  Urban mobility and rail capacity are issues that are starting to impact Houston, just as they were starting to impact Los Angeles and southern California 10 to 15 years ago.  We don’t want to be playing “catch-up” 15 years from now – we want to be proactive and stay ahead of the issues.  We have the advantage of learning from the rail infrastructure projects built in southern California and planned in Chicago.  The models are there and they involve extensive cooperation between the public and private sectors.

These will be big projects, but the Port Authority is no stranger to big projects.

Soon after the devastating Galveston hurricane of 1900, local business and civic leaders joined forces to pressure Washington to dredge a channel through Galveston Bay and Buffalo Bayou to a protected port in Houston, 50 miles upstream from Galveston.  The Port created along Buffalo Bayou has become the largest US port in terms of foreign tonnage and second in total tonnage and the tenth largest port in the world.

The Port has grown from a few docks served by a few ships to a 25-mile long complex of public and private docks receiving over 7,000 ships and 150,000 barges each year, handling over 200 million tons of cargo.  According to U.S. Customs and Border Protection, the volume of imported cargo moving through US ports will triple by 2020, just 13 years from now.

Fifty years ago, the Port of Houston was the destination for the first container ship.  In the 1970s, the Port started phased construction of a terminal designed specifically for container operations.  Today, the Barbours Cut Terminal handles 2/3 of all containers in the US Gulf and 94 percent of containers in Texas. Its final stage was completed eight years ago and it has been operating at or above capacity for the last five years. 

The Port Authority has just completed the first phase of an additional container terminal at Bayport, with a capacity twice that of Barbours Cut.  Outbound containers are being received at the Bayport Terminal this week and the first ship will be worked at the dock next Wednesday.  At full build-out, the 1,100-acre Bayport Terminal will have the capability to work seven ships at one time, handling 2 million TEU’s per year.  TEU is an industry measure of Twenty Foot (Container) Equivalent.  Bayport will have an on-terminal rail loading facility with over 2 ½ times the capacity of the Barbours Cut rail loading facility.

The Port Authority’s original plan was to build the Bayport Terminal in phases over 15 to 20 years, but the rapid growth in Far East trade and the expansion of the Panama Canal will demand a much more aggressive build out.  The pace of this growth is accelerating: it took the Port Authority 18 years to reach the 500,000 TEU mark, but only 11 years for the next 500,000, only 6 years for the next 500,000, and now 2 years with the anticipated achievement of 2 million TEUs in 2007.

Anticipating the continued accelerating container volume growth, the Port Authority already owns an 1,100-acre site for its next container terminal.

Efficiently handling so much cargo means we must work to assure the smooth flow of cargo beyond the boundaries of the Port Authority’s facilities.  Effective rail and roadway connections from the port remain a top priority. 

A century ago, Houstonians bragged about being the city where 14 rail lines met the sea.  These rail lines had been built by 14 competing railroads, each building its tracks without consultation or coordination with the others.  Then, the city grew.  What had been farmland or ranchland when the original tracks were built had become neighborhoods and business districts. 

Today, trains cross more than 750 public at-grade crossings in Houston resulting in more than 30,000 vehicle-hours of delay every day.  I like to look at that in measures I can understand better – 180,000 vehicles blocked for 10 minutes every day.

Jointly with the city, county and TxDOT, the Port Authority has been studying Houston’s rail corridors and roadway volumes to identify projects that can improve urban mobility and facilitate rail movements.  The goal is to make both the urban roadway system and the regional railroad system more effective and efficient.

In the last Texas legislative session, we supported legislation that allows a Freight Rail District to be created by the city and the county, with participation by neighboring counties.  Although the Freight Rail District will not have any taxing authority, it will be able to plan and design solutions to urban and rail congestion issues, seek and receive federal and state funding, and contract for construction of infrastructure projects.

My comments so far have focused on freight movements; it is time to shift to people.  In addition to the Container Terminal, the Port Authority is building an $80 million, 3-berth Cruise Ship Terminal at Bayport, scheduled to open later this year.

Your next cruise may well leave from Bayport.  There is good news – you can drive there, saving the cost of airfare, but there is also bad news – you can’t get there by train – at least not yet.

As you advocate for the South Central High Performance Rail Corridor, also advocate for including Houston in the Corridor.  As a Texan, I believe Houston belongs in the same system as Dallas, San Antonio, Austin, and Fort Worth – not in a system with New Orleans, Mobile, and Birmingham.

At the same time, don’t overlook the synergies between rail and cruise.  The cruise lines could buy rail transportation in bulk, and even operate their own rail cars in trains as an extension of the cruise experience, as they do in Alaska.  The potential for a combined land-sea package could increase passenger projections for a link between the South Central Corridor and Houston.

As you know, there are several possible routes to connect Houston and the South Central Corridor.  The Port Authority is a member of the Texas High Speed Rail and Transportation Corporation, which is looking at the Brazos Express through College Station and the Texas T-Bone connection to the South Central Corridor.  Others are looking at a route parallel to Interstate 45.  At this stage, our focus should be on assuring that the Dallas-Houston segment is included in the Corridor.  After that happens, we can let market and passenger studies decide the route.

The Port of Houston and the railroad system are still as interconnected as they were when “14 railroads met the sea.”  At the Port, we see nothing but growth on the horizon for both the Port and our railroad partners that serve the wharves and industries along the Ship Channel.

Thank you.  I would be pleased to answer any questions you may have.