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The Texas MaritimeTransportation System:Delivering the Goods


COMPONENTSOF THE TEXAS MARITIMETRANSPORTATION SYSTEMColoradoSan Jacint o RiverPort of HoustonPort of BeaumontPort of Port ArthurPort of OrangeRiverTexas’s Maritime TransportationSystem (MTS) consists of waterways, ports,and intermodal landside connectors.Together, the components of the MTS facilitatethe movement of goods and peopleover water. In Texas, 11 commercial portsare served by channels with a draft of morethan 30 feet (deep-draft ports). There are sixother ports that handle commercial cargoeswith channel depths less than a 30-footdraft (shallow-draft ports). The remainingshallow-draft ports are used for commercialfishing and recreational purposes and do nothandle commercial cargoes. Texas’s portsare connected by an extensive shallow-draftchannel called the Gulf Intracoastal Waterwayin Texas (GIWW-T), an integral componentof the state’s vast petrochemical andmanufacturing supply chains. In 2012, theLone Star State ranked second in the nationin total waterborne tonnage transported,with 486 million tons (or 21 percent) of thetotal U.S. maritime freight volume on bothdeep- and shallow-draft waterways.For more detailed information on each of Texas’ ports,including tonnage and economic impact, see the 2014 TexasPort Report available on TxDOT’s website www.txdot.gov.Guadalupe RiverSanAntonio RiverLavaca RiverCalhoun Port AuthorityPort of VictoriaPort of Corpus ChristiPort of Port MansfieldsPort of HarlingenPort of Port IsabelPort of BrownsvilleBrazos RiverPort of PalaciosPort of West CalhounPort of Texas CityPort of FreeportPort of GalvestonGulf of MexicoMiles0 5 10 20 30 40Cedar BayouSOURCE: 0-5538-P1 Guide to the EconomicValue of Texas Ports, Texas Department ofTransportationLegendChannelsDeep DraftShallow Draft1BTEXAS PORTS HANDLED:tons export cargo1.6Btons importcargo(Between 2007 & 2011)TEXAS—A NATIONAL LEADER INMARITIME TRADEMuch of the state’s import tonnage is crude petroleum; it enters into thepetroleum refining process and is rendered into gasoline, diesel, jet fuel, and otherpetroleum products sold domestically and internationally. Similarly, domestic andimported feedstocks are used to produce more sophisticated chemicals or products,which are then exported. In short, the importing of goods into Texas ports is criticalto the state’s economy and provides the necessary inputs for value-added activitiesthat generate wealth for the state.


As the nation’s leadingexport state, Texas portshandled over 20 percentof the nation’s total exporttonnage in 2012.Texas leads the nation in thetotal volume of intrastatemaritime cargo handled at305.7 million tons between2007 and 2011. Every tonof cargo handled on Texas’waterways reduces or eliminatesthe shippers’ needto use the state’s road, rail,or pipeline networks. As aresult, Texas’s coastwise maritimetrade plays a key rolein managing congestion andreduces the need to buildnew surface transportationinfrastructure. Additionally,much of the cargo movedon water includes hazardousmaterials and maritime vesselsprovide the safest modefor their movement.#2Texas’ rank in total U.S.waterborne tonnagemoved (2011)$31M1estimated wholesalevalue of seafoodenabled bythe GIWW-TGIWW-T QUICK FACTS#334,000number oftowboat tripson the GIWW-T(2011)tank barge carries enoughgasoline to meet the needsof ~2,500 people for 1 yearwaterway for tonnageonly the Mississippi and Ohio Rivers ship more tonnage90 %freight classifiedas petroleumand chemicalrelated(2012)75M tonsfreight movedon GIWW-T (2011)During 2013, Texas ports handled more than two million (68 percent) of the loaded twenty-foot equivalent-unitcontainers in the Gulf of Mexico. In total, approximately 80 percent of container traffic arrivingat Texas ports remains within the state. This indicates that the state’s economy relies heavily on the Texasport system for efficient and cost-effective transportation of the products it imports and exports.ECONOMIC IMPACTS OF TEXAS’S PORTS• 1.4M: total # of jobs supported by the port industryo 400K: # of jobs related to port operationso 1M: # of jobs from economic activity dependent on portsEMERGING•TRENDS$82.8M: personalAND ISSUESincome generated by port-dependent employmentTexas’ maritime • industry $6.5B: operates state/local within an tax environment revenue of generated strong demand by port and new industry opportunities. Both have been sparkedby recent exploration and production in the energy industry. Strong population growth and general economic expansion in Texasare sustaining this development. On the horizon is the completed Panama Canal expansion, expected to open in 2016.ECONOMIC IMPACTS OF TEXAS’ PORTSJOBS1.4Mjobs supported bythe port industry400Kjobs related toport operations1Mjobs fromeconomic activitydependent on ports$$$$82.8Bpersonal income generatedby port-dependentemployment$6.5Bstate/local taxrevenue generatedby port industry


Impact Of Increased Oil and GasProduction On Texas PortsThe dramatic growth of oil and gas production is currentlyhaving a significant impact on Texas ports, which have seen a largeincrease in frac sand, pipes, machinery, and other cargo tonnagehandled; this increase is the direct result of oil exploration andproduction in the Eagle Ford Shale play. The continued developmentof the Permian Basin and the Barnett Shale play also requiressubstantial transportation resources. The Port of Beaumont ishandling large volumes of crude oil produced in shale plays in theMidwest and oil sands regions of Canada, and many private terminalsare receiving oil and gas for refining or processing. Producersof natural gas are looking to export through a number of newnatural gas liquefaction facilities being planned along the TexasGulf Coast. Additionally, along deep-water navigation channels onthe Texas coast, billions in private investment are helping to buildpetrochemical plants that will use the state’s cheap and abundantnatural gas to produce plastic resins for containerized exports.Eagle Ford ShaleAs of January 2014, the reserve produced 1.2 million barrels of crudeoil per day, representing an increase of 41 percent from just a yearearlier. During this same period, natural-gas production has seensimilar growth, increasing by 34 percent (from 4.6 million to 6.1 millioncubic feet per day). It’s estimated that a continued increase incrude oil transported by barge from the Eagle Ford Shale play couldresult in the need to transport an additional 1.2 million tons or 445barge trips annually on the GIWW-T by 2022.Liquid Natural Gas (LNG)The United States has eight LNG import terminals planned for conversionto LNG export facilities—two are in Texas, including onewith the required Federal Energy Regulatory Commission approvalat Freeport. There are three more in the permitting stage, andseven more are being actively pursued at this time. Each facilityrequires between $6 billion and $10 billion in capital investment.Panama Canal ExpansionThe volume of cargoes handled at Texas’ maritime ports is expectedto increase with the expansion of the Panama Canal. Mostof the public narrative has focused on handling imported goods.But exports will also be a major part of the picture. A product likeLNG could potentially become a major export from Texas portsbecause the expanded canal will be able to accommodate thedeep-draft LNG vessels.Petrochemical InvestmentThe surge in ethane production from the shale plays since 2009have petrochemical producers planning for an unprecedented levelof capacity expansion. Houston is home to four of the eight largestethylene complexes in the world. In December 2014, proposedchemical construction located in Texas was almost $50 billion.According to the American Chemistry Council, U.S. petrochemicalcompanies recently proposed 100 new major projects worth a totalof $71 billion. Many of those developments are planned along theTexas Gulf Coast.WATERBORNE TRANSPORTATIONUsing almost every available metric, waterborne transportation is a superior mode formoving freight in comparison to truck or rail.CAPACITY: Tank BargeENVIRONMENTEFFICIENCYSAFETYUnits to CarryTon-Miles27,500 BarrelsTraveledof Liquid Cargoper Gallonof FuelRate of Spills in1 barge Gallons perRate ofMillion Ton-milesInjuries perMillion46 rail carsTon-miles144 trucksA loadedbarge carriesenough gasoline tokeep 2,500 automobilesrunning for 1 year4.892.5910.41Spills of More Than 1,000 Gallons1504786161.095.31,609.6


CONCERNS AND NEEDSOF THE TEXAS MARITIME TRANSPORTATION SYSTEMGIWW-TBrazos River FloodgatesDue to the narrow width of its lock and gate structuresand the 45 degree angle alignment of the channel andfloodgates, tow operators experience navigationaldifficulties on the GIWW-T when crossing the BrazosRiver. These operational inefficiencies cost industryover $12 million each year in delays and accidents.These 70-year-old structures are in need of replacementor reconfiguration.Maintaining DepthDue to a lack of federal funding, many portions of thechannel are not maintained to the authorized dimensionsof 12 feet deep and 125 feet wide. As a result,carriers have to load barges at less than their ratedcapacities—or “light load” them—to ensure that thebarge does not scrape bottom or run aground duringtransit. At 2013 traffic levels, losing just one foot ofdraft would have increased the cost of doing businessby roughly $58.7 million for carriers—or nearly15 percent. Light loading generates more traffic onthe GIWW-T, adding to existing congestion andproducing higher air emissions.PortsNeed for New Port InfrastructureTexas ports need to build newinfrastructure to meet the growingmarket demands and new developmentsin the shipping industry andimprove operational efficiencies.At the same time ports need toreplace aged docks, wharves, andcargo-handling facilities that arequickly reaching the end of theirusable life.Landside Highway and RailInfrastructure ProjectsTexas ports need new landsideroadway and rail infrastructureprojects to address port access, portcongestion, and local safety issues.CommonLack of Federal Funding forDredgingTexas port channels and the GI-WW-T both suffer from a lack of federalfunding for dredging, thoughthe source of funds and process forauthorization is different. Historically,Texas ports have receivedless than 25 percent of what theycontribute to the federal HarborMaintenance Trust Fund (a fund formaintaining deep water ship channels)each year. The average annualamount budgeted and funded forGIWW-T operations and maintenancehas been approximately $28million. This is about $34 million lessthan the average amount that theGalveston District requires for “fullfunding capability” each year.FUTUREIMPROVEMENTSFOR THE TEXAS MARITIMETRANSPORTATION SYSTEMTexas Ports 2015–2016 CapitalProgramDuring 2014, member ports of the TexasPort Authority Advisory Committee (PAAC)identified nine high-priority improvementprojects for 2015–2016 that would helppromote regional economic development,improve port access, and enhance intermodaltransportation opportunities. Collectively,these nine projects have an estimated costof $95.3 million, with the ports pledgingto contribute $43.14 million of that total (a50 percent match from larger ports and a25 percent match from smaller ports). The2015–2016 Port Capital Program can befound on the TxDOT Maritime Divisionwebsite at http://www.txdot.gov/insidetxdot/division/maritime.html.VictoriaBarge Dock with Eight Berthsfor Oil Loading andGeneral Cargo Capabilities$7.5MMansfieldDredging of thePort Mansfield Channel$8MPRIORITY PORT CAPITAL IMPROVEMENT PROJECTSBeaumontNew Access Roadwayand Overpass$10MHoustonBayport Rail Spur$12.95MCorpus Christi15-Acre Cargo Storage Yard Expansion,La Quinta Gateway Terminal$10MCorpus Christi52 ft Channel Improvement$353.2MBrownsvilleOil Dock 6$22MBrownsville52 ft Channel Improvement$251.1MGalvestonCruise Terminal 2 Expansion$13.05MFreeport55 ft Channel Improvement$239.3MPalaciosBulkhead Improvements —12th Street Shrimp Docks$2.6MSabine-Neches Waterway(Beaumont/Port Arthur)48ft Channel Improvement$1,114MPort Arthur4,000 Linear-foot Rail Extension and6 Acres of Backland Improvements$7.1MThe four projects highlighted in red—Sabine-Neches, Freeport, Corpus Christi,and Brownsville—represent unfundedchannel-deepening projects authorizedby the U.S. Congress. A fifth project inHouston (detailed on the followingpage) is self-funded and scheduled forcompletion by mid-2015.


ChannelDeepeningProjectsFive channeldeepening/wideningprojects are under wayin Texas. Four out ofthe five have alreadybeen authorized bythe U.S. Congress, andone is well into therequired feasibilitystudy-and-approvalprocess. The total cost ofthese projects exceeds$2 billion. Channelimprovement projectshave significant positiveeconomic impacts onthe port region andthe United States as awhole. The State of Texasdoes not contributedirectly to channelimprovement projects,but other states do toincrease their economiccompetitiveness.Estimated Annual Benefits ofDeepening the Sabine-NechesWaterwayImproving the Sabine-Neches Waterway providesone example of how channel-deepeningprojects can benefit the state and national economies.On an ongoing basis, deepening the Sabine-NechesWaterway would lead to increases inindustrial activity and export-related production.The fiscal benefits associated with this increasedeconomic activity would also be significant for localgovernments, the state, and the United States.See the information graphic in this section for thetypical annual benefits resulting from deepeningthis waterway.$36.7Bgross productcreated (Texas)The Houston Ship Channel: WhyDeepening Projects MatterTo see the impact of channel improvementsfrom another perspective, Houston commissioneda study by the Texas A&M TransportationInstitute (TTI) to quantify the costs associatedwith failing to dredge the Houston Ship Channel.TTI found a direct relationship between a loss ofwater depth and additional vessel operating expensesof $52 million for the study period (2008-2009). Had an additional loss of 1 foot of depthoccurred, associated costs would have topped$372 million. Convinced of the value of channeldeepening, Houston is helping fund neededimprovements.BENEFITS OF DEEPENING THE SABINE-NECHES WATERWAY115,000permanent jobscreated (Texas)$57.3Bgross productcreated (U.S.)177,000permanent jobscreated (U.S.)FUNDING NEW TEXAS MARITIME TRANSPORTATION SYSTEMINFRASTRUCTURE AND MAINTENANCEHistorically, Texas ports have notreceived direct funding from the statefor improving port infrastructure and arelargely self-sufficient. During 2012, Texasports spent in excess of $300 million oftheir own funds (through their revenuesor bonding authority) on capital expenditures.In 2001, the Port Access AccountFund was created by the 77th TexasLegislature to provide funds for Texasports to finance security improvements,port infrastructure projects, and relatedstudies. However, since its inception,the Texas Legislature has not appropriatedany funds to the Texas Port AccessAccount Fund.Many other states along the Gulf ofMexico and the East and West Coasts areactively funding ports to improve theircompetitiveness. Competition amongports for new tenants and enhanced businessopportunities is very intense. Manyof the ports competing with Texas receivestate subsidies to attract new tenants andhave access to grants or low-interest loansfor their capital improvement projects.Established by each state’s legislature,these programs make revenue availablethrough various programs, such as theeconomic development funds, generalrevenue, tax incentives, or transportationprograms. This revenue is used tosubsidize channel deepening and wideningprojects, dockside infrastructure,warehouses, cruise terminals, securityenhancements, and intermodal transportationprojects to reduce congestion.These subsidized port enhancementsmake non-Texas ports more attractiveto shippers and potential tenants, luringbusinesses away from Texas.• The Louisiana legislature appropriatedalmost $20 million in 2012 for portcapital projects.• Florida spends $15 million annuallyfor capital projects, and in recentyears, the state has invested over$400 million in ports.• Georgia has provided $266 millionto the Savannah Harbor ExpansionProject.• The State of South Carolina hasescrowed $300 million for the Portof Charleston channel improvementproject in order to be able to proceedwithout waiting on Congress toappropriate funds for the project.


Port Funding Programs by StateMotor VehicleEconomicState GrantsLow InterestLoansRegistrationFees Tax IncentivesTransportationProgramDevelopmentProgramGeneralRevenueTexas*Alabama **** XFlorida X X X X XLouisiana X X XMississippi X X X X X XGeorgiaXXSouth CarolinaXXNorth CarolinaXXVirginiaXRhode IslandXXOregonCaliforniaXXXIndianaOhioXXX**** Alabama provided a one-time grant from their general revenue fund for $10M; they do not have a formal program.*Texas authorized the Port Access Account fund as a general revenue fund in 2001. It has never been funded.Source: Port Authority Advisory Committee, Texas Ports 2015–2016 Capital Program Executive Summary.Charter: The Maritime Division promotes the development and intermodal connectivityof Texas ports, waterways, and maritime infrastructure and operations. It also serves as aresource to increase the use of the Gulf Intracoastal Waterway and promote waterbornetransportation to maintain Texas’ economic competitiveness.Source reports and more information, including contact information, can be found athttp://www.txdot.gov/inside-txdot/division/maritime.html

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