Open for Business

July 1st, 2016

The Panama Canal. (Photo micanaldepanama.com)

The Panama Canal. (Photo micanaldepanama.com)

Port of Houston officials looking forward to opening of renovated Panama Canal

By Rod Evans

For Port of Houston (POHA) officials, as well as executives at port facilities around North America and much of the world for that matter, Christmas arrived in June. That’s when the expansion of the Panama Canal was at long last completed.

At a cost of nearly $5.3 billion and almost two years behind schedule, the renovated canal opened on June 26 when the Chinese-owned, Marshall Islands-flagged Andronikos tanker became the first tanker to pass through the 102-year old canal. The centerpiece of the renovation project, launched in 2007 and initially scheduled to be completed in 2014, was the construction of a third set of locks that will enable the 50-mile waterway to accommodate New Panamax ships capable of holding over 14,000 20-foot long containers and are at least three times bigger than ships currently passing through the canal. The current Panamax size is roughly 4,500 to 5,000 TEUs.

While canal officials and the people of Panama are undoubtedly excited about the prospect of the enormous and oft-troubled project finally coming to an end, POHA officials are also highly anticipating the boon to business that the renovated canal promises to provide. The bigger ships passing through the renovated canal will soon be calling on the Houston Ship Channel, an eventuality that POHA officials have been working toward for several years.

The new canal locks—1,400 feet long, 140 feet wide and 60 feet deep—are considerably bigger in every way than the old locks (1,000-by-110-by 40 feet) and are necessary for the canal to keep up with world shipping trends toward utilizing the mammoth New Panamax tankers that, while they are much larger than the current tankers are, according to industry analysts, more fuel efficient.

But in order to accommodate the New Panamax vessels, the POHA embarked upon its own expedited renovation program, including dredging work at the Barbours Cut and Bayport Channels to deepen them from 40 to 45 feet so they can handle the new larger ships. The Barbours Cut project was completed earlier this year and POHA spokesman Lisa Ashley said the Bayport project is scheduled to be completed by the end of the year. Port Authority Executive Director Roger Guenther said the facility launched the project a little over four years ago and was creative in advancing the schedule to help ensure that the work would be done in time for the canal’s opening.

New cranes for Barbours Cut Container Terminal. (Photo POHA)

New cranes for Barbours Cut Container Terminal. (Photo POHA)

“Working through normal federal government channels, a project like that at Barbours Cut would cost over $100 million and going through the normal process of securing permitting, doing design work and obtaining funding you could realistically expect to do it in 15 years or more,” he said. “But our commission decided a few years ago that in order not to miss out on opportunities with ships possibly going elsewhere that we would go forward with funding the project ourselves.”

As a result, Guenther said the work, part of a five-year, $1 billion modernization plan that also includes land-side infrastructure and wharf improvements and the addition of four new Super Post Panamax cranes, the Barbours Cut project was completed in about four-year’s time.

The 30-story tall, 1,500-ton cranes, part of a $50 million contract approved by the POHA in 2013, were delivered to the Barbours Cut terminal last year following 70-day ocean journeys after being manufactured in South Korea and were needed in order to service the new larger vessels.

“The cranes are part of a master plan redevelopment that will help move Barbours Cut Terminal’s capacity from 1.25 million TEUs (twenty-foot equivalent units) to 2.5 million TEUs,” said Paulo Soares, the POHA’s managing director of operations. “As we continue to grow our volumes, the cranes are an important piece to container movements through our port.”

Soares adds that the new cranes will enable Barbours Cut to handle ships with as many as 14,000 containers, an increase from the current limit of about 8,000 containers and he predicts they will increase productivity by about 15 percent over the cranes they replaced. While the POHA is spending large sums of money to upgrade in order to accommodate the new larger tankers, officials expect to soon begin reaping the benefits of their labor and financial expenditure.

Shipping industry officials estimate that shipments through the canal may rise to 360 million tons by 2017, and that comes after a record of 340 million tons moved through the waterway last year. The POHA is far from alone in making port and infrastructure improvements, as facilities around the Caribbean and the east coast of the U.S. have been working at a fever pace to make room for the larger vessels and the abundance of cargo they’ll bring to their docks.

The POHA’s Ashley says there is no timetable regarding when the first New Panamax tanker will call on the local port, but adds “we’ve been working for years toward this. We’re ready.”

Meanwhile, former President Jimmy Carter, instrumental in the 1977 treaty that turned over local control of the canal to the Panamanian government, was among 70 heads of state—including President Barack Obama—in attendance when one of the world’s greatest engineering marvels enjoyed its grand re-birth.

Grand Re-Opening

March 1st, 2016

panama

A construction worker overlooks the canal. Photo: micanaldepanama.com

The Panama Canal renovation project is nearing its conclusion

By Rod Evans

After nearly 10 years of construction marked by several delays caused by flaws in building materials, the highly anticipated opening of the renovated Panama canal is on pace to occur in the second quarter of 2016; a development that will delight Port of Houston officials who have been readying the facility for the past two years.

Approved by the citizens of Panama in 2006, the $5.25-billion project calls for two new locks—one each at the Pacific and Atlantic sides—to be constructed. Officials say the new locks will double the capacity of the canal built in 1914 by creating new traffic lanes and allowing for the larger New Panamax size vessels, which are considerably larger than the current Panamax ships and are able to carry nearly twice as much cargo.

Ports across North America have been preparing for the grand re-opening of the canal by performing deepening and widening work in order to allow the new larger ships to call on their docks. At the Port of Houston, massive dredging projects to deepen and widen the Barbours Cut and Bayport Channels to the 45-foot depth required to service the New Panamax ships began in 2014. Work at Barbours Cut was completed last fall, while the Bayport project is expected to be completed this spring.

But even as the POH and other ports have stepped up their collective games in order to be ready to service the new, larger, more fuel efficient vessels, the project to renovate the canal—arguably an even bigger engineering challenge than the original undertaking that carved out the 48-mile canal—has moved along in fits and starts at times. Originally scheduled to take about seven years to complete, officials with the Panama Canal Authority, known by its Spanish language acronym as ACP, revealed in 2012 that the project had fallen six months behind schedule, and that was before the 2015 discovery of cracks in the concrete in one of the new locks, which necessitated major repairs.

But late last year, ACP officials announced that the project is about 96 percent complete. Testing of the locks could take place in a matter of weeks, followed by scheduled transit trial tests in April. Barring any further setbacks, the renovated canal could be able to accept its first vessels in May or June.

“We are very close. Only four percent remains to complete the project,” ACP CEO/Administrator Jorge L. Quijano said in a release. “An expansion of the Panama Canal has never been done and we should all feel very good about where we are today. We look forward to being able to provide the benefits of the new canal to our customers and the people of Panama.”

New Refrigerated Facility Headed for Bayport
The Port of Houston takes another big step in what officials say has been a long standing goal to increase the facility’s presence in the refrigerated cargo business with the recent announcement that a 300,000-square foot temperature-controlled cargo facility will be built at the Bayport Container Terminal.

Plans call for the cold storage facility to be built by AGRO Merchants Group and be designed as a multi-use building that will include warehouse space sufficient to handle the storage, handling, import and export of chilled meats, fish, poultry, fruits and vegetables.

“Developing the refrigerated cargo business has been one of my key initiatives. Our central location on the Gulf Coast, our consumer reach of 144 million consumers within 1,000 miles, and our ready access to South American sources of produce drive this opportunity,” Port Commission Chairman Janiece Longoria said.

Longoria adds that inspection and handling facilities for the U.S. Department of Agriculture, along with blast-freezing cells and deep truck docks providing ample doors for shipping and receiving, will be included in the design of the facility. It will also have separate frozen and chilled warehouse space, allowing for a diverse selection of products.

“We welcome AGRO Merchants Group and the additional cold storage capacity the company will bring to our regional and global customers to help support trade growth and create economic activity through our port,” Port Authority Executive Director Roger Guenther said. “This is a win-win for the Port Authority, AGRO and the Houston region overall.”

AGRO Merchants Group owns and operates 53 facilities in eight countries across the U.S., Europe and Latin America and focuses on providing innovative cold storage solutions.

“We are extremely excited to build a new facility that will provide our customers with industry-leading solutions and cost-effective alternatives to move product into and out of the U.S., especially in the gulf region. In Houston, we plan to leverage our property’s proximity to the Bayport Terminal to take advantage of legal transportation limits on overweight cargo and provide important rail and intermodal service capabilities,” AGRO Merchants North America President Don Schoenl said.

The first phase of the building will occupy more than 12 acres of land and provide plenty of room for expansion. The site is scheduled to go into operation in the summer of 2017.

Banner Year
As much as Port of Houston officials are looking forward to the rest of 2016, they will certainly look back on 2015 with great fondness. According to recently released financial reports, the Port of Houston Authority posted a remarkable year, with new records set in container movements and cargo tonnage.

In his report to the Port Commission, Executive Director Roger Guenther said the port handled 30.5 million tons of cargo at its facilities, which surpassed the record of 30.3 million tons set in 2014.

“The success of the Port Authority is a success for all of our stakeholders and the community that we serve,” Guenther said. “The Port Commission drives success for our customers and users of the Port Authority facilities.”