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Greater Houston Port Bureau
 
The following is the August, 1999 edition of "The Bulletin". Any questions or comments regarding content should be addressed to Alistair Macnab at 713-678-4300.
 
 The Editorial
 
How are we ever going to persuade the good folks who live around the Bayport area that the proposed Bayport Terminal now being developed by the Port of Houston Authority to take care of container and possibly cruise ship business in the 21st Century, need not be an unfriendly neighbor?
 
A lot of valuable time and printer's ink have already been spent on analyzing whether we need a new container terminal in the first place, or if its shown that we do, then where it should be located, and everyone seems to be ignoring the fact that these questions have been addressed a long time ago and that Bayport is currently the best answer on the table.
 
Whether a new container terminal is located in Bayport, Texas City, Galveston, Freeport, Beaumont, or Corpus Christi, the justification is the same. The production and consumption region encompassed within the Houston-Dallas-San Antonio triangle is the third-largest of its kind in the United States and a new and expanded container-handling facility is needed to connect us with the rest of the world.
 
Each port can make its own good case for its participation in this same business but it is only metropolitan Houston, standing on its own, that represents 50% of this world-class traffic. And it's to the Port of Houston that the international ocean steamship companies want to come. Where are all the banks, consulates, trade delegations, ocean transportation intermediaries, and technical and transportation services providers already located?
 
Why not Galveston? Its closer to the sea. Why not any of the others? Well, the Galveston question was answered a long time ago and as for the other contenders, putting it quite simply, they're not Houston. In transportation terms, the closer you can get to your destination by sea, the cheaper your transportation costs. The Houston market could be served from the other ports but why pay extra for the long-haul trucking? Its simple economics 101.
 
But if Houston is not in a position to handle the normal growth of container business or to permit ocean-going container ships to be worked efficiently and expeditiously, the owners of these ships might very well decide to cut their losses and land Houston's cargo in Savannah, Jacksonville, or Charleston, save themselves the extra four days' steaming into the Gulf, and let the railroads bring the goods the rest of the way. Not good news for the bright, shining container terminals built in places other than Houston, and waiting in vain for business.
 
Whether we like it or not, the merchants of the world and the steamship carriers who serve them, want to do business in Houston and we can either accommodate them or send them away. They see Houston as a destination and source of business in its own right and they also see Houston as the gateway to the Houston-Dallas-San Antonio triangle with its growing population and expanding economic strength.
 
A very good case for expanded container-handling facilities in Houston has been made and Bayport has been selected as the best location. As a matter of fact, a container terminal need not be an inconvenient neighbor: one can think of other less salubrious uses for the Bayport property which the Port Authority owns on behalf of the citizens of Harris County. If no other location can be demonstrated to have Bayport's advantages (and I believe none can) then let's get down to the business of making it a good neighbor, an environmentally friendly partner, and even something of a showcase for thoughtful and sensitive industrial development. This we can do for our communities, our county, our city, and our region.
 
Alistair Macnab
 
 House Appropriations Subcommittee Chair Promise ACE/ACS Funding
 
U.S. Representative Jim Kolbe, (R-AZ), Chairman of the House Appropriation Subcommittee, has promised to fund Custom's new Automated Commercial Environment (ACE) and Automated Commercial System (ACS) as soon as Customs presents completed planning documents requested by the Committee.
 
This promises to be good news for all users of Customs current system for clearing cargo as this Subcommittee is the only one responsible for funding the new ACE in the House.
 
The National Customs Brokers & Forwarders Association and other supporters of the new system are working to make sure that funding requests for ACE and ACS appears in the Administrations budget request for this year, without having it tied to an increased merchandise processing fee.
 
 Maersk Parent Group Agrees to Purchase Sea-Land Services
 
The A.P. Moller Group, parent company of Maersk Lines, a major steamship line, will purchase the liner services and terminal operations of Sea-Land Service, the largest U.S.-flag container line for a rumored $800 million.
 
The two companies have previously been cooperating on global operations for the past several years, but did compete in sales and marketing.
 
The new company will combine both companies under the name Maersk-SeaLand and will have nearly 250 ships with a total capacity of about 550,000 TEU's, 24 terminals including 13 in the United States including Sea-Land's current terminal at the Port of Houston's Barbours Cut Terminal. CSX Corporation, present owner of Sea-Land will keep Sea-Land's domestic service between the mainland U.S. and Hawaii, Puerto Rico and U.S. territories in the Pacific. In order to allow foreign owned Maersk to continue to receive U.S. subsidies for Sea-Land's U.S. flag vessels, the new company will set up a U.S. owned third-party company to operate those vessels. This is the third sale of a U.S. owned steamship operator in the last few years, starting with purchase of American President Lines (APL) by Singapore based Neptune Orient Lines and CP Ships Ltd's purchase of Lykes Brothers Steamship Lines.
 
 Grain & Feed Association Joins Fight Against Dredging Tax
 
The National Grain and Feed Association, a group representing nearly 1,000 grain and feed-processing companies has joined with several other organizations such as the American Association of Port Authorities (AAPA), the National Mining Association, the American Forest and Paper Association, the National Association of Manufacturers, the American Iron and Steel Institute and even the AFL/CIO's Maritime Trades Department in opposing the Clinton Administration's plan to pay for harbor maintenance dredging and deepening though increased user fees on vessels.
 
All these organizations are very much opposed to new user fess for this purpose and want such cost to be paid for from the general treasury funds. In fact a bill to do just that has been introduced into Congress by Reps. James Oberstar (D-MINN) and Robert Borski (D-PA), which has drawn support from the above associations along with some three dozen Congressmen. These organizations and Congressmen believe that harbor channels are a national benefit which helps the country as a whole and should be funded at the national level to allow for efficient and easy means to allow ships to move cargo to and from America.
 
 Port of Houston; Citizen's Advisory Group
 
What can the ordinary citizen do to assist the Port of Houston Authority in its search for the right policies and decisions that will allow it to preserve, protect, and increase the thousands of jobs that rely on the international commerce that makes the Port of Houston Number One in our Nation?
 
That was the question put to a representative group of citizens on July 20th. at the downtown offices of Vinson and Elkins, as Mr. John Hall, of John Hall Public Affairs, introducing himself as the Convener of a meeting sponsored by the Port of Houston Authority, asked those present to identify themselves and their special interests and affiliations.
 
While it was recognized that the principal topic was to provide citizen input into the design and eventual operation of the proposed Bayport Terminal and to look at the various issues raised in connection with the planned container and cruise ship facility, there were, nevertheless, several speakers who wanted to know more about the rationale for a new terminal in the first place or who questioned the need to locate it on the Bayport Channel.
 
Mr. Ned Holmes, Chairman of the Board of Commissioners of the Port of Houston Authority, was present to outline the many years of planning that have gone into the Authority's current plan for locating the needed expansion of container and cruise ship facilities on the Bayport property which the Port has acquired over many years.
 
There was a definite and demonstrated need, continued Holmes, to create new container-handling berths as the Authority's Barbours Cut Container Facility was nearing optimum utilization and taking it beyond that stage, even if Port customers could be persuaded to call at a congested complex, would only create inefficient operations to the detriment of the working environment and the quality of the work.
 
"Our leading role as the perceived Gulf Loadcentre is ours to loose", stated Holmes. "Our customers can easily take their ships elsewhere and the Commissioners would not be doing their duty if they were to allow this to happen. Too many jobs are at stake."
 
In a review of those present, Holmes asked if there was as much opposition to a cruise terminal as there was to a container facility? It was clear from the raised hands that most had no objections to cruise ships but that objection to container ships was quite strong. "You must realize that we can't build the cruise terminal without making it possible to also work containers," replied the Chairman. "Simple economics tells us that we can have a container facility without a cruise terminal but not the other way around."
 
The meeting continued with a quick overlook by Ms. Sharon Maddox of Vinson and Elkins at the permitting process and the Environmental Impact Study and Statement which will be carried out by the U.S. Army Corps of Engineers. This was followed by a more detailed discussion and review of the many issues, concerns, and expectations of the advisory panel. Many topics were raised including traffic and safety issues, transportation and infrastructure questions, environmental and recreational matters, and land use and esthetics concerns. It was also suggested that there should be an expanded membership in the Citizens Advisory Group to include representation from several organizations not originally invited. A code of behavior was recognized so that proceedings would remain cordial and courteous.
 
Mr. Hall, in his closing remarks, emphasized the need for frank and open discourse. The Port Authority was wanting to hear from the Group, which was the reason for its formation in the first place. With good will and a positive attitude, a great deal could be achieved and the eventual outcome a credit to all those who are participating in this advisory process. Further meetings are scheduled over the next several months.
 
 Port of Galveston's $1 Million for Capital Improvements and Business Development
 
The Port of Galveston refinanced its bonds in 1998 allowing for the realization of $1 million to be used for capital improvements and business development and the elimination of a $3.5 million payment due in 2004.
 
Other benefits arising from the refinancing included elimination of the mortgage on the shipyard located on port property, reduced interest rates, and elevation of the Wharves Board bond rating back to investment grade status.
 
Recent new business attracted to the Port include a bulk cement terminal at Pier 28, the development of a flexible pipe manufacturing business at Pier 14, a new cruise line for the Cruise Terminal, and a significant expansion of offshore vessel and drilling repair and fabrication activity by a local company on six acres of waterfront land and storage facilities.
 
Noting these various developments, Mr. Fred Wichlep, Chairman of the Board of Trustees declared that the time was ripe to take advantage of current market conditions and the Wharves' improved financial position. By putting money back into the facilities and maintenance projects, the Port was now able to continue to market itself to businesses interested in sites for future growth and development.
 
For more information on the Port of Galveston, call Mr. Ron Popham, Director of Marketing, on 409-766-6112 or 281-286-2484 ext.112
 
 HGAC Strategic Freight Corridor Workshop
 
With a look at several intermodal planning success stories and an explanation of the funding process for local intermodal projects, the Houston-Galveston Area Council's workshop on July 16th. was off to a busy session with over seventy interested parties in attendance.
 
Opening remarks by HGAC's MPO Director, Alan Clark, and its Executive Director, Jack Steele, were followed by explanations of such funding mechanisms as ISTEA and TEA-21, perhaps only acronyms that a bureaucrat could love, but necessary tools for anyone hoping to be able to tap into federal money to implement an intermodal project.
 
Typical intermodal projects were defined as truck-rail; truck-water; truck-air; truck-rail-water; or rail-water connections. Altogether, some 159 projects, located in 42 states involving some $4.8 Billion of planned and programmed public and private investment were said to be currently in existence. In the Houston area, these included highway access, bridge and overpass reconfigurations to accommodate high loads, and improved rail grade crossings.
 
But since the purpose of the workshop was to identify new projects that might be candidates for future public funding, breakout groups were formed after the mid-morning break and the results of these deliberations later reported back to the full assembly. A list of problem areas revealed by this process was then drawn up and will be submitted to detailed examination and review by the program's organizers.
 
To bring a most informative and instructional morning to a close, the Port of Houston Authority sponsored a box lunch during which representatives from airports, seaports, railroads, trucking, and government were encouraged to discuss their own particular intermodal problems with the Bureau's Alistair Macnab acting as Moderator.
 
The project continues under the direction of Jerry Bobo of the HGAC and TEI-Traffic Engineers, Inc. lead by Ms. Susan Alleman, acting as project managers. Ms. Alleman can be reached on 713-270-8145 for further information.
 
 Port Bureau's Lecture Series For Maritime Professionals
 
The enclosed flier will draw your attention to the series of lectures on topics of interest and importance to the marine professional. The introductory course will be available on three occasions throughout the fall on September 1st. October 13th. and November 17th. whilst the more advanced study program will consist of three, one-day concentrations on specific subjects such as Chartering, Claims, and Logistics, to be held respectively on September 22nd. November 3rd. and December 15th.
 
This series of training modules is being offered in furtherance of the development of a Center for Maritime and Commercial Education designed to offer Houston's international shipping community with local access to opportunities to develop greater personal skills in their chosen field. As the Nation's Number One seaport in respect on international tonnage shipped through the Port of Houston, it is imperative that we encourage promising new entrants into our ranks while at the same time ensuring that today's shipping executives are fully prepared and ready to conduct world class business from positions of knowledge and experience.
 
For corporate and individual applications to reserve places in the various modules, please call Cynthia on 713-678-4300. Classes are small and filling fast.
 
 Don't Forget Your Entry for the Bureau's Millennium Directory
 
The Greater Houston Port Bureau, the Marine Exchange of the West Gulf, the Houston Customhouse Brokers and Forwarders Association, and the U.S. Gulf International Commerce Club will be combining their membership into one Millennium Edition of a Membership and Services List to be published later this year.
 
A flier enclosed with this month's Bulletin gives you an opportunity to ensure that your free entry is exactly as you would want it. There is also an opportunity for you to display your corporate message in narrative form.
 
The list of members will be supplemented by a list of service providers displayed by type of service offered by the membership. This will provide an important cross-reference for the Directory's users and is designed to enhance its value as an essential reference and resource tool.
 
Advertising opportunities will be available as well. For more details please call Alistair on 713-678-4300
 
 Houston in Running for Pilothouse Simulation Center
 
Operators of tug and barge services in the Texas Gulf and Intracoastal Waterways have come together in support of bringing a Pilothouse Simulation Center to Houston. This is an orientation and training program designed by the Center for Marine Education and already in operation at their facilities in New York and Paducah, KY.
 
The success of the existing programs and the growing interest of the towboat industry have encouraged the Center, which is an offshoot of the Seamen's Church Institute (SCI) of New York and New Jersey, to seek support for a new installation in the Gulf. The ports of Houston, Houma LA, and New Orleans are possible locations currently being evaluated.
 
The Rev. Peter Larom, the Executive Director of the SCI, who is currently leading the evaluation of the competing sites, was here in Houston in early August to meet with representatives of the interested parties including the Texas Waterways Operators Association, the Port of Houston Authority, The Greater Houston Partnership, the Houston Pilots, the Greater Houston Port Bureau, and the Houston International Seamen's Center.
 
There is much local enthusiasm for locating this facility here in Houston. As the Nation's Number One Seaport in international tonnage terms, it is recognized that the broadest range of maritime activities has to be available if the Port and the region are to continue to develop and grow in world-class terms.
 
A Houston Center for Marine Education with the pilothouse simulator as its core activity will be a worthy and logical adjunct to the substantial, international maritime business already centered in our city and region. The Port Bureau is a strong advocate for the creation and delivering of professional learning programs and has already embarked on a series of courses for Fall 1999 which offer a range of educational opportunities extending from generalist one-day seminars to in-depth study programs designed to assist the maritime executive brush-up his skill sets.
 
The tug and barge industry, through the TWOA, has certainly stepped up to the line in recognizing the need to train and constantly update the skills of its tug captains and pilots. That the barge traffic on the Houston Ship Channel exceeds the deep-sea traffic by a factor of more than 10 to 1 only highlights the need for operational safety in this sector. With the pilothouse simulator program domiciled in Houston, yet another aspect of maritime commerce can "come of age" and help Houston grow.
 
 Houston Pilots Demonstrate New Communications System: Trial Pilot Booking and Boarding Confirmation Program Unveiled to Agents
 
To a gathering of the ship agents and ship operators who collectively account for the greatest percentage of pilot demand in the Port of Houston, Captain Tom Phelps, Presiding Officer of the Houston Pilots recently offered a look at the new communications system now undergoing a test with selected users.
 
The system has been developed in-house by the Pilots and creates a printed record of confirmed pilot call outs and vessel boardings with only a ten-minute delay. Seen as a major advance in the exchange of instruction and information between the Pilots and their Customers, the program presently runs to nominated fax terminals but is likely to be extended to communicate with E-Mail addresses in accordance with the wishes of the system's trial users. All information is secured by means of PIN and image numbers and customers can call up their assigned data fields upon demand.
 
To date, however, the program has been well received. During the next several months, the program will be further improved in preparation for a wider availability. For more information, call Theodore Nelson or Dave Morrell on 713-645-9620
 
In a separate but associated development, the Marine Exchange of the West Gulf, has recently installed new computers in preparation for the upgrading of the Port Traffic Intelligence system which is expected to provide a wider and more comprehensive range of ship, berth, and agency activities for subscribers. The Exchange also captures data from other Texas seaports and is linked to Marine Exchanges throughout the United States for the retrieval and dissemination of maritime information on a nationwide basis.
 
Commenting on the Houston Pilot's new program, Alton Landry, Manager of the Marine Exchange, noted that any program that improved the flow of information and made it easier to do business in the Port of Houston was to be welcomed. The Pilots' offer of confirmed booking and boarding data is seen as complimentary to the Exchange's "Passing Morgan's Point" live reporting and its specialist telephone answering and connecting services. The Marine Exchange of the West Gulf is a wholly owned subsidiary of the Greater Houston Port Bureau. Alton may be reached on 713-678-7711
 
 Commercial Marine Vessel Contributions to Emission Inventories
 
It has come as something of a shock to note that when it comes to measuring the extent and range of air pollutants in Galveston and Harris Counties, that ocean-going marine vessel emissions together with contributions from towboats and other harbor craft, are said to comprise a frighteningly high percentage of the total.
 
The development of a State Implementation Plan to reduce emissions has to be in place by November 15th. and there is a deadline in the year 2007 after which Federal penalties will kick in should the accepted clean air standards not be attained.
 
While Houston's ranking near the top of the pollution scale is nothing to boast about, the official quantification attributed to marine vessels is based on hypotheses and estimates from 1990 which now seem to be in error and greatly exaggerate commercial shipping's contribution to the base line.
 
A study is now under way and a stakeholders meeting was convened by the Port of Houston Authority on July 29th. to examine the situation and to seek the help of interested parties who might be of assistance in re-examining the governing data now believed to over assess pollution from the maritime sector. It is appreciated that any amelioration from one pollution source will have the effect of lowering the overall benchmark for the region as a whole and greatly assist in any attainment process.
 
Bruce Anderson of the Starcrest Consulting Group LLC, has been engaged to lead the study and already the official estimate of pollution from marine vessels has been found to be based on all deep-sea vessels traversing the entire length of the Houston Ship Channel which is not the case. In reality, most vessels stop off at their destinations well short of the Turning Basin at the head of navigation. It has also been found that the official count supposes motor ships to be operating on boiler fuel while navigating in our area whereas the reality is that many ships convert to light diesel during maneuvering.
 
Overall, hopes are high that on the marine vessels side, at least, a reassessment of the emission inventory base line will greatly assist Galveston and Harris Counties to better achieve overall compliance and spare us all the threat of draconian measures imposed by a bureaucracy not in possession of the true facts.
 
If you feel you can offer information in support of Bruce Anderson's study, you can reach him on 713-789-2213
 
 Steel Roundtable Convened by PHA Trade Development
 
Executives representing Houston's international steel trading sector were brought together by the Port of Houston Authority during July for a working lunch, to examine the current depressed state of steel traffic passing across the Port's wharves and to look at the prospects for the rest of 1999
 
For the first half of 1999, an estimated 990,000 short tons of steel products were received over the Public Wharves. This compares with 1,716,349 short tons for the same period last year. It is unlikely that the record tonnages handled in 1997 and 1998 will be matched this year.
 
Overall, in the USA as a whole, steel imports have slipped 8.6% when first-half 1999 is compared with first-half 1998 so it can be seen that Houston's shortfall is more dramatic than that experienced by many other ports of entry.
 
During the first half of 1999, more than 25% of steel imports into the USA have been bought from our neighboring NAFTA partners of Canada and Mexico as opposed to overseas producers. The big declines in import tonnage have been experienced by Japan, Russia, Australia, Turkey, and Ukraine.
 
PHA staff introduced Bob Moore, Vice President of the American Institute for International Steel (AIIS) and Curtis Spencer, President of IMS Worldwide, Inc., who presented a thoughtful reassessment of the value of utilizing Free Trade Zones for the purpose of substantially converting steel imports into export goods without actually "entering" the commerce of the United States.
 
Bob Moore, the local representative of the AIIS, can be reached on 713-968-6540 and Curtis Spencer of IMS Worldwide is available at his Houston head office on 281-286-0008
 
John Rydlund, PHA's Trade Development Officer and Walt Kleczkowski, the Port's Manager of the Turning Basin facilities, concluded the meeting with a description of the proposed Berth No.33 which has been conceived as a straight-line extension to the East of the existing Turning Basin Berth No.32. The particular interests of the steel group will be an influencing factor in the final design and layout of this new facility. More information may be obtained by calling John on 713-670-2582 or Walt on 713-670-2435
 
 Bulk Liquids Terminals Managers Meet to Consider Cooperative Strategies with Chemical Tanker Operators
 
Recent moves by chemical tankers operators to examine ways to facilitate the port operations of their vessels in the Port of Houston were reflected when a similar gathering of bulk liquids terminal managers was convened to examine the same issue.
 
The Greater Houston Port Bureau has offered its neutral and organizational facilities to both groups in an effort to encourage open discourse. There is no disputing that delays to vessels can occur during port operations. Whether or not significant operational efficiencies can be contemplated will depend very much on all parties' ability or willingness to work cooperatively within the continuing framework of existing proprietary parameters.
 
The Bulk Liquids Terminals group met at the Bureau on July 20th. when an ad hoc representative committee was formed that will eventually liaise with the Carriers' group established earlier this year in June.
 
Alistair Macnab of the Port Bureau has been appointed as Recording Secretary to both groups, which will continue to meet on a regular basis. For more information, Macnab can be reached on 713-678-4300
 
 West Gulf Maritime Association; Political Action Committee
 
Many Port Bureau and Marine Exchange members are also supporters of the West Gulf Maritime Association and its Political Action Committee (PAC) which was formed in 1994 to promote the best interests of the maritime industry. Such purpose is accomplished by raising and collecting contributions, which are expended in support for, or in opposition to, candidates for public office, and measures or proposals submitted to the people affecting our industry's best interests.
 
Each year, the WGMA PAC holds a fundraising social evening which, this year, is to be held at the Radisson Hotel on the Gulf Freeway on October 15th. The theme for this year's event is "Hawaiian Nights".
 
For more information please call Jim Morrison at the WGMA on 713-678-7655
 
 
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