HOUSTON — Ludovic Renou, president of CMA CGM America, on Tuesday said if the Texas governor signs a bill restricting larger vessels from calling the Port of Houston, the carrier will find a solution to meet rising demand from shippers. He also urged Gulf Coast ports to become competitive with other US ports in terms of pilots, tugboat and dockage tariffs.
The Texas Legislature’s House of Representatives on Friday approved legislation by a 139-0 vote that would prohibit ships of 1,100 feet or more in length — roughly 9,500 TEU — from entering the channel without prior approval from the port pilots’ board. The legislation, prompted by the energy industry’s concerns that tanker calls were being disrupted by ever-growing container ships, is expected to be approved by the Senate and then sent to Governor Greg Abbott for his signature.
“If we can’t increase our ship size in the future, then will not be able to address the growth produced by the energy company… producing resins.” Ludovic said, adding that resin exports out of the Gulf will reach at least 1 million TEU by 2022.
“Despite the challenges, we are committed to the region. We are investing in new services. We are investing in infrastructure…. So no matter what happens, I hope this piece of (legislation) will not be signed. Even it is, we are committed to the Gulf and we will make sure to find a solution.”
Addressing some resin export producers positioning to ship more resins out of East Coast ports, Renou said that the Texas governor’s signature on the legislation would suggest they were right to diversify their routing options. He said CMA CGM was taken aback by the legislation, as the channel is under federal jurisdiction and container lines will be hurt if they can’t bring in larger vessels.
“The ships are full today. It’s very concerning, ” he told roughly 300 attendees at the JOC Gulf Shipping Conference
Container volume through Houston, the seventh-largest port in North America, jumped 10.3 percent in 2018, according to data from PIERS, a sister product of JOC.com within IHS Markit, and resins exports are expected to accelerate in the second half of the year.
In his keynote speech, Renou said Gulf ports need to become competitive with other US ports in terms of pilots, tugboat, and dockage tariffs. Referring to research from CMA CGM Analytics, he said that the cost to call the most expensive — albeit unidentified — Gulf port with a 3,500-TEU ship was 60 percent higher than the most expensive unidentified West Coast port. Similarly, operating an 8,500-TEU ship at the same Gulf Coast port was triple the cost to serve the most expensive West Coast port.
Lengthy idling times at Gulf Coast ports also push up operating costs, Renou said, with CMA CGM ships logging 994 hours of idling in 2018 compared to 536 hours spent waiting at East Coast ports and 411 hours at West Coast ports during the same period. Renou said the carrier lost 704 hours in idling outside of Gulf Coast ports due to fog, and that it lost 1,062 hours alone in the first quarter due to a lack of navigation visibility.
CMA CGM, the first carrier to call Gulf Coast ports via Panama Canal routing in 2005, handled 15.09 percent of container volume moving through Houston in 2018, according to PIERS. Maersk Line last year was the largest carrier serving the port, handling 27.5 percent of total volume, followed by Cosco Shipping, which handled 21 percent.