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Houston port authority seeks flexibility in channel restriction

Houston port authority seeks flexibility in channel restriction

The Port of Houston Authority has limited how often 9,500-TEU and larger ships can call its terminals but is fighting a legislative effort to enshrine the change into law, leaving the door open for more than one weekly call of such vessels.

The authority board last week authorized its staff to work with legislators to change two bills to mitigate legislation that the authority said would limit ship movement and impact port business well beyond the intended focus of restricting the passage of big container ships. Houston has said that the limit on ship calls with capacities of 9,500 TEU or more won’t hamper growth. However, with a resin surge expected, some shippers and transportation providers aren’t so sure.

“The potential unintended consequences of the proposed bills under consideration by the Texas Senate and House could hinder the future of commerce through the Houston Ship Channel and hurt job generation and economic growth in the Houston region, Texas, and the nation,” the commissioners said in a statement released after the vote.

Broad cargo concerns

The authority on April 12 enacted a rule that limited containerized cargo vessels of greater than 1,100 feet — approximately those larger than 9,500 TEU — traversing the 52-mile trip from the entrance of the channel to the port’s two terminals to one per week. The impact was heightened by an earlier decision by Houston ship pilots to prohibit two-way traffic in the channel in some circumstances when a mega-vessel is en route.

One of the bills in the Texas Legislature, broadly echoing the authority’s own ruling, would allow the port’s board of pilots to impose one-way traffic in the port’s channel to once a week — but no more — and would prevent large vessels from entering and leaving the port in the same day.

The second bill would effectively eliminate the port’s board of pilots in favor of a new, seven-member body that would operate independently from the Port of Houston Authority. Unlike the current board, which is made up entirely of commissioners from the port authority, members of the new board would be appointed by county and city agencies.

The legislation, filed Mar. 8, was triggered by concern among non-container port users that the ever-growing container ships calling the port are disrupting the ability of other vessels to come and go in an efficient manner. Non-container vessel operators and users say the increasing size of container ships, and the narrowness of the channel, means that other ships are sometimes restricted from using the channel because container ships are so large no other vessels can occupy the channel.

Leading the charge is a group called the Coalition for a Fair and Open Port, whose membership includes companies that transport crude oil, refined products, and liquid chemicals.

80 percent threshold

All parties agree that the solution is to expand the channel. But while the port authority said last week that it is accelerating its effort to get the channel width increased, the completion of the project is not expected for five years or so.

Authority commissioners, who opted to oppose the legislation at a special board meeting on April 16, said that putting the limitations on big vessels into law would make the limitation too inflexible and make them unable to respond to the rapidly changing conditions in the port.

Commissioners noted that the day after the board limited to one a week the number of 9,500-TEU plus vessels that could go in the channel, the port pilots met and “eased the restriction” of only one vessel in the channel when a mega-ship is passing through. Although the pilots’ decision raised the possibility of two-way traffic in certain circumstances involving big container ships, the commissioners say adjusting the policy to reflect such a shift would be difficult if it was written into law, in part because the law would allow a change only if 80 percent of the pilots approved of it.

In addition, the commissioners pointed out that there are numerous situations each week at various locations in the channel in which only one vessel at a time can pass. If the legislation is not modified, one consequence would be that many of those situations in which only one vessel is allowed would technically violate the law.

Houston’s loaded cargo volume grew 9.5 percent year over year to 2.21 million TEU in 2018, with exports up nearly 9 percent and imports up 11.4 percent, according to PIERS, a sister product of JOC.com within IHS Markit.

Resins are a crucial element of the port’s export growth, and some resin packagers have expressed concern that limiting the number of container vessels into the channel could drive shippers to send their products through other ports.

Shareen Larmond, president of the West Gulf Maritime Association, which represents terminal operators, ocean carriers, stevedores, and other port employers, said the organization backed the authority’s opposition to the legislation for the same reason it opposed the authority’s own decision. She said it could send cargo through other ports and hurt the port economy.

“It restricts growth,” she said. “It’s a public port, and the free flow of commerce should thrive.”

Source: JOC