What can be said about the Port of Houston that we haven't already said? Not only is it Colliers' view that it's the "Most Irreplaceable Port" in North America, it's proven to be quite profitable. In July, the Port of Houston generated $21 million in operating revenue, a 7 percent increase over the same period in 2012. So far in 2013, operating revenue is up 4 percent, year over year. Net income in July rose by 47 percent, year over year, to $4 million. In this year-end report, we honor the port of Houston with the "GDP (Gulf's Darn Profitable)" award. This latest recognition should not be taken lightly when one notes the unfolding events at the port of Long Beach: It takes more than great physical facilities and deep water to be a great port; it takes a great port director and board of directors. Houston has both.
COLLIERS 1H 2013 NORTH AMERICAN PORT AWARDS
Colliers' North American Port Awards recognize achievement, innovation and long-term thinking by state and city port authorities. Whether taking leadership in logistics, CapEx spending, post-Panamax readiness or container traffic, these ports are poised to lead in the first post-Panamax decade (2015-2025).
THE GDP (GULF'S DARN PROFITABLE) AWARD
For incredible profitability in 2013
THE PORT OF HOUSTON AUTHORITY
In previous Colliers North American Port Analysis reports, Houston has been recognized as North America's "Most Irreplaceable Port" for the vital nature of its port's physical aspects; this new award recognizes its operational excellence. Not only is the Port of Houston-along with the other dozen support harbors and secondary ports along the Houston Channel or in proximity to its inlet from the Gulf-vital to U.S. energy interests, it's highly profitable. As we are learning from other major port situations in Southern California, Oregon and New York, port leadership and operational efficiency are cornerstones to port profitability. In 2013, Houston has been firing on all cylinders. In July, the Port of Houston generated $21 million in operating revenue, a 7-percent increase over the same period in 2012. Through 1H 2013, operating revenue is up 4 percent year over year. Net income in July rose by an impressive 47 percent, year over year, to $4 million. A 4-percent increase in tonnage in 1H 2013 is cited as a primary reason for the port's 1H 2013 financial results. For 1H 2013, bulk exports rose by approximately 20 percent, bulk commodities increased more than 15 percent, and container tonnage rose by 8 percent year over year. Houston has proven that the "Gulf's darn profitable."
HOUSTON'S OTHER NORTH AMERICAN PORT ANALYSIS MENTIONS:
NORTH AMERICAN POST-PANAMAX PORT READINESS UPDATE
- Houston ranks 6th
- 2013 TEUS (THOUSANDS): 2,100
- PPMX STATUS: In Process
- PPMX UPDATE: Dredging and upgrading cranes.
2012 TOP 10 U.S. CONTAINER PORT MARKET SHARE
DUAL-FUEL CONTAINER SHIPS
- Increasingly onerous in-port air-quality environmental regulations in both U.S. West Coast and European ports are forcing shippers to look at alternatives to idling their vessels in port (or, "cold-ironing") to comply with the plethora of new regulations. Idling a diesel-powered container ship is problematic, even with onshore electrical connections to run power systems. Dual-fuel powered vessels are an alternative solution favored by shippers. Many of the new post-Panamax (and even smaller Panamax) vessels being ordered are designed to run on dual fuel: diesel at sea and liquified natural gas (LNG) while in port. The United Arab Shipping Co., for example, has contracted Korean shipyard Hyundai Heavy Industries to build five 18,000-TEU ships and five 14,000-TEU ships for delivery beginning in the first half of 2015 that can be fueled with LNG. While this seems to be a no-brainer solution to air quality and environmental concerns for major port MSAs such as Los Angeles, there is a wrinkle: which ports will have the infrastructure to refuel dual-fuel container vessels by 2016? The Gulf ports, especially Houston, and the East Coast ports with plentiful natural gas supplies and backbone infrastructure already in place appear to have an advantage. This is a sleeper issue that will become a big deal in the next 12-24 months. At year-end 2013, port authorities were not able to yet provide us enough detail on how they would handle refueling dual-fuel vessels, but this will be a leading topic of study for Colliers' Spring 2014 North American Port Analysis.
NORTH AMERICAN PORTS LEADING IN CAPEX SPENDING
TOP 5 SPENDING > $100 MILLION IN 2013 & BUDGETED FOR 2014
- Houston ranks 4th with $220M expended in 2013, rising to $300M in 2014 with new $60M order to Super-PPMX gantry cranes. Port master plan to expend $3.0B on CapEx through 2025.
ABOUT THIS NORTH AMERICAN PORT ANALYSIS REPORT
This 2H 2013 North American Port Analysis report is the fifth semiannual examination of U.S. and Canadian ports by Colliers International. In 2011, the original purpose of the report was to inventory and profile the approximately 200 North American seaports, and illustrate their economic role and influence on the value of industrial real estate. The study evolved in 2012 to include a better understanding of the increasing inland movement of volumes of ocean freight that would likely result from the expansion of the Panama Canal lock system (still under way, with a new completion timeframe of 2H 2015). An increasingly global supply chain and the movement of container ships approximately three times the size of those that today make passage through the canal will bring major changes to North American ports and inland transportation systems. Other factors in addition to the Panama Canal expansion have converged to make the ports an even more critical concern for the U.S. economy and industrial real estate markets: the growth in e-commerce, evolution of logistics, on-shoring and near-shoring of manufacturing to the U.S. and Mexico, advancements in oil shale extraction technology that have led to a U.S. energy boom, ongoing labor strife among transportation workers emanating from port automation, and legislative changes such as the hours-of-service rules for truckers and the reform of the Harbor Maintenance Trust Fund (HMTF). The Spring 2013 report, CapEx or Capsize, examined the implications of capital expenditures to our port economies in anticipation of the first post-Panamax decade (2015-2025).
This new year-end 2013 port outlook report, titled "Biggie-Size It," updates the port upgrade projects under way, examines the material economic implications of unresolved labor, legislative and environmental issues, reveals the newest "shore" thing, and presents 10 distinctive new port awards.
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