Port Watch – 2020 Hindsight

By Tom Marian, Buffalo Marine Service, Inc.

It’s 2020 and Houston has been crowned the number one petrochemical port in the world upon eclipsing the Port of Rotterdam. President Trump’s final year of his first term is focused on trumpeting the Great American Comeback – the cornerstone of his re-election campaign. Thanks to the strong manufacturing climate in the U.S., record low unemployment has been instrumental in a projected 4% GDP growth for 2020. In Texas, the ports of Corpus Christi, Freeport and Brownsville are on track to shatter their tonnage records as the export of LNG, crude, distillates, ethane and various other manufacturing components derived from the vast shale gas reserves dominates their trade portfolios. Additionally, Houston’s burgeoning population and robust pipeline infrastructure has undergirded its dominance in the petrochemical world market. There is even talk that the Bayou City will displace the Windy City as the nation’s third largest city by 2025; no doubt aided by Illinois’ continued budget woes and the Panama Canal’s ability to move LPG, LNG and Ethane on ever larger vessels from Houston directly to Asian markets.


Retrospectively, Texas’ position as America’s premiere maritime state should not come as any surprise even when one considers that oil still remains below $80/barres. Back in the early teens, billions of dollars were poured into the expansion of existing petrochemical plants, the construction of pipelines into refineries in ports throughout the state, and improvements in fracking efficiencies when a barrel of oil was only fetching $45. It wasn’t until mid-2017 when Texas’ maritime trade picture began to gain traction and build a head of steam that underlies 2020’s bounty.

In fact, the port of Corpus Christi had a remarkable May in that year with a 7% monthly jump pushing the port to a near double digit gain year-to-date wise. The bet on this port was paying off as record amounts of exports streamed across its wharves. That same month, despite a 3% vessel arrival decline, Freeport was leading all Texas ports with the biggest year-to-date percentage rise of almost 15%. The prospect of fewer channel miles to transit, deeper waterways and an abundance of available waterfront has encouraged investments and the concomitant arrival of larger and more vessels. While May 2017 was not a particularly rosy month for Brownsville with 5% fewer arrivals, its foresight to encourage the development of LNG facilities and export terminals for petroleum-based cargoes would pay long term dividends even if the vessel arrival count was 22% lower than 2016’s.


One of the outgrowths of a more robust crude export market has been the shift of greater volumes of crude from domestic oil and gas plays into the pipeline that feed the Sabine and Texas City refinery and storage facilities. Thus, while Sabine experienced a flat month back in May 2017, its year-to-date arrival picture was trailing 2016’s by almost 5%. Texas City’s cumulative arrival count for 2017 was also 4% behind that of 2016; however, its monthly arrival tally was one of the better ones for the state as reflected by a 7% uptick. Back in 2017, not all ports were beneficiaries of the accessible BTUs from the Permian and Eagleford shale gas caches. The Port of Galveston’s heady days of benefiting from deep water exploration are still a distant memory. In May of 2017, the port was still 1.5% below 2016’s lackluster performance even after factoring in the year’s first monthly percentage positive performance of 11.5%.

What of the earth’s petrochemical port champion back in mid-2017? Its arrival tallies were somewhat misleading in that after recording a monthly wane of 4.5% it was outpacing 2016’s arrival numbers by a paltry 0.3%. Yet, those numbers are a bit deceiving since larger vessels were importing more containers and exporting more gases and manufacturing feedstocks. Even categories such as bulk ships were showing promise after a languid performance in 2016. Bulkers –after accounting for a 11% monthly drop – were logging 12% more arrivals than the previous year.

Unfortunately, the same could not be said about General Cargo arrivals whose arrival numbers were lagging 2016’s by nearly 17% after a monthly arrival decline of 5%. Containers, on the other hand, just keep coming as a burgeoning population replete with the prospects of brighter days ahead spent with gusto. A 5% monthly increase in containerships resulted in a 3% gain over 2016’s year-to-date pace. Car carriers matched the arrival pace of the previous month but are more than 6% behind the same period last year. Interestingly, the bright spot from a year-against-year perspective were the ocean-going barges with 43% more arrivals in the first five months of 2017 than 2016. Nonetheless, May was somewhat subdued given the 18% plunge.

The energy portfolio fared well in May 2017 with the exception of Tankers which suffered a monthly fall of 5% and lagged the prior year’s arrival numbers by nearly 11%. Most of this is due to staid demand for crude as the world market can only absorb so many barrels of distillates and condensate. The same cannot be said about LPGs and chemicals as both categories of vessels export relatively inexpensive cargoes to Latin America and Asia. The latter category posted another monthly rise of 3% while the former had a significant monthly set back of 13% fewer arrivals. That said, both categories are ahead of their 2016 arrival results by 15% and 4% respectively. Overall, May 2017 may not have been one of the most positive months for Texas ports but the first fruits from the sowing of nearly $200 billion in investments were the beginnings of a very bright future. Indeed, a future made even brighter by the past 3 years of regulatory reform, reduced taxes and a revitalized port infrastructure.

  • Date July 26, 2017
  • Tags July 2017