Spotlight on the Port of Galveston
Kyle Beam, GHPB
Rebels, renegades and rogues were once common on the waters around Galveston. Now Galveston has become home to a more luxurious class, dominated by cruise ships and cars.
The waters in and around Texas have been witness to history beginning long before Texas was a state. Much of this history on the water has centered around one city in Southeast Texas and its port – Galveston.
In the Land of Pirates
The Port of Galveston’s official history dates back to 1825 when the Mexican government issued a proclamation granting the land to be used as a sea port, but before that the land and waters that make up the Port of Galveston were controlled by a pair of infamous pirates, the Lafitte brothers.
Jean and his brother Pierre ruled the seas between the Gulf of Mexico and the Caribbean Sea in the early 1800s. The Lafittes had many ports of call during their time on the seas as smugglers and pirates, but their largest operation was located on Galveston Island. After helping Andrew Jackson in the Battle of New Orleans in the War of 1812, the Lafittes became engaged in espionage for the Spanish government, spying on Mexico during its war for independence from Spain. Pierre was based in New Orleans and Jean needed a new place to reside to report to the Spanish government. That place became a small settlement near the Karankawa Indians on a barrier island located two miles off the northeast coast of what in 1821 became Tejas, or Mexican Texas, one of the provinces of a newly independent Mexico.
Two weeks into his time on the island, the leaders of the small community of privateers left and Lafitte took over. Renaming the settlement Campeche, Lafitte required all who entered his domain to pledge their loyalty to him and abide by his rules. With the new rules in place, the pirate community that became Galveston prospered and grew to over 200 people. After 1818, the flourishing smuggling trade and the slave trade brought considerable wealth to Lafitte and allowed him to build a well-known mansion, Maison Rouge, on the island, but it also brought Lafitte attention after his pirates attacked an American ship. In 1821 the USS Enterprise, one of the ships of the United States Navy New Orleans Squadron engaged in anti-piracy operations, was sent to Galveston Bay to remove Lafitte. Lafitte left the island without a fight and all that remains of Jean Lafitte is legend and the foundation of Maison Rouge, identified by a Texas Historical Marker just south of the modern day Port of Galveston’s East End terminals.
After the departure of Lafitte, and Texas winning independence from Mexico, Galveston and the port continued to grow and prosper. Stephen F. Austin is said to have noted that Galveston had the deepest natural harbor on the Texas coast, the best he had ever seen. During this early time the port was composed of finger piers extending into the harbor to allow the ships at the time to dock. Each pier or wharf was controlled by and named for different interests. But as the port became larger the various interests needed to be consolidated for better control and management. In 1854, the state of Texas issued a charter allowing the various wharf owners to join together and they formed the Galveston Wharf and Cotton Press Company, which was a privately held and operated port.
The Galveston Wharf and Cotton Press Company, at one time referred to as the “Octopus of the Gulf”, controlled the port for much of the next 90 years. Galveston was for a time the second busiest port in the United States behind New York. In 1940 the Wharf Company sold its shares and holdings to the City of Galveston after a vote from the citizens and was renamed the Galveston Wharves, with a charter set out to govern its operations. Most of the port’s property remains in the ownership of the City today but, unlike other City controlled entities, the port has a very unique business relationship.
Port of Galveston Today
This business relationship stems from the way the Port of Galveston is managed. The port is an enterprise utility of the City of Galveston governed by a seven-person board of trustees. The board of trustees is appointed by City Council and includes one rotating member of City Council as an ex oficio member. Along with the way the port is governed, the funding of the port is completely different from any of the other city controlled entities.
“We receive no taxpayer money from the City, we have to operate like a normal business,” said Capt. John Peterlin, Port of Galveston’s Senior Director of Marketing and Administration.
Operating like a normal business and not receiving its operating funds from city taxes has had benefits and detriments to the Port of Galveston. Funding for new projects and infrastructure was and continues to be the main day-to-day challenge for the Port of Galveston. It has not been easy to acquire new sources of funding over the years and that has not allowed for growth some other ports have had and, it has also forced the Port of Galveston to have to work harder to achieve its growth.
The growth of the Port has had an impact on the shoreline around the northern edge of the City of Galveston. The shoreline has constantly changed over the years as trade has grown and the nature of the port has evolved. The small finger piers and wharves disappeared, replaced by landfill, docks that have been dredged out and larger and more complex finger piers and wharves that have been constructed separated by slips. Many of the slips have, in turn, been filled back in because of changes in ships and cargo types, as well as changes in tenants. What were mud flats and shoal ground to the north of the Galveston Channel in the 1800s became Pelican Island, as the area was used for dredged material placement over the following century. Over the years the port has changed its focus on what cargo is primarily handled. It has gone from being a major cotton and food trade port, to chemicals and containers, to now its two main niches, cruise ships and roll on/roll off (Ro/Ro) ships, specifically targeting heavy machinery, construction equipment and new and used vehicles. The port was also at one time one of the largest grain exporting ports in the country, boasting four export grain elevators. Though now only served by one grain elevator, export grain remains one of the port’s largest sources of revenue. Always a rail-centric port, the Port of Galveston is today served by both major Western Class 1 railroads, the BNSF Railway Company and the Union Pacific Railroad, connected to Port of Galveston facilities by the Galveston Railroad, which is a tenant to the port. The port became a Landlord Port in the late 1980s.
The Cruise Ship Revitalizes Galveston
In the years of the latter part of the 20th century business was not always the best at the Port of Galveston. The nature of cargo handling changed dramatically during the 1980s from break bulk to containers and further expansion at the Port of Houston lured away business from Galveston, so the port by the mid-to-late 1990’s found itself searching for a way to reinvent itself and achieve new growth. The route to recovery by the port was finally found in the passenger cruise industry taking a chance on cruises originating outside of the traditional Florida locations. In 1990, the Port of Galveston opened a $2 million Galveston Cruise Ship Terminal in a sixty-three year old cotton warehouse on the wharves financed through Tax Reinvestment Zone Bonds, with additional financing repaid from the proceeds of an Urban Development Action Grant loan. The new terminal began attracting some day-cruises out of the port. While things were slow for the cruise terminal in the beginning, that all changed in September of 2000 when Carnival Cruise Line, the largest cruise line in the world, began offering cruises out of the port. The arrival of Carnival had an immediate impact not only on the port, but the city as well. An influx of money from cruise tourism has helped to revitalize the Galveston economy. The Island has become a hot spot for new businesses, from boutique clothing shops, to restaurants and even theme parks. But the tourist choices on the Island are not the only areas where growth has been seen because of the cruise lines.
The port expanded its capacity for cruises by building a second terminal in 2002, again rehabilitating a disused dock-side warehouse. Over the years both terminals have been gradually expanded with greater amenities for passengers embarking on their trips, as additional and larger cruise ships began to call at the port. Since 2000, “we have invested between $75-85 million in the cruise terminals”, Peterlin said. The demand for cruises out of Galveston has expanded dramatically. Over the last sixteen years, Carnival has added a variety of additional ships using Galveston as their homeport, so that today the cruise line has three of its newest and most advanced ships deployed from the port year-round. Royal Caribbean International, which has sailed from Galveston since 2001, has homeported one of its largest cruise ships at the Port. New cruise lines have come in as well. Recently, Disney Cruise Line began offering cruises out of Galveston further expanding the options for consumers.
Rolling On and Rolling Off Into the Next Generation
The cruise ships are not the only reason for renewed growth in the Port of Galveston. For a long time the port had to be flexible in how they developed their docks and properties.
Tenants would change, cargo types would shift due to swings in prices and other ports became larger due to greater infrastructure and lower shipping costs. This never truly allowed for Galveston to keep up with the growth of others, but the onset of the cruise industry in Galveston provided a much needed boost in revenue, allowing the port to invest in a specific type of cargo – Ro/Ro.
For the last several years, a person could drive down Harborside Drive as it runs parallel to the port and on any given day at least one Ro/Ro ship will be docked. The cargo coming off or going onto the ships ranges from Caterpillar heavy equipment, large heavy machinery and new and used cars. Now, in 2016, right after a driver passes the remains of Jean Lafitte’s Maison Rouge new luxury has come to the Port of Galveston in the form of a brand new BMW and Mini vehicle processing and distribution center.
The Vehicle Distribution Center was nearly four years in the making from the port’s initial contact with BMW. BMW was looking to add a new distribution center because of the growing demand in the southern region of the United States, Peterlin said. Making sure Galveston was the port of call for BMW took a lot of work for the port’s staff. When trying to decide where to place a new vehicle distribution center “BMW was focused on facilities, access and infrastructure and a central geographic location for distribution, and BMW was looking at the fact the Texas population was growing,” Peterlin said. Galveston met each of these requirements for BMW and was willing to add even more infrastructure. In a statement to the Houston Business Journal Stephan Reiff, Vice President of Aftersales for BMW of North America said, “Why Galveston? BMW’s Southern Region is growing faster than any other region in the U.S. Building this facility allows us to continue to deliver the highest quality vehicles while providing faster delivery times to our customers.”
Announced in 2015, the facility was opened in April 2016. The $11 million facility is located on 19 acres in the vicinity of Pier 10 and operated by WWL Vehicle Services Americas (WWL VSA), with on-site management by BMW. The facility “turned into a small public/private partnership,” Peterlin said, with the port contributing basic infrastructure improvements, such as building foundations, water, sewer and paving and stripping the facility, and WWL VSA working with BMW to build out and equip their structures. The main portion of the facility is divided between two buildings with 36 employees, a full-scale paint and body shop and car wash. It is expected 32,500 vehicles will arrive annually, but “the facility could have the capacity for 70,000 vehicles”, Peterlin said. The facility will service dealerships in Texas, Arkansas, Louisiana and Oklahoma. Another hallmark is “The facility is the last full factory inspection,” Michele Luksa, Production/Distribution Manager said. She adds the facility works because “we have great people here with the same goals.”
Along with the new facility, BMW has loaned the Port of Galveston a brand new 2016 BMW X-5, equipped with Port of Galveston logos, as a courtesy vehicle and a thank you for the new partnership.
Looking to the Future
The Port of Galveston has grown by leaps and bounds in the last few years. After Hurricane Ike made landfall in September 2008, inflicting over $100 million in damage to port facilities, the port has rebounded together with the City of Galveston. While traces of Ike still remain on the docks, the port is looking to the future to grow on the back of their two world-class facilities. The BMW facility is expected to bring more ships to the port on two different shipping lines. “We are going to pick up another 12 ships a year from K-line,” Peterlin said, and “another 12 ships a year, or one ship a month, from MOL.” Peterlin also expects the cruise industry to continue to grow as well and said, “If we could find the place to put it, it would be possible to add a third cruise terminal.”
The two facilities are not the only area where Galveston is looking to grow. A recent memorandum of understanding was approved between Galveston County and the Port of Houston Authority to allow rights of way in connection with the building of new rail and road bridges to Pelican Island. The Port of Galveston is hoping this development will allow the port in the future to expand its ability to attract new vessel and cargo services on Pelican Island. “We think our property on Pelican Island could support Ro/Ro especially for new cars,” Peterlin said. He added, “A new Pelican Island bridge will also help our tenants on the island.” The expansion of Galveston has caught the attention of other ports in South Texas. Those ports are hoping to receive state funding, which is not currently given to ports, to research expanding their operations for getting cruise ships. The Port of Galveston plans to monitor this new development.
- Date June 14, 2016
- Tags June 2016