The U.S. states that border on the Gulf of Mexico are using their ports to help drive economic development. Activity stemming from their ports has helped these states navigate the difficult economic conditions in 2009 better than many of their inland counterparts. Furthermore, the ports directly and indirectly account for hundreds of thousands of jobs and pump billions of dollars into the states’ economies.

“Transportation-related jobs historically pay better, even in times of recession,” says Don Alee, executive director and CEO of the Mississippi State Port Authority, which operates the Port of Gulfport. “Ports are necessary and have to operate in all situations.”

Many Gulf ports are forging ahead with expansion plans in the hopes of attracting more inbound and outbound cargo. They are also preparing for 2014, the anticipated date for the opening of the expanded Panama Canal. The $5.25 billion project will double the waterway’s capacity and allow more traffic and wider ships to transit, and Gulf ports expect to receive more business as a result.

The Gulf ports benefit from companies shipping from China and other parts of Asia looking to avoid the congested West Coast ports. Shipping to a port in the Gulf puts retailers much closer to the overwhelming majority of U.S. consumers, plus an all-water route is less expensive than multimodal transportation, says Tim Feemster, senior vice president of global logistics for Grubb-Ellis.

Alee says location is a major strength of the region.

“If you take a map of the United States, hold it on either coast and put a crease in the middle, you would find that crease close to Mississippi,” he says. “This is a central location as far as access to North America.

“The Gulf is a very competitive maritime and port environment,” Alee adds.

Gulfport rebounds, grows after Katrina

The Port of Gulfport is right in the middle of that environment. New Orleans is about 65 miles to the west and Mobile, Alabama is about 65 miles to the east. “We sit in the middle of the Gulf,” Alee points out.

Gulfport is home to the largest fruit importation operation on the Gulf of Mexico with two tenants, Dole and Chiquita, operating inbound and outbound shipments weekly.

Hurricane Katrina heavily damaged the port in 2005, with seven of its 10 docks rendered unusable. “A lot of standing structures had to be completely demolished or required significant improvements to put them back into service,” Alee says.

The port has replaced about 400,000 square feet of shed space and all but one of the docks that was destroyed by Katrina.

At the same time, Gulfport is in the midst of a strategic master plan for expansion that will add 84 acres of new capacity, allowing it to handle an increase in containerized traffic and accommodate new tenants.

“Our plan is to create facilities that allow for the handling of huge volumes of containers,” Alee says.

Once unloaded, cargo has access to Class I rail systems operated by Kansas City Southern and CSX, and Interstate 10, the nation’s busiest east-west highway. There is also access to interstates 55 and 59, which both run north-south. More than 40 truck lines service Gulfport daily.

The port authority works closely with local and regional economic development agencies throughout Mississippi. “They know the value of the port to their own communities,” Alee stresses. “They know they are only a rail line or highway away from tapping right into the port.”

Port of Mobile plays a role in recruiting companies

Economic development has evolved into a critical role for the Port of Mobile as well. Jimmy Lyons, director and CEO of the Alabama State Port Authority, which operates the port, says he is constantly communicating with local and regional economic development agencies looking to recruit expanding manufacturers.

“We can make a tremendous difference,” he points out. “We can come up with a competitive solution to transportation needs. It can help put the finishing touches on a project.”

The port played a role in Germany-based ThyssenKrupp’s decision to build a $4.65 billion complex in Alabama. The complex, on the Mobile-Washington county line, has two business units: A carbon steel unit that will take steel slabs imported from Brazil and further process them and a unit that will manufacture new stainless steel from scrap. The two units are expected to employ 2,700 workers when fully operational.

“We were actively engaged in the site location process,” Lyons says. “Not only did we offer our existing facilities, but we are also building a specialized steel terminal for handling raw materials. Our willingness and ability to construct competitive facilities to support businesses has been a major advantage.”

Logistically, five rail lines access the port, as well as interstate highways and an intercoastal waterway system that runs into the Tennessee Valley and from Texas to Florida.

The Port of Mobile has 41 berths, 2 million square feet of warehouse space, and another 2 million square feet in open yards. To enhance its ability to handle cargo, the port will install a 400-ton crane in May, on top of its existing 110-ton cranes.

During the past decade, the port has added refrigerated cargo capacity and 600,000 square feet of Class A warehouse space, and it opened a $300 million container terminal in October 2008. There is also an ongoing $100 million expansion and improvement project at its coal terminal.

“We have been continuously building new facilities and warehouses,” Lyons says. “We’ve also upgraded equipment. We have an aggressive investment program.”

Aggressive expansion at the Port of Houston

Aggressiveness is also a word to describe the Port of Houston’s expansion efforts. The port has two container facilities, Barbours Cut and Bayport. Barbours Cut, the older of the two, is at full build-out and can handle 1.7 million TEUs.

Bayport, on the other hand, is undergoing a major expansion project that will only scratch the surface of its full capacity. The port is adding 1,330 feet of berthing space to the current 2,000 feet and adding 50 acres of container yard to the current 110 acres.

There are six post-Panamax cranes at Bayport, and the port has three super post-Panamax cranes on order. These upgrades, expected to be complete by the middle of this year, will put Bayport at about 46 percent of build-out, says Ricky Kunz, vice president of origination for the Port of Houston.

But that’s only the beginning for Bayport. Anticipating increased volume because of the Panama Canal project, the port is further expanding the facility. At full build-out, Bayport will have a design capacity of 2.3 million TEUs. The channel depth has already been widened and deepened to 45 feet, which will allow the port to handle larger vessels, Kunz notes. Target date for completion is 2018.

“We’re building Bayport as business demands, and because the business continues to demand, we continue to build out,” Kunz points out. “Retailers are coming here because they want to be closer to their customer base.”

More than 150 companies have facilities located near the port, including most major oil companies and many other companies that support the oil and gas industry.

The port has a $118 billion annual economic impact on the Houston region and directly or indirectly affects 785,000 jobs. “If we were a country, we would be the eleventh largest GDP (gross domestic product) in the world,” Kunz says.

Port Freeport adds cargo handling capabilities

Fifty miles from Houston, Port Freeport is expanding its operations with the opening of the first phase of its Velasco Terminal, which will add cargo handling capabilities. The terminal has a new 800-foot-long dock and 20 acres of backlands. Eventually, the port will offer 2,400 feet of berthing space and more than 90 acres of supporting land.

Land has long been one of Port Freeport’s greatest advantages, with about 7,500 acres, proximately located to the open Gulf waters, and available for future development, says A. J. Reixach Jr., executive director and CEO of Port Freeport.

In addition to undertaking the Velasco project, the port is designing a high-efficiency truck queuing area and continues to work in conjunction with federal and state officials to deepen and widen the port channel.

Port Freeport and its customers are also looking to gain from enhanced multimodal connections.

On the rail side, Union Pacific Railroad is putting a new bridge in place over the Old Brazos River, eliminating present weight restrictions. Roadway developments are led by the launch of a design and engineering project to elevate a major intersection involving Texas Highway 36.

Infrastructure upgrades at Port Manatee

On the other side of the gulf, Port Manatee, at the entrance to Tampa Bay, is anticipating increased traffic as a result of the Panama Canal project. It signed a memorandum of understanding with the canal last year “to maximize the advantage of its proximity as the closest U.S. deepwater seaport” to the Panama Canal.

A decade ago, Manatee began developing new docks—the first new docks since the 1970s—that will increase its capacity by more than 50 percent.

“We have built 2,200 linear feat of deepwater berths, with an additional 600 feet permitted and ready to be built,” says David L. McDonald, executive director of Port Manatee.

The port has embarked on a master plan that examines the next 50 years. The result is a proposed $750 million expansion on its north side, including four post-Panamax berths and up to 200 acres of development. The project is awaiting final approval from the state of Florida, which McDonald expects sometime this year.

More expansion is coming early this year with the construction of a 20-acre aggregate terminal operated by Martin Marietta Materials. The company will import crushed granite from Nova Scotia and also process lime rock and other building materials for the construction industry. Operations are expected to begin by the end of 2010. Once fully operational, Martin Marietta will handle about 1 million tons of cargo a year at the terminal.  wt



Ken Krizner is a freelance writer based in Cleveland, Ohio, where he writes often on economic development and technology issues.

Sidebar: New Orleans Region: Redefining its Business Mix, by Lara L. Sowinski

Following the massive devastation of Hurricane Katrina in 2005, officials in New Orleans made an unprecedented commitment to not only rebuild the region, but to rebuild it in a way that would set the stage for a more diversified business mix, an improved infrastructure, and a stronger education system.

International trade is one of four key sectors that is being targeted for renewed attention and investment, along with creative media and design; energy/petrochemicals/plastics; and advanced manufacturing.

In the area of international trade, the New Orleans region (from Plaquemines Parish to the city of Baton Rouge) boasts one of the largest port systems in the world, with access to the Mississippi River and the Gulf of Mexico, including five deep-draft ports and three shallow-draft ports. And, the Port of New Orleans is the only deepwater port in the U.S. served by all six of North America’s Class I railroads.

The remaining sectors are equally important, especially because their prospects for future job growth are more promising than the state’s existing industries, such as paper manufacturing and agriculture, which despite their economic importance, are likely to experience declining employment.

Last month, Stephen Moret, Louisiana Economic Development Secretary, spoke about digital media, water management, and fuel-efficient vehicle manufacturing as examples of underdeveloped sectors that are representative of these high-growth industries. Moret asserts that these sectors (part of his Blue Ocean Strategy) can generate 225,000 to 400,000 direct and indirect jobs for the state by 2030.

In the creative media and design sector, the greater New Orleans region has successfully attracted an impressive amount of investment in recent years. According to GNO, Inc. (Greater New Orleans Inc., the regional economic development agency serving the 10-parish greater New Orleans region, www.gnoinc.org): “TurboSquid is a good example of an innovative technology company that is thriving in the greater New Orleans region post-Katrina. TurboSquid, which opened in New Orleans in 2000, has taken advantage of the state’s Digital Interactive Media Tax Credit Program. The company has created the largest library of 3D products for sale in the world with over 158,000 models and textures, software and tutorials.”

The company and about a dozen others are located in the 85,000 square-foot Intellectual Property (IP) Building on Magazine Street in downtown New Orleans, which opened last April.

In early 2010, GNO, Inc. and partners will launch two new entrepreneurial hubs, an “IP North” building in Covington, and a second space connected to GNO Inc.’s downtown New Orleans office, called GNO, Thinc.

“These spaces help create a culture that both nurtures our existing businesses and attracts new ones,” stated Michael Hecht, President and CEO of GNO, Inc., in a recent article published in New Orleans Living magazine. “And on top of this culture, we also have business conditions up to 30 percent cheaper than other markets, and then hard incentives—a new 35 percent tax credit for the production of digital media. What earlier legislation did for film, this legislation will do for digital media. If you think it has been exciting shooting to number three in the country for movie production, get ready for what will happen in digital, an industry that dwarfs film in potential for growth and high-quality job creation.”

Meanwhile, momentum is gaining for alternative car manufacturer V-Vehicle to open its production plant in Monroe, Louisiana. The San Diego, California-based company has been very tight-lipped about the specific design of the car for competition reasons, only disclosing that it’s a “high quality, environmentally friendly, and fuel-efficient car.” However, it does have some big-time backers, including founder and former Oracle executive Frank Verasano and maverick investor T. Boone Pickens. —Lara L. Sowinski