Houston grapples with growth

Everything's big in Texas, including the challenges of double-digit freight growth

By Perry A. Trunick

While the flow of goods into and out of Asia is driving growth in Houston, the area has not lost sight of its position on the north-south axis that connects the U.S. with Mexico and Central and South America. Indeed, Houston ranks as the most logistics-friendly city in the U.S. Southwest, scoring high marks in all major transportation categories — air cargo, waterborne commerce, railroads and interstate highways.

Houston's high ranking, though, could be a mixed blessing if the growing volume of goods moving through the area becomes a bottleneck. Avoiding becoming another chokepoint in a global supply chain will require solid planning and lots of expansion — possibly faster than Jim Edmonds, chairman of the Port of Houston Authority Commission, might like.

Mexico, Brazil and Argentina remain the Port of Houston's largest trading partners, but since the West Coast port shutdown in 2002, volumes coming through the Panama Canal have definitely increased. Houston has a marketing agreement with the Panama Canal authority and, looking ahead to some of the widening at the Canal and the larger ships that are headed his way, Edmonds says some of the Port's expansion plans may have to be put into motion ahead of current plans.

The way it stacks up, according to Edmonds, is Houston has seen growth of about 10% per year in container volumes and he has been warned to expect that rate to increase to 16% to 23%. Presently, about 86% of the containers that come into the Port of Houston stay in Texas, but that will change, Edmonds continues.

Demographics indicate Texas will continue to grow, but construction of multi-state distribution centers in the region indicate more imports will be headed across the Texas border, deeper into the U.S. mainland. More retailers are coming to Texas to develop large distribution centers that serve regions as large as 12 states, so though demand may be growing and the volume of containers coming into Texas is certainly growing, the percentage that remain inside the state could change.

The Port of Houston is in a good position, however, in part as a result of an agreement it struck when the Union Pacific and Southern Pacific railroads merged. The Port got access to some right of way that it has been using to expand container operations and which will play into future expansion plans.

The pressure to build is strong, and it could accelerate some of the projects the Port has planned, including expansion to Pelican Island, near Galveston. Edmonds is confident and is actually looking forward to the challenge. Can the other modes keep up?

From a highway perspective, the facts might appear to be stacked against Texas. Since 1980, while the population has increased 57%, the number of registered vehicles has risen 61% and miles driven have jumped 103%, total road capacity has increased only 8%.

In his annual report for 2004, Michael Behrens, executive director of the Texas Department of Transportation (TxDOT), said the state had approved $9 billion over four years to preserve the existing transportation system ($5.5 million of that for rail) and $21.5 billion to improve mobility statewide. During the year it also awarded $4.1 billion in highway construction contracts for the second year, adding "congestion-reducing capacity and improved safety to Texas' transportation system."

Important to the logistics community, Texas has moved forward on the Trans-Texas Corridor proposal covering highways running from the Oklahoma border to the border of Mexico.

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