According to Union Pacific Railroad Vice President of Marketing and Sales for Chemicals Beth Whited, the low cost of feedstock is creating a great cost advantage for chemicals manufacturing in the U.S. with “a marked concentration of growth” in the Gulf area.
“What we’ve really seen over the last several years is a resurgence in the market — not just plastics, but really all kinds of chemicals,” Whited said, addressing the 2015 Petrochemical & Maritime Outlook Conference held recently in Pasadena, Texas. “There’s very much a focus on the chemicals industry in the Gulf Coast for Union Pacific. We’re very excited about the plant expansions, and we’re very interested in being ready and capable of handling the business.”
As many as 245 new projects have been announced for the U.S. chemical industry, yielding approximately $150 billion in potential capital investments.
“When we think about being ready to support that growth for our customers, we think about how we need to be ready to handle this from a locomotive and people perspective,” Whited, a member of the event’s “Transportation and Logistics” panel, said. “We’re going to see a very significant investment in our own infrastructure to support the needs of our customer base.”
In 2009, prior to the shale boom, the railroad spent approximately $40 million to expand its capacity in the south.
“This year, we’re spending $335 million — almost 10 times as much as we were spending just six or seven years ago on the south end of our railroad,” Whited continued. “That’s being done on our part to make sure we can provide the same level of quality and reliable service to our customers who are already ship-ping with us, as well as take on this growth with the added service products.”
Piloting the Ship Channel
The Port of Houston is the No. 1 container port on the Gulf Coast, handling 8,000 vessel movements and 200,000 barge movements annually.
The Houston Pilots are responsible for the safe passage of those movements through the port’s Ship Channel.
“We’re not the guys and gals that fly over the Houston Ship Channel; we’re the guys who bring the ships in and out of the port,” summarized Capt. Mike Morris, Houston Pilots’ presiding officer.
The largest tankers the Houston Pilots currently navigate through the channel are approximately 900 feet long and 165 feet wide, but Capt. Morris has seen “an explosion” in the size of container ships.
“The 12,000 20-foot equivalent unit ships that will fit through the Panama Canal when it opens next year are the size many of our container friends want to bring into Houston,” Capt. Morris said, joining Whited, Kirby Marine Transportation Group’s Christian O’Neil and Katoen Natie’s Frank Vingerhoets on the panel.
Despite an industry adage that claims, “water depth is for money, channel depth is for safety,” Capt. Morris believes the port’s waterways must be widened and deepened.
“We pass ships closer than any port in the world — sometimes as close as only 50 feet apart — but this is actually a little too close for us,” he said. “We need a wider channel if we’re going to maintain two-way traffic.
“Our organization has always been extremely proud of helping build this port to what it is today because of two-way traffic. And that’s where it affects the chemical industry. We’re afraid somebody’s going to get delayed if we have to go to one-way traffic.”
Capt. Morris encouraged industry leaders to provide feedback about their plans and needs to the Army Corps of Engineers.
“Share the story of how channel limitations impact your business, and reinforce the need for channel modernization,” he concluded. “It’s critical to the future success of the port.”
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