Port Houston’s plans to improve infrastructure and efficiency in the transportation and export process. A look into trade and how export markets are shaping future infrastructure.
Over 50 percent of all sorghum grown in the U.S. is produced for export markets, making port facilities, and the highways and rail leading to them, increasingly important for the success of sorghum producers up and down the Sorghum Belt.
Because of its importance in the transportation and export process, Port Houston, where 28 percent of all sorghum leaves the U.S., is implementing a five-year plan to improve the port’s infrastructure and efficiency.
Wayne Cleveland, executive director of the Texas Grain Sorghum Association, said transportation infrastructures in the U.S. are some of the most efficient systems in the world, and they are only getting better.
“In China, it is cheaper for them to buy grain sorghum from Texas and ship it to China than it is for them to buy their own and grow it locally in northern China and move it to the southern regions where many of the animals are,” Cleveland said. “That’s a huge testament to how we are able to move grain out.”
Cleveland said innovation and demand have allowed grain transportation systems to become better, especially at ports along the Texas coast, like Port Houston.
“Anytime we can broaden our scope as far as markets and the efficiency of getting it there,” Cleveland said, “is, I think, why most international markets return to the United States.”
Cleveland said trade with those international markets shows how advanced our transportation infrastructure is.
Infrastructure in sorghum export markets, Cleveland said, is often what dictates how U.S. sorghum is shipped.
While sorghum can be shipped by container, much of the U.S.’s sorghum exports are shipped by breakbulk, which is transporting as a loose grain.
“That’s how they are able to move it around on a pretty inferior road system,” Cleveland said. “A lot of countries we go to, such as Columbia, they discharge those vessels by hand and fill burlap sacks full of grain for transportation out to the country. That is why a lot of it is sold in containers. ”
U.S. ports, like Port Houston, remain competitive on the world stage among developing sorghum markets due to proximity, as well.
“In the United States, Texas has about a seven-day freight advantage to Columbia over Brazil,” Cleveland said. “That moves a lot of grain into Latin America.”
Though the U.S. can outperform competitors, Cleveland said, there is still a great need to keep the infrastructure of the U.S. highway, rail and port systems up-to-date, especially with the recent expansion of the Panama Canal.
“The bottleneck is always with transportation, especially with sorghum,” Cleveland said. “We’re expanding that bottleneck so that grain can flow out of here in an expeditious manner.”
With its five-year plan, Port Houston has answered the call to expand the transportation bottleneck.
Port Houston Senior Manager in Trade Development Ty Reasonover said the improvements will take place in phases.
“Starting from the very beginning, we knew we needed to make these investments,” Reasonover said. “As things started to change and growth started to get bigger, especially from the Asia trade, we knew we needed to double-down and make more investments to stay ahead of the demand-curve.”
Reasonover said many of the projects are underway and some have even been completed already.
“We completed our $80 million dredging project to access our container terminals,” Reasonover said. “Our container terminals are now authorized at 45-feet deep to accommodate the new generation of Neopanamax vessels.”
Reasonover said the Neopanamax vessels are the ultra-large container ships, which are now able to fit through the expanded Panama Canal.
With an expanded Panama Canal and larger ships able to pass through, costs for companies which export sorghum, like Cargill and Lansing, could be cut.
According to the vessel shipping distance table on sea-distances.org, the use of the Panama Canal results in over 4,500 miles saved in the one-way trip to Shanghai, China.
“Those cost savings could be a great thing for companies that export sorghum from any of the gulf ports, as well as our end-users,” Cleveland said.
In order to keep up with the infrastructure expansion at the Panama Canal, Port Houston must also make infrastructure investments to remain efficient.
While most terminals at Port Houston are privately leased, Reasonover said, Port Houston Authority operates two container terminals, which they are improving for a wave of new-generation ships.
“We are investing about $1.7 billion in our two container terminals together,” Reasonover said.
Reasonover said many of the updates and improvements, which include new cranes and expanding yard space, were not only spurred by the expansion of the Panama Canal, but also huge growth of the port’s imports and exports.
Port Houston is the fastest growing top-10 port in North America, Reasonover said, with 13 percent growth year on year.
For sorghum producers, the growth of the port as a whole could mean more opportunities for international trade.
“We are talking to the ocean carriers to bring more services to Houston,” Reasonover said, “to bring more empty containers by bringing more imports in. As they are bringing more imports in, those get turned around back to the terminals as empty containers and those can be used for more exports like sorghum or cotton.”
Reasonover said along with investments in infrastructure and attracting ocean carriers, Port Houston is looking for ways to diversify their exports.
“At Houston, the main goal is to grow and diversify the types of cargo that go through our facilities,” Reasonover said, “so we’re extremely interested in more sorghum business.”
Investments are not just being seen from the port authority. Many private businesses leasing terminals at the port, like Cargill and Lansing, have taken it upon themselves to improve their infrastructure, as well.
The Sorghum Product Line Manager for Cargill, Bob Vanderloo, said Cargill has invested a lot of money into their facilities at Port Houston.
“We have had an export elevator there since maybe the 60s or 70s,” Vanderloo said. “Cargill has put a lot of money in our elevator and retrofitted it to become an elevator of the future.”
While Port Houston gears up for the future of exports and demand from foreign countries, so too is Cargill.
“Cargill expects to have robust exports and meet the needs of the world,” Vanderloo said, “and I think that’s what the Houston Port Authority is hoping for.”
For Cleveland, the TGSA executive director, the port improvements are an important part of the export process and keeping the U.S. competitive.
“The port is just there to capacitate those shipments,” Cleveland said. “For the most part, they are building a field of dreams, hoping the players will come. In this case, with exports as robust as they are, it’s just putting another grocery store on the street—it makes it easier to get our products out of the United States.”
Cleveland said another concern is other modes of transportation throughout the export process, like railroads.
“We tend to be held captive with rail,” Cleveland said. “By expanding that bottleneck, that should allow more grain to come down from Kansas into Houston.”
Luckily for sorghum producers, Port Houston, Reasonover said, is planning on updating their rail, as well as working with railroad companies to expand services.
“At Port Houston, we have an infrastructure division which has solid relationships with the Texas Department of Transportation and the railroads,” Reasonover said. “We are putting in rail to the Bayport facility soon. We need all the help we can get from our partners and stakeholders, the railroad, the highway department, and the federal government to give all of us more opportunities to grow.”
Working with the railroads and private companies could potentially lead to a growing market for sorghum at Port Houston.
Looking past infrastructure improvements, Cleveland said filling the world’s demand for U.S. sorghum is another focus of the industry.
The U.S. has a liquidity problem with sorghum, Cleveland said, because export markets have room for more sorghum. Through the Sorghum Checkoff, privatized seed development and agronomic education, Cleveland believes the liquidity of U.S. sorghum can be lifted.
“The world wants our product,” Cleveland said, “it’s a high-quality, efficiently produced product, and the shipping channels absolutely work. We just need to get it to the port and get trade agreements nailed down. Those are our two greatest concerns right now.”