Men's Breakfast, February 14, 2015

The Men’s Breakfast Group met Saturday, February 14th with Glenn Carlson, CEO of the Port of Freeport.   After military service in logistics, Glenn went to work at Sea-Land Transport.  Sea-Land was a pioneer in containerization and container transport.  Containerization has revolutionized sea transport and made international commerce much cheaper.   When Sea-Land was bought by a competitor, Glenn went to work for the Port of Charlotte, North Carolina.  A couple of years ago he took the position of CEO of Port of Freeport. 

The Port of Freeport is a public agency governed by four elected commissioners.  The port has taxing authority and collects taxes on property in the Navigation district.  The taxes amount to about five million dollars, which is about a fifth of the port’s budget.  The commissioners plan to keep the amount of property taxes constant in the future.  With the expected increase in port business, taxes will be a declining portion of the port’s budget.  Also, the increase in property values in the district will mean that the tax rate can be reduced. 

The port is important to the local economy.  Glen said that many thousands of jobs are generated by port operations, both directly and indirectly.  Unloading and loading a container ship requires over a hundred workers, from crane operators to customs officers to a large number of truck drivers.  The longshoremen now drive trucks rather than tote bales out of the ship.  The longshoremen are members of the international longshoremen’s union.  The union has a national contract with wages and benefits set nationally.  This means that the ports can’t compete by reducing wage rates but must compete on efficiency and service.  Glenn said he is on good terms with union and officers and they work together well. 

The port has had several capital projects and expects several more in the future.  When Glen arrived at Freeport the notorious berth seven had just been repaired.  The port bought two used cranes from China during a down portion of the business cycle.  They were able to buy the cranes for seven million each and now that model of crane is going for fifteen million.  Berth seven is now in operation, processing a couple of ships a week.  A second capital investment is the new administration building costing over two million dollars.  The new building has several advantages over the Freeport Bank building.  It is much closer to the port operations.  The offices are laid out better and it has a more professional appearance for potential port customers.  Glenn also emphasized that the Freeport Bank building has a mold problem that makes working in it uncomfortable for many people.    The port has also paved a large area for temporary storage of containers and other cargo. 

Now that berth seven is in operation they are planning to extend the docks to provide berths eight and nine and a special area for roll on-roll off cargo.  There is already a contract with a line for automobile shipments which will use existing docks.  The new docks will be able to handle panama carriers.  These ships will be able to traverse the expanded Panama Canal and make shipping from Asia to the east and Gulf coasts cheaper.  New docks are only one aspect of this program.  The ship channel from deep water through the jetties will be deepened and widened.  When the jetties were moved twenty years ago the channel was dredged only to 200 foot width.  The plan is to dredge it to 400 foot width.  There is enough space between the jetties so this can be done without moving the jetties.  The widening will enable two ships to pass in the channel.  This will aid the LNG plant in its shipments. 

This expansion does have other problems.  The area near the port is too congested and narrow for safety.  John Gunning, a Freeport pilot, was able, in simulation, to bring a panamax vessel into harbor under very adverse conditions on his first try.  However, he said that he could not guarantee success under these conditions and should have more room.  The main problems are the Phillips Petroleum docks and the Dow thumb.  The docks can be moved at a cost of about twenty million dollars.  Freeport LNG may pay this because it will make its operations safer.  The Dow thumb is more of a problem.  Major chemical plants are on the thumb.  The levee protecting them is protected by a hundred-fifty-foot strip of land.  A proposal is to put a flood wall in the levee and remove the strip, widening the basin.  The corps of engineers has not responded to this proposal so it is in limbo.  Another problem with dredging the thumb is that the soil there is likely to be polluted and would be difficult to dispose of.  Another aid would be to replace the present tug boats with much more powerful tugs.  These do exist but have not been assigned to Freeport. 

Another problem is to get the cargo out of Freeport.  The highways will be congested with all the additional truck traffic.  The railroad will be loaded to capacity which will give Union Pacific pricing power over its shipments, both from the port and from the chemical plants.  Another possibility is to build another railroad parallel to highway 36.  An agreement between Fort Bend and Brazoria counties has been signed to work on this.  Because this railroad would go through rural land , it might be cheaper than double tracking the present Union Pacific line.  Also, Union Pacific has little incentive to do this and competition would serve to keep rates lower. 

The men had an enjoyable discussion and a good breakfast.  The next meeting will be March 14th.