Ecommerce Steadily Rising

 “With a trillion-dollar year on the visible horizon, coupled with the size and continued growth of the Houston area, I wholeheartedly believe Houston’s industrial market is primed for a windfall of e-commerce leasing activity in the coming months and years,” said Justin Tunnell of Lee & Associates. 

The City of Houston is still in its infancy for e-commerce, as it has historically been served by regional distribution centers in Dallas, noted Justin Robinson of Stream Realty Partners. “However, that model has rapidly changed due to accelerated delivery expectations of consumers,” Robinson said. “As a result, e-commerce companies have established facilities in Houston to more efficiently and effectively meet consumer needs.”

Distribution Center Locations

Much of the cargo activity has occurred around Port Houston. Stream has been involved with Principal Real Estate’s Bay Area Business Park, which has grown a 3.3 million square foot Class AA industrial development and minutes away from the Bayport and Barbours Cut Container Terminals.

A host of distribution centers already had been taking shape in the greater Houston region in recent years. For example, furniture distributor IKEA acquired more than 143 acres at Generation Park in northeast Houston for a distribution center that will top 1 million square feet. Additionally, Dollar Tree, Inc. is building a new distribution center in Rosenberg, investing $130 million in the facility. Retailer Five Below has completed and is occupying its new 860,000-square foot facility located in Houston suburb Conroe. Retailer Ross Dress for Less is building a large distribution center in Waller County, southeast of Brookshire. Amazon has also expanded its footprint around the city building two more centers to bring its total to five distribution centers in the Houston area. Proximity to the Houston Ship Channel remains a prime area for distribution centers keeping logistics practical and more efficient.

Growth for the City and Port Houston

“Port Houston continues to be among the fastest-growing container ports in the country, fueled by an increasing number of import distribution centers in the Houston region and a robust manufacturing base in the state of Texas,” NAI wrote.

That growth is projected to continue, CBRE said in a newly released report.

“Houston is a growing port of entry to supply the Southcentral U.S, which is projected to increase in population by 7.1 percent over the next five years,” stated the report, entitled “The Changing Flow of International Trade.”

The growth of imports has factored into the decision-making by Port Houston leadership to continue to expand infrastructure. Three new Neopanamax electric cranes for the Bayport Container Terminal, which is still being built out, are under construction now. The $35 million ship-to-shore cranes, which are for Wharf 5 at the Bayport Container Terminal, are expected to be operational in the summer of 2021 and will be capable of handling 18,000-TEU ships. The cranes will bring Port Houston’s fleet of ship-to-shore cranes to 29.

Retailers in Texas and beyond are banking on that kind of growth and investing in Houston. The port and city drive home Houston’s fast-emerging image as a major gateway for imports.

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Port Houston welcomed a group of sorghum buyers from China at the Bayport Container Terminal for a tour in conjunction with the Sorghum Checkoff and the U.S. Grains Council July 19.

Sorghum, a top choice of livestock feed in China, is one of many Texas agricultural exports.

Port Houston Senior Manager of Trade Development Ty Reasonover met with the Chinese representatives and provided an overview of the port and its operations.

“Port Houston is committed to handling agricultural goods as efficiently as possible,” Reasonover said. Port Houston supports the expedited flow of cargo that provides a quick, reliable, hassle-free way to sell our American goods to global consumers.”

In addition to its portfolio of two ultra-modern container terminals, the port has a six million bushel grain facility, now operated by a new tenant, the Lansing Trade Group. The facility is directly connected by road and rail served by Union Pacific, BNSF and Kansas City Southern railroads.

Port Houston also has three weekly all-water services connecting East Asia to Houston via the Panama Canal and China is one of the fastest-growing trading partners for Port Houston. “The TransPacific trade is extremely important to our overall cargo mix here at the port,” added Reasonover.

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Port Houston was recently added as a port of call for MSC’s existing Indus Service that serves the U.S., India and the Middle East via the Suez Canal.

The M/V Seamax Greenwich, an 8,900 TEU vessel, arrived at the Bayport Container Terminal in June.

“The remainder of 2018 looks great on the container front with this new weekly service,” Executive Director Roger Guenther said during a recent public meeting.

The Houston region is becoming an important distribution and logistics center for plastic resins, much of which are expected to move across Port Houston docks. Loaded container imports for 2017 increased 22 percent, making Port Houston the fastest-growing import port in the U.S. Loaded container exports grew 5 percent, for a 13 percent overall growth rate.

Much of the container import growth is from the strengthening East Asia market. Inbound transpacific volumes increased 32 percent in 2017. East Asia imports represent 41 percent inbound loaded TEUs.

With three Asian services, projections show Houston’s import growth expanding, while handling new demand from growing plastics exports to Asia.

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Port Houston hosted a Perishables Summit Feb. 14-15 at the port’s executive building. The meeting was a platform to engage with exporters, growers and industries involved with the perishables trade focusing on imports of fruits and vegetables.

Topics discussed at the event included best practices for the supply chain, market challenges and reefer capacity. Networking opportunities and match making sessions between exporters and buyers were also organized. Tours were provided of the ports terminals and third-party warehouses with perishable-related operations.

The U.S. Customs and Border Protection, the U.S. Department of Agriculture and the Food and Drug Administration highlighted best practices for importing perishables, food safety regulations, cold treatment programs as well as other customs exams processes. The two-day event, which included tours of some of Houston’s refrigerated warehouses and port facilities, was developed to improve communication between all stakeholders of Port Houston's perishable community.

The inaugural event featured a diverse group of Latin American produce export trade organizations and U.S. produce buyers.

“Houston is the best gateway for importing perishables,” said John Moseley, Senior Director of Trade Development for Port Houston. “Retailers and importers save time and money by using Houston instead of alternative ports because of our direct services from Central and South America and our ability to shorten transit times.  Short transit time and speed to table is what keeps the product fresh and price competitive.”

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Port Houston hosted a Steel Roundtable event with over 40 participants, including steel traders, manufacturers and other industry partners Sept. 28 at the port’s executive building.

Port Houston’s Senior Director of Trade Development John Moseley provided opening remarks to the crowd. Director of General Cargo Facilities Randy Stiefel, provided an update on current port breakbulk and project cargo-related projects, port capital improvement projects and the status of the port after Hurricane Harvey.

Steel is an important commodity segment for the U.S., and the port has seen an increase of 40 percent of steel cargo volume this year. John Foster, chairman of the American Institute of International Steel, and Richard Chriss, president of the Institute, reported that imported steel and iron supports 1.3 million jobs in the U.S. and contributes $239.8 billion to the U.S. economy.

Port Houston handled 2.23 million tons of steel in 2016.  

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More than 100 attendees learned the benefits, costs, best practices and processes of operating business in a foreign trade zone at Port Houston’s foreign trade zone conference August 24.

Port Houston manages Foreign Trade Zone #84, which includes many privately owned and port-owned sites located throughout the Houston region and Harris County, Texas. Currently, FTZ #84 contains 9 magnet sites, 26 general purpose zones and 13 traditional subzones.

State Senator Paul Bettencourt and Attorney Sam Webb of Cox Law Firm discussed the Texas economy and the impact of foreign trade zones. “FTZs are essential policy to promote manufacturing and exports,” the senator said.

Texas is the top state for FTZ activity in regards to merchandise received and exports. A total value of $660 billion was received into active FTZs in 2015, noted an Ernest and Young Global Trade representative.

FTZs allow for distribution, storage, repackaging, testing and inspection, assembly, repair and manufacturing. No duty is paid if merchandise is exported directly from the zone.

“FTZs help encourage activity and value-added at U.S. facilities,” said Camille Evans, senior analyst at the U.S. Foreign Trade Zones Board.

The event was held at the Hilton Houston Post Oak Hotel.

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