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 hosted the Texas Farm Bureau Ag Lead XIII members during their Southeast Texas session at the Bayport and Barbours Cut container terminals for a visit and tour.

The Bureau representatives discussed cotton, grain, beef and other agriculture products coming through the port as well as Port Houston container operations. The Bureau is a membership-based agricultural organization for independent farmers and ranchers.

Port Houston Senior Trade Development Manager Ty Reasonover provided a presentation and overview of the port’s history, structure and facilities. Chief Commercial Officer Ricky Kunz discussed port security, environmental and channel development efforts in the Houston port region. “Texas agriculture is marketable world-wide. The port delivers an efficient and cost-effective service to bring these products to market,” said Kunz.

Cotton and grain are two of the port’s historic specialized commodities. At Port Houston Facilities, most agriculture products are shipped by containers. Although, Port Houston also has a Public Grain Elevator facility operated by Louis Dreyfus for bulk grain exports. 

Texas is home to the largest cotton gin, according to the Bureau. “It’s important for these Bureau members to see how their production is directly tied to what we do here at the port,” added Kunz.  

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Nearly 280 beneficial cargo owners, shippers, ocean carriers, and logistics providers attended Port Houston’s third annual Synthetic Resin Symposium Conference Jan 23. Resins are a solid plastic substance used to make many of our daily consumer products such as bags, cups, car parts and toys.

The event focused on the local supply chain, current market trends, as well as rail, highway and port infrastructure.  Port Houston continues to invest in its facilities to serve customers and partners export needs. Houston is home to the largest petrochemical complex in the U.S.

Port Houston Executive Director Roger Guenther provided opening remarks at the event, while Director of Container Terminals Ryan Mariacher provided an update on port operations and infrastructure. “We are in the business of providing a service,” Mariacher said. “We differentiate our terminals by providing quality levels of consistent service. Safety is paramount.”

Port Houston is unique in the fact that it is one of the few operating ports in the nation.

A panel of ocean carriers with Maersk Line, CMA-CGM and COSCO Shipping discussed readiness and container capacity for resin exports. “Port Houston is a great key partner. We are excited about the Houston market,” said one carrier executive.

“We look at Houston as an investment for the future,” another panelist noted.  

IHS Markit forecasts that the Port of Houston will be the dominant U.S. export player in coming years. With new packaging and production facilities coming on line throughout the Gulf region, capacity expansion for resins will allow Houston to be an important gateway for this cargo.

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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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