Gulf ports play growing role in auto trade

on Sep3

A Hoegh Autoliners vessel.

Hurricane Harvey’s disruption to finished-vehicle distribution in Texas and surrounding states illustrates the growing importance of Gulf ports for getting autos to market.

In the past two years, the ports of Houston, Galveston and Freeport have added new capacity to provide shipping service for automakers.

Port officials say manufacturers and ocean transportation providers are inquiring about using their facilities as import/export gateways.

Historically, imported vehicles bound for the middle of the country came through East and West Coast ports. Automakers now realize they can save on logistics by using ocean shipping to reach customers in the lower Midwest with foreign-made vehicles, or to export vehicles built in the Southeast’s assembly plants.

“Bringing the product closer to market lowers the overall inland cost for these guys,” said Anthony Vrban, vice president of operations for Horizon Terminal Services LLC, a subsidiary of Norwegian shipper Höegh Autoliners that operates a facility at Port Freeport.

Rail and truck transport are substantially more expensive per unit than ocean shipping because of economies of scale, fuel efficiency and less need for labor, transportation experts say. The 2015 opening of a wider set of locks at the Panama Canal has enabled much larger ships to pass through, making routes from Asia to the Gulf more economical for car carriers.

General Motors contracts Höegh to carry full-size SUVs made at its Arlington, Texas, plant to the Middle East. Höegh also brings in the Chevy Trax and Buick Encore crossovers from South Korea, said Jason Miura, Port Freeport’s business development manager.

“The GM product we handle today used to come out of Jacksonville,” Vrban said. “Now it can get from plant to port the same day.”

Recent winter storms that temporarily closed the ports of New York/New Jersey and Baltimore, as well as highways and rail lines, also taught automakers the need to diversify port options, Vrban said.

Port Freeport, due south of Houston, was largely unscathed by the storm because it has a protected approach, as well as storm levies with good drainage, and only picked up about 15 inches of rain compared with several feet of rain farther inland where the storm stalled. Höegh had a roll-on/​ roll-off vessel holding offshore for several days until the port reopened for vessel traffic on Thursday. It discharged about 160 GM vehicles plus heavy machinery, Vrban said.

Freeport began handling autos two years ago after partnering with Horizon to build the necessary terminal infrastructure. Last year it processed 62,000 vehicles.

All vehicles are trucked to and from the port, but operators broke ground Aug. 21 on a $21 million rail project connecting the dock with a Union Pacific trunk line. A multimodal industrial park also under development will include new vehicle processing and storage areas. The rail infrastructure is expected to be operational by next July.

The Port of Galveston opened its first auto terminal in January 2016 to support BMW and Mini. It moved about 18,000 units through the facility in 11 months last year.

Galveston also escaped significant damage because high wind drove a lot of water out of Galveston Bay, said Peter Simons, interim port director. Although parking areas at the two vehicle processing centers had flooding, vehicles had been moved to higher ground before Harvey hit.

Vehicles imported from Germany and South America through Galveston head to dealerships in Texas, Louisiana, Oklahoma and Arkansas.

Port Houston has long supported Volkwagen imports but last year opened space for Fiat Chrysler Automobiles by converting an idle cruise terminal into an auto processing facility run by Auto Warehousing Co.

Auto processors provide myriad services such as applying paint protection, making mechanical and body repairs, and conducting pre-delivery inspections.

The terminal handled about 17,000 vehicles last year, according to Auto Warehousing Co-President Ben Seher. Volumes are expected to grow in coming years, he added.

VW’s rail-served facility handles more than 120,000 units per year. All VW, Audi and Bentley models move through Houston, except for the U.S.-built VW Atlas crossover and Passat sedan, a spokesman said.

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