Port of Brownsville positions itself as a “gateway” to Mexico and Latin America

The mood at the “gateway” to Mexico and Latin America, as Port of Brownsville (PoB) likes to profile itself, is upbeat as it tries to implement its expansion plans, aided by the prospect of a number of big-ticket projects being set up on its land.

Arkansas-based Big River Steel has cast its gaze on PoB as the site for a steel mill which, according to PoB sources, will entail a $ 1.6 billion cost for construction.

Indeed, according to the speculation in the steel industry, Big River Steel is expected to send representatives to Brownsville before the end of this summer to discuss its plans in details.

PoB and Big River Steel signed an option agreement covering up to 800 acres of property enabling the steelmaker to continue its due diligence pursuant to the company’s interest in developing a steel manufacturing plant, storage and distribution facility.

PoB, the only deep-water seaport directly on the U.S.-Mexico border, and the largest land-owning public port authority in the nation with 40,000 acres of land, transships more steel to Mexico than any other U.S. port. Mexico is arguably Latin America’s most dynamic economy, and has overtaken Brazil as the region’s largest steel consumer.

“In 2017, the Port of Brownsville moved 10.6 million tons of cargo. The port’s Foreign Trade Zone No. 62 is currently ranked second in the nation for the value of exports, reporting more than $2.8 billion in exported goods in 2016,” said Steve Tyndall, the port’s senior director (marketing and business development) in an interview with the American Journal of Transportation at the recent Steel Success Strategies-XXXIII conference in New York.

Indeed, steel is a major commodity moved by the port.

With more than $43 billion worth of projects currently in the works, PoB is transforming the Rio Grande Valley by providing what Tyndall called “positive investment opportunities” and creating jobs. Activity at the port would provide an additional $2 billion impetus to the region’s economy, $3 billion to the Texan economy, and create more than 44,000 jobs.

Proposed LNG Facility

Another important development for the PoB is the Texas LNG’s proposed liquefied natural gas project at the port. Texas LNG, which had been waiting for approval from the Federal Energy Regulatory Commission, announced end June that it had received letters from the U.S. Coast Guard, the U.S. Department of Defense and the U.S. Department of Transportation Pipeline and Hazardous Safety Administration, thus paving the way for the project’s progress.

Texas LNG described the letters as “important milestones” for the project and required for the FERC approval process. The company said full approval and a “final investment decision” on whether to build the terminal, which would liquefy and ship domestic natural gas to foreign buyers, is expected in 2019. Texas LNG, which anticipates first-phase production of 2 million tons a year to begin in 2023, has secured long-term offtake term sheets from LNG buyers in China, Southeast Asia and Europe.

Then there is the $1.5 billion Valley Crossing Pipeline project. In June 2016, Valley Crossing Pipeline, LLC, was awarded the 168-mile intrastate gas pipeline project by the Comisión Federal de Electricidad (CFE)—Mexico’s state-owned utility serving 37 million customers—to provide natural gas transportation services to meet Mexico’s growing electric generation needs, and other shippers in South Texas. The US Federal Energy Regulatory Commission has authorized construction of Valley Crossing Pipeline’s 2.6-Bcf/d Border Crossing project for natural gas delivery to Mexico.

“All three projects … the Big River Steel, the Texas LNG and the Valley Crossing Pipeline will be built on the Port’s land,” Tyndal said.

Dredging

Tyndall also confirmed that PoB had, meanwhile, received authorization from the U.S. Congress to carry out dredging work that will increase the depth of the port from its present level of 42 feet to 52 feet. The dredging work is expected to start in five years; the entire dredging project should be completed by 2025.

The growing trend of larger ships in the international maritime fleet is influencing big changes in shipping industry’s infrastructure, necessitating expansion as in the case of the Panama Canal and enhanced port infrastructure around the world. PoB received on January 31, 2018 the M/V Nordic Pollux, the largest cargo vessel to call at the port to date.

The huge oil tanker made its way from Philadelphia to Brownsville where it loaded approximately 150,000 barrels of heavy naphtha.

Completion of the port’s channel deepening project will allow it to accommodate deeper draft cargo ships, making visits by ships like the Nordic Pollux a more common sight. Bigger ships are seen as a source of larger cargo volumes and, consequently, also as a source of more jobs for moving cargo onto and off the giant vessels.

Like other ports, PoB is also pursuing further development of its foreign trade zone which is the nation’s second biggest FTZ after the one in South Carolina. Tyndal said that all the projects, excepting the one involving dredging, will be under way in 24 months, adding that “never before have there been projects of such scale”.

Trade debate

Since it handles a large volume of steel, PoB Is also closely monitoring the ongoing national debate on steel and aluminum tariffs on imports.

“We are concerned about it (the imposition of steel and aluminum tariffs). If the tariffs go into effect, it will change the pricing of steel although that will not affect the efficiency of our port or the superior logistics platform we have built. We move more steel into Mexico than any other port. Despite the apprehensions and doubts of many, we are going to see more traffic and not less,” Tyndal said, adding that “new avenues of opportunities” would open up.

PoB’s senior director underscored the importance of “shared cultures and shared borders” with Mexico. “We have a lot more in common with Mexico than what separates us,” he observed, somewhat philosophically, pointing out that besides steel, PoB also receives limestone for buildings, sugar, bunker sea fuel, celestite, etc. “Export shipments from our port to Mexico include steel, slabs, scrap, pig-iron, petroleum, etc.

PoB had a record year in 2017, and it is “strong and getting stronger”, as Brownsville Navigation District Vice Chairman John Reed put it in his annual state of the port address on March 8.

The port’s total operating revenue reached nearly $24 million in unaudited total revenue, exceeding the previous high-water mark of $19.9 million set in 2015 by more than $4 million.

On the annual tonnage side of the business, the volume of cargo handled at the port topped 10.3 million tons, also a new record.

Vessel traffic recorded a 21% increase; a total of 1,317 vessels called on the port in 2017 – up from 1,091 vessel calls registered FY 2016.