By the time the summer of 2015 rolls around, a major change in the way cotton and other commodities are shipped from the U.S. to destinations around the world will occur.
That's when the Panama Canal expansion project is expected to reach the end of eight years of construction improvements that will allow the first of thousands of oversize container ships, or post-Panamax vessels, to pass through the new locks of the historic canal as they head to U.S. ports in the Gulf of Mexico and up and down the Atlantic Seaboard.
The grand canal project means that giant container ships will no longer be required to port at U.S. West Coast facilities where cargo must be offloaded onto rail cars or trucks for ground shipment to final U.S. destinations, usually thousands of miles away.
Instead, the big ships can travel through the Panama Canal and head directly to U.S. ports in the South and East, saving countless millions of dollars in ground transportation costs each year.
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For U.S. cotton producers in the South, expanded ports of call like Charleston, Savannah and Miami will offer a better alternative than the current practice of shipping cotton by rail across the country or by smaller ships through the Panama Canal to the West Coast for trans-Pacific shipping. And cotton producers in Texas, the leader in U.S. cotton production, can ship from Gulf ports in Houston and Corpus Christi.
"For cotton producers in the South and parts of the Southwest, this will offer a lower cost, shipping alternative that could boost profits for both producers and ginners," says David Fields, CEO and President of Gulf Compress in Corpus Christi.
Gulf Coast improving facilities
Fields says officials at the Port of Corpus Christi, the nation's sixth largest port in tonnage, recognize the potential of providing services to post-Panamax size vessels as a result of construction improvements underway in Panama. Like many other ports on the East and Gulf coasts, the Port of Corpus Christi is racing to improve facilities to handle the demand and requirements of the oversize container ships that have become the standard for maritime shipping companies.
With the ability to pass through the Panama Canal, these giant ships will be able to reach ports in the South and on the East Coast without taking the longer and more expensive route through the Suez Canal.
Gulf Compress, located on port property with over two million square feet of warehouse space, is a cooperative association organized in 1950 for the purpose of providing safe, dependable storage and services for South Texas cotton producers. Owned and controlled by 21 member cotton gins and associations stretching up and down the Texas coastline, the company is directed by member representatives and a full time staff.
The company's latest cotton warehouse project serves as the anchor for the Port of Corpus Christi's massive $400 million La Quinta International Trade Gateway. Expanded cotton production throughout South Texas over the last 15 years had forced the compress to lease additional storage facilities, so constructing the $13.5 million dollar new container warehouse in 2004 was the best solution to a growing South Texas cotton industry.
Plans call for La Quinta to be a state-of-the-art container facility to handle significant amounts of cargo to and from key market areas including Latin America, the Pacific Southwest, Asia, and Central and Southwest Texas. When completed, it will include a marine terminal with storage areas, a wharf capable of handling three container ships simultaneously, nine cranes to load and unload cargo, a rail terminal, and dredge material placement areas.
Fields says the Trade Gateway is just one of many projects that will carry the port into the future. Port officials have already spent about $70 million to extend the ship channel well over a mile and are in the process of completing docks to handle larger ships. In addition, plans are underway to deepen the channel to 45 feet and eventually 52 feet, deep enough to handle the larger container ships that will be coming through Panama.
The company's massive port warehouse is located on 1,100 acres of port property and surrounded and serviced by rail service.
Raise the bridge
The port has already raised in excessive of $700 million to elevate the expansive Harbor Bridge adjacent to downtown Corpus Christi from 140-plus feet to over 200 feet to accommodate the larger container ships.
"Transportation costs are not getting cheaper. Speaking in rough numbers only, it can cost about $3,000 to deliver a truckload of cotton to a textile mill in China these days where it cost $300 to $400 a truckload 30 years ago, so the cost of transportation plays heavy on how competitive U.S. cotton can be," Fields said.
Already the company ships cotton across the country and to international destinations including Mexico, Turkey, and China, and with large container service coming to Corpus Christi, it puts the company in a good position to provide cost-effective storage and shipping services for Texas producers to destinations across the world.
"Currently, Texas cotton goes to Houston to move it either by rail or water to the West Coast, so once we have full freight and eventually container service out of the Coastal Bend, that would put us in the major flow of providing Texas cotton to the world," Fields added.
Saving a little money on the cost of delivery to cotton buyers will eventually be negotiated back into the price for the grower, "and that's what being a coop is about, working for the best interests of the grower."
Fields says Gulf Compress averages about 675,000 bales of cotton each year, about their storage capacity, and provides services to growers from the Houston area west to Uvalde and up and down the coast as far south as the Rio Grande Valley.
While 2013 is not shaping up to be a usual crop, Fields says irrigated cotton from the Valley looks exceptionally good, but the best yields are coming from the upper coast north of Victoria. He estimates the year is shaping up to be the second worst in the company's history though with only about 200,000 bales expected to be processed through their facilities this year.
"The only thing we need is normal weather and good prices and we will be right back in the thick of it. With seed varieties the way they are now, under the right conditions, we could be looking at 25 percent increase in yields over historic numbers, so every time I start to give up, I just have to remember we could easily be right back in the full blown cotton business in no time," he added.
For the future, Fields says U.S. cotton has a good outlook. With expensive and escalating fuel costs and with more technology advancements, he believes we will eventually see more mill operations returning to the United States.
"Technology advancements alone are amazing and combined with the quality of cotton that U.S. growers can produce, I think we will see a continued demand to produce high grade cotton right here in Texas," he said.
"And as far as Corpus Christi is concerned, the Houston port is extremely congested and we are located on deep water here in the Coastal Bend, so I believe we will see a great deal of growth for the port facility here, for Texas cotton, and for Gulf Compress."