Chicago — Shipping firms and related companies are gearing up to move a lot of new polyethylene resin.
New construction is being spurred by the addition of massive amounts of new PE resin capacity being built in North America, primarily on the Gulf Coast. Newfound supplies of natural gas throughout the region can be refined into ethane and the ethylene, a PE feedstock.
Executives from the shipping industry spoke at Global Plastics Summit 2016, Sept. 28-30 in Chicago. The Port of Houston is deepening its channel to 45 feet to handle larger resin loads, according to Chief Commercial Officer Ricky Kunz.
Shipping resin through the port includes a chain that goes from a PE plant to a railroad to short line rail, before the resin is bagged and placed on a truck or barge before reaching the port for overseas destinations.
The Houston area also has the advantage of having many more resin bagging facilities — with more on the way — than ports in New Orleans or Norfolk, Va., according to Kunz.
But the new opportunities aren't without some challenges, said Frank Vingerhoets, president of global shipping giant Katoen Natie. Challenges in the Houston area include container availability, rail and port congestion, truck driver shortages and waiting times, he said.
Antwerp, Belgium-based Katoen Natie is working with railroad leader Union Pacific Corp. on a new Dallas-to-dock shipping service, along with plans to build a major resin shipping center in Dallas.
The Dallas-to-dock service transports plastic pellets in hopper cars from the Gulf Coast region and ships the product to Dallas, where the pellets are packaged and transferred into intermodal containers. The containers then travel to ocean ports via Union Pacific's premium intermodal service.
To support the service, a plastics packaging facility will be built in Dallas' Prime Pointe Industrial Park, a 3,000-acre industrial park in South Dallas County served by rail by Omaha, Neb.-based UP, which ranks as the largest rail provider in the United States. The 500,000-square-foot location will be adjacent to UP's Dallas Intermodal Terminal and is scheduled for completion in the third quarter of 2017.
Since the resin being added far exceeds North American demand growth needs, much of it will be exported. Vingerhoets said U.S. polyolefin exports are expected to increase 60-80 percent between 2016 and 2018. His firm also is expanding its presence in Baytown, near Houston.
Vingerhoets also is in favor of local authorities increasing truck load limits to 98,000 pounds. Doing so, he said, will decrease the number of trucks on local roads by 15 percent and will keep Texas ports competitive. Katoen also hopes to extend its operating hours and add Saturday operations.
“The resin boom is only 10 months away,” Vingerhoets said.
Rail giant BNSF Railway Co. and Texas-based firms Hillwood Development Co. LLC, and Packwell Inc. are working on a resin shipping center in Fort Worth. That project will be part of the AllianceTexas mixed-use development and is expected to come online during the fourth quarter of 2017.
The Hillwood/Packwell/BNSF effort will be part of a new global supply chain route that enables Packwell to ship resins in containers to end users through ocean steamship lines that work with BNSF. This route will connect Texas to Asia through ports in California.
BNSF executive Jon Tinker said that his firm “is ready and prepared for this challenge.” Investments in rail equipment are needed as the amount of PE exported grows from 20 percent of total production to 30 percent, added Tinker, the firm's industrial products marketing director.
In the Houston area, officials are hoping that all of this new resin will lead more processors to open or expand operations making plastic products there.
“We're seeking out [processors] who are looking to redeploy some of their assets here,” said B.J. Simon, an official with the Baytown/West Chambers County Economic Development Foundation.
“Our strengths are resin availability, work force access and access to customers in Texas, Oklahoma, Louisiana, Arkansas and other states,” he said. “We're close to the Port of Houston and have truck export to Mexico and are close to the automotive corridors there.
“We hope that processors will consider having satellite production in Houston vs. the [U.S.] Northeast and Midwest with the addition of lower resin costs,” Simon added.