Freight News

Galveston Wharves plans major cargo expansion projects

[ August 3, 2022   //   ]

Guided by its 20-Year Strategic Master Plan, Galveston Wharves is planning and executing projects for long-term economic and jobs growth, pending final Wharves Board approval and acceptable financing. These involve two projects totaling about $50 million that will expand acreage and infrastructure at the Port of Galveston’s West Port Cargo Complex.
Galveston Wharves Company controls the port facilities.
The goal of the projects is to bid these projects concurrently to save time and money and to continue the close-out of Federal Emergency Management Agency (FEMA) funding for Ike projects.
“We continue to recover from the $45 million revenue loss suffered during the 15-month-long suspension of our cruise business but have great confidence in the port’s future,” says Rodger Rees, Galveston Wharves Port Director and CEO.
According to Rees, the port’s cruise business typically generates 65 percent of port revenues, is making a strong return.
“During the pandemic-related drop in revenues, our board and staff continued to cut costs and maximize revenues to protect cash reserves designated for essential capital projects,” he says. “While we don’t have the cash to fully self-fund these critical improvements, we can leverage our savings with grants, loans, bonds and public-private partnerships.”
By 2024, the plan calls for filling two outdated slips to gain 18.6 much-needed acres; extending rail to the waterfront for direct ship-to-rail cargo transfers; and increasing valuable dock space by 2,200 linear feet by filling the slips and repairing long-neglected, unusable docks.
“According to our cost-benefit analysis, these improvements will generate 423 construction jobs, $23.2 million in wages, and $1.7 million in state and local taxes, as well as support long-term economic growth,” Rees says.
The port qualified for a $30 million low-interest federal loan to fund one slip fill and a new rail spur to the waterfront. The U.S. Department of Transportation awarded the Railroad Rehabilitation & Improvement Financing loan through a competitive application process earlier this year. The port will draw from its cash reserves to pay between $500,000-$750,000 in loan execution costs, as well as annual debt service.
One of the biggest expenses in a slip fill project is buying and transporting fill materials.
“We hope to cut costs by using spoils from a scheduled Galveston Ship Channel dredging project,” he says. “This is a great example of how our citizen-owned port looks for ways to be cost-effective. We must be very careful with how we leverage these improvements because we’ll have annual cash payment requirements to service principal and interest, in addition to maintaining day-to-day operations.”
Plans calls for financing the $20 million cost for the second slip fill project with cash reserves and short-term borrowing. “FEMA will reimburse us for about half of this project,” he says.