Houston: Home for the Happy Holidays?

Dec 04, 2013, 12:22PM EST
Houston: Home for the Happy Holidays?
A pilot rate increase on the Houston Ship Channel may be a bridge too far for a maritime industry that is still reeling in a recovering economy.

 

There is nothing like a pilot rate war. Nothing. Well, unless the rate war is taking place over the holidays. And, then, it is really special. As a former resident of the Bayou City (1982 – 1996) and someone who made his living shipping up and down that channel (among others), and then later, climbing shore tanks and vetting ships all along its 52-mile length, I now write about all things maritime. Hence, when a Houston story pops up, I take notice. Recently, the Houston Pilots – the state-sanctioned monopoly of licensed mariners who guide the large, deep draft ships in and out of port – requested a 3.5 percent tariff increase, to start in 2014.

 

It’s a bigger story than you might think. There are probably very few people that are happy about the rate increase request and that’s because the Houston Pilots already make more than just about everybody else on the Gulf Coast and the customers they serve – foreign registered tonnage – remain stuck in a decidedly bad financial pickle. The West Gulf Maritime Association (WGMA), a nonprofit voice and advocate of Gulf Coast maritime stakeholders, says that pilot rates have all but doubled since 2000.

 

According to the brief submitted by the WGMA, the 86 Houston Pilot professionals received $44.4 million in distributions in the calendar year ending 31 December 2012, with a corresponding average distribution per pilot of $516,766. Beyond this, and according to a certified public accountant hired by the WGMA, the average Houston pilot was awarded another $233,482 in benefits in 2012. Outpacing their Louisiana colleagues annually by an average of $100,000 and dwarfing that received by in-state Corpus Christi pilots by $168,000, it is clear that Houston pilots are doing just fine. I’d venture to say that all of them are. They all work hard, do a reportedly good job and are collectively critical to the intermodal engine that makes this great nation run.
 

The Houston Pilots will tell you that the Houston Ship Channel is the busiest and most dangerous in the nation. The busy part is easy to see and work itself isn’t for the faint of heart. In my day, mariners who traded in and out of Houston had a grim name for the channel: the “veer-ditch.” Still, one could argue that there are other equally difficult ports to navigate in the United States and I’m betting that the good people who navigate Sabine Pass and/or the Mississippi River could tell you a thing or two about dangerous work. So, too, could Boston (MA) pilots who make far, far less and have to practically use grease to ease product tankers in and out Gasoline Alley (yeah, there is such a place) in Boston Harbor. But, really, how busy are these Houston pilots? I took a look at the numbers.

 

As we head into the New Year – the one which the Pilots hope Father Christmas will bring another 3.5% in fees above and beyond what I already described – the Houston Ship Channel (according to numbers given to me by others, and these coincide nicely with traffic estimates taken from the port of Houston’s own web site) is averaging about 687 ship arrivals per month. In contrast, Corpus Christi is averaging about 163 port calls. The Bayou City is exponentially busier, to be sure and in fact, typically averages more deep draft port arrivals than the rest of the Lone Star state’s deep water ports combined.

 

Nevertheless, I took those monthly deep draft port call numbers and doubled them (each ship has to come in and out) and then, for good measure, I assumed that every other vessel that comes into the port(s) has to shift at least once (bunkers, split disport, lay berth for repairs, etc.). That increased the total movements per month in Houston to 1,718 and at Corpus Christi, 408. Then, I divided those numbers by the (WGMA) reported number of pilots at each port of call (Houston – 86; Corpus Christi – 13). In theory, then, Houston pilots handle about 20 ships per month each, in contrast to their Corpus Christi colleagues who, if my calculations are correct, board about 31.

 

You could argue that Houston is anything but understaffed, overworked and/or underpaid. Conversely, if so, then we’ve got a worrisome situation in Corpus Christi and those guys deserve an immediate raise (and a vacation). But, I finish up that analysis by assuming that both groups follow maximum, fully compliant safety rules which meet or exceed OPA-90 rest rules and/or the newly coined MLC (2006) work rules.

 

We can play with numbers all day. I’m sure that someone else might interpret the data in a different way. That said; these rate increase requests often follow a similar path. The pilots in any given port who want a raise will collate the salary and benefit packages from deep draft U.S. ports, from sea-to-shining-sea, point to other ports where pilots make more and say, “Hey, we deserve those dollars, too.” Maybe they do. In this case, however, there appear to be few, if any U.S. pilot groups who earn more. So, I’m still not sure what the basis is for this latest rate request.

 

Arguably, the rate increase request in the Port of Houston comes at the worst possible time for the international shipping stakeholders that the port serves. Foreign flag (registered) vessels are required to take a pilot every time they move within the port. Global freight rates also remain at perilously low levels amidst overcapacity problems in several sectors, regulatory pressures to install prohibitively expensive equipment (ballast water treatment, increasingly cleaner engines and emissions abatement equipment, just to name a few) have never been more onerous and the cost of so-called “green” bunkers is also an issue. Those aren’t the problems of the Houston Pilots. In a perfect world, however, rates in one aspect of a business shouldn’t go up while all other indicators head south.

 

A final decision will be made as early as December 10th by the board of pilot commissioners for Harris County ports. They will consider all arguments and one has to assume that they will do the right thing. Meanwhile, I’ve got my Christmas wish list out there and circulating. I’m hoping, among other things, to get those snazzy floor mats for my Honda Pilot. Here’s hoping.  The Houston Pilots have a wish list, too. Do they deserve a raise? That’s not for me to say. – MarPro

 

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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.


 
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Comments
Lou Vest
I'm a Houston pilot, just speaking for myself. I don't know how many of us read your column. Describing this as a rate war is a bit extreme. We've gone through the usual channels and asked for an increase of about what inflation has been for the last few years. Far from a war. We have friendly relations with the people we work with in the port and hope to continue that way.

Your comparison to other ports is incomplete. I have a lot of respect for pilots everywhere. Each port has its own trials and tribulations. Corpus is closer to the Gulf of Mexico, so even though they do more trips per month their total bridge time is probably less. We'd need more information to make a good comparison.

As for breaking out the grease: http://www.flickr.com/photos/72511036@N00/10139174775/in/photolist-grXVqc-grXpWw
12/6/2013 6:18:24 PM