Ports of Prosperity

Texas’ top trade districts — Houston,  Laredo and El Paso — are rebounding well from the national recession and witnessing huge increases in the value of trade passing through their ports this year.

The Laredo customs district — which also includes Brownsville, Del Rio, Eagle Pass, the Edinburg airport, Hidalgo, Progreso, Rio Grande City and Roma — remains a powerhouse: It currently ranks sixth nationally, despite this year’s uptick in violence in the Mexican state of Tamaulipas, just across the border. The El Paso trade district — which includes El Paso; Fabens; Presidio; the Albuquerque airport; Columbus; and Santa Teresa, N.M. — ranks 15th nationally. The Houston trade district ranks fourth nationally, behind only Los Angeles, New York and Detroit.

Last year, Laredo and El Paso dipped to their lowest trade levels in decades, but so did the rest of the country’s trade districts, according to Florida-based WorldCity, a media and data clearinghouse that ranks trade data by import, export and country of origin. Despite the downturn, Texas’ inland ports fared far better than most. Laredo dipped to $146.85 billion, down 16 percent from $174.68 billion in 2008. (To put that amount in context, the state of Texas’ biennial operating budget is about $182 billion.) El Paso dipped to $50.8 billon, down 6.4 percent from 2008. Both ports lost less business than the national average, which declined 23 percent in 2009.

Traffic through both land ports bounced back strong in the first months of this year. Through May, the El Paso port had already seen $27.7 billion in trade, compared to $18.9 billion during the same period last year — a 47 percent increase.

Laredo saw $73.4 billion in trade during the first five months of the year, compared to 55.1 billion in 2009 — an increase of 33 percent. Houston posted a 34 percent increase, with about $83.9 billion moving through its ports, up from $62.5 billion through May of last year.

The gains have come despite the explosion of drug-related unrest in Mexican border towns, where much of the trade passes through or originates. Commercial traffic has continued unabated, despite substantial drop-offs in bridge crossings for noncommercial purposes, presumably because of safety concerns. The Laredo International Bridge System, for instance, witnessed an average monthly decline in non-commercial vehicle traffic of 5.6 percent, or about 22,840 vehicles, from January through May 2010. Pedestrian traffic fell by about 5.1 percent monthly, totaling about 16,840 fewer crossings. The decline follows a trend that has been steady since 2003, says City Manager Carlos Villarreal.

The outlook for commercial trade, however, appears bright, says WorldCity Executive Director Ken Roberts. “The El Paso Customs District is one of a handful, one of two or three, that is growing at record pace this year,” he says.  

Though trade districts encompass multiple metropolitan areas, individual municipalities are charged with maintaining and operating their international bridges — and their budgets rely on local fees paid to cross the bridge. Even with the potential for competition between two or more ports within one district, Roberts says, Texas could also enjoy the current peaceful coexistence for years to come. “I think the pie is going to get bigger because Mexico’s trade will continue to grow for a number of reasons,” he says.

One of those reasons is the strength of the Mexican economy, which in 2009 was ranked 14th in the world by the World Bank and the International Monetary Fund. As trade routes become clogged or transport costs increase, Roberts says some foreign markets could consider moving at least some of their operations to Latin America.

“To some extent you might see some Asian manufacturing move back into Mexico and Central America if the transportation costs become significant enough,” he says. China is second, behind Canada, in total trade with the U.S., with $162.2 billion worth of goods moving between the two countries from January to May; Mexico was third at $153.9 billion.

El Paso County also plans to build what could be the largest inland international port in the U.S., with more than 100 acres of land dedicated to the project. It will directly connect the Texas town of Tornillo — less than 30 miles east of El Paso's city limits — and Guadalupe, just east of Juárez. The federal government has spent or allocated about $96 million for the project, according to figures from the office of U.S. Rep. Ciro Rodriguez, whose 20-county district ends just west of the El Paso County boundary. The governments of the U.S. and Mexico, his office says, have also undertaken the arduous task of applying for the Presidential Permit from the U.S. State Department, which is required for construction of the port.

Juárez Mayor Jose Reyes Ferriz said on Monday that while many retail and service shops in his city have closed, maquilas, the factories that dominate the city’s industrial sectors, remain strong. About 100 of the current Fortune 500 companies, he added, have a presence in Juárez.

Meanwhile, Laredo has added more commercial lanes at its World Trade Bridge, the busiest of its ports, though estimates reflect the port operates only at about 35 percent capacity. Asked if the El Paso project could be a threat, Villarreal says the city’s ideal location would prevent any loss of business.

“Laredo happens to be geographically perfectly located,” Villarreal says, “and mere construction of a bridge does not move geographic location — simple as that.”

Roberts agrees, saying the computer industry has spurred the growth in El Paso. Computer trade has increased 80 percent in the El Paso trade district, accounting for about 85 percent of the district’s trade with Mexico through May.