2015 Hampton Roads Maritime & International Trade Guide by Virginia Business

2015 HAMPTON ROADS

ANNIVERSARY

& International Trade Guide

Looking ahead Port plans for the future

INSIDE: Growing capacity at the port Break and break-bulk cargo Construction of the Elizabeth River Tunnels Building the next generation of port workers

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A note from the publisher

Investing in the port’s future

ANNIVERSARY

2015 HAMPTON ROADS

& International Trade Guide A PUBLICATION OF VIRGINIA BUSINESS MAGAZINE

www.VirginiaBusiness.com

President & Publisher Bernard A. Niemeier Editor Robert C. Powell III Managing Editor Paula C. Squires Special Projects Editor Jessica Sabbath Special Projects Asst. Editor Veronica Garabelli Contributing Writers Mike Coleman Beth Cooper Richard Foster Joan Tupponce Art Director Adrienne R. Watson Contributing Photographer Mark Rhodes

The Port of Virginia continues to handle record levels of cargo and is now doing so from a stronger financial position. Virginia Port Authority Executive Director John Reinhart has made great strides in improving the port’s bottom line during his first year leading the port. This should give the port better resources to invest in itself. Global trade predictions show the number of containers moving through the port’s marine terminals is likely to continue to surge over the next few decades. Ocean carriers are attracted to Virginia’s deep channels and strategic rail connections to the Midwest. However, these volumes are taxing the port’s terminals, with congestion causing major delays for motor carriers servicing the port. With its finances in order and port on the brink of major growth, now is the time for Virginia’s maritime community to come together and invest in expanding its capacity. We invite you to use the 2015 Hampton Roads Maritime and International Trade Guide to learn more about Virginia’s maritime industries. It is a valuable reference source on major companies providing services to the port community. This guide includes information from the Virginia Port Authority, the Virginia Maritime Association and the Hampton Roads Economic Development Alliance. We thank them for their assistance. — Bernie Niemeier

CONTENTS News and features 4 Port plans for the future

by Jessica Sabbath

11 News roundup

Production Manager Kevin L. Dick

by Jessica Sabbath

Circulation Manager Karen Chenault

14 Break and break-

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bulk cargoes offer opportunities

17 Elizabeth River

Tunnels project to alleviate congestion

by Beth Cooper

20 Creating a mega

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32 New CEO to take over at Norfolk Southern by Jessica Sabbath

32 Norfolk airport

continues to renovate and refurbish by Jessica Sabbath

33 Relieving congestion for motor carriers by Jessica Sabbath

34 FTZs can help reduce exporting costs

by Richard Foster

24 Building the next generation of workers

by Veronica Garabelli VIRGINIA BUSINESS PUBLICATIONS LLC

by Jessica Sabbath

by Joan Tupponce

region

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31 Exporting resources

27 2015 forecast for ocean shipping

Commentary by Mike Coleman, CV International Group

Cover photo courtesy Port of Virginia

by Jessica Sabbath

References 28 30 32 34 35 36

Port stats 2014 Trade overview Air cargo/passengers Foreign Trade Zone #20 Maritime lawyers International firms

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COVER STORY:

Looking ahead With finances in order, port plans for the future by Jessica Sabbath ith cargo containers stacked five high, the Port of Virginia’s facilities are being maxed out with the influx of record cargo volumes moving through its marine terminals. “Today at 1.4 million containers [per year], we’re using 90 percent of our capacity, so we’re above optimum,” John Reinhart, CEO and executive director of the Virginia Port Authority, told a group of maritime community executives gathered in Norfolk for his annual State of the Port address in March. “If you take a very conservative flow of the cargo, we will be over 2 million containers in 2024. That’s on a conservative growth plan, so we need to match that with [investment in our] facilities.” And the Port of Virginia appears poised to continue that growth well

W 4

into the future. Virginia’s naturally deep harbor already is attracting Post-Panamax vessels that can come in and out of the port fully loaded. The port’s terminals could see even more of these ships after the expansion of the Panama Canal is completed in early 2016. Service from two Class 1 railroads also is making Virginia an ideal place to unload cargo headed to the Midwest. “The port’s going to have to expand,” says John Milliken, chairman of the Virginia Port Authority Board of Commissioners. “In round numbers, we think by the 2040s we’re going to need to have the capacity to handle 7 million TEUs [20-foot equivalent units]. That’s almost triple what we’re doing now.” Port officials say that to handle the influx of cargo, the port community will need to work together with

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the state and federal governments to make the necessary investments to accommodate current and future growth. “We are operating at, near or above our capacity,” Reinhart said during his State of the Port address. “If we want to grow the port there are certain things we need to do as a community, as a port authority, as a commonwealth.” Turning a profit A better balance sheet should allow the port to further reinvest in itself. Reinhart took over leadership of the port in February 2014 at a time when port officials were touting record cargo volumes but losing millions at the same time. When Reinhart arrived, the port had posted six years of operating losses totaling $102.4 million. The port’s bottom line quickly improved after Reinhart came on

Photo courtesy Port of Virginia Photo credit

board. For the first eight months of fiscal year 2015 (or July 2014 through February 2015), total profit was $4.6 million, compared with a $16.6 million loss during the same period a year earlier. Milliken says the positive swing in financing is critical to the port’s financial future. “I think the first priority was to establish in the eyes of the larger worldwide maritime community that we are a financially stable port that they could rely on for the long term to do business with,” says Milliken. “Now we’ve got to grow the port, and we’re able to do that because our finances are better.” Milliken was one of five new commissioners appointed in 2014. Soon after Gov. Terry McAuliffe was inaugurated in 2014, he replaced almost half of the port board, citing the port’s poor financial performance.

“We’re pleased with the direction the port’s going,” says Virginia Transportation Secretary Aubrey Layne. “John and his team arrested the significant losses. We understand there are going to be ups and downs, but we think they are headed in the right direction.” Congestion at the terminals In many ways, the Virginia Port Authority, which runs the state’s marine terminals, has become a victim of its own success. Virginia’s terminals have seen more and more containers coming in and out of the port, including those aboard massive Post-Panamax vessels that bring a lot of volume all at once. In 2014, the port’s marine termi-

nals were handling an average of 1,228 rail moves each day and 2,378 truck moves per day. The port handled 2.4 million TEUs (with most containers measuring two TEUs) in calendar year 2014, an increase of 7.6 percent over 2013. When port officials tally the number of paid loads serviced at its terminals, the Port of Virginia grew faster than all other East Coast ports since the end of the Great Recession. The Port of Virginia’s volume of paid cargo grew 34 percent between fiscals years 2009 and 2014. During the same time period, Savannah’s traffic volume grew 27 percent, Charleston,

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

cover story The Port of Virginia is starting an appointment system for motor carriers at Norfolk International Terminals in June.

S.C.’s grew 24 percent and the Port of New York/New Jersey volume grew 15 percent. All this growth has created backups at the port’s marine facilities, leaving truckers waiting hours to drop off or pick up their loads. Ed O’Callaghan owns Audax Transportation, an agent of Century Express with 35 motor carriers who service marine terminals at the Port of Virginia. In 2013, his trucks could move an average of 3.9 containers per day at the port’s terminals. That dropped to two containers last year and 1.4 in the first seven weeks of 2015. “What frustrates the trucking companies and the dispatchers the most is the congestion is unpredictable on what day or what terminal will have the backup,” he says. Earlier this year, congestion problems were compounded when the Port of Virginia received cargo that had been diverted from the West Coast during labor disputes, and a series of winter storms shut the port down for four days in February. But port officials cite a lack of planning for the long-term congestion issues. Many contend the previous administration was too distracted to invest properly in the port when the state received unsolicited bids in 6

2012 to privatize the port’s operations. That was the second round of private bids port leadership had to consider in three years. “[The former state leaders] were being pushed by the ill-conceived thought that we would be better off as a private port than a state-run port,” says Frank Borum, president of the Tidewater Motor Truck Association. “The state procrastinated in trying to make a decision whether to change operating arms of the port or to maintain the current situation, and I think it hampered the current situation quite a bit.” O’Callaghan is among a group of motor carriers meeting withTop theloader? VPA’s board of commissioners to consider ways to relieve the terminal congestion. “Our voices are starting to be heard, but it’s imperative that they get on track right away,” says O’Callaghan. “Congestion is not only causing frustration, it’s causing revenue loss.” Short-term solutions Port officials are undertaking a variety of measures to mitigate congestion. Those measures range from equipment purchases to plans to remove empty containers left

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at the port that get in the way of operations. Equipment purchases include new yard hustlers in its rail operations, top loaders and 400 truck chassis that are being added to the terminals. The port has implemented a program to encourage ocean carriers to remove empty containers on the port’s terminals. In addition, the port has expanded its operating hours to handle the increased volume and is paying not only the overtime for the port employees but also for the U.S. Customs and Border Protection employees required to work extra hours. In the fall of 2014, the Port of Virginia spent $7 million to reopen its Portsmouth Marine Terminal (PMT) to container traffic. PMT had been closed to container traffic since 2011, after the VPA began its lease of what was then APM Terminals in Portsmouth (now known as VIG). The port continues to move equipment over to PMT to handle ships calling there. The port also is planning to start an appointment system for trucks at the Norfolk International Terminals (NIT) this June. The rollout will Photos courtesy Port of Virginia

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cover story Major capital requirements Ultimately, major investment is needed to grow the port and its capacity. “On a conservative basis, in the next 10 years, capital requirements will Reinhart approach $1.54 billion [not including] the cost of expansion of VIG,” Reinhart said at his annual address. “$2 billion is what will be needed to support the growth that’s coming into the Port of Virginia.” That number includes the modernization of the NIT and the deepening of the Norfolk channel to 55 feet and the Southern Branch of the Elizabeth River to 45 feet. “This is where we start leaving our competition behind,” says Art Moye, executive vice president of the Virginia Maritime Association.“We have a green light [from the U.S. Army Corps of Engineers.] It would take two decades for any competition to catch up.” (For more information on

that project, see page 13). But the port’s two major expansion opportunities are in Portsmouth. The port is five years into a 20-year lease of VIG, which can currently handle 1 million TEUs annually. The terminal has expansion room to be doubled. Last year, APM Terminals sold its state-of-the-art terminal to a partnership including infrastructure investment firm Alinda Capital Partners and Universities Superannuation Scheme Ltd., a pension fund based in the United Kingdom. The port commissioners have begun discussions with VIG’s new owners about the expansion, which is expected to cost [an estimated $350 million]. Milliken “We’ve had several rounds of discussions with the new owners about VIG 2,” says Milliken. “We need their ‘ok’ to do that, and we’d be interested in some addi-

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be slow, says Joe Harris, spokesman for the Port of Virginia. “The idea is to create consistency in the flow of traffic through the terminal, so every hour you know you’re going to have ‘X’ number of trucks at the gate.” In the next two years, a couple of projects should improve efficiencies at the port. By June, the port hopes to complete the leveling and paving of five acres at Virginia International Gateway that will be designated for rail containers. “It reduces the stack density [of containers], and it ensures there aren’t two rail boxes on top of yours,” says Harris. “It will add to the efficiency of the terminals.” Another major project is the creation of a new intermodal gate at Norfolk International Terminals. This project will replace the existing truck gates with a 22-lane, semi-automated North Gate Complex. This should speed the entry of trucks into the terminals. The VPA received a $15 million TIGER (Transportation Investment Generating Economic Recovery) grant from the U.S. Department of Transportation to cover about half the cost of the project. The VPA is paying for the rest. The port hopes to break ground this summer on the project, which is expected to take about 16 months to complete. The North Gate Complex will tie into the Interstate 564 connector, which will provide a high-speed highway connection from I-564 to Norfolk International Terminals and the Norfolk Naval Station. This will keep trucks off of Hampton Boulevard and improve access to the terminals. Construction on the $169 million project is expected to begin this fall. The port and maritime community continue to try to work together to come up with other solutions. In the fall, port officials and representatives of the Virginia Maritime Association, which represents more than 400 companies involved in Virginia’s maritime industry, met in a “Port Productivity Summit” to brainstorm together.

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cover story 64 Express brings container traffic between Norfolk and the Port of Richmond three times a week.

tional investment from them and to see whether we can extend the lease.” The VPA has leased VIG for five years now. To make a major investment, the port would want to extend the 20-year lease to ensure investment in the facility makes sense. “These conversations are progressing

well,” says Milliken. “That’s the important longer term next step.” The VPA also is looking at extending its current five-year lease of the Port of Richmond and providing some additional investment in that facility. “It’s a very attractive alternative to trucking up [I-64], and a lot of our customers see that as having some

potential,” says Milliken. Currently a barge service travels between Hampton Roads and Richmond three times a week, handling about 4 percent of the port’s cargo. Further out on the horizon is the construction of Craney Island, which already has federal approval. The future terminal would double the entire port’s container capacity when fully built out. Construction of the land mass has begun, with about eight years to go before completion. Construction of the terminal would take about two to three years. “It’s time to invest and continue the reinvention that we started last February,” Reinhart said when he concluded his address to the maritime community in March. “We’re stewards of the tomorrow. We’re doing the best we can. We fail you some days, but I guarantee you we are moving in the right direction, and we’ll get there. With your help and your support we will become the preferred port on the East Coast of the United States.”

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ROUNDUP:

News from and around the port Stories by Jessica Sabbath

Port has $60 billion impact, study says

of The Port of Virginia and further he Port of Virginia contributed $60.3 underscore why a healthy port is billion to Virginia’s economy in fiscal critical to so many sectors of the year 2013, according to a study by economy as we go forward,” John F. the College of William & Mary’s Mason Reinhart, the Virginia Port Authority’s School of Business. CEO and executive director, said in a The study, previously done for fiscal statement. year 2006, shows the port’s impact growing The study found that the port’s along with its increased cargo volume. contribution to gross state product The 36-page study considered the (GSP) was $30.5 billion, equal to port’s direct and indirect impact during its about 6.8 percent of the estimated 2013 fiscal year, which ran from July 1, 2012 $448.8 billion total GSP in fiscal year to June 30, 2013. The economic impact of the Port of Virginia 2013. From 2006 to 2013, the study found: grew 47 percent between 2006 and 2013. The study considered how the • The port’s economic impact in the port affects Virginia’s economy in commonwealth grew 47 percent three ways: the transportation of to $60.3 billion in 2013, compared export and import cargo; the export of goods made in Virwith $41.1 billion in fiscal year 2006; • Port-related employment grew 9 percent to 374,646 ginia; and the processing and distribution of imports retained jobs, up from 343,001 jobs in 2006. The number of in the commonwealth. The study took into account only the activity of Virginia’s jobs accounted for 9.4 percent of Virginia’s resident state-owned facilities. workforce; The Virginia Maritime Association is in the early stages of • Tax collections from port activity grew 17 percent to $1.4 billion from $1.2 billion in 2006 (including corpo- commissioning a study that would take into account the ecorate and individual taxes, general sales taxes and local nomic impact of Virginia’s entire port industry. For example, there are about 1,000 ship calls each year made to terminals property taxes); • Employee compensation grew 30 percent to $17.5 bil- in Hampton Roads that are not run through state-owned facilities. The study could help lawmakers better understand the lion from $13.5 billion. “The findings of this work emphasize the importance entire impact of the region’s maritime community.

Shipbuilding and repair still going strong

espite the looming threat of sequestration, the Hampton Roads’ shipbuilding and ship repair industries have fared well under the current federal budget. “Our workload has been very steady and very full,” says Bill Crow, president of the Virginia Ship Repair Association. “This is a robust ship repair year.” Congress and the president reached agreement on a spending plan for fiscal year 2015 in late December. The budget lasts through Oct. 1. The current spending plan maintains a fleet of 11 aircraft carriers, which is good news for the region. Newport News-based Huntington Ingalls Industries Inc. is the country’s only builder of nuclear-powered aircraft carriers. At press time, Huntington Ingalls was expected in early April to receive a contract to build the second aircraft carrier in the Virginia-class fleet, the USS John F. Kennedy. The shipbuilder is scheduled to deliver the first in that class, the USS Gerald R. Ford, in 2016.

Top: Photo courtesy Port of Virginia Bottom: Photo courtesy Huntington Ingalls Industries

who says the Navy even added work to take care of a backlog of maintenance issues. The Virginia Ship Repair Association is working with its federal partners to avoid potential cuts under sequestration in 2016. Under sequestration, federal defense cuts will total $50 billion in 2016 unless Congress and the White House can agree on ways to keep the federal budget capped. If the Defense Department faced those required cuts, the Navy could Huntington Ingalls is the sole plans toface a tight budget. BAE Industries Systems Ship Repair acquire Norfolkbuilder of nuclear-powered “We are basedaircraft Marinecarriers. Hydraulics International Inc.the strength behind the fleet,” Crow says of ship repairers in The federal budget included prep- the region. “And yes, the concern arations for the mid-life overhaul of the is that our ship repairers need to put USS George Washington and the pur- food on the table, but most important chase of two Virginia-class submarines is the readiness of the U.S. Navy and their ships. in 2015. “These people have an enorSo far, federal budgets also have kept intact operations and mainte- mous amount of pride in what they nance for Navy ships, the key driver for do. They keep these ships maintained the region’s ship repair industry. “All of and at maximum readiness, and they Navy maintenance has been funded to are modernized throughout their life slightly over 100 percent,” says Crow, span.” 2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

roundup

Offshore wind research project to provide valuable lessons

Dominion Virginia Power is leading a team that will design, install and test two 6-megawatt wind turbines.

ominion Virginia Power is working on parallel projects to make offshore wind power a reality off of Virginia’s coast. The Richmond-based power company is leading a team that will design, install and operate two 6-megawatt wind turbines that will be located 24 nautical miles off the coast of Virginia Beach. The Virginia Offshore Wind Technology Advancement Project (VOWTAP) should provide valuable lessons and experience for Dominion’s potential wind energy commercial development adjacent to the research area. In fall 2013, Dominion was awarded the lease of about 113,000 acres off the coast of Virginia for commercial wind energy development. “We will gain experience on a smaller scale with the research project and then apply those lessons to a larger-scale project to derive efficiencies and economies that we can pass on to our customers,” says Robert Hare, Dominion’s wind energy development manager. Those lessons include everything from the permitting and approval process to the installation and operation of the turbines. The research also should help the company determine if offshore wind can be produced 12

economically. “If we can find a way to do it more efficiently with two [turbines] then when we have 100, we can pass those efficiencies on,” Hare says. VOWTAP reached a major milestone in March when Virginia was awarded a federal wind energy lease for the area where the two turbines will be installed. Virginia became the first state in the nation to receive such a lease from the United States Bureau of Ocean Energy Management (BOEM). Virginia’s Department of Mines, Minerals and Energy (DMME) has designated Dominion as the lease operator on the project. The energy company is leading the project with a team that includes DMME, wind turbine manufacturer Alstom Power, engineering firm KBR, Keystone Engineering, the National Renewable Energy Laboratory, the Virginia Tech Advanced Research Institute, Newport News Shipbuilding and environmental consultant Tetra Tech. The team’s current focus is obtaining the permits and approvals required for the project. “With a large complicated project there are many development processes that [are required,]” says Hare. The team also is conducting a variety of engineering projects that will

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help it prepare for its regulatory filing with the State Corporation Commission later this year. In that filing Dominion will include the estimated cost of the project. The company was one of three last year to receive a competitive award of up to $47 million from the Department of Energy to go toward design and construction of the turbines. Dominion already had received $4 million in federal funds to undertake initial engineering, design and permitting processes. The project is expected to be built in 2017. Construction would include the installation of two foundations, placement of the turbines, installation of the interconnection cables between the turbines and the installation of the distribution cable, which will run underneath the dunes to the shore in Camp Pendleton. In addition to the permitting and regulatory approval process, Dominion currently is selecting an engineering and construction contractor that would finish the design and installation of the turbines. The awardee will be announced before Dominion’s SCC filing. After the project, Dominion will provide select data to external stakeholders as well as apply the results to its offshore wind development. If all goes smoothly, it could be about a decade before construction of the first phase of commercial offshore wind development. “To complete the appropriate permitting and regulatory approval processes, we have identified in our Integrated Resource Plan that the first block of commercial offshore wind turbines could be operational by 2025,” says Hare. Maritime executives in Hampton Roads believe the development of offshore wind power could be a major economic boon to the region. Economic development officials say Hampton Roads could be a key player in the supply chain of offshore wind development, from the manufacturing of wind turbines to the building and maintaining the massive ships required to transport the turbines.

File photo

55’ in 5: VMA pushes efforts to deepen channel

orts up and down the East Coast are racing to match the Port of Hampton Roads’ depth advantage. Meanwhile, the Virginia maritime community is pushing to go even deeper. The Virginia Maritime Association (VMA) has launched a campaign to dredge the Norfolk channel from 50 feet to 55 feet and the Southern Branch of the Elizabeth River from 40 feet to 45 feet. The “55’ in 5” campaign aims to have the dredging project begin by 2020. Deepening the waterways would provide major benefits to the port. Today’s largest ships require a 50-foot depth when fully loaded, and ships are likely only to get bigger. Today, Virginia is the only port on the East Coast capable of handling these massive ships when fully laden. (The Port of Baltimore has a 50-foot depth at one berth.)

Vi Virginia Maritime Association is the “V “Voice of the Port” W have grown to represent more than 400 We companies that employ over 70,000 Virginians serving as the premier business organization to enhance competitiveness and promote commerce through the ports of Virginia.

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“Increasingly, ships are requiring every bit of that 50 feet,” says David White, vice president of the Virginia Maritime Association. “[These large ships] have to come in with the tide. As we see a greater percentage requiring it, scheduling becomes an issue.”

In addition, most ships exporting coal require 50-foot depths. “It’s important to have access to the global market,” says White. The U.S. Army Corps of Engineers first approved the project in 1986, and the state and Corps are splitting the cost of a $6 million re-evaluation study needed. That study, currently being conducted, will take three years to complete. The next step is to obtain a $2 million commitment (divided evenly between the state and federal government) for the project design and engineering. The VMA’s goal is to begin phased construction by 2020. The cost of the project is expected to be $244 million. “The additional capacity gives us growth opportunities,” says Art Moye, executive vice president of the VMA. “This is where we start leaving our competition behind.”

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2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

BREAKBULK

Outside the box Break-bulk and bulk cargo are key to the region’s economy by Joan Tupponce

ontainerized cargo is a familiar site on the roads of Hampton Roads, with trucks bringing shipping containers to and from the marine terminals of the state-owned Port of Virginia. Less visible are products coming in and out of the region outside of containers, such as grain and wood pellets. These break and break-bulk cargos are an important but less wellknown part of the economy of the Port of Hampton Roads, which encompasses both the Port of Virginia and privately owned marine terminals. “So much of it is unseen and may be even unknown by most of the public,” says Virginia Maritime Association executive vice president, Art Moye, of the cargo going in and out of Hampton Roads. Last year, the Port of Virginia recorded a record year with an increase in containerized cargo of 7.6 percent over 2013. But containerized cargo is just one type of cargo shipped in and out of Virginia waterways. “There are just under 3,000 commercial ships that come in and out of the port every year,” says David Host, chairman and CEO of Norfolk-based ship agents T. Parker Host Inc. The containerized cargo moving through the Port of Virginia accounts for almost 2,000 of those each year, meaning about one-third of ships coming to and from the region are transporting non-containerized cargo. Both bulk and break-bulk cargo historically have been important to the Port of Hampton Roads. Bulk cargo includes items such as coal and agricultural products. Break-bulk cargo ranges from rolls of paper to machinery. “They enhance the performance of the port, and they provide revenues, jobs and taxes,” Moye says of the two types of cargo. “Break-bulk commodities are very competitive.” While The Port of Virginia does 14

Break and break-bulk cargo, such as wood pellets, are an important part of the economy in Hampton Roads.

handle break-bulk cargo at its Newport News Marine Terminal, that type of cargo isn’t currently as large a focus for the state-owned port. It is, however, a potential growth area. “We know there is business to be had in that area,” says Joe Harris, spokesman for the Port of Virginia. “Break bulk is a dynamic cargo niche where they are looking for the fastest and most economical option.” Presently, private terminals in the Port of Hampton Roads handle most of the bulk and break-bulk cargo that is exported and imported. There are more than 50 private terminals that “bring in cargos either for their own uses or for distribution to other manufacturers,” Host says. “We are the largest port on the East Coast if you are measuring in terms of total tons of all commodities including containers.” The cargo traffic in the state benefits from two class 1 railroads — Norfolk Southern and CSX — that transport goods to the port as well as deep 50-foot channels, the deepest shipping channels on the East Coast. The lack of “deep water warehouse availability creates many new

A publication of Virginia Business magazine

opportunities for growth in developing new terminals on former industrial sites along the Southern branch of the Elizabeth River where most of the bulk and break-bulk cargos come in,” says Douglas Higginbotham, president of the maritime consulting firm Tidewater Global LLC in Chesapeake. “We want to continue to develop all the available areas along the Southern branch to be able to handle an increased request for products that are imported and exported.” T. Parker Host oversees much of the coal and other commodities shipped by bulk in and out of Virginia waterways. “Coal has been a staple here since 1880 both on the Newport News side and in Norfolk,” he says. “Coal movement is cyclical. It depends on world conditions.” Historically most of the metallurgical coal, used in making steel, is exported to Europe and Brazil. However there are potential for exports of coal to India. “Coal has always been a significant commodity in Hampton Roads, and I hope it always will be,” Host says. One of the newest commodities to be exported are wood pellets. “They go to Europe, and they are used in utilities for burning,” Host says. Bulk imports also add to the state’s economy. Imports include fertilizers and other minerals such as pumice stone from Greece. “That’s used in the construction industry,” Host says. “In another year you might see the import of cement coming into the port. The U.S. produces about 80 million tons of cement but when demand exceeds that it has to be imported. Also with the closure of coal-powered plants, we will not have fly ash that we need for road building and that will have to be imported.” Agricultural exports, including forestry products, reached a new alltime high of more than $3.35 billion in File photo

2014, making Virginia the second largest agricultural exporter on the East Coast. This is the fourth consecutive year that Virginia has set a new record level for agricultural exports. “It’s been a great public-private partnership,” says the state’s Secretary of Agriculture and Forestry, Todd Haymore. “We have an outstanding port system and a powerful infrastructure to move products.” The state’s three top export markets in 2014 were China, Canada and Switzerland. The most dramatic increase was China, which went from approximately $140 million to $160 million in 2009-2010 to $691 million last year. “There has been a lot of effort and energy in growing the China market,” says Haymore. The state has additionally seen increases in exports to Mexico and the United Kingdom. Virginia has dedicated trade representatives in all of the top export markets as well as in India and Russia. It also has a satellite office in Costa Rica. “We’ve gone from

one to 10 trade offices,” Haymore says. “The state has spent roughly $3 million on that. We know there have been [about] $750 million in new export deals facilitated by dialogue started from our initiatives, trade missions and trade representatives. It’s something we are very proud of and want to build on.” The goal is to grow exports even further. Regions being targeted include Southeast Asia (Vietnam, Malaysia, Singapore and the Philippines) and the Mediterranean and Northern Africa (Turkey, Morocco, Egypt, Tunisia, Saudi Arabia, Kuwait and Qatar). Last year the state exported more than $300 million to Southeast Asia and more than $340 million in agricultural and forestry products to the Mediterranean and Northern Africa. “That is a large, lucrative area,” Haymore says. “But it is a little more volatile and politically sensitive.” The top agricultural and forestry product exports include everything

from soybeans, pork and unmanufactured leaf tobacco to corn, poultry and processed foods and beverages including wine. “Exports are incredibly important for the local economy,” says Haymore. The United States Department of Agriculture’s 2014 Effects of Trade on the U.S. Economy study says that every $1 of U.S. exports stimulates a $1.22 return to in-state support activities such as processing and shipping. Looking at the future, the worldwide need for products and commodities will continue to grow. “Depending on what study you look at more than 80 percent of the world’s population lives outside of the U.S. Some studies show it as high as 90 percent,” Haymore says. “That’s a huge number of people we can service with our products.” And the increase in agricultural exports should only mean more opportunities for the Port of Hampton Roads.

YOUR MID-ATLANTIC GATEWAY FOR BREAKBULK TRANSLOADING Specializes in Handling: Rubber • Wood Products • Machinery • Project Cargo Lambert’s Point Docks, Inc. (LPD) in Norfolk, Virginia, provides performance-driven import and export transloading services, featuring the dual conveniences of strategic location and excellent connections. Performance-driven transloading is safe, efficient and focused on your cargo handling requirements. Situated on one of the U.S. East Coast's finest natural, deepwater harbors, LPD is ideally positioned to serve world markets. The docks are rail-served and located within two miles of the interstate highway system, affording you the power of choice in transportation to or from the nation's industrial business centers. Lambert’s Point Docks has served shippers, manufacturers and brokers for more than 65 years. It is among Virginia's largest breakbulk marine terminals. LPD is a full service facility, encompassing 117 acres with 1.2 million square feet of covered warehouse storage space and outdoor acreage.

For more information, contact: Corine Barbour, General Superintendent Ph: (757) 446-1212 Fax: (757) 446-1253 Corine.barbour@nscorp.com 2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

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TUNNEL

An engineering marvel Elizabeth River Tunnels project to alleviate congested tunnels Construction of the new tube of the Midtown Tunnel requires putting together 11, 16,000-ton concrete elements. (Inset: concrete element being towed from Sparrows Point Dock)

by Beth Cooper

nhanced productivity, accessibility and connectivity are on tap for Hampton Roads commuters and businesses as the Elizabeth River Tunnels Project takes shape along the Norfolk and Portsmouth waterfronts. The massive undertaking includes construction of a new twolane Midtown Tunnel, the rehab of the existing Midtown Tunnel and

Photos by Trevor Wrayton and D. Allen Covey, courtesy Virginia Department of Transportation

the two tubes of the Downtown Tunnel and extension of the U.S. 58 Martin Luther King Jr. Freeway to Interstate 264. Scheduled to open in December 2016, the new Midtown Tunnel is the centerpiece of the $2.1 billion project. The state formed a publicprivate partnership â&#x20AC;&#x201D; one of the largest in the U.S. â&#x20AC;&#x201D; with Elizabeth River Crossings (ERC) to complete

the project. The Virginia Department of Transportation owns and oversees the project, while ERC will operate and maintain the infrastructure until 2070. ERC is a joint venture between Skanska Infrastructure Development of Washington, DC and Macquarie Group and Real Assets of Sydney, Australia, which was formed to design, build, main-

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

tunnel Most of the technology used in construction of the tunnel was designed in Europe, according to the project’s construction director, Dallas Marlow (left). ERC CEO Greg Woodsmall says the tunnel’s concrete structure is superior to the existing tubes.

tain and operate the 51 highway miles of infrastructure included in the tunnels project. Carrying approximately 30,000 vehicles per day, including about 3,000 per hour during rush hour commutes, the nearly 53-year-old Midtown Tunnel has the dubious distinction of being the heaviest traveled two-lane road east of the Mississippi. Add traffic going through the Downtown Tunnel, and more than 120,000 drivers use the tubes each day to cross the Elizabeth River, resulting in congestion, increased fuel usage and lost time on the job. According to the ERC, traffic congestion at the tunnels wastes more than 17 million gallons of fuel annually and three lost workdays per 18

driver per year. With the improved roadways, Hampton Roads could see a $170 million to $254 million annual increase in gross regional productivity. In addition, connectivity between the cities would lead to greater military readiness, additional access to trucks traveling to and from the Port of Virginia and reduced commute times. Motorists are expected to see reduced commutes by 30 minutes and save $66.3 million in annual fuel costs. From a safety standpoint, the new tunnel will eliminate the harrowing bi-directional traffic that motorists have put up with for years, with traffic in the new tunnel going east into Norfolk, while traffic traveling west into Portsmouth will use the existing Midtown Tunnel.

A publication of Virginia Business magazine

That will also increase capacity for emergency response vehicles as well as evacuation readiness. Designed to stand the weight of a Nimitz-class aircraft carrier, the new tunnel is only the second in the U.S. to be built entirely of concrete as opposed to a traditional steelshell. “The technology today is far superior to what was used in the existing tubes,” says Greg Woodsmall, ERC’s chief executive officer. With the concrete, the structure is easier to seal and less likely to develop leaks. At mid river, the bottom of the element reaches 95 feet below surface, while the road deck is 90 feet below, and the top of the tube is 65 feet below surface. Positioning the tunnel below the river’s surface protects it and prevents it from interfering with ship traffic. The tunnel is actually 11, 16,000-ton, rectangular, sealed elements, each the size of a football field. Since no dry dock in Hampton Roads large enough to meet the construction schedule was available, the elements were built at Sparrows Point, Md., and individually floated down the Chesapeake Bay to the Elizabeth River. About 1.2 million cubic yards of material in the river was dredged to provide a trench for the elements. In a process that takes about 12 hours, a special barge submerges each element which is then connected to the adjacent tube by a hydraulic arm, forming a watertight seal. “Most of the technology (for the tunnel construction) was developed in Europe,” notes Dallas Marlow, the project’s construction director. “Several European tunnel experts came over here to consult on the construction. It’s taken a tremendous amount of engineering technology and know-how. We couldn’t risk being wrong.” Six of the 29-foot tall elements have been connected, with the final five slated to be submersed by September. By October, construction workers should be able to walk from one end of the new mile-long tunnel to the other. Photo by Mark Rhodes

State-of-the-art features reflect input from local first responders and include a separate escape corridor, jet fans, a deluge system, fire sensors, fire alarms, extinguishers and hose connections, motorist aid phones, fireproofing and video monitoring. The new tunnel also boasts a 10-foot high drainage system designed to prevent flooding and protect one of the region’s major hurricane evacuation routes. “What we’ll have here is an island,” Marlow says. “All of Ghent will be under about two feet of water before we see water.” The need for that feature was driven home during Hurricane Sandy in 2012. “We almost lost the Midtown Tunnel,” Marlow notes. “The drainage system backs up at an elevation of 6 and one-half feet. The water got up to seven feet. Water was rushing in, and we were frantically pumping it out. Luckily the river backed off at the last minute.” The concrete used for the tubes and in the approaches to the tunnel was designed to last 120 years. “We ran over 100 test batches of concrete for the tunnel tubes to ensure that they would meet the specifications and workability requirements,” Marlow notes. Rehab work on the existing Midtown Tunnel will begin once the new tunnel opens, with ERC repairing leaks and tiles and installing a new ventilation system. Completion is scheduled for May 2018. The Downtown Tunnel is already getting a much needed overhaul, with a repaved road bed and new lights, ventilation and traffic control systems. Rehabbing the Midtown Tunnel and both tubes of the Downtown Tunnel is projected to cost about $120 million. Along with the new and rehabilitated tunnels, contractors are extending U.S. 58 Martin Luther King Freeway from London Boulevard to Interstate 264 with an interchange at High Street. The state purchased 88 parcels to extend and elevate the freeway, leading to the dislocation of about 60 homes. On the Norfolk side, the interchange Top: Photo courtesy Elizabeth River Crossings Bottom: Photo by Mark Rhodes

The Midtown Tunnel’s concrete elements were built in Sparrow Point, Md. and floated 220 miles to the Elizabeth River.

is being modified at Brambleton Avenue and Hampton Boulevard. And, while cranes and beams still dot the landscape, the project has already received accolades. Roads & Bridges magazine recently named it the No. 1 Road Project in North America for 2014. The trade publication, which honors the top 10 projects for successful navigation of challenges, the scope of the work and regional impact, cited ERC for both constructing a new tunnel, and taking on the rehabili-

tation of the existing tunnels and extending the Martin Luther King Freeway Extension with minimal disruption to traffic. Laurels aside, the ERC feels the eyes of millions of motorists, businesses and public officials watching as it works to deliver the project on time. “We’re held to a constant standard,” Marlow says. “We have key performance indexes we have to meet or maintain. We have a job to do, and we’re taking revolutionary risks.”

When construction is complete, the Midtown Tunnel will feature state-of-the-art features such as jet fans, a deluge system, fire sensors, fire alarms, extinguishers and motorist aid phones.

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

MEGAREGION

Creating synergy Business execs want to create a Richmond-Hampton Roads mega region

Williams Mullen Chairman and CEO Tom Frantz says creating a mega region will make it easier to attract corporate headquarters and foreign investment. by Richard Foster

t some point in the future, every Richmonder sporting those snappy RVA bumper stickers may be swapping them out for ROVA stickers – for Richmond to the Oceanfront. That is, if Thomas R. Frantz has his way. Chairman and CEO of Richmond-based law firm Williams Mullen, Frantz is also a volunteer member of the Hampton Roads Business Roundtable and is one of the prime movers behind an effort to market Richmond and Hampton Roads as a single “mega region.” “We’re trying to educate and weave the beginning of a discussion as to why we should move in this direction,” says Frantz, who has been frequently speaking on the topic to state and local business 20

groups. “We’re not advocating the consolidation of any government … [or] any services. … All we’re talking about is what amounts to a marketing strategy to market this region better to the world.” A little over a year ago the members of the Hampton Roads Business Roundtable and the Richmond Management Roundtable passed a joint resolution to explore an effort to combine the regions into a single Combined Statistical Area (CSA) or Metropolitan Statistical Area (MSA). Such a move could be done informally via cooperative marketing efforts or formally by applying to the U.S. Office of Management and Budget to join the two existing Richmond and Hampton Roads MSAs, Frantz says.

A publication of Virginia Business magazine

The combined region would stretch from the Richmond metro area into North Carolina and would include all of Hampton Roads. Separately, Richmond and Hampton Roads, rank 44th and 37th, respectively, in size among U.S. metropolitan areas, but together they’d be the 16th largest MSA, Frantz says, and that would translate into more advertising dollars, more foreign investment, more corporate headquarters looking at the region for relocations and more federal dollars for infrastructure improvements. The combined region would also hold about 40 percent of the Virginia General Assembly’s legislators. By boosting new economic development and trade, it would also lessen Virginia’s dependence Photo by Mark Rhodes

on federal defense spending, Frantz says. “It just makes sense from an economic development standpoint that the larger your MSA, the better you can compete on the national and the international scale,” says Bryan K. Stephens, president and CEO of the Hampton Roads Chamber of Commerce. The concept would package together the combined region’s greatest assets — including the Port of Virginia’s marine terminals, Richmond’s central location at the crossroads of interstates 64 and 95 and Richmond’s status as state capital. “The Port of Virginia is the key because it’s such a wonderful asset,” says Tayloe Negus, a partner with Aon Hewitt and a volunteer member of the Richmond Management Roundtable. Marketing a combined region would result in greater synergies with the Port of Richmond, which is oper-

ated by the Virginia Port Authority, which runs the state-owned terminals of the Port of Virginia. Negus could see the Richmond port becoming more like the Virginia Inland Port in Front Royal, attracting more distribution centers and advanced manufacturing operations. Increased volume at the Port of Virginia also would result in increased profits and tax dollars that could be reinvested in the region’s growth and infrastructure, Stephens says. The Richmond and Hampton Roads roundtables are discussing establishing an umbrella organization to take up the banner for a mega region. They’ve also identified key steps that would need to be taken to create a mega region and have appointed a joint task force to examine the feasibility. Those steps include widening Interstate 64 between Hampton Roads and Richmond; improving traffic flow on U.S. Route 460; deepening the Port of Vir-

ginia’s marine terminals to 55 feet (an effort already in progress); improving and increasing traffic between the Port of Virginia and the Port of Richmond; adding more high-speed rail connectivity; and increasing the number of available sites for largescale industrial development. Frantz also has called for increased cooperation and business ventures between health-care, medical research and biotech firms in Richmond and Hampton Roads, especially at the medical and research hub at Princess Anne Commons in Virginia Beach. “If we could connect the government, the crossroads and the port, everybody in that corridor is a winner,” says Frantz, “and we have a greater opportunity to be a logistics hub, a manufacturing hub and a health-care hub and diversify our economy and reduce the reliance on government and defense contracts.”

EXPAND YOUR INTERNATIONAL BUSINESS. Interested in developing overseas sales? Want to capitalize on your overseas growth ŽƉƉŽƌƚƵŶŝƟ ĞƐ͍ sĂůƵĂďůĞ ĐŽŶŶĞĐƟ ŽŶƐ ƚŚĂƚ ĐĂŶ ƚĂŬĞ ǇŽƵƌ ŝŶƚĞƌŶĂƟ ŽŶĂů ďƵƐŝŶĞƐƐ ƚŽ ƚŚĞ ŶĞǆƚ ůĞǀĞů ĂƌĞ ǁĂŝƟ ŶŐ ƚŽ ŚĂƉƉĞŶ͘ Ʃ ĞŶĚ ŝŶĨŽƌŵĂƟ ǀĞ ǁŽƌŬƐŚŽƉƐ͕ ŚĞĂƌ ĐŽŵƉĞůůŝŶŐ ƐƉĞĂŬĞƌƐ͕ ĂŶĚ walk away with new ideas that can put global trade to work for your business. zŽƵ ĐĂŶ ĚŽ ŝŶƚĞƌŶĂƟ ŽŶĂů ďƵƐŝŶĞƐƐ͕ ĞǀĞƌǇ ĚĂǇ͕ ĞǀĞƌǇǁŚĞƌĞ͘ tĞ ĐĂŶ ŚĞůƉ͘ >ĞĂƌŶ ŵŽƌĞ Ăƚ ƚŚŝƐ year’s Virginia Conference on World Trade. Virginia Conference on World Trade | November 4-5 Sheraton Norfolk Waterside, Norfolk, Virginia

Employment • Market Access • Investment •

VIRGINIA’S ECON [ THE PORT OF VIRGINIA’S ECONOMIC IMPACT ON THE COMMONWEALTH ]

$17.5 Billion State Wages

$1.2 Billion

Economic Development

9.4%

Virginia Workforce

374,000

Port-Related Jobs

$6.2 Million Incentives Annually

$620 Million

Investments Generated

• Commitment • Opportunity • Community

NOMIC ANCHOR Our commitment is to grow The Port of Virginia to support job creation, strong communities and help to build an economicallystrong Virginia. Today, more than 9% of the Commonwealth’s workforce is in port-related jobs and the port-related activity is responsible for more than $60 billion in total annual revenue to the Commonwealth. Come and OHDUQ PRUH DERXW 7KH 3RUW RI 9LUJLQLD DQG LWV EHQHÀWV DW SRUWRIYLUJLQLD FRP 600 World Trade Center, Norfolk,VA 23510 | 757.683.8000 | 800.446.8098 Source:The Fiscal Year 2013 Economic Impacts of The Port of Virginia, Raymond A. Mason School of Business, College of William & Mary

EDUCATION

Building the next generation of workers Hampton Roads’ maritime community working to fill skills gap

The shipbuiding and ship repair industries are facing a major work-force shortage. The industry is supporting many job-training programs to combat the problem, such as the Newport News Shipbuilding’s apprenticeship program. by Veronica Garabelli

or Donnie Mills, owner of Mills Marine & Ship Repair in Suffolk, it’s a struggle to find skilled laborers for his ship repair and manufacturing business. “A lot of the general labor people that we are seeing, a lot of them have never been in a shipyard before,” says Mills. Mills’ dilemma is not new in the ship repair and building industry, which is facing a major skills gap due to the retirement of baby boomers. According to William W. “Bill” Crow, president of the Virginia Ship Repair Association (VSRA), the industry expects to lose

more than 16,000 workers by 2020. The association represents more than 250 companies who are looking for ways to fix that problem and “make the age needle move in the right direction,” Crow says. It is one of many organizations in Hampton Roads offering educational resources in the maritime industry. One example is VSRA’s Pre-Hire Career Training Program, which was originally launched in 2010 by Newport News Shipbuilding (NNS) and the state’s community colleges. Through the initiative, companies partner with community colleges to offer training that will lead to

A publication of Virginia Business magazine

employment in an entry-level field in the ship repair and shipbuilding industry. Students pay the $250 tuition up front but are reimbursed if they are hired by one of the companies in the program. Last year, during its pilot run, the program offered coatings and marine electrical courses through Tidewater and Thomas Nelson community colleges, respectively. This summer, they will add marine welding and outside machinist classes, since those skills are in demand in the industry, says Barbara Washer, the association’s interim development coordinator. She says that Photos courtesy The Apprentice School

out of 29 students that participated in the program last year, 22 were offered positions with participating companies. VSRA also provides community colleges and technical schools in the state with the Technical School Welding Ship Skills Resource Handbook. The manual aims to help teachers at these institutions adapt their current curriculum for use in a shipyard environment and help them educate students on the opportunities available in the ship repair and shipbuilding industry. The association also is developing a similar curriculum for electrical students in Virginia. Another major educational force in the industry is the Newport News Apprentice School of Shipbuilding, run by NNS to strengthen its workforce of more than 23,000. NNS, a division of Huntington Ingalls Industries Inc., is the only builder of U.S. Navy aircraft carriers and one of two providers of U.S. Navy submarines. Overall, the school offers apprenticeships in 19 trades and eight optional advanced programs, where students can pursue an associate’s degree through Thomas Nelson or Tidewater community colleges on the Apprentice School’s dime. The school also has partnered with Old Dominion University in Norfolk to offer apprentices a bachelor’s degree in mechanical or electrical engineering. Overall, the school has articulation agreements with nine colleges and universities. Starting May 11, apprentices at the school will earn $16.51 hour and by the end of their apprenticeship they can earn $26 per hour. Those figures don’t include overtime, which can boost pay even more. However, the school remains competitive to get into. It has averaged 3,998 applications annually over the past eight years, with about 220 students starting at the beginning of each school each year. Prospective Apprentice School students can also look forward to new digs. In December 2013, the school

The Newport News Apprentice School of Shipbuilding offers apprenticeships in 19 trades and eight optional advanced programs.

opened a new 90,000-square-foot building in downtown Newport News, which tripled the school’s instructional space. The facilities include computer labs, video teleconferencing classrooms and a 600-seat gymnasium. But apprenticeships also are available at small employers, like Técnico Corp. The Chesapeakebased subcontractor’s customers include the U.S Navy and commercial shipping organizations. Its apprenticeship program offers training for shipfitters, welders, machinists, electricians, pipefitters, sheet metalists, and heating, air-conditioning and refrigeration (HVAC) mechanics. Like other apprenticeship programs, Técnico’s apprentices get paid while they earn. They learn skills on the job and take community college classes at night they can apply to their trade. Although Mills Marine & Ship Repair currently does not have an apprentice program, Mills says he’d like to develop one in the future. Terry Stead, corporate planner at Técnico, says the company wants to pass knowledge to the next generation through its apprenticeship program and develop its

future leaders. “It’s a win-win situation,” he says. Another maritime education institution in Hampton Roads is the Mid-Atlantic Maritime Academy (MAMA) in Norfolk. The academy, which provides vocational training for maritime professions, recently expanded its facility from 21,000 square feet to 35,000 adding conference rooms, video teleconferencing capabilities and space for an upcoming dynamic positioning course. Overall, MAMA offers about 80 courses, including classes on fire fighting and ship navigation and management. Old Dominion University’s Maritime Institute in Norfolk also is hoping to expand its offerings. The institute is working to offer students a master’s degree in Maritime Trade and Supply Chain Management. The new program would likely start in January 2016 — if it receives approval from the State Council of Higher Education for Virginia, says the institute’s executive director Wayne Talley. The institute currently has an undergraduate major in Maritime Trade and Supply Chain Management, where nearly 90 students are enrolled.

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

education But that’s not the only major news at ODU’s Maritime Institute. Last summer, the organization hosted the Conference of the International Association of Maritime Economists (IAME), which brought 250 people from around the world to Norfolk. One hundred and fifty academic papers were presented at the event, which was held for the first time in North America since 1995. The organization’s more than 400 members include academics, graduate students, and industry and government representatives. “The conference gave great exposure to our maritime program, the Port of Virginia and the local maritime community,” Talley said in an email summarizing the event. The Southeast Maritime and Transportation (SMART) Center, hosted by Tidewater Community College (TCC), also is working to build a pipeline of workers in the maritime and transportation industries. The center is one of 40

National Science Foundation (NSF) Advanced Technological Education Centers, which aim to bolster the skills of technicians in the U.S. The SMART Center offers a pathway where students can stack certificates to earn an associate degree in maritime technologies from TCC and San Jacinto College in Texas. The center is working on a similar pathway that would lead to an associate’s degree in transportation technologies at Anne Arundel Community College. Barbara Murray, the center’s executive director, says that completions of maritime technologies courses at TCC have steadily increased since 2010 when the center opened. Besides students, the center also teaches educators about the maritime and transportation industries. This year, for example, the institute will once again hold its Smart Center Maritime and Transportation Institute, which provides educators in the Science, Technology, Engineering

and Math (STEM) fields with insight on the maritime and transportation industry, and how they can better promote avenues to STEM careers. The institute will be held July 19-24 at Tidewater Community College and earlier in the summer at Anne Arundel Community College in the Baltimore area and San Jacinto College near Houston. In 2014, the SMART Center also released a video series, which shows the benefits of careers in the maritime and transportation industry. The videos, which feature firsthand accounts from workers in the field, are being shown to students nationwide to promote careers in the sector. “Our mission in changing the face of the maritime and transportation industry has been accomplished, all while knowing … there is much more to do,” Murray says in an email. So far, it seems that the SMART Center and others are on the right path.

Major employers: Smithﬁeld Foods, Keurig Green Mountain & International Paper Shirley T. Holland Intermodal Park, the premier, publicly-owned manufacturing, distribution & logistics park in the Hampton Roads region: • 1,500 acres competitively priced • Able & ready labor force of 830,000+ • 35 minute drive to APM Terminals of Virginia • Access to interstates 95, 85, 64, 264, & 664 • Enterprise & Foreign Trade Zones • Rail-served sites • All utilities including abundant public water • Proven fast-track site plan review & permitting process

Local Roots, Global Reach

Put down roots in Isle of Wight. 757-356-1962 or www.insidetheisle.com 26

A publication of Virginia Business magazine

COMMENTARY

2015 forecast for ocean shipping by Mike Coleman

s predicted, 2014 brought its share of challenges in the ocean freight market. From the constant rate fluctuations we have come to expect on many trades to unforeseen levels of congestion at our own ports, shippers, carriers, and third-party logistics providers alike were forced to adapt to a shipping environment that is more complex than ever. On the transpacific eastbound trade, attempts at spot market General Rate Increases (GRIs) in 2014 began as monthly occurrences and eventually shifted to a bi-weekly schedule. The GRIs were only occasionally successful, but the frequency of the changes resulted in significant increases over the course of the year. In 2015, we are already seeing higher rate levels year-over-year as we head into the contract negotiation season. While early 2015 GRIs have not been fully implemented as announced, the result of last year’s increases indicates that we will continue to see higher rates overall on this trade. The vessel supply and demand gap continues to narrow, but it will remain a factor in 2015. According to Alphaliner, carriers will take delivery of 1.8 million twenty-foot equivalent units (TEUs) of new capacity this year, representing an 8 percent increase year-over-year. In contrast, demand is expected to rise only 3 to 5 percent. The majority of the deliveries will be mega-vessels with capacity over 10,000 TEUs, many with capacity of at least 13,000 TEUs. While rates can be expected to rise year-over-year, we expect downward pressure on the freight market before this year’s peak season due to persistent supply and demand imbalance. Last year brought new developments on the carrier alliance front. The P3 Alliance, originally announced in 2013 as a partnership between the world’s three largest ocean carriers (Maersk, MSC and CMA-CGM) failed to gain China’s seal of approval. Plans for the P3 were subsequently canceled, and the carriers involved moved forward with alternative alliances. Maersk and MSC joined forces to create 2M Alliance, which operates at an estimated combined capacity of 2.1 million TEUs, 1.2 million of which are on the transpacific trades. In response to the 2M, CMA-CGM entered into a competing transpacific alliance, the Ocean Three (O3), with

United Arab Shipping Company and China Shipping Container Lines. The goal of these and other ocean carrier partnerships such as the longer-standing G6 and CKYH alliances is to realize operational efficiencies and gain economies of scale where possible. While concerns about a monopolistic market structure remain, the more likely long-term result of these arrangements is improvements in customer service, sailing options, and rate stability. The potential for consolidation in the form of mergers and takeovers, however, is cause for greater concern. In 2014, Hapag-Lloyd and CSAV completed a merger that created the world’s fourth largest ocean carrier. The potential for additional “mega-mergers” remains as carriers search for new ways to improve their bottom lines and increase market share. The focus for now remains on alliances, but future development in the area of mergers is something to watch. On the domestic front, port congestion is the most significant development we have seen over the last year. On the West Coast, strained negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) resulted in unprecedented delays in the second half of 2014 continuing into 2015. After the involvement of the federal government in early 2015, an agreement was reached on a new master contract, but the effects of the situation are ongoing across the supply chain. Cargo moving in and out of the Ports of Los Angeles and Long Beach, collectively the largest in the U.S. and the ninth largest in the world, was delayed for as long as six weeks. Vessels sat anchored offshore waiting for other vessels to sail, sometimes for weeks at a time. West Coast ports are currently working to recover, but the delays are expected to continue for at least the next few months. Closer to home, the Port of Virginia has been experiencing significant congestion. The situation has been exac-

erbated by surging volumes and winter weather shutdowns. Port management has assured the industry that steps are being taken to alleviate truck wait times and delays. Portsmouth Marine Terminal has been reopened, gate hours have been extended, container handling equipment has been repositioned, and various other steps have been taken to improve efficiency amid record volumes. In the meantime, cargo moving in and out of the Port of Virginia continues to be subject to delays and associated costs. With the port’s continued active engagement of the industry and additional infrastructure investment, we are confident resolution will come sooner rather than later. Port congestion has also directly affected the efficiency of the trucking industry, which has struggled in recent years due to hours of service reductions and driver shortages. It is increasingly more difficult to recruit new drivers to the field, and capacity continues to shrink. Chassis availability is another growing concern; ports and truckers are still working toward the most efficient solutions for making chassis readily available now that ocean carriers are out of the business of providing them. The challenges of truck power and chassis availability have forced increases in inland drayage rates across the board, a trend that is expected to continue. Now more than ever, it is essential for shippers to work closely with their supply chain providers in order to anticipate and mitigate the myriad challenges facing the industry. An experienced and proactive logistics provider will work with you to determine an effective, customized solution to meet your needs. Not all factors impacting the supply chain can be foreseen or controlled, but a true logistics partner will provide the level of service necessary to evaluate the obstacles and navigate the current shipping environment in the most efficient manner possible.

Mike Coleman is president of CV International Group, a freight forwarder, customs broker, non-vessel-operating common carrier, and ships agency (also d/b/a Capes Shipping Agencies) headquartered in Norfolk. He can be reached at mcoleman@cvinternational.com.

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

PORT STATS

Top 10 commodities by value EXPORTSยน

Machinery

$5,323.85

Plastic

2,213.19

Electrical machinery

2,667.33

Pharmaceutical products

1,639.81

Vehicles, not railway

2,570.25

Vehicles, not railway

1,478.10

Furniture and bedding

2,043.03

Electrical machinery

1,329.10

Pharmaceutical products

1,810.82

Organic chemicals

1,194.02

Plastic

1,545.36

Misc. grain, seed, fruit

1,057.30

Toys and sports equipment

1,165.34

Misc. chemical products

956.72

Beverages

1,037.86

Tobacco

923.48

Knit apparel

1,001.71

873.50

Rubber

10 Wood 1

IMPORTSยน

In millions of U.S. dollars for 2014 at the Port of Virginia

Machinery

$9,174.31

953.49

Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

Top 10 commodities by short tons Short tons1

EXPORTS

IMPORTS

Short tons1

EXPORTS1

1 Mineral fuel, oil, etc. 41,225.43

Machinery

869.96

Italy

5,690.89

2 Wood

2,469.67

Salt; sulfur; earth; stone

644.98

Netherlands

5,490.20

grain, seed, 3 Misc. fruit

2,182.02

Furniture and bedding

617.66

Brazil

4,948.65

4 Woodpulp, etc.

1,691.30

Misc. grain, seed, fruit

549.69

United Kingdom

4,920.79

5 Cereals

1,425.81

Beverages

475.41

China

4,218.90

waste; animal 6 Food feed

1,294.52

Plastic

452.80

Turkey

2,704.47

7 Plastic

665.73

Vehicles; not railway

435.49

South Korea

2,661.42

8 Paper; paperboard

556.17

Mineral fuel, oil, etc.

427.16

Morocco

2,451.78

9 Machinery

428.24

Fertilizers

393.77

Japan

2,204.54

10 Iron and steel

324.39

Wood

387.73

France

2,141.10

In thousands of short tons at Port of Virginia in 2014. One short ton is equivalent to 2,000 pounds. Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

Top 10 tradin by total carg

A publication of Virginia Business magazine

1 In thousands of short tons for 2014. One short ton is equivalent to 2,000 pounds.

Export/import TEUs handled at Port of Virginia

East Coast port market share Ports

TEUs

Market share

Export

Import

Total TEUs

New York/New Jersey

5,772,303

32%

2014

1,298,389

1,094,649

2,393,038

Savannah, Ga.

3,346,024

2013

1,187,321

1,036,301

2,223,532

Port of Virginia

2,393,039

2012

1,132,376

973,511

2,105,887

Charleston, S.C.

1,791,986

2011

1,032,136

885,893

1,918,029

Port Everglades, Fla.

1,029,237

2010

1,005,370

889,648

1,895,018

Jacksonville, Fla.

922,255

2009

928,360

816,868

1,745,228

Miami

876,706

2008

1,120,520

962,758

2,083,278

Baltimore

770,139

2007

1,128,343

1,000,023

2,128,366

Philadelphia

449,098

2006

1,055,756

990,530

2,046,286

10 Wilmington, N.C.

280,347

2005

1,013,059

968,896

1,981,955

TEU: Twenty-foot equivalent unit

ng partners go

Source: Virginia Port Authority

Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, American Association of Port Authorities, Virginia Port Authority

Top 10 trading partners by total value EXPORTS1

IMPORTS1

China

2,042.41

China

Brazil

1,103.86

Germany

2,156.57

Germany

4,513.21

Germany

689.46

Brazil

1,933.45

India

2,602.36

India

671.64

United Kingdom

1,821.32

Italy

2,475.82

Italy

492.85

Belgium

1,541.74

Japan

2,067.69

Turkey

405.61

Netherlands

1,492.18

Brazil

1,985.68

Canada

352.92

Japan

1,200.63

United Kingdom

1,693.62

France

326.20

Saudi Arabia

1,120.95

Spain

1,174.98

Spain

272.21

India

993.91

France

1,161.54

Netherlands

266.22

United Arab Emirates

847.31

Indonesia

1,072.19

Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

$3,277.61

China

$9,148.83

In millions of U.S. dollars at Port of Virginia for 2014. Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

Port Stats

2014 Trade overview TOTAL Short tons (thousands)

Metric tons (thousands)

Total cargo

67,334.78

61,085.71

General cargo

19,061.41

17,292.20

18,733.35

16,994.59

328.06

297.61

Container cargo 1

Break-bulk cargo Container units

1,373,138

TEUS

2,393,038

Total cargo dollar value

$71,470.59

Vessel calls

2,789 1

Coal loadings (short tons)

41,987.15

1 Coal loadings and break-bulk cargo include international and domestic shipments.

EXPORT Short tons (thousands)

Metric tons (thousands)

Total cargo

56,515.68

51,270.69

General cargo

10,388.92

9,424.66

Container cargo

10,343.72

9,383.66

45.20

41.00

Break-bulk cargo Container units

743,091

TEUS

1,298,389

Total cargo dollar value

30,480.58 IMPORT Short tons (thousands)

Metric tons (thousands)

10,819.09

9,815.02

General cargo

8,667.23

7,862.77

Container cargo

8,389.62

7,610.93

277.61

251.84

Total cargo

Break-bulk cargo Container units

630

TEUS

1,094,649

Total cargo dollar value

40,990.01 Source: Port of Virginia

A publication of Virginia Business magazine

Photo courtesy The Port of Virginia

EXPORTS

Finding new markets Exporting creates new opportunities for Virginia businesses

hink there’s an overseas market for your product or service, but not sure where to start? Luckily, there are a number of state and federal resources to help companies navigate the complexities of exporting. Ranging from one-day training sessions at the Virginia SBDC’s

Export University, to the two-year VALET (Virginia Leaders in Export Trade) program, companies can benefit from a wide range of sources when it comes to selling overseas. Below are sources available for companies interested in exporting.

KEY SOURCES VEDP – International Trade: Virginia’s main point of entry for companies interested in exporting. The site of the Virginia Economic Development Partnership is packed with information about exporting and includes contacts for local trade managers. www.exportvirginia.org

STATE PROGRAMS AVAILABLE:

Export.gov: Hosted by the U.S. Department of Commerce’s International Trade Administration, Export.gov combines the federal resources to help American businesses plan international sales strategies. The site includes market research and trade leads from the Commerce Department, export finance information from the ExportImport Bank and the Small Business Administration, and agricultural export assistance from the United States Department of Agriculture. www.export.gov

Travel to market: The VEDP-International Trade works with companies to arrange trade missions that allow participants to meet face-to-face with potential buyers and distributors. exportvirginia.org/need-help/travel-to-market

U.S. Commercial Service: The U.S. Commercial Service helps companies start or develop the export of their products and services with trade counseling, market intelligence, business matchmaking and commercial diplomacy. www.export.gov/virginia

Virginia Leaders in Export Trade: (VALET) Virginia Economic Development Partnership’s two-year program includes 50 companies interested in exporting. Participants receive $15,000 toward export-related expenses and help with creating an international sales plan and entry into new foreign markets. exportvirginia.org/programs/valet-program

International market research: The VEDP-International Trade offers Virginia businesses access to more than 75 consultants around the world. These advisers can provide in-country research specific to a company’s product or service. They also can provide match-making services, helping companies meet potential customers or potential distributors. exportvirginia.org/international-market-research/ Passport to Global Markets: The Virginia SBDC (Small Business Development Center Network) offers export programs for companies that want to break into specific markets in three to 18 months. The program, taught by private-sector business experts, includes counseling from the Virginia SBDC and U.S. Commercial Service. Companies present their international business plans to a panel of experts and receive feedback. www.virginiasbdc.org/programs/passport-to-global-markets Export University: The Virginia SBDC network offers these one-day programs at locations around Virginia on international trade fundamentals. www.virginiasbdc.org/programs/passport-to-global-markets

Just beginning? These sites can help get you started. SBA Export Planner: Detailed information about everything from creating an export business plan to financing, accounting and useful technology for exporting. www.sba.gov/exportbusinessplanner

Exporting 101: A Basic Guide to Exporting helps businesses find information about establishing and developing overseas markets for their products and services.  export.gov/basicguide

Exporting how-tos: Detailed information about everything from starting exporting to information on specific countries. exportvirginia.org/internationalmarket-research/exporting-tos

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

RAIL

New CEO to take over at Norfolk Southern by Jessica Sabbath

orfolk Southern Corp. is getting a new but familiar leader. The company announced earlier this year that Norfolk Southern President James A. Squires will become CEO in June. Current CEO Charles “Wick” Moorman IV will continue to be executive chairman of the company’s board of directors. “Thanks to the dedication of Norfolk Southern Squires people, the support of our customers and business partners, and the outstanding leadership team in place at Norfolk Southern — led by Jim Squires — I am confident that the company is poised for continued growth,” Moorman said in a statement when the promotion was announced. Squires has worked for Norfolk Southern since 1992. He has held a variety of executive positions at the Norfolk-based company, including senior vice president of

law, executive vice president of finance and executive vice president of administration. Norfolk Southern is one of two class 1 railroads that serve the port’s marine terminals. Both Norfolk Southern and CSX Corp. recently have undergone various projects to improve accessibility for goods coming to and from the Midwest. In early 2014, Norfolk Southern opened a Thoroughbred Bulk Transfer (TBT) terminal in Chesapeake, which specializes in the transfer of bulk commodities between rail cars and trucks. The TBT can handle dry and liquid bulk, food-grade commodities such as flour, sugar, grains and plastic pellets, as well as aggregate products. In 2010 Norfolk Southern opened the Heartland Corridor, a $290 million project that cut a day’s travel time from the time required for double-stacked container trains to travel from Hampton Roads to Columbus. CSX is in the second phase of its $850 million National Gateway to provide a more

direct route from the mid-Atlantic to the Midwest for double-stacked container trains. In November, CSX announced that the Federal Highway Administration had approved a construction alternative for CSX’s Virginia Avenue Tunnel project in Washington, D.C., a key piece of its National Gateway. The project would rebuild the tunnel to accommodate double-stacked container trains. The announcement was made after three years of input from residents, businesses and government agencies located in the neighborhood around the tunnel in southeast D.C. Construction is scheduled to begin this year and take 30 to 42 months. Rail traffic is a key component of future growth at the Port of Virginia, although rail growth tapered a little bit last year. Cargo moved via rail grew 4 percent last year, compared to 11 percent the prior year. Rail cargo now makes up 33 percent of all container traffic moved at the Port of Virginia’s terminals.

AIRPORTS

NIA continues to renovate and refurbish

orfolk International Airport (NIA) is upgrading its passenger terminal and planning to add another runway. The airport, which serves almost 3 million passengers sengers each year, also recently comp completed pleted a major upgrade of its general p aviation facilities, which are used by corporate and private aircraft at NIA. The upgrade expanded the parking area and updated its terminal building with new exterior lighting, exterior trim painting and the cleaning and sealing of all aggregate surfaces. The airport’s passenger terminal is undergoing a major renovation spanning several years. The first phase of renovations was completed last year, which included a new skylight in the lobby, installation of terrazzo floorYear NIA NNW ing in the lobby and the replacement of carpet and wall coverings around the outside of the lobby. 2014 2,965,306 532,655 Year NIA NNW The airport also expanded the Transportation Security Administration’s passenger screening checkpoint on 2014 55,637,623 29,121 2013 3,112,355 544,031 Concourse B. 2013 58,113,441 34,042 NIA currently is undergoing the second phase of 2012 3,299,712 646,550 the refurbishment project, which includes a renovated 2012 70,424,886 39,124 2011 3,193,388 1,058,505 security checkpoint at Concourse A, new and renovated restrooms, skylights and carpet in the arrivals building and 2011 64,354,839 37,994 2010 3,332,466 1,062,007 ticketing lobbies. The project is scheduled to be com2010 63,212,040 56,106 pleted in spring 2016. 2009 3,409,456 1,019,336 The airport continues to pursue funding for a paral2009 59,015,963 38,094 lel runway through the Federal Aviation Administration. 2008 3,549,204 1,045,369 2008 64,083,225 73,440 NIA has completed a technical study of the proposed 6,700-square-foot runway, which would be located about 2007 3,714,323 1,056,303 2007 70,056,727 33,626 850 feet east of Runway 5/23. The airport is currently 2006 3,703,664 1,052,946 undergoing the first phase of a required environmental 2006 68,778,934 26,602 impact study for the new runway. 2005 3,844,422 1,058,839 2005 70,990,700 19,353 The Newport News-Williamsburg International Airport continues to try to attract a low-cost carrier. AirTran 2004 70,316,492 26,372 2004 3,778,216 915,968 left the facility in 2012, and People Express stopped its NIA: Norfolk International Airport NIA: Norfolk International Airport service from the airport in September when a truck hit NNW: Newport News/Williamsburg International NNW: Newport News/Williamsburg International Airport one of its planes. Frontier Airlines, a low-cost carrier with Airport Source: Individual airports flights serving Denver, pulled out in January. Source: Individual airports 32

Air cargo handled at Hampton Roads airports

A publication of Virginia Business magazine

Passengers at Hampton Roads airports

TRUCKING

Growing pains Congestion hurts motor carriers, but major projects are on the horizon

ith the increase in cargo coming through the Port of Virginia, motor carriers have been suffering. Ed O’Callaghan, owner of Audax Transportation, an agent for Century Express, says that each of the 35 motor carriers in his company were able to move an average of 3.9 containers per day in 2013, while that dropped to two containers per day in 2014. Averages for his company dropped even lower in early 2015 when the port faced backups caused by four days of snow

closings. “From a trucking company’s perspective, it’s all about productivity,” says O’Callaghan. “We measure productivity by how many containers a truck may move a day.” The Port of Virginia is implementing a number of short-term and longterm solutions to improve service predictability and relieve congestion for motor carriers, including the creation of an appointment system at Norfolk International Terminals in June and the paving of a desig-

nated area for empty rail containers at Virginia International Gateway. For more information on the port’s congestion mitigation plans, see page 4. Truckers also should see improvement on the areas highways. New money dedicated to the region’s transportation projects mean a number of projects are underway to relieve traffic on the region’s roadways. Following are just some of the examples of transportation projects in the region.

I-64 Widening

Elizabeth River Tunnels/MLK Expressway

(Newport News/York County/James City County)

(Portsmouth)

About the project: A 12-foot wide traffic lane and shoulder will be added in each direction to three segments of I-64 between Jefferson Avenue (Exit 255) and Yorktown Road (Exit 247); between Yorktown Road (Exit 247) and Hummelsine Pkwy/Rt. 199 (Exit 242); and between Hummelsine Pkwy/Rt. 199 (Exit 242) and Lightfoot Rd/Rt. 199 (Exit 234). Status: ● Segment 1 ($122 million): Contract awarded February 2015 is expected to be complete in December 2017. ● Segment 2 ($214 million) Public hearing will be held in April 2015 and request for proposals is scheduled for June 2015. ● Segment 3 ($311 million) Preliminary engineering starts in 2017.

About the project: ($2.1 billion) Construction of a new tube is underway for the Midtown Tunnel, expanding it from two to four lanes. The current Midtown Tunnel and the Downtown Tunnel will be rehabilitated and a new MLK Expressway is being built. See page 17 for more information. Status: Under construction. On schedule for completion in 2018.

I-564 Intermodal Connector

Route 460 Improvements (Suffolk/Isle of Wight County) About the project: ($375-$425 million) The Commonwealth Transportation Board is supporting a new location to build a new four-lane, divided highway from a new U.S. 460/58 interchange in Suffolk to west of Windsor. Status: Location approved. Project under negotiation.

(Norfolk)

I-64/I-264 Pavement Rehabilitation

About the project: ($169 million) To create a high-speed highway connection from the existing I-564 to Norfolk International Terminals and the Norfolk Naval Station. This will alleviate congestion, reduce truck traffic on city and naval station streets and be the first section in place for the eventual Patriot’s Crossing, or the “Third Crossing.” Status: Contract awarded. Construction starts fall 2015.

(Norfolk/Virginia Beach)

Hampton Boulevard Grade Separation (Norfolk) About the project: ($105 million) Hampton Boulevard will be depressed under existing railroad tracks to remove the need to disrupt vehicular traffic for railway movement in and out of the port terminals. Status: Construction underway. Expected completion: summer 2015.

About the project: ($128 million) The project will repave and restore distressed pavement over 163 lane miles of I-64 and I-264. Status: Under construction. Completion by end of 2015.

Gilmerton Bridge (Chesapeake) About the project: ($134 million) Construction of a new vertical lift span bridge over the Southern Branch of the Elizabeth River. This replaces a bridge built in 1938 and has vertical clearance of 35 feet and up to 135 feet when fully opened. Status: Construction underway. Anticipated completion by summer 2015.

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

FOREIGN TRADE ZONES

Smart exporting

FTZs help reduce export costs for U.S. manufacturers

t’s easier for Port of Virginia customers to take advantage of federal benefits designed to boost exports. A year ago Foreign Trade Zone # 20 received federal approval to reorganize under the Alternative Site Framework (ASF). The Port of Virginia is the grantee for FTZ # 20, one of the largest geographic zones in the country. The service area of FTZ # 20 includes the counties of Accomack (part), Gloucester, Isle of Wight, James City, Mathews, Northampton, Southampton, Sussex, Surry and York and the cities of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Suffolk, Virginia Beach and Williamsburg. The ASF designation expedites the approval process for companies seeking FTZ site designation. Once companies send their applications to the Foreign-Trade Zones Board, the approval process now takes about 30 days, instead of the typical 10 to 12

months previously. “It’s going to take awhile for it to mature, but it’s at a good point where we can leverage it in the market as we talk to companies that look to expand,” Joe Harris, vice president of communications for the Port of Virginia, says of economic development efforts with the new designation. In the past year, Givens has expanded its FTZ site, and Becker Hydraulics of Germany agreed to open a manufacturing facility in the Cavalier Industrial Park. The port con-

tinues to work with several companies to bring new sites and subzones to the zone. FTZs are strategic tools for U.S. manufacturers. They are specific geographic locations that allow manufacturers to lower their taxes and streamline their exports because they are considered outside U.S. Customs and Border Protection (CBP) territory. Companies operating in FTZs are required to pay duties on products only if and when they enter the U.S. market place. That means companies operating in an FTZ can defer, reduce or eliminate duties on imported products. Product components can be stored, assembled, manufactured, tested or repurposed in the zone, and custom duties are not applied on any exported products. FTZs are most useful when the duty rate on raw materials is higher than the duty rate on the finished product and when the volume of imported shipments is high.

Foreign trade zones Site Number

Site

City

Status1

Active site

Givens

Chesapeake

Usage-driven site

Cargoways Logistics/ Norfolk Marine Terminal

Suffolk

Usage-driven site

Katoen Natie Norfolk Inc.

Norfolk

Usage-driven site

Cavalier Industrial Park (Usui International Corp. and Becker Hydrualics USA)

Chesapeake

Virginia Regional Commerce Park (Sumitomo) Stihl Inc.2 Canon Virginia Inc.2

Suffolk Virginia Beach Newport News

Port Norfolk Holdings

Norfolk

Usage-driven site

Grandwatt Electric Corp.

Suffolk

Usage-driven site

19 23 24 34

Shirley T. Holland Commerce Park Virginia Commerce Center Westport Commerce Center Suffolk Intermodal Center

Windsor Suffolk Suffolk Suffolk

21 20E 20D

Magnet site Magnet site Subzone site Subzone site

Non-active sites

Magnet Sites are usually located at ports or industrial parks. They are open to multiple zone users. Source: Port of Virginia

A publication of Virginia Business magazine

Magnet site Magnet site Magnet site Magnet site

Subzones/Usage-driven sites are approved for a specific company/use.

Photo courtesy Port of Virginia

MARITIME LAW

Maritime lawyers

1 2

Phone number1

Law firm

City

Website/email

Berkley III, Law Office of Waverly L. Bouffard, Law Office of Henry P. Bowman Green Hampton & Kelly Burnette, Law Office of M. Lawrence Crenshaw, Ware & Martin PLC Dalcher, Law Office of Bruce P. Davey & Brogan PC Furr Law Firm, Carter B.S. Gawrys, Law Office of Joseph A. Hughes III, Robert M. McGuireWoods Patten, Wornom, Hatten & Diamonstein LC Rutter Mills Schempf & Ware PLLC Serpe, Law Office of Richard J. TaylorWalker PC Troutman Sanders Vandeventer Black LLP Ventker Warman Henderson PLLC Waters Law Firm PC Willcox Savage

Norfolk Norfolk Chesapeake Newport News Norfolk Norfolk Norfolk Norfolk Virginia Beach Virginia Beach Norfolk Newport News Norfolk Yorktown Norfolk Norfolk Norfolk Norfolk Norfolk Norfolk Norfolk

wl.berkley@verizon.net hbouffardlaw.com bghklaw.net mlburnette@gmail.com cwm-law.com dalcher-law.com daveybroganpc.com cbsfurr@worldnet.att.net N/A N/A mcguirewoods.com pwhd.com ruttermills.com 4000law.com serpefirm.com taylorwalkerlaw.com troutmansanders.com vanblk.com ventkerlaw.com waterslawva.com willcoxandsavage.com

Number of maritime lawyers2

625-2230 663-7572 548-2323 930-0322 623-3000 995-4425 622-0100 622-2258 486-6660 463-2612 640-3700 320-5171 622-5000 240-4000 233-0009 625-7300 640-0004 446-8600 625-1192 446-1434 628-5500

1 1 1 1 3 1 4 1 1 1 1 1 3 1 1 1 3 18 3 1 4

All phone numbers are (757) area code. Source: Maritime Law Association of the United States This list includes only Hampton Roads-based lawyers who are members of the Maritime Law Association of the United States. It does not include general counsel attorneys.

Vandeventer Black has a tradition of representing maritime clients for over 130 years. Our team represents domestic and international interests in virtually all areas of marine law. We offer a diverse range of maritimerelated legal services and have the depth and experience to handle the full spectrum of legal issues that arise. Collision Cargo Damage Vessel Sales/Financing & Documentation Customs Law

Charter Parties & Bills of Lading Ship Repair Maritime Litigation & Arbitration Coast Guard Matters

Terminal Operations Pollution Offshore Renewable Energy Personal Injury Defense

PUT OUR HISTORY ON YOUR SIDE

101 W. MAIN STREET 500 WORLD TRADE CENTER NORFOLK, VA 23510 757.446.8600 VanBlackLaw.com

2015 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide

INTERNATIONAL FIRMS

Foreign firms promote job, economic growth in Hampton Roads

ompanies with international ties made a splash in Hampton Roads last year. Most economic development announcements from foreign-affiliated firms in the area were expansions, such as Continental Automotive Systems’ decision to ramp up production in Newport News, which will add approximately 500 new jobs. The automotive supplier is a division of Germany-based Continental. But the region snagged new international firms too, like Italy-based Pacorini, which is supporting the local operations of Green Mountain Coffee Roasters, manufacturer of Keurig’s K-cups.

International firms with operations in Hampton Roads

Continental Automotive Systems

Number of companies

Percent of total

Germany

18%

Japan

Other*

United Kingdom

Switzerland

ontinental is no stranger to Hampton Roads. It has had a location in Newport News for more than 40 years, so it was welcome news when the company announced plans to invest approximately $150 million to start producing turbocharg-

Canada

Ferguson Enterprises

France

Netherlands

Sweden

Italy

Austria

China

Denmark

Country

TOTAL

171

*Other includes Australia, Belgium, Brazil, Finland, Greece, Hong Kong, Iceland, Israel, Liechtenstein, Malaysia, Norway, Spain, Turkey and United Arab Emirates. Sources: Hoovers Inc.; Virginia Economic Development Partnership; Virginia Employment Commission; cities/counties

According to the Hampton Roads Economic Development Alliance (HREDA), the region is home to 171 foreign firms, most of which are from Germany. The bulk of international companies are in the manufacturing or service industries (75 percent) and the rest are in the distribution business. Below is a roundup of new jobs announced by international companies in the area in 2014, according to the Virginia Economic Development Partnership’s database of economic development announcements.

hen Ferguson Enterprises, the nation’s largest wholesale plumbing distributor, outgrew its national sales center in Newport News, it didn’t look far for its expansion. It recently moved the center

A publication of Virginia Business magazine

ers and increase production of its gasoline high-pressure injector, fuel rail and pump assembly lines. Virginia beat out Mexico for the project, which is expected to create more than 500 new jobs in the commonwealth.

to Hampton and plans to add 163 jobs in the city by the end of the next fiscal year. Though Ferguson Enterprises is headquartered in Newport News, its parent company, Wolseley, is based in Switzerland.

Canada Metal Pacific

newcomer to Hampton Roads’ roster of international firms is Canada Metal Pacific, which makes marine and industrial products. The Canadian company is investing $3 million to establish its first manufacturing operation in Virginia Beach, a move that’s expected to create 70 new jobs over the next three years.

Pacorini and Massimo Zanetti Beverage USA

ccording to Suffolk Mayor Linda T. Johnson, the city thinks of itself as the “caffeine capital of Virginia,” and that may be for good reason. Italy-based Pacorini, a logistics services provider for the coffee market, is investing half a million dollars to support Green Mountain Coffee Roasters’ operation in Isle of Wight County. Massimo Zanetti Beverage USA (also affiliated with an Italian company) announced a $4 million expansion to make filter cups for machines that accept Keurig Green Mountain Inc.’s K-Cups.

Industry breakdown for region’s international firms Industry

Number of companies

Percent of total

Service

40%

Manufacturing

Distribution

TOTAL

171 Sources: Hoovers Inc.; Virginia Economic Development Partnership; Virginia Employment Commission; cities/counties

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