News

Port of Virginia says Congestion Woes Behind it and it’s Mega-ship Ready

Source: Journal of Commerce

January 22nd 2016

After near-unprecedented congestion rocked the Port of Virginia in 2015, the 50-foot-deep port says it’s ready to handle brisk volume growth coming via the larger vessels soon to move through the expandedPanama Canal – and do so efficiently.

“We were at a point of crisis earlier... and we had to change aggressively and quickly to stem the tide,” Port of Virginia Director and Chief Executive Officer John Reinhart told JOC.com. “But we’re there. We’re on track.”

The port moved a record number of containers in 2015, reaching 2.5 million 20-foot-equivalent units, an increase of 6.14 percent year-over-year. Reinhart expects traffic to rise between 4.8 percent and 7.5 percent this year.

But many in the Norfolk port community don’t think it will get the chance to truly test its mettle because they see lackluster container volume growth ahead and few mega-ship calls. The dip in November and December volume – down 2.6 and 3.1 percent, respectively, on a year-over-year basis – was a harbinger for slower growth and reflects the intense competition for discretionary cargo from ports such as New York and New Jersey and Savannah, said Art Moye, executive vice president of the Virginia Maritime Association.

“Freight levels right now are dismal. All market indicators show that 2016 will be a very difficult year from the standpoint of reduced container volume,” Ed O’Callaghan, president of Norfolk-based truck firms Audax Transportation and Century Express, told JOC.com.

Port officials in Virginia say the arrival of mega-ships in the wake of the Panama Canal ribbon-cutting ceremony this year is a guarantee. What’s unclear is just how many vessels will come.

“I was never one to say that once they cut the ribbon on the expanded Panama Canal that all of a sudden we’re going to see a flood of big ships,” Moye told JOC.com.“I have to agree with some of those estimates that 2016 may be a bit softer.”

Additional business at East Coast ports will depend on each individual port being part of a port range free of chronic bottlenecks, a situation that isn’t the case today. Terminals at Port Newark-Elizabeth in New Jersey and on Staten Island, New York can’t handle larger ships until the lifting of the Bayonne Bridge is completed in 2017, and Virginia spent the past year struggling with near-unprecedented congestion after a winter storm forced the waterfront to shut down for days.

How ports like Virginia cope with mega-ships, more than twice the size of the average vessel now calling at the port, could determine how fast mega-ship services come to the Eastern Seaboard, said Curtis Foltz, executive director of the Georgia Port Authority.

Of the port’s 35 weekly services, 11 connect the Port of Virginia with ports in Asia, India and the Middle East. New York-New Jersey has 22 weekly Asia services. Savannah, the South Atlantic’s largest port for Asian cargo, has 24.

In 2015, New York-New Jersey handled 1.6 million TEUs originating in Asia – not including the Mideast and the Indian subcontinent – up 12.1 percent. Savannah handled 1.1 million in the same period, up 25.6 percent. Virginia, on the other hand, handled 489,583 TEUs, less than half of the other ports, but still a marked increase over its own records and up a comparable 11.9 percent.

In preparation for the port’s anticipated cargo uptick and those massive discharges in 2016, port officials are continuing to improve productivity by investing in infrastructure and better synchronizing operations.

Virginia’s chassis pool will soon adopt a new system allowing beneficial cargo owners to be billed directly for chassis fees, taking truckers and ocean carriers out of the middle of the billing process. By deriving billing rules from gate-move and shipment data, the program promises to provide parties with accurate visibility of all chassis movements. The port has already bought, leased or obtained a total of 1,600-plus chassis, including 1,000 since February, increasing the chassis fleet there 10.5 percent.

“There’s no chassis shortage in Virginia. That is a tribute to what we can do,” Reinhart said.

The port is also at work on a capital construction project at NIT’s North Gate that began construction in July after the port was awarded a $15 million TIGER grant to pay nearly half the $31 million cost of the new intermodal gate complex. The 22-lane semi-automated North Gate complex will tie into the nearby Interstate 564 Intermodal Connector project.

Combined, the projects will increase truck velocity through NIT’s North Gate, remove a significant amount of daily truck traffic from Norfolk, Virginia, city streets and provide motor carriers with direct, safe access to I-564. Construction on the project should be completed by next fall, according to the port.