Saturday, March 25, 2023

Despite Pandemic’s Hit on Supply Chains, Business is Booming at the Port of Virginia

The Port of Virginia’s Virginia International Gateway facility in Portsmouth. (Port of Virginia)

VIRGINIA BEACH — Not long into his “State of the Port” address before a packed oceanfront hotel ballroom in Virginia Beach, Virginia Port Authority CEO and Executive Director Stephen A. Edwards shared a journalist’s comment to him: “Congratulations on being the least newsworthy port.”

During a tumultuous 2021 that included an unrelenting pandemic, widespread supply-chain dysfunction and scores of ships marooned off some U.S. ports, particularly on the West Coast, no news, in port circles, really did become good news — at least in Virginia.

Container-volume growth at the port jumped 25 percent over the previous year, making it the fast-growing port in the country, on a percentage basis, Edwards told about 460 people in his roughly 40-minute address, his first since taking over the helm of the port in January 2021.

Last year, Virginia moved more than 3.5 million containers measured in 20-foot-long units — known as “TEUs” — its most productive year ever.

While other big East Coast ports also saw double-digit growth last year — New York/New Jersey, the largest, moved nearly 9 million TEUs, an 18.5 percent jump, while Savannah, the second-largest, moved 5.6 million units, a 19.8 percent increase — Virginia’s percentage gain beat the competition.

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“This is an industry that normally grows as a factor of GDP, 1 to 1.5 times GDP is what our industry normally grows at,” Edwards said. “We’re not supposed to grow at 25 percent…So this is extraordinary growth within our industry.”

While port congestion worldwide was and continues to be a big story, Virginia has managed to pull through relatively unscathed.

“Of course, we have some,” Edwards said in comments after his talk, though he added it’s a matter of degree. “We’ve had much less than any of the other gateways.”

One of the key advantages the port has is what he terms “the Virginia model.”

The port owns and operates its terminals as well as the “Hampton Roads Chassis Pool” — the truck carriages on which containers are mounted. This arrangement, unlike some other large ports where private, competing entities can own and operate terminals and key assets, allows for quicker decisions that ensure greater efficiency rather than losing time while rival financial interests are resolved: “We don’t have a competing economic interest; the economic interest is the Port of Virginia.”

The port’s bottom line appears to have benefited, Edwards’ presentation showed: operating revenues in 2021 were up 39.2 percent year-over-year, while operating expenses rose 15.5 percent and operating income surged by nearly 320 percent to $174 million.

In other remarks, Edwards pointed to sustainability benchmarks to which the port is committed: net zero carbon emissions by 2040 and, while a slide noted that port operations would be powered by 100 percent clean energy by 2032, he said that goal may be achieved by 2024.

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He also noted progress on the $350 million investment to dredge the port’s channels to 55 feet — the federal government has come through with the last of its share of funding.

“We have the funding,” he said. “We’re now full-speed ahead.”

The deeper, wider channels will allow two-way transit of vessels entering and exiting the port, instead of ships moving in and out one-at-a-time, an advantage that neither New York/New Jersey nor Savannah has, Edwards added.

Also highlighted was the $200 million offshore-wind project at Portsmouth Marine Terminal, which will produce “the most capable offshore-wind hub on the East Coast,” with construction expected to start in July.

Early in his talk, Edwards commented — in the context of the pandemic — on the size of the crowd in the room and the risk of self-delusion.

“Just because we’ve got 460 people in the room, we think it’s over,” he said. “We’re kidding ourselves, because as we all know Shanghai is shut. So in the supply chain, America is open and China is at zero COVID.”

He elaborated in comments after his presentation: because of China’s zero COVID policies and the presence of COVID in Shanghai, the city is in a degree of lockdown: “The transportation warehousing and manufacturing base within Shanghai is closed; so when it reopens, as the manufacturer of all of our goods, those goods will then have to surge out of China and they’ll start arriving in America in a surge, as opposed to in a steady state.”

As he said in his talk: “So if we think we’re through it, we’re not through it. It’s just going to be a different ride in 2022 than in 2021.”

This story is brought to WYDaily readers courtesy of the Virginia Mercury.

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