Just remember that you heard it here first…

Once completed, the improved traffic pattern will allow the port to build longer trains carrying imported cargo containers without disrupting traffic on Hampton Blvd.  The port estimates that this could allow them to utilize rail for an additional 20% of the product that comes through the port.  Currently, that 20% leaves the port via truck and contributes to pollution, congestion and disgruntled neighbors.  The more product that can leave via rail, the better for Hampton Roads.

Now that Hampton Boulevard is being addressed, the State is considering an additional $17.8 million investment to double the on-dock rail capacity at Norfolk International Terminals.  These are all great projects for the port and will further enhance its competitive position over other East Coast ports.

The most exciting news comes is that one of the CKYH services, the NATCO-4, will have Norfolk as its first stop from Asia.  This means that customers shipping goods via this services will be able to receive their containers via Virginia before other ports.  First Call services are a big deal for ports and Virginia hopes that they can leverage the NATCO-4 success into more First Call services.  The full port rotation for the NATCO-4 service is Shanghai, Chiwan, Yantian, Hong Kong, Virginia and New York and will utilize eight vessels each with a 3,850 TEU capacity.  With the change in the service, CKYH dropped Savannah from the NATCO-4 rotation.

Virginia is also being added to the NATCO-5 service.  The full port rotation for that service is Pusan, Shanghai, Ningbo, Yantian, Xiamen, Savannah, Virginia and New York and will utilize eight vessels each with a 3,300 TEU capacity.

Finally, after bypassing Virginia over one year ago, China Shipping is adding Virginia back into their weekly AAE-1 service.  The full port rotation for the AAE-1 service will be Shanghai, Hong Kong, Yantian, Miami, Savannah, Virginia and New York.  This service will use smaller vessels, each of which are approximately 3,000 TEUs.

All told, the new services represent about 150 new ship calls to the Port of Virginia.  That’s great news in any economic environment.

However, privatization comes with several big question marks.  As it stand right now, Virginia International Terminals operates the Virginia terminals.  They are a state owned organization and are currently focused on increasing the amount of cargo that flows through Virginia.  If CenterPoint were to operate the terminals, that focus may change to protecting their financial bottom line.  However, the two are more closely aligned than you might expect.  Port rankings are typically done by TEU volume (VIT’s goal), and shippers follow activity (more customers for them to work with, choose from and steal) and that flows through to CenterPoint’s bottom line.  So, the higher Virginia ranks the more business it will do and (presumably) the more profit it generates for CenterPoint.  Everyone wins.  If Virginia does agree to do this, I would suggest they structure significant rent penalties for CenterPoint if TEU volume targets are not met.

CenterPoint is not new to the Virginia market as the Chicago based developer recently won approval last month for its $350 million industrial park in Suffolk.  Although they are majority owned by CalPERS, I am not familiar with their terminal operating capabilities.  They may be exceptionally qualified to operate a port terminal, I’ve just always known them as an industrial real estate developer.  

If the proposal does arrive as expected, I am sure it will spawn a lively debate.  It will be interesting to see both sides present their arguments in the coming months.  I’ll keep you posted…

While the loss of Maersk will be difficult for the Port of Charleston to handle, I am afraid that it may be just the beginning.  When the largest shipping line in the world publicly announces that it can’t operate in your port because it is too expense relative to the competition, few other shipping lines will be beating down your door to sign up.  Where the big boys go, so goes the little guy.

The Story: Last year VDOT received three plans to construct the new highway 460 running from Hampton Roads to Petersburg, south of Richmond.  When those plans were received they contained provisions for massive amounts of public money to make them a reality.  VDOT is now asking those bidders to revisit their proposals to potentially reduce the amount of public money required.  While making 460 a toll road was a possibility in the first round of proposals, it will almost certainly be a component of the revised bids.

The Analysis: Few realize just how vital highway 460 is to the economy of Virginia.  In addition to being an additional hurricane evacuation route, it is a critical link in the global supply chain that comes through the Port of Virginia.  While Interstate 64 might seem like the logical way for containerized goods to leave the area, anyone who has attempted to traverse the bridge-tunnel at 3pm knows it can be a slow process.  460 offers a convenient way for trucks to leave the area without having to go through that bottleneck.  Before you start complaining, yes, 664 is better but still not great.

America’s global supply chain is a very low margin business where every penny matters.  VDOT needs to be very careful that they don’t price 460 out of the market.  Any additional cost associated with getting goods through the Port of Virginia is a competitive disadvantage.  Planning 460 as a toll road could have the unintended effect of pushing more trucks through the tunnel or pushing port business further south to Charleston or Savannah.

Highway 460, if done correctly, has the potential to be a significant relief valve for Hampton Roads traffic.  If tolls are the answer, I would hope that VDOT would at least make some considerations for fast toll lanes and/or a toll exemption for trucks.