Virginia’s Maritime Future Is Now

The Northern Javelin, one of the new-generation container ships visiting the ports of Virginia. Photo credit: Virginia Business.

The Northern Javelin, one of the new-generation container ships visiting the ports of Virginia. Photo credit: Virginia Business.

by James A. Bacon

Virginia’s maritime industry has long anticipated the arrival of the new giant, post-Panamax ships, and now they’re here — a couple of years before they were anticipated, and well before the completion of the Panama Canal expansion that is expected to release the floodgates. As the East Coast port with the deepest channels, Hampton Roads is attracting more than its share. The leviathans pose special logistical problems but the maritime industry is working through them. Virginia Business has the story here.

As author Jessica Sabbath writes, the world’s largest ships can carry twice the number of containers that the big ships of 10 years ago could. These bad boys represent almost 60% of the shipping world’s total cargo capacity. Any port with growth ambitions will have to accommodate them.

The Ports of Virginia planned for the arrival of the big ships by digging 50-foot channels, the deepest on the East Coast, and erecting modern cranes that can reach across the wide-girthed vessels. But by virtue of their enormous size, the post-Panamax ships require more precision in their handling and scheduling. If Virginia’s ports can climb the learning curve faster than other ports, they can create an important competitive advantage even as rivals seek to deepen their own shipping channels.

The big ships must move more slowly to avoid damaging wake. They require especially high-powered tugboats to maneuver in tight quarters. Because the big ships take longer to unload, longshoremen work longer shifts. Even with longer shifts, the maritime industry has added more than 200 longshoremen to handle the increased cargo volume — which increased 8.8 percent to a record 2.5 million TEUs (equivalent to 5 million containers) in Fiscal Year 2015.

The movement of these giants through the ports and their containers through the supply chain creates issues of vessel bunching and equipment imbalance. Shippers often scramble to find available motor carriers. When bunching occurs — it can take more than 24 hours to transfer a container from the ship to a Norfolk Southern railroad train — shippers and motor carriers experience larger demurrage fees. These are the kinds of problems would expect anywhere in similar circumstances, and they take time to sort out. If the maritime community does so successfully, Hampton Roads could well enjoy years of growth and job creation.

Interestingly, one issue that Sabbath did not mention: roads. The McDonnell administration had feared that clogged roads would make it more difficult to ship containers out of Norfolk and Portsmouth. Adding capacity to the Midtown and Downtown tunnels should alleviate localized congestion. But plans for upgrading the U.S. 460 highway connection between Suffolk and Petersburg were sharply curtailed after a funding debacle. Norfolk Southern is accommodating some of the surge in freight traffic with its double-stacked trains destined for Midwest markets. Judging by the article’s silence on the subject, highway congestion has not yet emerged as a bottleneck for the maritime industry’s growth. But if freight traffic continues growing at last year’s pace, congestion could become an issue.

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8 responses to “Virginia’s Maritime Future Is Now

  1. well, you make it sound like it’s the government that is responsible for coping with the infrastructure demands – which is curious coming on the heels of the conversation with you and CrazyJD about the govt taking money from citizens to spend on something – the private sector would do much more efficiently and productively.

    so I tweak you on this and would wonder what your philosophy is on whether the State or the private sector should be investing in the infrastructure upgrades.

    what say you?

    • Larry, for about the five millionth time, there are legitimate functions for government. One of them is building infrastructure. The trick for building infrastructure, though, is to avoid wasteful pork barrel. The way to do that is to make infrastructure projects as self-funding as possible. Thus, if government is going to dredge deeper channels in Hampton Roads, that should be paid for by the maritime community of Hampton Roads — not taxpayers from around the country. If a new highway is to be built, that should be paid for by the people using the highway.

  2. well no… there are conflicting signals. .. because what’s been said is that every time – regardless of reason – taking taxpayer money is a loss for the taxpayer who could have allocated that money more efficiently.

    if that’s NOT the case – then can we explain what the criteria is for knowing that taking taxpayer money is justified?

    It looks to me that much of this is or should be a private sector venture – not a publically-funded one.

    what justifies the govt spending taxpayer money?

    now – don’t yell at me… I’m not razzing you… I’m asking a legitimate question… perhaps Crazy can weigh in… and educate…also.

  3. Some of the added tonnage from the Tidewater ports will be hauled by truck, which, in turn, will damage roads and bridges. The Commonwealth ought to charge additional fees for the repair of the highways and bridges, as well as to encourage rail haul. Let’s try something beside crony capitalism for once.

  4. The saga of US 460 is interesting. It was supposed to be a key part of the panamax evolution but a funny thing happened – the feasibility study indicated that trucks would not be willing to pay tolls to use it.

    So all of this anticipated truck traffic is apparently planning on using existing roads – congesting them and beating them to heck and back so taxpayers will have to fix them…

    Jim rightly talks about ROI – …. where is the ROI on taxpayers funding the port and the roads?

    I’m not necessarily opposed to helping the ports if it brings more jobs but I’d like to know the numbers

    and yes – I do consider Bob McDonnell responsible for US 460…, increased gas taxes (after he beat Deeds over claiming he’s raise taxes), , HOT Lanes and tolled tunnels in Hampton!

    bad bad McDonnell!..

  5. How many of you caught Savage’s linked-to article’s reference to “… traveling no more than 8 or 9 knots per hour…”? After a few short hours the ship would be going very fast indeed since knots/hour is an acceleration, not a velocity … sorry, just my Physics degree talking.

    In all seriousness though, as she states truck wait times at the gates are indeed helping stall the port’s progress.

    And when driving down the Rte. 164 Western Freeway one seldom sees the CSX median strip rail line with any movement at all. There are many empty gondola (is that what they are called?) cars sitting still. So maybe truck access to APM Terminals is not the only problem. Where’s that efficiency expert when you need him/her?

  6. We have several distribution centers near us and more are being built in the region.

    basically I think they work like this :

    1 – they are invariably located right next to the CSX or NS mainline rail or on a spur

    2 – they have huge warehouses where the shipping containers are unloaded and returned to the rail cars empty for return to the port.

    3. – they have dozens, hundreds of tractor trailers on the side opposite from the rail side….

    These distribution centers are not your fathers warehouses.

    they are a key part of a integrated logistics supply chain that moves goods from the ports to the store where you shop for your stuff.

    when you check out and your item is scanned – it’s not only put on your ticket to pay for – it’s sent to the warehouse where the next order for replacing that item in that store is being built in real time.

    trucks typically do not bring shipping containers to stores.

    500 Panasonic microwaves and 200 LED TVs in a single container go from the port to a distribution center, unloaded and put in inventory.

    as orders come in from the stores – these items on assembled on pallets then wrapped with plastic and loaded onto trucks with forklifts.

    the trucks are loaded with everything else that store needs from dog food to paper towels to underarm deodorant – all palletized and all loaded onto that 18-wheeler to go to the store.

    This happens for every store in the region that distribution center serves.

    but if you think about this – Panamax is not going to result in twice as many TVs and microwaves being sold in a given region. They’ll sell the same amount and they’ll received the same amount of shipping containers via rail to keep them supplied. And they won’t be sending out any more 18-wheelers than they did before.

    and there won’t be more shipping containers. What changes is the number of ships bringing the shipping containers. Since those ships hold twice as many containers – there will be less ships .but bigger ships.

    so Hampton is getting roughly the same number of containers – with half the number of ships versus many more shipping containers that would hold far more goods.. than the region is buying.

    the distributions centers are not going to be twice as big because they’re not going to be sending out twice as much… they’re going to be continuing to supply the existing demand (plus growth).

    the only way we get more microwaves, ergo more shipping containers is if we expand the geographic regions the distributions centers serve or we build more distribution centers to do that.

    So I guess I’m not convinced we’re going to see more trucks if they’re not carrying any more goods than before… it’s the same amount of goods brought on fewer but much larger ships.

    where am I going wrong on m thinking?

  7. LtG, If you are replying to me one issue is that some trucks take an entire day to make one trip to/from port and warehouse. They are not making any money at that rate and are barely able to handle the present volume of 20′ TEUs. If volume were to grow the problem gets worse.

    Some good things are happening like the new intermodal connector in Norfolk and new gate construction/procedures but we are already behind even Savannah and they are not really as advantageously located as we are.

    Each segment of the port whether in Newport News or Southside has its own unique set of issues.

    Port depth is a temporary advantage we have but even that may be limited in the future by tunnels beneath the Chesapeake Bay and Elizabeth River channels. Once in place and ballasted the controlling depth is limited.

    Maybe Jim can get John Rinehart or another port exec to contribute to this thread.

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