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Home » Virginia Port Executive Sees Permanent Shift in Import Traffic from Asia to U.S.

Virginia Port Executive Sees Permanent Shift in Import Traffic from Asia to U.S.

May 1, 2005
Global Logistics & Supply Chain Strategies

The shift of some Asian containerized imports from intermodal to all-water services is a permanent one, says J. Robert Bray, executive director of the Virginia Port Authority (VPA).
Along with other major U.S. East Coast ports, the VPA has benefited greatly from trans-Pacific ocean carriers' increased reliance on the Panama Canal as a means of getting Asian containers into the eastern region of the country. They have been prompted by severe congestion at U.S. West Coast ports, particularly in Southern California.
Bray says the shift began with the shutdown of West Coast ports in the early fall of 2002. The dispute, triggered by a lockout of longshore workers by terminal owners, forced carriers and shippers to scramble for other ways to get their cargoes to inland destinations in time for the Christmas shopping season.
East Coast ports saw a surge of containers moving by all-water service through the Panama Canal. But the resolution of the West Coast labor dispute didn't result in a complete reversal of that pattern. Soon after, heavy congestion caused by an improving economy and inadequate inland facilities for container transfer began plaguing West Coast ports. Carriers began moving even greater amounts of traffic through the Panama Canal to U.S. East and Gulf coast ports.
VPA's container tonnage has risen steadily ever since. It grew from 1.4 million twenty-foot equivalent units (TEUs) in 2002 to 1.6 million TEUs in 2003. In 2004, the total exceeded 1.8 million TEUs. Overall traffic growth in 2004 reached 10 percent, Bray says, and activity in the first quarter of 2005 shows an additional increase of around 13 percent.
All-water is both cheaper and slower than moving import containers over West Coast docks, then to inland destinations by truck or rail. But "the whole system adjusted to the time difference," Bray says. "Once they found out it would work, [all-water] traffic continued to increase."
Bray says containers moving westward from Asia, then through the Suez Canal for eventual unloading on the East Coast, are also on the increase. He notes, however, that volumes through West Coast ports are still on the rise as well. All major U.S. gateways appear to be benefiting from the explosion of business from Asia, driven primarily by increased manufacturing and sourcing in China.
Like all of its counterparts, Virginia has had to find ways to cope with the increased business. The VPA has undertaken a flurry of new development projects, spending more than $300m to build new terminal facilities and ease the handoff of cargo between ships and inland modes of transport. "We've got more construction under way than everything we've built [up to now]," Bray says.
The work includes the reconstruction of 4,300 feet of marginal berth at Norfolk International Terminals (NIT) South. NIT is the port's largest container-handling facility. The project, scheduled for completion in May, includes installation of eight new container cranes, able to work the largest containerships on the water, and 33 straddle carriers to move boxes within the terminal. Three additional cranes are slated for the Portsmouth Marine Terminal, the port's second-largest container facility in terms of berthing space.
The next big facility to rise up on the Virginia waterfront is the port's only dedicated container terminal, built for APM Terminals, a subsidiary of Maersk Inc. Located on the Elizabeth River in Portsmouth, the expanded APM terminal will feature 4,000 feet of deepwater berth space. Dredging is slated to begin later this year, with terminal completion set for 2007.
Bray says the port will dredge its main channel to 50 feet, deep enough for the latest generation of containerships. The project will improve access both to NIT and the Newport News Marine Terminal, a third cargo facility that handles steel, project cargoes and containers.
Longer term, the VPA plans a container terminal on nearby Craney Island, built upon 600 acres of dredged materials. Bray says the port hopes to have the facility under construction by 2007, and completed by 2017.
The VPA is also addressing the issue of intermodal transfer. Shippers have complained of severe delays at railheads throughout the country, and the difficulty of obtaining chassis for truck transport in a timely manner. In response, the VPA has launched what Bray says is the nation's first universal chassis pool in a port location, with all shipping lines contributing equipment. A large backup area at NIT has been created to house the chassis. In addition, the carriers have formed an operating company in partnership with Virginia International Terminals Inc., VPA's terminal-operating arm, to inspect and repair chassis on site.
The VPA continues to operate the Virginia Inland Port, located in Warren County more than 200 miles west. The VIP was created to serve as an off-dock intermodal transfer facility, with links to major highways and rail routes. Bray says the operation has been "a tremendous success story," with 22 new distribution centers opening nearby in the past seven years. More than $500m has been spent to build distribution facilities in the area, he says.
Intermodal rail continues to be a problem for many ports on the East Coast, where low tunnels and overhead wires make it difficult to run cost-efficient double-stack container trains. The Norfolk Southern railroad has cleared some of its lines for double-stack, Bray says, and is now working with the VPA to open up more direct routes to Columbus, Ohio and other parts of the Midwest. Local governments in Ohio and West Virginia, in addition to the VPA, have set aside money for construction of the "Heartland Corridor." But the project's fate still depends on congressional funding, as legislators vote on reauthorization of the existing appropriations measure.

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Logistics Ocean Transportation High-Tech/Electronics Asia Pacific North America
KEYWORDS Asia Pacific High-Tech/Electronics Logistics North America Ocean Transportation
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