HJR 72: Joint Subcommittee Studying Public-Private
Partnerships Regarding Seaports in Virginia
August 26, 2008
The first meeting
of the Joint Subcommittee Studying Public-Private Partnerships Regarding
Seaports in Virginia was held in Richmond. Delegate Purkey was elected
chair and Senator Wagner was elected vice-chair.
Bridges, Executive Director, Virginia Port Authority
Port of Virginia, the third largest port on the East Coast and the fifth
largest port in the United States in 2007, is an economic engine for the
Commonwealth, with 343,000 port and port-related jobs statewide, $41 billion
in business revenues, and $1.2 billion in state and local taxes. Mr. Bridges
described the growth plans (e.g., Craney Island Marine Terminal, estimated
to bring to the Hampton Roads region 54,000 new jobs, $1.7 billion in
wages, and $155 million in annual state and local tax revenue), which
amount to a $3 billion commitment, to accommodate projected cargo demand.
He identified financing options available to the Port of Virginia to remain
competitive and listed factors that contribute to the East Coast competitive
environment in which it operates.
Dorto, President & CEO, Virginia International Terminals, Inc. (VIT)
Mr. Dorto delivered an overview of port operations. Mr. Dorto
explained that VIT is a nonstock, nonprofit company created in 1983 by
the Virginia Port Authority to operate the State's ports. VIT receives
no state general fund dollars, terminal revenue funds the entire operations
of VIT and the Virginia Port Authority. Transportation Trust Fund money
received by the Virginia Port Authority can only be used for maintenance
and capital improvements. In addition, Mr. Dorto stated that VIT has 448
full time employees and hires approximately 800 longshoremen per day.
VIT's fiscal year budget for 2009 is $239,969,000 gross income and VIT's
fiscal year budget for 2009 is $59,293,000 net income.
VIT has negotiated
10-year agreements with all but one of its customers, and these agreements
ensure the steady flow of cargo through the Virginia Port Authority ports
for the next 10 years, allowing the Virginia Port Authority/VIT to better
plan their improvements and expenditures in the future. Moreover, VIT/Virginia
Port Authority has been successful in attracting major distribution centers
to the Hampton Roads area in the past five years. VIT has a good balance
of import/export containers (49%/51%, respectively, for 2007), which enables
truck and rail to have two-way moves and balance their equipment. Mr.
Dorto told the joint subcommittee that $465 million has been reinvested
into the ports' infrastructure and has paid the cost of operations for
the Virginia Ports Authority. Mr.
Dorto’s presentation can be found at http://dls.state.va.us/GROUPS/ports/MEETINGS/082608/operations.pdf.
Homer, Virginia Secretary of Transportation
Secretary Homer explained that the Port of Virginia has the ability
to be competitive with other ports. He explained that the Port of Virginia
"will be competitive well into the future because of external factors"
- The completion
of the Panama Canal expansion by 2015.
- Deep natural channels
that accommodate the largest cargo ships.
- Existing freight
rail network along with significant rail improvements by the federal
and state government, Norfolk Southern, and CSX.
Homer noted that securing capital funding for a port expansion in Virginia
Port Authority's 2040 plan and road and rail improvements consistent with
the Commonwealth Transportation Board's long-range plan are constraints
on the Port of Virginia's future competitiveness.
also discussed how cargo truck traffic will increase as business grows
and how road and rail networks will support or constrain growth (i.e.,
road connections to the Port of Virginia are strained, but rail is a competitive
advantage for the Port of Virginia). Secretary Homer then explained that
the Port of Virginia could maintain its competitiveness through operational
improvements (e.g., dwell time reductions for containers), expansions
at APM and Craney Island, and expanded road and rail networks. Specifically,
Secretary Homer suggested that for the future competitiveness of the Port
of Virginia, the critical highway corridors and rail networks are necessary.
He also warned that the slowing economy will reduce public funding for
port-related infrastructure. Secretary Homer's presentation can be found
Dr. Roy Pearson,
Professor Emeritus, Mason School of Business, The College of William &
Pearson discussed how the Virginia Port Authority operations added value
for Virginia businesses, governments, and households in fiscal year 2006.
Dr. Pearson first explained the components impacting his findings (i.e.,
impact components): direct impact, indirect impact, induced impact, and
total impact. Direct impact is the production and sale of goods or services
being analyzed; indirect impacts are purchases from other businesses to
carry out the direct activities; induced impact are earnings created by
direct and indirect impacts that are spent by households, businesses,
and state and local governments; and total impact is the sum of the three
types of impacts. The impacts were modeled using IMPLAN Professional 200,
which is based on government data about national, state and local production
of goods and services and market transactions and other specific state
and local information from surveys and other sources. Dr. Pearson then
remarked that the Virginia Port Authority's full contribution to Virginia's
economy includes contributions flowing from exports produced in Virginia
and imports used in Virginia.
Dr. Pearson stated
that Virginia Port Authority-related port operations impacts (which include
the Virginia Port Authority, Virginia International Terminal, port service
companies, and companies transporting goods to and from the terminals)
included $4.46 billion in revenue/sales, $1.6 billion in employee compensation,
and 35,665 employees. Total Virginia economic impacts of the Virginia
Port Authority include $41.07 billion in revenue/sales, $13.52 billion
in employee compensation, and 343,000 employees. With regard to exports,
of $14.7 billion in exports handled, $8.1 billion was made in Virginia.
Virginia Port Authority Virginia-made export impacts included $16.28 billion
in revenue sales, $4.29 in employee compensation, and 93,520 employees.
By contrast, with regard to imports, of $21.5 billion in imports handled,
$8.5 billion stayed in Virginia. Impacts of Virginia use of Virginia Port
Authority imports include $20.31 billion in revenue/sales, $7.59 billion
in employee compensation, and 213,816 employees. Dr. Pearson's presentation
can be found at http://dls.state.va.us/GROUPS/ports/MEETINGS/082608/VPA.pdf.
Rosemond, Vice-President of Sales & Marketing, Wyatt Transfer Inc.
Rosemond expressed concerns of truck drivers who are independent-operators
and deliver cargo to/from the ports. He noted, however, the good relationship
with such truck drivers and the Virginia Port Authority, which is due
in part to the monthly meetings in which Mr. Bridges, Executive Director
of the Virginia Port Authority, meets with such truck drivers.
Senior Vice President and Corporate Secretary, "K" Line America,
Nobuo Ishida, Senior Vice President "K" Line America, Inc.
Mills discussed "K" Line America, Inc.'s history, corporate
principles, and financial highlights (e.g., $13.3 billion in revenues;
$1.3 billion in operating income). He discussed the international operations
of "K" Line America, Inc., such as its containership, dry bulk
carrier, car carrier, logistics, short sea and coastal shipping, energy
transportation, and tanker and heavy lift businesses. Mr. Mills shared
why "K" Line America, Inc. decided to relocate from New York,
New York and headquarter in Richmond, Virginia. A low cost of living,
enjoyable climate, and a well-educated, quality workforce were found in
Richmond, Virginia. Also, locating in Virginia allowed "K" Line
America, Inc., as an ocean carrier, to enjoy:
- A strategic location
within the Mid-Atlantic Coast.
- A superior inland
- Favorable relationships
- State economic
- A deep harbor.
- Close proximity
to open ocean.
- No ice free or
air draft from bridges.
Mr. Mills discussed
factors affecting port competition (e.g., good infrastructure to deliver
goods to customers, high productivity for vessels, and fast rail connections
to/from inland destinations) and means to enhance a port's competitiveness
(e.g., recruit exporters and manufacturers, invest in Virginia's infrastructure).
The presentation can be found at http://dls.state.va.us/GROUPS/ports/MEETINGS/082608/KLinePPT.pdf.
September 24, 2008
On September 24,
2008, the joint subcommittee studying public-private partnerships regarding
seaports in Virginia held its second meeting at 1:00 pm at Old Dominion
University in Norfolk, Virginia.
Brown, Sr., International Vice President of Port of Hampton Roads, International
Brown first delivered a presentation to the joint subcommittee. He began
describing the membership and charitable activities of the International
Longshoremen's Association in Hampton Roads. By detailing his many experiences
working at the ports over the past decades, Mr. Brown explained why he
prefers the current operations of the ports. In addition, Mr. Brown suggested
that the current operations of the ports in Virginia have contributed
to increased economic growth and attractiveness in the Hampton Roads region.
Furthermore, longshoremen have received extensive training in containerization
and incomes due to the current operations of the ports, according to Mr.
Patrick B. Trapp, Commander of Coast Guard Sector Hampton Roads
United States Coast Guard
Captain Trapp delivered a presentation in which he discussed
the Coast Guard's relationship to Virginia's seaports. In doing so, Captain
Trapp first stated the mission statement of the Coast Guard with respect
to the Sector Hampton Roads area. In addition, he explained that the Commander,
Sector Hampton Roads serves, concurrently and ex-officio, as the Captain
of the Port; Officer in Charge, Marine Inspection; Federal On-Scene Coordinator;
Federal Maritime Security Coordinator; and Search and Rescue Mission Coordinator.
After explaining the duties associated with the aforementioned titles,
Captain Trapp shared some local port security challenges facing the Coast
Guard, e.g., nearby chemical and power plants, nearby major fuel pipelines.
Finally, Captain Trapp discussed the new regulations relating to the Transportation
Worker Identification Credentials and the mandates and composition of
the Area Maritime Security Committee.
K. Talley, Executive Director, International Maritime Ports and Logistics
Management Institute, Old Dominion University
Talley delivered a presentation entitled "Global Port Governance,
Privatization and Operation." After delivering opening remarks about
Old Dominion University's business programs that relate to port management,
Dr. Talley described four types of ports: "the service port; (2)
the tool port; (3) the landlord port; and (4) the private port."
(owns land/all assets)
(operations controlled by port authority)
(owns land and assets)
(staff operates port-owned equipment; private cargo-handling firms
operate other cargo handling activities)
(leases port's infrastructure to private terminal operator, who
may hire dockworkers, purchase and install own equipment, and maintain
own buildings, to operate port)
Owner (owns land and infrastructure)
(leases port operations)
used in chart is solely attributable to Dr. Talley and can be found
in his presentation on the study website.
Dr. Talley reported
that service ports have decreased in number as privatization of port operations
has increased. Privatization is a process in which governments seek "to
increase the efficiency of port operations" through asset and service
privatization. Note that asset privatization, according to Dr. Talley,
is "the transfer of assets from a public port to the private sector
(e.g., to a private port terminal operator)" and service privatization
is "the transfer of a public port service (but not public port assets)
to the private sector its provision."
port privatization in the United Kingdom, Dr. Talley detailed the process
by which port privatization has occurred. He also shared examples of the
works of and speculative interests in private port terminal operators.
Jerry A. Bridges, Executive Director, Virginia Port
Authority, Joseph A. Dorto, President & CEO, Virginia International
Terminals, Inc., and Barbara Reese, Deputy Secretary, Office of the Secretary
of Transportation all offered statements in response to the presentations
made and the discussions that took place. In particular, Ms. Reese discussed
the Public-Private Transportation Act with members of the joint subcommittee.
The next meeting
is scheduled for October 22.
The Hon. Harry
Kevin Stokes, DLS
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