Ports in Virginia

the Virginia Port Authority leases the Virginia International Gateway terminal in Hampton Roads (orginally known as the APM terminal) plus the Port of Richmond, owns three terminals in Hampton Roads and the inland port in the Shenandoah Valley, and plans to build at new terminal on Craney Island to handle containers
the Virginia Port Authority leases the Virginia International Gateway terminal in Hampton Roads (originally known as the APM terminal) plus the Port of Richmond, owns three terminals in Hampton Roads and the "inland port" in the Shenandoah Valley, and plans to build at new terminal on Craney Island to handle containers
Source: Joint Legislative Audit and Review Commission, Review of the Virginia Port Authority's Competitiveness, Funding, and Governance (2013)

Ocean-going ships have stopped at Virginia wharves since the first English colonists arrived in 1607 and anchored at Jamestown. For the first century of colonization, shipping remained dispersed.

Early trade involved importing colonists and manufactured goods from England, including clothing and items made of iron. Virginia exported raw materials such as sassafras, deer hides, lumber, and especially tobacco to Europe. Virginia supplied much of the corn, wheat, and pork sent to the Caribbean islands where planters chose to dedicate most land and slave labor to growing sugar rather than food.

Jamestown was the first port for ocean-going ships in Virginia
Jamestown was the first port for ocean-going ships in Virginia
Source: National Park Service, "Jamestown - Sidney King Paintings," Arrival of Lord Delaware

Virginia still exports raw materials, particularly coal and food. Most international trade today involves shipments not in hogsheads but in containers measured in TEU's, for "twenty-foot equivalent units." Most containers are 40 feet long, and containers of that length are counted as two TEU's in port statistics.

Development of towns where wharves were concentrated to create a "port" occurred slowly in Virginia. There were few roads in the 1600's or even the 1700's that were passable when the ground was wet. It was not feasible to use carts pulled by oxen to carry hogsheads of tobacco, loads of lumber, or barrels of flour/salted beef very far on land. Plantation owners in Tidewater preferred to ship directly from their individual wharves, rather than carry goods overland and store them in warehouses at someone else's wharf until a ship arrived.

view from the river of replicas of the first English ships at Jamestown (Susan Constant, Godspeed, and Discovery)
view from the river of replicas of the first English ships at Jamestown - Susan Constant, Godspeed, and Discovery

The deep channels of multiple rivers and the colonial government's generous grants of land shaped the development of Virginia east of the Fall Line. The various rivers connecting to the Chesapeake Bay provided easy access for trans-Atlantic ships to collect cargo from many "necks" (peninsulas) and riverbank wharves in Tidewater.

the natural river channels of the Piankatank, Rappahannock, and other rivers in Tidewater were deep enough for ocean-going ships in the 1700's to sail directly to plantations, delaying the development of centralized port towns
the natural river channels of the Piankatank, Rappahannock, and other rivers in Tidewater were deep enough for ocean-going ships in the 1700's to sail directly to plantations, delaying the development of centralized port towns
Source: Library of Congress, A map of the most inhabited part of Virginia (by Joshua Fry and Peter Jefferson, 1755)

After a ship arrived at a Virginia plantation, it would dock at a major plantation's wharf. It would then launch the ship's shallop (a small boat used in shallow waters), and together with local boats a ship would collect hogsheads of tobacco, wheat, lumber, and other products. Those items would be gathered from the separate wharfs of smaller, nearby plantations/farms. Almost every colonist could interact with international visitors; sailors from a wide variety of exotic locations were "in the neighborhood" almost annually.

The use of small boats to collect cargo from multiple locations on the river reduced the number of stops a ship had to make to gather a full load for the return to Europe. However, the inefficient collection process required a trans-Atlantic ship to spend as much as seven unprofitable months in Virginia to collect 300 hogsheads of tobacco.1

Virginia's rivers had deep channels that allowed ocean-going ships to sail all the way inland to the Fall Line in the colonial era, so ports developed 60 miles west of the coast at Petersburg, Richmond, Newcastle, Fredericksburg, and Alexandria
Virginia's rivers had deep channels that allowed ocean-going ships to sail all the way inland to the Fall Line in the colonial era, so ports developed 60 miles west of the coast at Petersburg, Richmond, Newcastle, Fredericksburg, and Alexandria
Source: Architect of the Capitol, Washington's Farewell Address, 1796

The impact of Virginia's physical geography on the settlement pattern and international trade was clearly recognized by English officials, who desired concentrated development to facilitate military defense and the collection of taxes. As John Clayton noted in 1688:2

For the great Number of Rivers, and the Thinness of the Inhabitants, distract and disperse a Trade. So that all Ships in general gather each their Loading up and down an hundred Miles distant; and the best of Trade that can be driven is only a Sort of Scotch Pedling; for they must carry all Sorts of Truck that trade thither, having one Commodity to pass off another.

This (i. e.) the Number of Rivers, is one of the chief Reasons why they have no Towns: for every one being more sollicitous for a private Interest and Conveniency, than for a publick, they will either be for making forty Towns at once, that is, two in every Country, or none at all, which is the Country's Ruin.

The result, as one recent scholar has noted:3

It was not until after 1700, with the extension of European settlement beyond the fall line and development first of Norfolk and later of other port towns and cities, that trade began to concentrate and significant proportions of the population lived out of direct contact with the maritime world.

hogsheads of tobacco were shipped from Jamestown, but away from the colonial capital ships had to stop at multiple wharves built at separate plantations
hogsheads of tobacco were shipped from Jamestown, but away from the colonial capital ships had to stop at multiple wharves built at separate plantations
Source: National Park Service, Jamestown Lifescape - Mid-17th Century (Keith Rocco painting)

In the 1700's, concentrations of population led to development of port towns. Norfolk, Portsmouth, and Hampton developed in Hampton Roads. Population expanded in the Piedmont, and agricultural products were shipped down river. By 1750 Richmond, Petersburg, Fredericksburg, Dumfries, and Alexandria emerged at the Fall Line.

Because it offered a safe harbor on the Elizabeth River and was closest to Europe, Norfolk was Virginia's leading port at the time of the American Revolution. It had close ties to merchants in England, and was a Loyalist stronghold. After Lord Dunmore fled Williamsburg in 1775, he had British warships anchor off Norfolk. After a series of incidents the British burned part of the town at the start of 1776, and the patriots completed that destruction so Norfolk woud not serve as a Brittish base during the war. The shipyard at Gosport and Hampton served as primary bases for the Virginia Navy during the American Revolution until the 1779 raid by Admiral Sir George Collier and General Edward Mathew, followed by invasions under General Alexander Leslie and then General Benedict Arnold in 1780.

Port Republic, where the North, Middle, and South rivers merge to form the South Fork of the Shenandoah River, reflects Virginia's dependence on water-based transportation even far inland from ocean-going ports
Port Republic, where the North, Middle, and South rivers merge to form the South Fork of the Shenandoah River, reflects Virginia's dependence on water-based transportation even far inland from ocean-going ports
Source: Library of Congress, Topographic map of the battle-field of Port Republic, Virginia, June 9, 1862

Norfolk rebuilt after the Treaty of Paris was signed in 1783, but as population increased to the west more trade came down Virginia's rivers and stopped at the Fall Line. Ports further west, closer to the inland trade than ports in Hampton Roads, gained more traffic.

New technology also reshaped shipping patterns. The new steamships developed after 1815 could push up the James River to the Fall Line fast while sailing ships that relied upon windpower had to tack back and forth across the river. By the 1820's, Richmond surpassed Norfolk as Virginia's largest port.

the Port of Richmond is 100 miles up the winding, shallow James River from Norfolk, much closer to farms on the Piedmont
the Port of Richmond is 100 miles up the winding, shallow James River from Norfolk, much closer to farms on the Piedmont
Map Source: US Fish and Wildlife Service, Wetlands Mapper

The state capital maintained its leadership position until after the Civil War. That dominance was extended in part because Richmond and Petersburg interfered with Norfolk's growth. The Fall Line cities used their influence to erect political and financial barriers that delayed Norfolk's efforts to build railroads that would connect Hampton Roads ports with the farmers exporting crops from the Piedmont of Virginia and North Carolina.

Between the Civil War and World War I, ocean-going ships grew larger and required deeper channels, and Norfolk surpassed Richmond. By the 1880's, the biggest ships required 19' deep channels. Richmond was able to get Congressional funding to cut direct routes through several bends in the James River, but the river channel was dredged to only 18' by 1916.

After the Civil War, exports were sent to deeper-water ports east of the Fall Line. The Chesapeake and Ohio (C&O) Railroad bypassed Richmond in 1882, when Henry Huttleston Rogers built the Chesapeake and Ohio Railroad down the Peninsula and created a new coal-shipping port at Newport News. The Norfolk and Western Railroad expanded its coal-shipping terminal at Norfolk, and the Virginian Railroad later built its terminal just to the north at Sewell's Point.

the decision of the Chesapeake and Ohio Railroad to build its coal terminal at Newport News spurred population growth there
the decision of the Chesapeake and Ohio Railroad to build its coal terminal at Newport News spurred population growth there
Source: Boston Public Library, Chesapeake and Ohio Terminal, Newport News, VA

Large steamships brought imports to Norfolk, Portsmouth, or Newport News, then collected their next load of cargo there. Goods going inland to Richmond were transferred to smaller vessels in order to be "lightered" upstream. Whenever possible, shippers sent goods directly from deepwater ports in Hampton Roads. The extra costs to use an extra ship, to get cargo up or down the shallow James River channel, led to the decline of Richmond as a port city.

dredged channels at Hampton Roads
dredged channels at Hampton Roads
Source: National Marine Fisheries Service, Maintenance of Chesapeake Bay Entrance Channels and use of sand borrow areas for beach nourishment

During the Great Depression in the 1930's, the US Army Corps of Engineers dredged a 25' deep James River shipping channel. It was too little, too late; by then the bigger ships needed even more depth and a wider channel to maneuver. The Corps of Engineers still maintains a 300-foot wide, 25-foot deep channel to Hopewell and a 200-foot wide, 25-foot deep channel to Richmond, but shipping traffic is limited primarily to a three-times-per-week barge service known as the 64 Express.4

the Pocahontas Parkway bridge over the James River has a high clearance, to allow ships to reach Deepwater Terminal just upstream
the Pocahontas Parkway bridge over the James River has a high clearance, to allow ships to reach Deepwater Terminal just upstream
Source: US Federal Highway Administration, Introduction to Public-Private Partnerships (P3s)

As shipping to Richmond declined, traffic at ports in Hampton Roads grew. The railroads continued to use their private coal-exporting terminals at Norfolk and Newport News. Other companies built additional private terminals to import/export petroleum products, grain, and other commodities.

After World War II, the cities of Newport News, Portsmouth, and Norfolk each built a municipally-owned shipping terminal using local tax revenues and profits from terminal operations. The Norfolk Industrial Port Authority was created by the city in 1948 to "bring the world to Norfolk, and bring Norfolk to the world." It expanded the US Army's original World War I Norfolk Army Base (later used as the World War II Port of Embarkation and Korean War Hampton Roads Army Terminal) into Norfolk Tidewater Terminals in the 1960's.5

The Peninsula Ports Authority of Virginia owned the Newport News Marine Terminal on the northern bank of the James River, and contracted with the Chesapeake and Ohio Railroad to operate it until the early 1980's. Nissan chose Newport News as a primary entry site for its East Coast car imports, and it became a "roll on, roll off" hub.6

The Portsmouth Port and Industrial Commission developed the Portsmouth Marine Terminal at Pinners Point. The Western Branch Railway had built a terminal there in 1886, and in 1896 the Atlantic Coast Line and Southern Railway had greatly expanded it.7

The General Assembly had created the Virginia State Ports Authority in 1952, hoping to create more shipping-related jobs in Virginia. However, the three jurisdictions each wanted a local return on their local investments for local taxpayers. They competed more than cooperated with each other, fragmenting trade to the region.8

After World War II, population growth led to fierce competition among Hampton Roads jurisdictions with territorial annexations, consolidations, and conversion of counties to city status, particularly to limit Norfolk's expansion. The competition between local governments limited the state's efforts to market the strengths of three different ports as a single package, in order to generate regional and statewide growth. The refusal of the separate jurisdictions in Hampton Roads to consolidate their municipal governments also limited bonding capacity and revenue available to expand the capacity of separate ports.

the Virginia Port Authority acquired three municipally-owned ports in 1971-72, and the consolidatiion of operations and investments to upgrade equipment led to a dramatic increase in containerized cargo over the next 40 years
the Virginia Port Authority acquired three municipally-owned ports in 1971-72, and the consolidation of operations and investments to upgrade equipment led to a dramatic increase in containerized cargo over the next 40 years
Source: Virginia Coastal Energy Research Consortium, Hampton Roads Maritime And Ports Capacity Report (July 2009)

In the 1960's the local jurisdictions determined that the costs of port expansion were too high, while the General Assembly determined it would not fund port expansions unless the state had a stronger role in managing the assets. The Virginia State Ports Authority was renamed the Virginia Port Authority and, with the support of the three cities, the state agency acquired the three municipal terminals. The Virginia Port Authority took ownership of the Portsmouth Marine Terminal (PMT) and the Newport News Marine Terminal (NNMT) in 1971, and the Norfolk terminal (NIT) in 1972.9

The 1970's consolidation under the Virginia Port Authority was intended to streamline operations among the publicly-owned terminals and with the longshoremen, shipping companies, and railroads. Greater efficiency was intended to draw business away from competing East Coast ports, particularly in New York/New Jersey, Baltimore, Charleston, and Savannah. The state now advertises a consolidated Port of Virginia, a term which includes the various terminals controlled by the Virginia Port Authority and the private terminals managed by other companies.

The publicly-owned terminals in Hampton Roads upgraded their cranes, chassis storage yards, and railroad connections in response to the shift starting in the 1960's to containerized cargo. The state-controlled terminals handle most of the containers that move through Hampton Roads, though the terminals can still handle "roll-on roll-off" cargo such as cars and "break bulk" cargo (goods packed on various sorts of pallets and sacks) such as wood products.

Consolidated operations increased efficiency and marketing success, and attracted more ships to Virginia's ports. The deep shipping channels to Norfolk, Portsmouth, and Newport News helped attract the large ships that carried the most containers. In 1980 the Hampton Roads ports were #30 in the United States measured by tons of cargo handled. By 2013, they had risen to #3.10

Newport News Marine Terminal (NNMT)
Newport News Marine Terminal (NNMT)
Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 18)

The General Assembly created the Virginia International Terminals (VIT), a non-stock corporation, in 1983. It is the service operator of state-owned terminals and negotiates with the International Longshoremen's Association. VIT is wholly owned by the Virginia Port Authority but technically a private corporation, so it can deal with the labor contracts without violating the state legislature's long-standing prohibition against union negotiations by state agencies.

In 1986, the General Assembly raised taxes to finance transportation projects. Part of the package passed under Governor Baliles was creation of the Commonwealth Port Fund, managed by the Virginia Port Authority to facilitate infrastructure improvements by local governments and state agencies.

In the first 40 years of state ownership, the General Assembly invested $1 billion in upgrading port infrastructure. Between 1986 and 2012, the Commonwealth Port Fund provided nearly $700 million for expanding capacity. Since gaining ownership of the municipal terminals through 2012, the state legislature appropriated another $300 million from the General Fund to cover mostly costs of operating the terminals, plus some money for rail infrastructure improvements, dredging, and Craney Island expansion for creation of a future terminal.11

Today Virginia Port Authority owns four major terminals and leases two others. The Commonwealth of Virginia owns the three terminals at Norfolk, Portsmouth, and Newport News in Hampton Roads, plus the Virginia Inland Port that opened in 1989 in Warren County.

Portsmouth Marine Terminal (PMT)
Portsmouth Marine Terminal (PMT)
Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 8)

The Virginia Port Authority has long-term lease to operate the privately-owned Virginia International Gateway (VIG) in Portsmouth, formerly known as A. P. Moller Terminal (APM). The Virginia Port Authority also operates the Richmond Marine Terminal, formerly known as Deepwater Terminal, under a separate long-term lease with the City of Richmond.

Richmond Marine Terminal (RMT) at the Port of Richmond (POR)
Richmond Marine Terminal (RMT) at the Port of Richmond (POR)
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 27)

The Virginia Port Authority is a public agency; investors can not buy stock in it or replace management through shareholder votes. The governor appoints 11 people to the 12-person board to manage the Virginia Port Authority. By law the State Treasurer is also a member of the Board, and three board members must come from Hampton Roads cities - one from Portsmouth or Chesapeake, one from Norfolk or Virginia Beach, and one from Newport News or Hampton.

The independence of the Virginia Port Authority board is limited. Governor McDonnell demonstrated the power of his office in 2011 when he fired 10 of the 12 members on the Virginia Port Authority board.

Virginia had rejected proposals in 2009 to privatize the state-owned ports, or to create a public-private partnership to replace the Virginia Port Authority. Virginia chose to invest state funding, rather than rely upon the private sector, to improve efficiency and expand capacity in anticipation of future profits. While the Virginia Port Authority was retained, the governor and his Secretary of Transportation recognized that the ports of New York/New Jersey, Savannah, and Charleston were recovering faster after the 2008 recession. Replacing 10 board members made clear the governor's desire for a different management approach.

The 10 new board members clearly had experience running businesses, but they were also expected to be more responsive to Governor McDonnell's priorities. As noted by the Richmond Times-Dispatch:12

The new board consists of business leaders and Republican donors. The dismissed board members were all appointed by Democratic governors. The lone remaining member on the new board is Michael J. Quillen, the CEO and chairman of coal operator Alpha Natural Resources, a major McDonnell donor.

In 2012, Governor McDonnell once again considered various proposals to privatize the terminals controlled by the Virginia Port Authority. Once again, the Republican governor chose to retain government ownership and control of key transportation assets that affected so much economic activity across the state.

terminals in Hampton Roads where ships load/unload containerized and break bulk cargo
terminals in Hampton Roads where ships load/unload containerized and break bulk cargo
Source: The Port of Virginia Infrastructure Update - Norfolk (February 16, 2012)

The state continues to expand and consolidate its shipping infrastructure. In 2010 the Virginia Port Authority leased the privately-owned A. P. Moller Terminal (APM) for 20 years, until the year 2030. A Danish business conglomerate known as A. P. Moller–Maersk Group had built the highly-automated facility in 2007 for $450 million.

The world economy was booming at the start of the 21st Century as China developed, and the A. P. Moller Terminal was the largest private container terminal in the country when constructed. When a major recession hit in 2008, ocean shipping declined substantially and the brand new terminal was underutilized. The Virginia International Terminals (VIT) had signed long-term contracts with shipping companies prior to the opening of the competing APM terminal in order to lock in the business, but many containers were being handled at the outdated and inefficient Portsmouth Marine Terminal (PMT).

Hampton Roads has been an international shipping destination since 1607
Hampton Roads has been an international shipping destination since 1607
Source: Commonwealth of Virginia, Statewide Rail Plan (Figure 2-6)

By leasing the A. P. Moller Terminal (APM) terminal, the Virginia Port Authority gained an efficient container-processing terminal without having to borrow money for the initial capital investment. The lease also eliminated the state's competitor for processing containerized cargo in Hampton Roads, ensuring the efficiency of a monopoly and the ability to set prices.

Leasing the terminal guaranteed A. P. Moller–Maersk Group at least $40 million annually for 20 years, removing the business risk associated with the ups and downs of shipping. The private A. P. Moller Terminal (APM) terminal handled shipping from the Maersk line (a related company) and the Evergreen shipping line, but the Virginia International Terminals (VIT) had offered such good terms on its long-term contracts that the state-controlled terminals retained the business of the other shipping lines.

The Virginia Port Authority shifted container traffic from Portsmouth Marine Terminal (PMT) to the new terminal. A portion of the Portsmouth Marine Terminal (PMT) was leased to a company exporting wood pellets and another portion used by the contractors building the new Downtown Tunnel between Portsmouth-Norfolk.

The Portsmouth Marine Terminal (PMT) was largely dormant, but not "mothballed." In 2014 it was used to ship 2,500 Chrysler Jeep SUVs to China. Afterwards, as an unexpected surge number of shipping containers created congestion at the Norfolk International Terminals (NIT) and Virginia International Gateway (VIG) terminals, Portsmouth Marine Terminal (PMT) was re-activated as a container terminal.13

Portsmouth Marine Terminal is constructed in part on material dredged from the Elizabeth River when the Midtown Terminal was bult in 1962
Portsmouth Marine Terminal is constructed in part on material dredged from the Elizabeth River when the Midtown Terminal was built in 1962
Source: US Geological Survey (USGS), Norfolk South 7.5 minute topographic quad (2011)

Plans to expanding capacity, in anticipation of attracting more traffic after the Panama Canal was expanded, including building a fourth major terminal in Hampton Roads. The Virginia Port Authority planned to construct the Craney Island Marine Terminal (CIMT) by 2030. The new terminal, estimated to cost over $2 billion, would double the port's capacity and allow it to handle five million "trailer equivalent units" (TEU's) per year.

The Craney Island Marine Terminal (CIMT) will be located on new land created on the west side of the Elizabeth River, north of the Virginia International Gateway (VIG) terminal. The new land is being created from material dredged regularly from the bottom of the Elizabeth River and Hampton Roads in order to deepen/maintain shipping channels, then dumped at the Craney Island Dredged Material Management Area.

Building a new terminal on new land is a long-term project. It required decades to plan, and will require even more decades to implement. The Craney Island Eastward Expansion Environmental Impact Statement (EIS) was approved in 2006, and final permits were issued by the Virginia Department of Environmental Quality in 2010. Construction began soon afterwards, so dredged materials will ultimately extend the Craney Island Dredged Material Management Area to form new land for the new terminal.

In 2012, as Virginia reconsidered privatizing its terminals, the Corps of Engineers re-analyzed the proposed Federal investment in the Craney Island Marine Terminal (CIMT) project.

The Panama Canal, before widening, has been limited to ships 13 containers wide. The re-analysis assumed use of the larger Suez-class cranes that can stretch across ships loaded 22 containers-wide, stacked six containers high on a ship's deck. The Corps concluded that the benefit-cost ratio of the Craney Island Marine Terminal over the next 50 years would be better than 6:1, almost double the Federal government's initial estimates.14

Studies and plans are projections that may come true in the long run, but actual business conditions vary. Starting with the 2008 recession, the Virginia Port Authority lost money for five years in a row. During debates over privatizing the state-owned facilities, the Virginia International Terminals (VIT) offered steep discounts that attracted so much business that most workers were earning overtime pay, but revenue was below the costs to handle the extra containers.15

In 2014, after completing return-on-investment calculations, Virginia officials chose to expand capacity at the Portsmouth Marine Terminal (PMT) rather than speed up construction at Craney Island. The owners of the A. P. Moller Terminal (APM) sold it to a British pension fund in 2014, which renamed it the Virginia International Gateway (VIG). The Virginia Port Authority also began negotiating with the private owners of the Virginia International Gateway (VIG) to extend the 20-year lease and identify a formula for using public funds to expand that terminal as well.

the Virginia International Gateway (VIG) Transfer Zone provides space for containers to be moved by a straddle carrier onto a truck chassis
the Virginia International Gateway (VIG) Transfer Zone provides space for containers to be moved by a straddle carrier onto a truck chassis
Source: Virginia International Gateway, Terminal Cameras

In 2015 the General Assembly authorized redirection of funding away from planned construction of the new Craney Island Marine Terminal (CIMT), towards upgrades of existing Port of Virginia facilities. In 2016 the state legislature approved $350 million in new bonds to upgrade the Norfolk International Terminals (NIT) and Virginia International Gateway (VIG) infrastructure, and the Virginia Port Authority budgeted $739 million for capital investment. Investment in new gantry cranes was planned to increase the number of containers that Norfolk International Terminals (NIT) could process by nearly 50%, from 1.4 million TEU's annually to over 2 million TEU's.

Capacity at the Virginia International Gateway (VIG) would also be doubled to 2.2 million TEU's, once the lease was extended long enough for the state to amortize its investment. The state also considered purchasing that terminal outright, perhaps at the end of a longer lease period. Since the A. P. Moller–Maersk Group had sold the terminal in 2014, lease/sale terms were no longer affected by potential shipping rivalries.

The state's plans to purchase new gantry cranes created concern in the City of Portsmouth. The privately-owned equipment originally installed by the A. P. Moller–Maersk Group at Virginia International Gateway (VIG) generated $8 million in annual tax revenue for the city. New cranes would speed container processing, but as a local government the City of Portsmouth would not be able to tax the state-owned equipment. The Virginia Port Authority could make special arrangements in any lease or purchase agreement to accommodate the city's concerns, of the General Assembly could authorize a local tax on each container shipped through the terminal.16

terminals in Hampton Roads include Newport News Marine Terminal (NNMT), Norfolk International Terminals (NIT), Portsmouth Marine Terminal (PMT), APM/Maersk Terminal (APM) - now Virginia International Gateway (VIG), and the future Craney Island Marine Terminal (CIMT)
terminals in Hampton Roads include Newport News Marine Terminal (NNMT), Norfolk International Terminals (NIT), Portsmouth Marine Terminal (PMT), APM/Maersk Terminal (APM) - now Virginia International Gateway (VIG), and the future Craney Island Marine Terminal (CIMT) (the privately-owned coal terminal at Lamberts Point, used by Norfolk Southern railroad to load coal, is visible between PMT and NIT on the east side of the Elizabeth River)
Source: Port of Virginia, State of the Port (2009)

Even after the state leased the Virginia International Gateway (VIG), the Virginia Port Authority does not have a 100% monopoly on all shipping in Hampton Roads. Private shipping terminals remain on the Elizabeth River and the James River, primarily shipping cargo not in containers.

The Virginian Railroad's coal-shipping terminal at Sewell's Point is now the site of Naval Station Norfolk, the world's largest navy base, but coal is still a major commodity shipped from Hampton Roads. The CSX railroad carries coal down the Peninsula to two privately-owned coal terminals in Newport News, Kinder Morgan's Pier IX and a separate coal export terminal owned by Dominion Terminal Associates. The Norfolk Southern railroad exports coal from its large Pier 6 terminal at Lamberts Point in Norfolk.

Hampton Roads exports both bituminous "steam" coal, burned to generate electricity, and metallurgical ("met") coal used for making steel, mined in Kentucky, West Virginia and western Virginia. Only 2% goes to other US ports; 98% go to other countries. World economic cycles shape the demand for the coal. The United States is the "swing supplier" that meets peaks in demand and loses business when economic activity slumps, and Hampton Roads is the world's largest coal export port.

In 2002, at the end of one economic recession, Hampton Roads shipped just 12.5 million tons of coal. In 2012, as the economies in China, India, and Brazil expanded, Hampton Roads shipped nearly 50 million tons of coal, an amount last reached in the early 1990's. That peak then declined quickly to a prediction of only 22 million tons in 2016.17

Perdue Agribusiness ships soybeans from its private terminal on the Elizabeth River (purple circle)<br>and KinderMorgan handles bulk cargo at its private terminal further south (green circle)
Perdue Agribusiness ships soybeans from its private terminal on the Elizabeth River (purple circle) and KinderMorgan handles bulk cargo at its private terminal further south (green circle)
Source: US Geological Survey (USGS), Norfolk South 7.5 minute topographic quad (2011)

KinderMorgan, the "largest independent terminal operator in North America," owns the Elizabeth River Terminal (ERT) on the South Branch of the Elizabeth River, upstream (south) of the Portsmouth Marine Terminal (PMT). Elizabeth River Terminal (ERT) handles mostly bulk cargo such as fertilizer, scrap steel, and other commodities.

Perdue Agribusiness also has a private terminal on the South Branch of the Elizabeth River in the City of Chesapeake. Starting in 2011, Perdue began exporting soybeans to China from that Chesapeake terminal, which it described as "the only soybean-processing facility on deep water on the East Coast." In 2013, the company agreed to export $100 million of soybeans (two million bushels in each of four shipments in Panamax vessels), and considered expanding to the under-utilized Portsmouth Marine Terminal (PMT).18

key maritime facilities in Hampton Roads: 1) Newport News Shipbuilding, 2) Newport News Marine Terminal, 3) CSX-serviced coal terminals operated by Dominion Terminal Associates and Kinder Morgan at Pier IX, 4) Norfolk Naval Base, 5) Norfolk International Terminals, 6) site of proposed Craney Island Marine Terminal, 7) Virginia International Gateway (VIG), 8) Norfolk Southern Lambert's Point docks, 9) Portsmouth Marine Terminal, 10) Norfolk Naval Shipyard, 11) Perdue Agribusiness terminal, 12) Elizabeth River Terminal
key maritime facilities in Hampton Roads: 1) Newport News Shipbuilding, 2) Newport News Marine Terminal, 3) CSX-serviced coal terminals operated by Dominion Terminal Associates and Kinder Morgan at Pier IX, 4) Norfolk Naval Base, 5) Norfolk International Terminals, 6) site of proposed Craney Island Marine Terminal, 7) Virginia International Gateway (VIG), 8) Norfolk Southern Lambert's Point docks, 9) Portsmouth Marine Terminal, 10) Norfolk Naval Shipyard, 11) Perdue Agribusiness terminal, 12) Elizabeth River Terminal
Map Source: US Fish and Wildlife Service, Wetlands Mapper

A 2006 economic analysis of the terminals managed by the Virginia Port Authority documented that 88% of imports arrived in containers. Only 12% was roll-on roll-off (RoRo) bulk cargo such as cars. By 2013, 98% of the tonnage processed at the four Port of Virginia terminals was containerized. The remaining 2% of "break bulk cargo" moved primarily through the Newport News Marine Terminal (NNMT), particularly imported automobiles. (NOTE: those statistics do not include the private terminals exporting coal and much of the grain from Hampton Roads.)

Both the 2006 and 2013 reports indicated that 40% of goods imported via those Hampton Roads terminals remained in Virginia for sale to consumers, or for processing by Virginia businesses. Cargo in containers was easy to load directly on rail cars and trucks, and 60% of imported cargo was carried to out-of-state destinations by truck or rail. Port officials made clear in 2016 that the growth in demand would continue to be rail shipments to the Mississippi River watershed:19

Our growth area is really in the Midwest... The rail hubs in Ohio and even to Memphis and Chicago and St. Louis — we've got the rail access to service that market.

CSX has control over rail access to the Newport News Marine Terminal (NNMT), plus a competitive advantage at the Portsmouth Marine Terminal (PMT) and the Richmond Marine Terminal (RMT). Norfolk Southern has control over rail access at the Virginia Inland Port (VIP), plus a competitive advantage at Norfolk International Terminal (NIT). Rail access at the Virginia International Gateway (VIG) is equitable.

primary Virginia rail corridors for Port of Virginia cargo
primary Virginia rail corridors for Port of Virginia cargo
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 8)

The Commonwealth of Virginia has funded improvements by both the Norfolk Southern and its rival railroad, CSX.

The Heartland Corridor project helped to fund reconfiguring railroad tunnels west of Roanoke so Norfolk Southern trains could "doublestack," allowing railcars to carry one container on top of another. Removing the physical constraints doubled the number of containers a train could carry between Norfolk and Columbus (Ohio), and to Chicago. Norfolk Southern trains can also carry cargo via the Crescent Corridor to the Virginia Inland Port and other destinations to the south in Tennessee and North Carolina.

trains going north on Norfolk Southern's Crescent Corridor carry containers from Hampton Roads through Manassas, before crossing the Blue Ridge on the B Line parallel to I-66
trains going north on Norfolk Southern's Crescent Corridor carry containers from Hampton Roads through Manassas, before crossing the Blue Ridge on the "B Line" parallel to I-66
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 32)

trains using Norfolk Southern's Heartland Corridor carry containers from Hampton Roads cross through the Blue Ridge at Roanoke, then go up the New River parallel to US 460 through West Virginia
trains using Norfolk Southern's Heartland Corridor carry containers from Hampton Roads cross through the Blue Ridge at Roanoke, then go up the New River parallel to US 460 through West Virginia
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 32)

The CSX National Gateway project, including the Kilby Rail Yard in Suffolk, will also enhance access to Virginia's ports. CSX stopped offering intermodal service to the Newport News Marine Terminal (NNMT) at the end of 1988. Twenty years later the railroad refocused on Hampton Roads, after the APM/Maersk terminal (now Virginia International Gateway) was completed and container operations moved there from the Portsmouth Marine Terminal (PMT).

upgrading the CSX National Gateway including improving the Virginia Avenue Tunnel in Washington, DC so it could accommodate rail cars with double-stacked containers
upgrading the CSX National Gateway including improving the Virginia Avenue Tunnel in Washington, DC so it could accommodate rail cars with double-stacked containers
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 30)

Shippers using Virginia Port Authority terminals benefit from rail competition. Since 2012, both CSX and Norfolk Southern (NS) have been able to build trains at Virginia International Gateway (VIG) without the expense of drayage to an off-site rail yard. However:20

the schedule for CSX trains at VIG is compressed by the national and regional schedules for passenger trains and to a lesser degree freight trains due to the mainline track capacity shortages between Richmond and Fredericksburg.

The Port and CBP [Customs and Border Protection] have limited resources to support this schedule, resulting in reduced level of Port and CBP service for CSX cargo.

and at Norfolk International Terminal (NIT):

At NIT, NS enjoys a competitive advantage as it owns a rail line leading directly into the NIT complex. CSX accesses NIT utilizing the Norfolk and Portsmouth Belt Line Railroad (NPBL), which was formed over 100 years ago by the Class I railroads (of which, NS and CSX are the sole remaining shareholders) to improve level of service to rail-served industries in Hampton Roads. This introduces additional rail operations for CSX to access the terminal. NS's advantage has thus far limited CSX rail demand at NIT to relatively low volume project, bulk, and break-bulk cargo.

the short-line Commonwealth Railway (CWRY) and Norfolk and Portsmouth Belt Line (NPBL) ensure shippers using Port of Virginia terminals have access to both CSX and Norfolk Southern railroads
the short-line Commonwealth Railway (CWRY) and Norfolk and Portsmouth Belt Line (NPBL) ensure shippers using Port of Virginia terminals have access to both CSX and Norfolk Southern railroads
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Figure 7)

Shippers are attracted to ports that offer competition between railroads, allowing for negotiations to improve service and reduce costs. The Maersk Line shifted its business from Norfolk Southern to CSX in 2012 and started to ship containers to the CSX Intermodal North Baltimore terminal near Toledo, Ohio.21

Virginia's ports offer better rail connections and greater intermodal transport than competing ports in other states (TEU = twenty-foot equivalent units, half the length of trailers commonly loaded on rail cars now)
Virginia's ports offer better rail connections and greater intermodal transport than competing ports in other states ("TEU" = "twenty-foot equivalent units," half the length of trailers commonly loaded on rail cars now)
Map Source: Virginia Office of Intermodal Planning and Investment, Master Rail Plan for the Port of Virginia (Table 1)

Virginia's major ports are in competition with others on the Atlantic Ocean and Gulf of Mexico, New York to Houston. Virginia also competes with West Coast ports, from San Diego to Vancouver. Manufacturers from Asia can deliver goods in a 40-foot or 53-foot shipping container to Los Angeles, load them on a train headed to the East Coast, and truck them to a warehouse or even directly to a retail outlet. Such multi-modal shipping can be faster than the all-water route through the Panama Canal to Norfolk, Portsmouth, or Newport News.

in 2009, Norfolk edged out Savannah to take second place among East Coast ports for total tonnage of cargo handled
in 2009, Norfolk edged out Savannah to take second place among East Coast ports for total tonnage of cargo handled
Source: US Department of Transportation, Atlantic Port Call by Tonnage, 2009)

The Port of Virginia relies heavily upon Federal funding to maintain and even deepen the existing shipping channels. The military presence in Hampton Roads helps get Congressional support for appropriations to improve the shipping channels and the local transportation network, both rail and highway. The military presence is also a stimulus for generating a new generation of high-tech businesses, in addition to the economic impact of payrolls and contracts for normal operations

Newport News Shipbuilding, the only shipyard designing/building US Navy aircraft carriers and one of two designing/building nuclear submarines, is located on the James River at Newport News. The Norfolk Naval Shipyard, where some Navy vessels are maintained and repaired, is on the South Branch of the Elizabeth River. When it was first started in 1767, it was called the Gosport Shipyard, then the Gosport Navy Yard, U.S. Navy Yard Norfolk, and Norfolk Navy Yard Portsmouth. In 1945 the military designated the facility as "Norfolk Naval Shipyard."

the Norfolk Navy Yard - in Portsmouth, not Norfolk - was destroyed by Federal forces in 1861 and then by Confederate forces evacuating in 1862
the Norfolk Navy Yard - in Portsmouth, not Norfolk - was destroyed by Federal forces in 1861 and then by Confederate forces evacuating in 1862
Source: Library of Congress, Ruins of the navy yard at Norfolk, Va., December 1864

Congressional staff and the general public can get confused over the names and locations of military facilities. Naval Station Norfolk (also called the "Norfolk Navy Base"), where ships are stationed between tours, is located in Norfolk, Virginia. The separate Norfolk Naval Shipyard, where ships are repaired, is within the municipal boundaries of the city of Portsmouth, Virginia. Confusion can be increased by the fact that the Portsmouth Naval Shipyard is located in Portsmouth, New Hampshire.22

The Norfolk Naval Shipyard played a key role in the Civil War. In April 1861, Virginia military forces seized the shipyard even before voters ratified the Ordinance of Secession. At the Norfolk Naval Shipyard, the Confederate Navy converted the USS Merrimack into the armored CSS Virginia. The Confederate ironclad ship then engaged the USS Monitor in the "Battle of Ironclads" on March 9, 1862.

When shipyard workers added armor plating to cover the wooden deck of the old USS Merrimack, they also increased the weight of the CSS Virginia so it would ride low in the water and protect the unarmored hull. As a result, the CSS Virginia was unable to flee when the Confederates abandoned Norfolk in May, 1862. The ironclad required a 22-foot deep channel but the natural channel up the James River to the Confederate capital of Richmond was shallower, so the Confederate warship was scuttled at burned at Craney Island.23

the Confederate Navy destroyed the CSS Virginia in 1862 when Norfolk was abandoned, because the ironclad required a channel deeper than 18' to steam up the James River to Richmond
the Confederate Navy destroyed the CSS Virginia in 1862 when Norfolk was abandoned, because the ironclad required a channel deeper than 18' to steam up the James River to Richmond
Source: 1862 Currier & Ives lithograph from National Oceanographic and Atmospheric Service (NOAA), Monitor National Marine Sanctuary

1922 airplane landing on USS Langley, the Navy's first aircraft carrier (built at Norfolk Naval Shipyard)
1922 airplane landing on USS Langley, the Navy's first aircraft carrier (built at Norfolk Naval Shipyard)
Source: 1862 Currier & Ives lithograph from National Oceanographic and Atmospheric Service (NOAA), Monitor National Marine Sanctuary

Building ironclads was not the end of innovation at the Norfolk Naval Shipyard. After World War I, the coal-carrying USS Jupiter was converted there into the USS Langley, the first US aircraft carrier.

Today, all aircraft carriers are built at a shipyard in Newport News, and the five nuclear-powered aircraft carriers in the US Navy Atlantic Fleet are "homeported" at Naval Station Norfolk. The US Navy advertises that facility as "the largest naval complex in the world."24

There is no guarantee that the carriers will be based only at Naval Station Norfolk. After the last conventionally-fueled carrier was retired, the Pentagon considered transferring one aircraft carrier from Norfolk to the retired carrier's homeport, Naval Station Mayport (near Jacksonville, Florida).

Upgrading Mayport to deal with nuclear-powered ships would cost $500 million-$1 billion, but would enhance continuity of operations by reducing dependency upon just one facility. In 2012, Virginia politicians foreclosed the potential loss of jobs/economic activity in Hampton Roads by blocking appropriations in Congress for any transfer.25

aircraft carriers docked at the Norfolk Naval Base are readily visible to people driving across the Hampton Roads Bridge-Tunnel to Willoughby Spit (in background)
aircraft carriers docked at the Norfolk Naval Base are readily visible to people driving across the Hampton Roads Bridge-Tunnel to Willoughby Spit (in background)
Source: CNIC Naval Station Norfolk, Welcome to Naval Station Norfolk

When the Chesapeake Bay Bridge-Tunnel was constructed across the mouth of the Chesapeake Bay in 1994, Virginia adopted a design that accommodated the Navy. The military was concerned that any bridge across the mouth of the Chesapeake Bay could become a barrier to ship traffic, if an enemy (in 1964, that meant the Soviet Union, Cuba or "Red" China) managed to destroy the bridge and it ended up blocking the shipping channel.

To ensure that could never happen, the Chesapeake Bay Bridge-Tunnel was constructed as a hybrid. A standard bridge crosses most of the distance between Virginia Beach-Northampton County, but tunnels were dug below the Trimble Shoals and Chesapeake shipping channels. For the same reason, transportation infrastructure crossing the James River below Newport News and the Elizabeth River below the Norfolk Naval Shipyard include tunnels, to ensure shipping channels remain open.26

The Army as well as the Navy provides economic drivers for Virginia's ports. The US military's primary center for logistics education is located now at Fort Lee (near Petersburg). That site grew in importance after a Base Realignment and Closure Commission decision to move the headquarters of the U.S. Army Transportation center and equivalent units to Fort Lee. Local and state economic development seek to convert military-funded research in logistics and simulation/modeling into new civilian-oriented businesses in Hampton Roads.

The state created the Commonwealth Center for Advanced Logistics Systems in 2013 to build on military contractor expertise, and to link manufacturing companies (such as Rolls-Royce's advanced manufacturing facility for jet engines in Prince George County, Virginia) and universities (starting with University of Virginia, Longwood University, Virginia Commonwealth University and Virginia State University).27

The most obvious benefit of the military presence near Hampton Roads ports is the shipping channel. To support the US Navy and civilian traffic, the US Army Corps of Engineers now maintains a 50' deep shipping channel from the Atlantic Ocean to terminals in Hampton Roads, and a 25' deep channel up the James River to Richmond.

most cargo going through Norfolk International Terminal (NIT) is containerized
most cargo going through Norfolk International Terminal (NIT) is containerized
Source: ESRI, ArcGIS Online

Virginia claims to have "the deepest natural harbor on the east coast" at Norfolk, but that claim ignores the natural harbor at Eastport, Maine. That town's harbor is deeper at 60+ feet, and the granite bedrock bottom does not require regular dredging. Eastport has an appropriate name.

Eastport is the closest US port to Europe, Africa - and Asia, once ships start to use the Northwest Passage as the ice in the Arctic Ocean disappears. However, Eastport lacks transportation links inland. There is no rail line, and Route 1 is only a two-lane highway headed south.28

Hampton Roads offers several ports with excellent rail and road connections to inland customers. The 11-mile long Atlantic Ocean Channel is dredged to 52 feet deep from the deep ocean to the Thimble Shoals channel, and is authorized (but not funded) to be dredged to a depth of 60 feet.

A 50-foot deep shipping channel is currently maintained to Norfolk and Newport News by regularly dredging the bottom of the Chesapeake Bay, Elizabeth River, and James River. The inbound channel above the Thimble Shoals tunnel of the Chesapeake Bay Bridge-Tunnel is 350 feet wide and 50 feet deep, while the outbound channel is 650 feet wide and 50 feet deep. Dredging to 55 feet is authorized, but not funded yet.29

A 1,500 feet wide and 50-foot deep channel is maintained to Norfolk International Terminals (NIT). A narrower 800-foot wide and 50-foot deep channel extends south to Norfolk Southern's piers for coal exports at Lambert's Point. The Elizabeth River is dredged to its southern end, to maintain a 250-foot wide, 35-foot channel to the Atlantic Intracoastal Waterway.30

The 800-foot wide, 50-foot channel to Newport News International Terminal (NNIT) is also authorized (but unfunded) for deepening to 55 feet.31

Craney Island, like the Norfolk Navy Yard, is located within the city boundaries of Portsmouth - across the Elizabeth River from the Norfolk Naval Base within the city of Norfolk
Craney Island, like the Norfolk Navy Yard, is located within the city boundaries of Portsmouth - across the Elizabeth River from the Norfolk Naval Base within the city of Norfolk
Source: US Fish and Wildlife Service (FWS), Wetlands Mapper

Since 1957, mud, sand, rocks, shells, and other material scraped up from the bottom ("dredge spoils") has been deposited into one of three cells at the Craney Island Dredged Material Management Area. One cell receives fresh dredge spoils, while two others dry out.

The Corps identified that the Craney Island site would reach capacity in 2025, and the Virginia Port Authority predicted that its Hampton Roads terminals would reach capacity in 2011 and a new terminal was needed. The Corps had a solution to both problems: expand the Craney Island disposal site eastward into the Elizabeth River and construct of a new marine terminal on the newly-formed land created from dredge spoils.

Congress approved the plan, though funding for full implementation is not guaranteed. The urgency of the Virginia Port Authority to construct the Craney Island Marine Terminal eased after the state agency leased the new APM/Maersk terminal in Portsmouth.32

Savannah processes more Trailer Equivalent Units (TEU's) in international trade than Norfolk, but that statistic does not include break bulk cargo
Savannah processes more Trailer Equivalent Units (TEU's) in international trade than Norfolk, but that statistic does not include break bulk cargo
Source: US Department of Transportation, Maritime Administration, U.S. Waterborne Foreign Container Trade by U.S. Custom Ports)

the slow recovery from the 2008-2011 recession triggered proposals to privatize the state-owned terminals in Hampton Roads
the slow recovery from the 2008-2011 recession triggered proposals to privatize the state-owned terminals in Hampton Roads
Source: Virginia Joint Legislative Audit and Review Commission (JLARC), Special Report: Review of Recent Reports on the Virginia Port Authority’s Operations (Table 1)

Norfolk has an even balance of container imports and exports, unlike the ports at Los Angeles
Norfolk has an even balance of container imports and exports, unlike the ports at Los Angeles
Source: US Army Corps of Engineers Waterborne Commerce Statistics Center, U.S. Waterborne Container Traffic by Port/Waterway in 2011

Norfolk's competitors are not just Savannah, Baltimore, New York/New Jersey, or even the Gulf Coast ports such as New Orleans. Ships can steam across the Pacific Ocean to West Coast ports in 12 days. Containers can be carried from Los Angeles, Seattle, or other West Coast ports by train/truck to East Coast destinations in another 5-8 days. Ships going through the Panama Canal to an East Coast port require 24 days.33

California ports dominate the foreign container trade, as measured in twenty-foot equivalent units (TEU's), reflecting the significance of Asian imports
California ports dominate the foreign container trade, as measured in twenty-foot equivalent units (TEU's), reflecting the significance of Asian imports
Source: U.S. Department of Transportation, Research and Innovative Technology Administration, America's Container Ports: Linking Markets at Home and Abroad (Figure 2, January 2011)

Hampton Roads has advertised a 50-foot outbound channel since it was dredged in 1989 to accommodate large ships exporting heavy loads of coal, and a 50-foot inbound channel since 2007. Norfolk International Terminals (NIT) has loaded container vessels that required a 49-foot channel to exit through the Chesapeake Bay.

The Port of Virginia competes with other states in part because no other port exceeds the depth of the Hampton Roads channel. A least one shipping line designed port visits to include a "last stop" at Norfolk, topping off a large container ship's load there because other ports with shallower channels could not accommodate a fully-loaded vessel.

The Chesapeake Bay Bridge-Tunnel under the Thimble Shoal Channel, the Hampton Roads Bridge-Tunnel under the Norfolk Harbor Channel, and Monitor-Merrimac Bridge-Tunnel under the Newport News Channel are buried at least 63 feet deep below the bottom, so the challenge is financial rather than physical. Virginia's elected officials and businness leaders consistently lobby the US Congress to fund its already-authorized plans to dredge the inbound and outbound challels to 55 feet and widen the channels so large ships could maneuver safely.

With a deeper and wider shipping channel, Virginia could compete better against Baltimore, Miami, and New York/New Jersey, the three rival East Coast ports that also have 50-foot deep shipping channels. The Port of Virginia could grow beyond its current capacity to handle a 10,000 TEU ship (i.e., carrying 5,000 containers that were each 40-feet long) and attract ships carrying 14,000 TEU's.34

the planned submarine cable to bring electricity onshore from offshore wind turbines (highlighted with red line) was routed to avoid the deep inbound channel dredged by the US Army Corps of Engineers in the Outer Continental Shelf
the planned submarine cable to bring electricity onshore from offshore wind turbines (highlighted with red line) was routed to avoid the deep inbound channel dredged by the US Army Corps of Engineers in the Outer Continental Shelf
Source: Dominion, "Virginia Offshore Wind Technology Advancement Project," Offshore Constraints

All ports know that Federal funding to deepen shipping channels could enhance or erode competitive advantages. The other two main competitors to the Port of Virginia, Charleston and Savannah, have their own plans to attract the largest container ships to the East Coast.

Charleston has obtained Federal funding to deepen its channel from 45-feet to 50-feet, but that was not enough for South Carolina. The state agreed to pay 100% of the extra cost required to dredge an extra two feet. Charleston plans for fully-loaded ships to have a 52' deep channel to move at low tides, as well as at high tides.35

a Digital Elevation Model (DEM) of Hampton Roads reveals artificially-straight dredged ship channels, plus tunnels constructed underneath two channels for the Chesapeake Bay Bridge-Tunnel linking Virginia Beach to the Eastern Shore
a Digital Elevation Model (DEM) of Hampton Roads reveals artificially-straight dredged ship channels, plus tunnels constructed underneath two channels for the Chesapeake Bay Bridge-Tunnel linking Virginia Beach to the Eastern Shore
Source: South Atlantic Fishery Management Council, Essential Fish Habitat Viewer

Savannah, Georgia has a 23-mile channel from ocean to port. When the channel was deepened from 38 feet to 42 feet in 1994, the goal was to service ships carrying up to 4,000 TEU's. By 2013, ships calling at Savannah arrived with less than a full load. They could carry up to 8,100 TEU's, if the channel was 48-feet deep.

Savannah has received Federal approval to deepen the channel from 42 feet to 47 feet, with 60% funded by the Federal government and 40% by the Georgia Port Authority. All projects to deepen channels require arrangements for dredge spoil disposal, but each port has unique environmental mitigation requirements. Currents in a deeper-dredged Savannah River could result in oxygen-starved zones underwater, so that channel will not be dredged to the full depth of 48 feet as authorized by Congress. Georgia may have to build underwater oxygen bubblers to maintain a minimum level of 4 milligrams of oxygen per liter in the deeper channel.36

Getting Federal support to deepen shipping channels or upgrade on-shore infrastructure (such as rail/road connections) requires lobbyists in Washington, who advocate for staff to include specific language in authorization/appropriation legislation, then encourage Members of Congress to approve funding that benefits a specific port. Representatives of all ports in serious competition for Federal funding must educate Congressional staff and members on the economic potential of port expansion - "if only Federal funding were provided to (...insert name of port here...), then (...insert what good things would happen there...)."

gantry cranes move containers from ships to chassis bodies on the wharves, and the chassis bodies are then moved to a location where containers can be loaded onto trucks or rail cars
gantry cranes move containers from ships to chassis bodies on the wharves, and the chassis bodies are then moved to a location where containers can be loaded onto trucks or rail cars
Source: Virginia Port Authority, Comprehensive Annual Financial Report for the Virginia Port Authority for the Fiscal Year Ended June 30, 2014

The Virginia Port Authority has planned for expansion, particularly for processing containerized cargo. The port predicts that the number of containers to be processed will triple between 2015-2035. Larger ships will bring more containers, and the Virginia Port Authority seeks to increase the number of visiting ships above 2,000/year. To handle the extra containers, capacity at the Norfolk International Terminal (NIT) and Virginia International Gateway (VIG) will be doubled with new equipment.

The Craney Island Eastward Expansion project will continue, to allow for construction of the Craney Island Marine Terminal (CIMT) when justified by demand for extra container prcessing capacity. Portsmouth Marine Terminal (PMT) and Newport News Marine Terminal (NNMT) will be enhanced to process non-containerized cargo, including break-bulk operations (cargo not packaged in containers) and "roll on, roll off" cargo such as cars imported from Japan.37

roughly half of the capital investments to expand capacity at the Port of Virginia will come from profits generated by the port's operations; 46% of the funding will be state/Federal subsidies (CPF = Commonwealth Port Fund, established by new transportation taxes in 1986)
roughly half of the capital investments to expand capacity at the Port of Virginia will come from profits generated by the port's operations; 46% of the funding will be state/Federal subsidies (CPF = Commonwealth Port Fund, established by new transportation taxes in 1986)
Source: Port of Virginia 2065 Master Plan

If the deepest water for containers ships was at Hampton Roads, then shipping companies could design their routes so the terminals in Norfolk, Portsmouth, and Newport News would be "first-in, last-out." Vessels importing the most containers would stop first in Virginia. Ships headed back to Europe, Asia, or elsewhere would get their last containers from a Port of Virginia terminal.

Many ships already follow that route design. Just having a deeper channel might not help the Port of Virginia compete if other ports also get deeper channels.

t
he Port of Virginia is the beggining and the end of key roads and rail lines in Virginia
Source: 2015 Governor's Transportation Conference, Port of Virginia Final Video

New York/New Jersey attracts ships as a "first-in" site because its high population means many containers are destined. a high number of customers. Savannah attracts ships because so many distribution centers for the southeastern US are clustered there. Congress is at risk of providing more funding than is required to meet shiiping infrastructure needs, and for politics to direct Federal subsidies so one or more ports become "winners" while others are left behind.

Despite a 1994 state law prohibiting Virginia state agencies from hiring lobbyists, in 2013 it was revealed that the Virginia Port Authority was paying for such services. The state agency tasked its engineering contractor to perform advocacy to legislators, paying a 15% surcharge for the engineering contractor to make arrangements with a standard lobbying firm. The Virginia Attorney General concluded the arrangement did not violate state law, because it defined "lobbying" as efforts to influence state officials while the port agency was only trying to influence Federal officials. As the chair of the Virginia Port Authority stated:38

We need to figure out how to explain to the federal government that every port in America doesn't have to be dredged to 50 feet and that that might not be a wise use of our federal funds, particularly when you've got one sitting here with two Class 1 railroads (and) 50 feet of depth...

Savannah's channel was deepened in 1994 from 38' to 42' to service ships carrying 4,500 Trailer Equivalent Units (TEU's), but Norfolk is targeting ships with three times that number
Savannah's channel was deepened in 1994 from 38' to 42' to service ships carrying 4,500 Trailer Equivalent Units (TEU's), but Norfolk is targeting ships with three times that number
Source: Virginia Department of Rail and Public Transportation, Draft 2013 Virginia Statewide Rail Plan (Figure ES-4)

evolution of container ships - and future, post-Panamax size
evolution of container ships - and future, post-Panamax size
Source: Captain J. William Cofer presentation to Virginia Port Authority Virginia's Offshore Fairways (November 27, 2012)

Successful labor relations are essential to maintaining business activity at Virginia's ports. Longshoremen in different East Coast ports united their negotiation efforts in 1916, so the shipping companies could not shift to a different port until a worker's strike was broken. Port workers on the West Coast created a separate union in 1937. Shippers on each coast must negotiate with one union for all ports on that coast, but still retain the option of transferring business when ports on one coast are closed by a strike.39

The major container carriers, terminal operators and port associations for Gulf Coast and East Coast ports have organized as the United States Maritime Alliance. That group negotiates directly with the International Longshoremen’s Association, the AFL-CIO union that represent longshoremen on the East Coast, regarding wages, hours, benefits, and employment guarantees. Every 5 or so years now, workers at Virginia ports who belong to the International Longshoremen’s Association vote to approve or reject the latest "master contract" negotiated with the United States Maritime Alliance.

In 2002, West Coast ports were closed for 10 days while the Pacific Maritime Association and the International Longshore and Warehouse Union (the West Coast equivalents of the United States Maritime Alliance and the International Longshoremen’s Association) negotiated a new master agreement. The expensive disruption of the supply chain caused Asian shippers to diversify their operations.

Shippers bring cargo from Asia implemented a dual-gateway strategy to reduce reliance on West Coast ports by expanding service through the Panama Canal to carry containers to East Coast ports. Since 2000, East Coast ports have doubled their share of Asian imports to 30%, despite the extra week or so required to sail the extra distance.

The first "neo-Panamax" ship arrived at Norfolk International Terminals (NIT) in July, 2016, after stopping first at the Global Terminal in Bayonne, New Jersey. It inaugurated a ne shipping route linking the Asian ports of Qingdao, Ningbo, Shanghai, and Busan with New York, Norfolk and Savannah.40

ports in Virginia, New York/New Jersey, South Carolina, and Georgia expanded capacity in anticipation of attracting more business, after widening of the Panama Canal in 2016 allowed ships with 10,000 TEU's to reach the East Coast
ports in Virginia, New York/New Jersey, South Carolina, and Georgia expanded capacity in anticipation of attracting more business, after widening of the Panama Canal in 2016 allowed ships with 10,000 TEU's to reach the East Coast
Source: Supply Chain 24/7, The New Expanded Panama Canal: Bigger Ships, Bigger Paydays for Beans, Coal, and Gas (June 26, 2016)

Since the 1950's, the traffic at Virginia's publicly-owned ports has shifted from break-bulk cargo (shipped on pallets) to standardized containers (moved by cranes directly to trucks/rail cars). Operations are far more efficient, after massive investments of capital to modernize cranes, upgrade rail/truck access, and enhance information technology. Containerization has dramatically reduced the need for workers, but the unionized members of the International Longshoremen’s Association are essential for port operations.

State government control of the ports in Hampton Roads and Warren County is exercised through the Virginia Port Authority. The governor appoints 11 people to the authority's board, as well as the State Treasurer who by law is also a member of the Board. Three members must come from Hampton Roads cities- one from Portsmouth or Chesapeake, one from Norfolk or Virginia Beach, and one from Newport News or Hampton.41

In Virginia, the General Assembly prohibits state agencies from negotiating with unions, so privately-owned service contractor companies operate the publicly-owned ports and negotiate with the International Longshoreman's Association. The Port of Richmond contracted with PCI before the Virginia Port Authority leased Deepwater Terminal. The state agency retained PCI to operate what it now calls Richmond Marine Terminal (RMT).

To operate the Hampton Roads terminals and the Virginia Inland Port (VIP) controlled by the Virginia Port Authority, the General Assembly created a special corporation called Virginia International Terminals (VIT). It is a non-stock, non-profit corporation chartered by the state of Virginia and controlled by the public Virginia Port Authority, but theoretically is not a state agency and thus able to engage in union contract negotiations.

In anticipation of ever-expanding containerized traffic in Hampton Roads, the state and Corps of Engineers made plans to open a new Craney Island terminal. The plans involved an investment of $1 billion to expand the dredge spoil facility at Craney Island, with new cells for sand/muck dredged from the river channel so a future pile-supported wharf could support up to 28 container cranes processing 2.5 million TEU's at full capacity.42

The proposed opening date of the Craney Island Marine Terminal (CIMT) was planned to be two years before expiration of the A. P. Moller (APM) terminal lease, which was signed in 2010 and authorized use of that site until 2030.

The Virginia Port Authority developed an alternative strategy to maintaining its lease until 2028: abandon the A. P. Moller (APM) terminal and default on the 20-year lease. That would be expensive; the contract signed under Governor McDonnell committed the state to pay APM roughly $50 million/year. The new governor elected in 2013 described it as "one of the worst lease deals I've ever seen negotiated," and proceded to revise the deal.43

two dikes on eastern side of Craney Island will be connected by a third perpendicular dike to create a 200-acre cell, to be filled with dredge spoils and then developed as a new terminal by 2028
two dikes on eastern side of Craney Island will be connected by a third perpendicular dike to create a 200-acre cell, to be filled with dredge spoils and then developed as a new terminal by 2028
Source: Virginia Port Authority/Corps of Engineers, Containment Dikes Break Surface of the Elizabeth River

If Virginia had broken its lease, or if transferred shipping business to a new terminal on Craney Island, the private owners of the A. P. Moller (APM) terminal would return to competing against the state for shipping contracts. That possibility incentivized A. P. Moller–Maersk Group to sell its terminal in 2014 to a different group of private investors.44

The new owners renamed the facility the Virginia International Gateway (VIG). The Virginia Port Authority negotiated with the new owners to extend the lease for the Virginia International Gateway (VIG) an additional 35 years. Instead of reverting back to the private owners in 2030, the re-named terminal would remain under state control until 2065.

The extension was key to upgrading capacity. The state was unwilling to invest in new equipment at the Virginia International Gateway (VIG) terminal when the amortization period was just 15 years, but the lease extension justified spending money to upgrade the cranes and other infrastructure.

In the extended lease, the private owners agreed to fund the cost of expanding capacity at Virginia International Gateway (VIG), doubling capacity to about 2.2 million TEU's annually. The state did not pay the $320 million upgrade costs. Instead, the private owners borrowed the fundsit agreed to increase its annual payment to reimburse the private investors. The new contract committed the state to pay $4.2 billion, and gave Virginia the right to purchase the terminal in 2065 at fair-market value.45

Increasing capacity at the existing Virginia International Gateway (VIG) and Norfolk International Terminal (NIT) allowed the Virginia Port Authority to meet projected demand beyond 2030. The investment of $320 million to expand Virginia International Gateway (VIG) and the long-term lease of that site until 2065, plus the $350 million upgrade at the Norfolk International Terminal (NIT), reduced the need to complete the Craney Island Marine Terminal (CIMT) as originally scheduled.46

The City of Portsmouth ended up the loser in the deal. Virginia International Gateway (VIG) amd its equipment is private property, and the city's largest taxpayer paying $7.5 million per year. The new lease shifted $64 million worth of assets to the tax-exempt Virginia Port Authority and cut the taxes paid by the terminal almost in half.

To replace the lost revenue, the City Council would have to raise property taxes by 4%. Such an increase would be a substantial percentage for the jurisdiction that already had the highest tax rate in Hampton Roads, and where over half the property (including the Norfolk Naval Shipyard, the Naval Medical Center, and Craney Island) was tax-exempt.47

alternative locations considered for a new container terminal, before selecting eastward extension of Craney Island
alternative locations considered for a new container terminal, before selecting eastward extension of Craney Island
Source: US Army Corps of Engineers, Craney Island Eastward Expansion Feasibility Study (slide 18)

Commonwealth Railway

Craney Island Dredged Material Management Area and Craney Island Marine Terminal (CIMT)

Cruise Ships in Virginia

Hampton Roads

Heartland Corridor

Norfolk and Portsmouth Belt Line

Norfolk Naval Shipyard

Port Cities

Port of Richmond

Port Operations and Privatization Proposals

Virginia Inland Port (VIP) and Intermodal Terminals

Virginia Ports and National Security

major container ports with Twenty Foot Equivalent Units (TEU's)
major container ports with Twenty Foot Equivalent Units (TEU's)
Source: US Army Corps of Engineers, Craney Island Eastward Expansion Feasibility Study (slide 19)

the top 10 trading partners in 2015 for the Port of Virginia (measured in Thousands of Short Tons) were different for imports and exports
the top 10 trading partners in 2015 for the Port of Virginia (measured in Thousands of Short Tons) were different for imports and exports
Source: Port of Virginia, 2015 Trade Overview

in 2015, as for the last century, coal was the largest export (measured in Thousands of Short Tons) from the shipping terminals now called the Port of Virginia
in 2015, as for the last century, coal was the largest export (measured in Thousands of Short Tons) from the shipping terminals now called the Port of Virginia
Source: Port of Virginia, 2015 Trade Overview

the value of cargo exported and imported at Newport News from China was balanced in 2015
the value of cargo exported and imported at Newport News from China was balanced in 2015
Source: Bureau of Census, USA Trade Online

Links

blocks leased by the Federal government for offshore wind turbines are located away from the designated inbound (green) and outbound (yellow) shipping channels
blocks leased by the Federal government for offshore wind turbines are located away from the designated inbound (green) and outbound (yellow) shipping channels
Source: Bureau of Ocean and Energy Management, Exploring Ocean Wind Energy

general economic conditions, such as the recession starting in 2008, affect the number of containers processed by the Port of Virginia
general economic conditions, such as the recession starting in 2008, affect the number of containers processed by the Port of Virginia
Source: Virginia Port Authority, VPA General Statistics

References

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(last checked May 31, 2013)
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types of ships that called at Atlantic ports, 2009 (Ro-Ro stands for roll-on, roll-off ships carrying cargo such as Nissan cars to Newport News)
types of ships that called at Atlantic ports, 2009
("Ro-Ro" stands for "roll-on, roll-off" ships carrying cargo such as Nissan cars to Newport News)
Source: Bureau of Transportation Statistics, Atlantic Coast U.S. Seaports (Figure 3)


Chesapeake Bay
From Feet to Space: Transportation in Virginia
Virginia Places