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
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
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
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
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
The result, as one recent scholar has noted:3
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.
The new steamships developed after 1815 could push up the James River to the Fall Line even faster that the sailing ships that relied upon windpower and had to tack back and forth across the river. As population increased to the west, more trade came down Virginia's rivers to Fall Line ports. By the 1820's, Richmond surpassed Norfolk as Virginia's largest port.
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.
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.
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
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.
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
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. 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.
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
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.
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).
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
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.
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
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
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
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) such as cars, break bulk, or bulk cargo. Only 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.19
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.
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).
Shippers using the Virginia International Gateway terminal and the proposed Craney Island terminal benefit from rail competition. Since 2012, both CSX and Norfolk Southern have been able to build trains at Virginia International Gateway without the expense of drayage to an off-site rail yard.
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.20
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.
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."
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.21
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.22
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."23
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.24
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.25
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).26
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.
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. Technically, it 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.27
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.28
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.29
The 800-foot wide, 50-foot channel to Newport News International Terminal (NNIT) is also authorized (but unfunded) for deepening to 55 feet.30
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.31
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.32
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 14,000 TEU ships.33
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.34
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.35
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...)."
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.
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:36
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.37
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.38
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.39
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.40
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.
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. The contract signed under Governor McDonnell commits 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 sought to have the deal renegotiated.41
If Virginia broke its lease, or if transferred shipping business to a new terminal on Craney Island, the owners of the A. P. Moller (APM) terminal would have to return to competing against the state for shipping contracts. That possibility incentivized A. P. Moller–Maersk Group to sell its terminal in 2014, and the new private investment owners renamed the facility the Virginia International Gateway (VIG).42
The sale opened the opportunity for the Virginia Port Authority to negotiate a 35-year extension of the lease for the Virginia International Gateway (VIG) so it would remain under state control until 2065. The state was unwilling to invest in new equipment there when the amortization period was just 15 years, but the lease extension justified new state investment. The private owners would fund the cost of the new equipment, which would double capacity to about 2.2 million TEU's annually, and the state would increase its annual payment.43
Expanding the existing terminals postponed the urgency to complete the Craney Island Marine Terminal (CIMT).
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
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