Economic Impact of Coal Exports Approaches $1 Billion Pier 6
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Volume 77, No. 10 October 2013 Published by the Virginia Maritime Association, Norfolk, Virginia email: [email protected] • web site: www.VAMaritime.com Economic Impact of Coal Exports Approaches $1 Billion ld Dominion University released its 14th Annual State of the Region report. The eight-part report dedicated an Oentire segment to “Coal: A Very Important Economic Engine in Hampton Roads.” Hampton Roads is the largest coal port in the United States as well as one of the largest coal ports in the world. The area is home to three coal terminals: Lambert’s Point Dock, owned and operated by Norfolk Southern; Pier IX, owned and operated by Kinder Morgan; and Dominion Terminal Association, owned by subsidiaries of Alpha Natural Resources, LLC, Arch Coal, Inc. and Peabody Energy. In 2011, the three terminals transported a combined 47 million metric tons of coal through the port. Photo courtesy of Dominion Terminal Associates Many services are linked directly or indirectly to the transportation Despite growth in other energy sources over the past decade, the of coal, creating an economic ripple effect for freight forwarders, report shows coal remained the primary energy source in the U.S. ship agents, testing labs, samplers, surveyors, tugs and harbor and worldwide. Although in 2011, coal was used more often to pilots, plus an extensive range of auxiliary services. generate electricity than natural gas, the trend shows a decline in the use of coal for domestic electricity. However, it should not Hampton Roads handled roughly 40% of the U.S. coal export negatively impact the prosperity of the Port. Three-quarters of volumes in the past decade. Based on ODU’s data, the economic the aggregate coal shipments through Hampton Roads consists impact to the area equates to approximately 4,200 employees of metallurgical coal, primarily used to produce steel. with over $200 million in earnings and generates more than $900 million in goods and services for the region. To review the full report, visit our website news section. Pier 6 Golden Anniversary Topped with Record Coal Loading orfolk Southern’s Pier 6 celebrated its Golden Anniversary thriving steel industry that required low-sulfur, low volatile, on September 18, 2013. Built 50 years ago at a cost of $25 high-energy coal that the Appalachian coalfields were famous Nmillion, Pier 6 is still the world’s largest and fastest coal for. N&W’s decision to build a new pier was in response to handling facility. The pier has been extended twice from its increasing demand from overseas customers for the high quality original 1,600 foot length to 1,800 feet to accommodate vessels Appalachian coal. as they increased in size. Pier 6’s twin coal loaders are the largest moving machines in the U.S., capable of dumping 20,000 tons N&W engineers began drawing up plans for a new coal pier. When an hour. Pier 6’s operating efficiencies are such that no vessel the McDowell-Wellman Engineering Company of Cleveland, anywhere can accept coal as fast as the facility can load it. Ohio was tasked to design and build Pier 6 in 1961, there was no prototype to follow. The new pier had to be biggest, the fastest, In 1959, Norfolk & Western (now Norfolk Southern) acquired the and the most efficient coal pier in the world. They wanted it Virginian Railway, a railroad that brought central Appalachian to be able to handle loading 100,000-ton plus ships that were coal to Norfolk, giving N&W access not only to more mines, but expected in the future. consolidated Virginian’s two coal piers at Lamberts Point. This increased their efficiencies, yet put more strain on N&W’s export In the 1960’s, N&W Railway ran an advertisement that posed the facilities. Lambert’s Point’s first coal piers were primarily built to question “Why would a railroad build a $25 million coal pier?” load steam coal destined for domestic coastwise clients. That That question has been answered time and again over the changed as the economies in Europe and Japan recovered after WWII and coal exports grew. In the 1950’s, Japan developed a (continued on page 5) VIRGINIA MARITIME MIC Golf Classic Results ASSOCIATION OFFICERS n October 26, 130 golfers headed toward the tee boxes of Cedar Point CHAIRMAN OF THE BOARD Country Club in Suffolk, Virginia, to support the Virginia Maritime Thomas W. Godfrey, Jr. OAssociation’s Maritime Issues Council (MIC). PRESIDENT Shirley G. Roebuck MIC is a Political Action Committee established by the Association in 2000 to work on behalf of our maritime industry with the Virginia General Assembly. Each year, VICE PRESIDENTS the maritime industry must address many issues with the General Assembly and Joseph A. Dorto Raymond A. Newlon our legislators. Funds generated through MIC are used to support these efforts. Jeffrey S. Heller Winning the round with a score of 59 was the team playing for JR Research: John EXECUTIVE VICE PRESIDENT & SECRETARY Arthur W. Moye, Jr. Rachels, Bill Magann, Jim Bento, and George MacDonald. Tim Foley with Gilco Properties, and Jesse Welsch of Endurance IT Services, “let it rip” down the fairway TREASURER to win the “Longest Drive” contests, while the accurate shots of Jeff Davidson, Judy M. Barrett Domestic Fuels and Lubes, Terry Voltz, W F Magann, and Pat Hall, Kinder Morgan, ASSISTANT TREASURER won the “Closest to the Pin” titles. It was the precision of Will Chaney that stunned Michael W. Coleman everyone when he made a hole-in-one on tee number 12. Congratulations to you all for a round well played. STAFF VMA would like to take this opportunity to recognize and thank the companies who VICE PRESIDENT David C. White supported this event through sponsorships. These sponsorships help make this event successful. Platinum Sponsors: Hampton Roads Shipping Association, Kinder AccoUNTING MANAGER/CONTROLLER Morgan Terminals, McAllister Towing, and Norfolk Southern; Gold Sponsors: CV Sam Davis International, CP & O, Gilco Properties, Liberty Tire, T. Parker Host, Troutman Sanders, EXECUTIVE ASSISTANT Vandeventer Black, and the Virginia Pilot Association; Silver Sponsors: Bay Diesel Janice S. Klasek Corporation, Capes Shipping Agencies, Colonna’s Shipyard, Dominion Terminal Associates, GreatWide/RJR Elite, Hasler & Company and Newport News Shipbuilding; EvENTS COORDINATOR Jennifer N. Parham and Bronze Sponsors: Arreff Terminals, Bay Disposal & Recycling, D.D. Jones, Givens Logistics, Jackson Lewis, Kemper Consulting, Launch Pad Consulting, The Hampton SHIPDESK CLERK Roads Global Commerce Council, W. F. Magann, and Western Branch Diesel. Lynne H. Stonum MEMBERSHIP/PUBLICATION COORDINATOR & EDITOR S usan N. Wisniewski ANCHOR MEMBERS Branscome, Inc. CSX Intermodal Maersk Line Limited McAllister Towing of Virginia TowneBank Virginia International Terminals Virginia Pilot Association Virginia Port Authority MARITIME BULLETIN is published 12 times a year by Virginia Maritime Association. Subscriptions are available through membership in the Association. Recipient of Presidential “E” and “E Star” Awards for Excellence in Export Service Recipient of ASAE Communication Excellence & Honorable Mention Award L-R Jim Bento, John Rachels, George MacDonald, missing from the group shot is Bill Magann. 2 MARITIME NEWS JLARC Reports on Performance and Operations of the Virginia Port Authority n October 15, the Joint Legislative Audit and Review they interviewed VPA and VIT staff and board members; Commission (JLARC) released a draft report on VPA customers in the shipping community (shippers, ocean Othe “Review of the Virginia Port Authority’s (VPA) carriers, rail and trucking companies); staff of other state Competitiveness, Funding and Governance.” port authorities, and economic development staff at State, Regional and Local government levels, as well as maritime The General Assembly’s Joint Legislative Audit and Review industry experts. To gain a proper perspective, members of Commission (JLARC) is the oversight agency established to JLARC also visited VPA’s container terminals. evaluate the operations and performance of State agencies The key findings of the current report are: and programs. It is how the General Assembly ensures that the funds it has appropriated are used effectively and efficiently • To date, the Virginia Port Authority (VPA) has competed by State and local agencies. The Commission is comprised of successfully against other ports to handle cargo destined nine members of the House of Delegates and five members for Virginia and the surrounding region and for major of the Senate. One of the objectives of JLARC is to make Midwest markets. recommendations on ways State agencies may achieve greater efficiency and effectiveness in their operations. • VPA’s plans for future growth in a highly competitive industry appear reasonable and will result in capabilities In October 2012, an initial review of the VPA was prompted comparable to those of its competitors, but these during the process to evaluate the impact of port privatization. strategies will be costly. House Appropriations Committee Chairman, Lacey E. Putney, requested JLARC to further review the reports prepared by • VPA’s reputation for high prices does not appear to be paid consultants and determine whether the studies fairly a problem at this time, but could hinder its ability to and accurately assessed the successes and shortcomings of compete for some future cargo. Steps should be taken the operations, whether the comparisons to Ports in other to make sure its prices are competitive and that its states were fairly made, and if the