Volume 77, No. 10 October 2013

Published by the 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 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 . 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 , 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 institutional structures operating costs are managed. of VPA and Virginia International Terminals (VIT) sustained or hindered VPA’s ability to focus on market position. Those • All major East Coast ports have received financial findings, which were released in January 2013, concluded assistance from their states or are cross-subsidized by that: (1) Claims that the VPA market performance and other operations. Ports in two states – Georgia and South outlook are negative were inaccurate and failed to consider Carolina – have not received financial assistance for on- all relevant factors in Port success; (2) Statements by the terminal projects in recent years and have managed to Secretary of Transportation and others that the VPA is fund these projects with terminal revenues. Georgia financially unsustainable were incorrect. In fact, the report and South Carolina have funded off-terminal projects found the VPA well-positioned to generate a net profit during that benefit their ports, but have spent less overall than the next five year; and (3) Additional improvements could be Virginia in the past 10 years. made at both VPA and VIT to increase operational efficiency and lower administrative costs. • For the VPA, State funding has been a relatively modest and decreasing proportion of revenue. Going forward, As a result of legislative action during the 2013 General the VPA Board of Commissioners should examine the Assembly session, JLARC was further directed to study the feasibility of dedicating future State funding to VPA’s competitiveness, efficiency, and governance structure of the most necessary and strategic capital projects, financing Port of Virginia. other needs with terminal revenue.

To get an overview of the two entities, JLARC collected data • Legislative changes are needed to ensure greater and analyzed: VPA’s and VIT’s financial history; trends in continuity and stability of the VPA Board of Commissioners cargo types, volumes, and destinations for East Coast ports; and that members have the requisite experience. and measures of operational efficiency. During the process 3 PORT STATISTICS

4 News Briefs & Announcements

The Port Brings Economic Development Investment to Virginia

n recent weeks, manufacturing companies have in Suffolk to accommodate its custom blending services. announced plans to invest approximately $104 million in PRUFROX Innovative Power Products GmbH, a worldwide IVirginia. system partner in the development and projection of digital ignition systems and electronic control units, will invest $7.3 Ardagh Group, a global manufacturer of containers for million to establish its first U.S. facility in Virginia Beach. the food and beverage industry, will invest $93.5 million to establish a metal packing facility in Roanoke County. These companies choose Virginia to do business with over Continental Terminals announced it will invest $4-$5 million the other State’s competing for the projects because of the to expand its green coffee warehouse and distribution center port’s logistic connections to other major markets.

Virginia Ranked #1 in Forbes’ “Best States for Business” list

n the eighth annual Forbes “Best States for Business” list, the heaviest. Business costs and quality of life were the two Virginia was ranked number one. Over the past three areas in which the state missed making the top five. Iyears, Virginia has been ranked second. Because of its business friendly government policies and strong incentive Virginia fared better than most states during the Great offerings, Virginia ranked first in the regulatory category for Recession mainly due to federal spending, but could have a 2013. The Commonwealth was the only state to rank in the major fall out from sequestration and cuts in federal spending, top five in four of the six factors examined. as 30% of its economy is attached to the federal government.

The study looked at six factors for business: cost, labor supply, Virginia has the seventh largest concentration of big regulatory environment, current economic climate, growth companies of all the states. There are 31 companies prospects and quality of life. The “Best in States” ranking is headquartered in the state with more than $3 billion in determined by examining 35 data points across the six main sales. Virginia has a very diverse economy with strengths in areas with business costs; wages, energy, and taxes, weighing bioscience, manufacturing, logistics and technology.

Pier 6 Golden Anniversary

(continued from page 1) years. Since 1963, Pier 6 has loaded 1.2 billion tons of coal for steel and energy production across the globe. Just two days prior to the celebration of the pier’s Golden Anniversary, Pier 6 set a record for the pier, and the port, by loading 166,840 net tons of metallurgical coal into the 984-foot China Pioneer. Then on September 23, it broke the national record by loading 168,977 net tons of coking coal into the Negonego. Both vessels were bound for China.

In 1982, Norfolk & Western Railway and consolidated to form Norfolk Southern. The railroads have been transferring coal and coke from railcars to vessels at Lambert’s Point since 1884, when Pier 1 was opened. 5 VMA Highlights

The Association In Action

or several days in September, a group of national site to protect lives, property and the environment in emergency selection consultants toured the ports of Virginia and the situations. On Sept. 24, the U.S. Coast Guard Captain of the Port Fregion’s assets. These consultants influence decisions made conducted a half-day Place of Refuge Tabletop Exercise putting about where companies will locate or expand their operations. stakeholders through a drill dealing with a simulated hazardous The Virginia Port Authority, Virginia Economic Development materials incident on a ship inbound to Hampton Roads. Partnership, and Hampton Roads Economic Development Including VMA, participants came from 6 federal agencies, 8 state Alliance worked together to coordinate the visit and VMA was agencies, 7 local government departments, 4 environmental pleased to play a small part demonstrating the attractiveness of organizations, and several other industry experts. our ports and the Commonwealth. During its Sept. 25-27 annual business meeting, the Maintaining and improving a positive business climate requires membership of the National Waterways Conference elected regular communication and education for elected leaders and David White, VMA’s Vice President, to its Board of Directors. policy makers that can exert a great deal of influence on matters The National Waterways Conference, established in 1960, is the affecting companies. Some of the leaders the VMA met with leading national organization to advocate for the enactment in September included; Governor McDonnell, William Howell, of common-sense water resource policies. Conference Speaker of the Virginia House of Delegates, State Senator membership is comprised of flood control associations, levee Ralph Northam, candidate for Lt. Governor, members of the boards, waterways shippers and carriers, industry and regional Virginia Senate Republican Caucus, and RADM Steven H. Ratti, associations, port authorities, shipyards, dredging contractors, Commander, Fifth Coast Guard District. regional water districts, engineering consultants, state and local governments, and others. This seat on the Conference’s board SKW Constructors is the contractor doing the marine work for will improve VMA’s ability to promote policies beneficial to the new Midtown Tunnel between Norfolk and Portsmouth. Virginia’s maritime industry. With the mutual goal of minimizing the impacts to commercial navigation, SKW has held several meetings with VMA and The Virginia Institute of Marine Science (VIMS) has a three- others regarding the maritime aspects of this very technically part mission to conduct interdisciplinary research in coastal challenging project. On Sept. 18, a Pre-Dredging Coordination ocean and estuarine science, educate students and citizens, meeting was held to discuss this first phase of dredging to take and provide advisory service to policy makers, industry, and place in the navigation channel in October and the schedule for the public. Many port-related projects have relied on VIMS’ the remaining phases of marine work. These meetings also help research and information; a current example being research VMA keep affected members well informed. and environmental studies connected to offshore wind. VMA is represented on VIMS Advisory Council, which met Sept. 27, and Training and preparation are essential to developing the skills discussed ways to continue fostering its relationship with the and experience of the first responders our industry relies upon maritime industry. Committee Update

SHIPPERS COMMITTEE (Sept. 4): The committee discussed in INTERNATIONAL TRADE SYMPOSIUM SUBCOMMITTEE detail the impacts of increased volumes on container terminal (Sept. 12): Lea Bogatch-Genossar, President of North America & operations and measures to improve the flow of their cargoes Caribbean Area of Zim-American Integrated Shipping Services, through the facilities. An update was provided on the reorganization was introduced as the new chairwoman for the International of the Virginia Port Authority and Virginia International Terminals Trade Symposium. The committee focused on ideas for which should be mostly invisible to port customers. The committee improving the conference through increased networking was briefed on the ILA’s Aug. 30 ratification of a new local labor and interaction with guest speakers. Also discussed were agreement specific to Hampton Roads. the challenges associated with late registrations and ways to encourage attendees to register earlier. TOWING & BARGE OPERATORS COMMITTEE (Sept. 11): The committee received a presentation from Dave Phillips, EDUCATION & TRAINING COMMITTEE (Sept. 17): The Senior Marine Inspector, from the Coast Guard’s Towing committee finalized the content and the deployment plan for Vessel National Center of Expertise. The presentation covered a survey to be sent to the VMA membership about workforce the implementation of a regulatory transition of previously challenges. It was agreed to begin exploring ways to begin uninspected vessels to vessels requiring inspection; including building a library of resources, thinking about a job bulletin statistical data, a review the current top ten deficiencies found board hosted on VMA’s website, and ways to increase awareness during Industry Initiated Exams, and projects the NCOE is about industry workforce needs. working on. The committee also discussed delays to their operations in connection with construction at bridges and off- schedule bridge closures. 6 Membership NEWS

NEW MEMBERS VMA MEMBER BENEFITS Continental Terminals, Inc. Warehousing & Distribution 1032 Cavalier Blvd. Chesapeake, VA 23323 Endurance IT Services 757-487-5354; FAX 757-487-5753 Discount pricing on Mr. Steve Guido, General Manager computer network services. [email protected] Contact Blake White 216-3671 www.continentalterminals.com

Roster Updates OptimaHealth Competitive Rates and Value-Added Benefits Pg 17 – ARCADIS-US, Inc. Pg 50 – Rutherfoord a Marsh & for health insurance. New Contact: Ms. Susan Herbert, McLennan Agency, LLC Contact Jim Blassingham 533-4655 Project Scientist New Contact: Zachery Brandau, Vice e-mail: susan.herbert@arcadis-us. President replaces Dan Cook com e-mail: Zachary.brandau@ rutherfoord.com Pg 30 – Fracht FWO (VA), Inc. Contact Name change: Vicki King Pg 52 – SunTrust Bank e-mail: [email protected] New Contact: Ms. Charity Volman, E-Dental City President replaces Leroy Pg 32 – Goldman & Associates Abrahams Group Level Dental Benefits Address Change: 500 E. Plume Street, Phone: 757-624-5590 offered on an individual basis. Suite 406 e-mail: charity.volman@suntrust. Contact Ross Winfield 340-9777 Remove fax number com ext. 355 Pg 35 – J.P. Morgan Chase Pg 56 – Virginia International e-mail change: [email protected] Terminals, Inc. website: www.chase.com/ Replace Regina Brayboy and Joe Dorto commercial-bank with New Contact: Mark Thorsen, Vice Retirement Needs President/Chief Information Officer e-mail: [email protected] Retirement plan evaluations New Contact: Shawn Tibbetts, Senior for business owners and trustees. Vice President Operations Contact Jim Blassingham 533-4655 E-mail: [email protected]

VMA Membership Workforce Survey Discounted Room Rates for In accordance with VMA’s Strategic Plan, the Association is embarking on an Members and Guests initiative to support member company growth. Helping members increase their Visit VAMaritime.com for discount information. resources for workforce development and recruitment is part of this goal. We are requesting each member company to complete the following survey one time only. Please ask the person most knowledgeable about your companies workforce issues to take a few minutes PAPCO, Inc. to complete this survey. The information we receive from Fuel purchase program to manage fuel costs your company will help guide the work of the Education & Training Committee and provide data that will be useful as Call (800) 899-0747 option #3 VMA speaks to the workforce needs of our industry. VMA Membership Workforce Survey Link: https://www. surveymonkey.com/s/TLZPVST Deadline for submission: October 31, 2013 7 IME RIT A A SS M O PRESORTED STANDARD C A I I A N T U.S. POSTAGE PAID I

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236 E. Plume Street Norfolk, Virginia 23510 P.O. Box 3487 Norfolk Virginia (757) 622-2639; FAX 622-6302 www.VAMaritime.com [email protected]

Club Contacts

Customs Brokers & Int’l Freight Forwarders Assn. Hampton Roads Traffic Club Tidewater Motor Truck Association Contact: Val Sutton • 853-1940 Contact: Michael Hirsch • 485-4799 Contact: Frank Borum • 494-0276 www.HamptonRoadsTrafficClub.org Ed O’Callaghan • 450-8484 Hampton Roads Coal Association Troy Tibbetts • 544-0693 Contact: Joe DeMatteo • 928-1520 ODU Maritime Institute Speaker Series Contact: Sara Russell • 683-3964 Virginia Ship Repair Association Hampton Roads Global Commerce Council Contact: Sylvia Bell • 233-7034 Contact: Peter Trocchiano • 201-9796 Organization for Women in Int’l Trade (OWIT) www.VirginiaShipRepair.org www.hrgcc.org Contact: Sara Russell • 683-3964 Propeller Club - Port of Norfolk Contact: Taylor Miller • 440-7214 www.PropellerClubNorfolk.org December Club Events Calendar Mon Tues Wed Thur Fri Sat/Sun 25 26 27 28 29 30/1

Motor Truck Association 6:00 p.m. Elizabeth Manor Country Club

2 3 4 5 OWIT 6 7/8 12:00 p.m. Williams VMA Annual Business Mullen’s Office, Dominion Meeting Tower, 17th Floor ODU Speaker Series 10:00 a.m. Half Moone, 7:30 a.m. Nauticus Norfolk, Virginia Coal Association 5:00 p.m. CC 9 10 11 12 13 14/15

Traffic Club 5:30 p.m. Children’s Charity Night Holiday Inn, Greenwich

16 17 18 19 20 21/22 VA Ship Repair Assoc. 12:00 Renaissance Hotel Customs Brokers & Int’l Freight Forwarders 5:30 Christmas Party Town Point Club 23 24 25 26 27 28