2017 HAMPTON ROADS MARITIME & International Trade Guide INSIDE: A caffeine buzz in Suffolk The future of offshore wind Newport News Shipbuilding to hire 3,000 more workers

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Givens-VB Maritime-Guide-A.indd 1 3/3/17 10:17 AM A note from the publisher Honor the past. 2017 HAMPTON ROADS Virginia’s port continues to drive economic growth What an exciting time for the Port of Virginia and the maritime community. After two years of negotiations, the port signed a 50-year lease of the tech- Experience the present. MARITIME nologically advanced Virginia International Gateway. And now work has begun to & International Trade Guide almost double the capacity of the state-of-the-art terminal. The project coincides with plans to expand the port’s biggest terminal – Norfolk International Terminals Shape the future. A PUBLICATION OF VIRGINIA BUSINESS MAGAZINE – by 46 percent. There are a lot of unknowns in international shipping right now: the effects of ocean carrier alliances and larger ships — and a president who supports increas- NORFOLK - PROUD NAVY TOWN 100 YEARS ing the U.S. Naval fleet, but who may also change the country’s policies toward www.VirginiaBusiness.com international trade. But, the Port of Virginia and state government are all working together to President & Publisher Bernard A. Niemeier ensure that Virginia’s leading position on the East Coast continues to grow. Editor Robert C. Powell III We invite you to use the 2017 Hampton Roads Maritime and International Managing Editor Paula C. Squires Trade Guide to learn more about Virginia’s maritime industries. It is a valuable Senior Editor Jessica Sabbath resource on major companies providing services to the port community. Special Projects Editor Veronica Garabelli Intern Greg Kremer This guide includes information from the Port of Virginia, the Virginia Maritime Contributing Writers Richard Foster Association and the Hampton Roads Economic Development Alliance. We thank Bill Smith them for their assistance. Joan Tupponce — Bernie Niemeier Art Director Adrienne R. Watson Editors’ note Contributing Photographer Mark Rhodes Production Manager Kevin L. Dick Are big changes on the horizon? Circulation Manager Karen Chenault Accounting Manager Stephen P. Fishel Changes in political winds can create a lot of uncertainty. CENTRAL VIRGINIA But in recent history, international trade has never been more in the crosshairs 1207 East Main Street, Suite 100, Richmond, VA 23219 of a president. (804) 225-9262 Fax: (804) 225-0028 Throughout his campaign, President Donald J. Trump derided trade deficits Vice President of Advertising Hunter Bendall and free-trade deals such as NAFTA and the Trans-Pacific Partnership, proposing higher tariffs on goods entering the U.S. Trump’s policies leave major questions for Account Manager Molly Thompson the international shipping industry and American businesses. What changes will HAMPTON ROADS be made to NAFTA? Could trade wars begin? Could exporters be hurt? 4211 Monarch Way, Suite 104, Norfolk, VA 23508 (757) 625-4233 Fax: (757) 627-1709 This annual guide can’t begin to cover all the “what ifs,” so we’re not focusing Sales Manager Susan Horton on all the angles of Trump’s long-term effects, if any, on international trade. What we know is that on any given day, millions of colorful containers full of ROANOKE goods are traversing the globe on massive ships. We know that through techno- 210 S. Jefferson Street, Roanoke, VA 24011-1702 logical change, the world is likely to get smaller, and trade seems destined for Editorial: (540) 520-2399 Advertising: (540) 597-2499 continued growth. Sales Associate Lynn Williams And we know the Port of Virginia is preparing for the anticipated growth with VIRGINIA BUSINESS PUBLICATIONS LLC almost $700 million in capacity improvements. So in this guide, we’ve focused on those projects and the latest investments affecting this dynamic industry. A portfolio company of Virginia Capital Partners LLC — Jessica Sabbath and Veronica Garabelli Frederick L. Russell Jr., chairman CONTENTS News and features References

4 Cover story 31 Unlocking congestion 22 Export resources by Jessica Sabbath by Jessica Sabbath 27 Commentary News roundup 32 New double-stacked train 10 service heading to Midwest 16 Huntington Ingalls Industries by Jessica Sabbath 28 Port stats sees higher profits in 2016 33 Newport News/Williamsburg 29 2016 Trade overview by Veronica Garabelli awaits audit results by Veronica Garabelli 20 Caffeine buzz by Joan Tupponce 33 Air cargo/passengers 34 Foreign-trade zone 23 Boosting the workforce expands into North 34 Foreign Trade Zone #20 by Greg Kremer Carolina 35 Maritime law firms 25 A change in demurrage and 36 Global companies dock detention fees? Staff reports in Hampton Roads 36 International firms We Salute our Maritime History and Industries which Make Norfolk Proud and Strong. Please join us in our year-long celebration. The calendar of events may be found at Cover photo courtesy Port of Virginia 2 A publication of Virginia Business magazine norfolk.gov/navy100 Honor the past. Experience the present. Shape the future.

NORFOLK - PROUD NAVY TOWN 100 YEARS

We Salute our Maritime History and Industries which Make Norfolk Proud and Strong. Please join us in our year-long celebration. The calendar of events may be found at norfolk.gov/navy100 COVER STORY: A new class Port prepares for more cargo and bigger ships with major capacity improvements by Jessica Sabbath

hey keep getting bigger. On May 8, the Cosco Development, a ship with 30 percent more cargo capacity than the largest ships visiting the Port of Virginia today, will call on T Norfolk for the first time.

4 A publication of Virginia Business magazine Photo by Stefan Hofecker/Alamy PhotoStock Photocredit In May, the Cosco Development, a 13,092-TEU ship, will call on the Port of Virginia. It is the largest ship to ever visit the East Coast.

The ship will travel from Shanghai through the “What this tells me is we’re seeing what we’ve Panama Canal, visit the Port of Virginia and then been saying for a number of years about the future Savannah and Charleston before heading back to of the port, that it would handle the largest ships that Hong Kong. will be coming to the East Coast as the result of the While the Cosco Development calls on the Port of widening of the Panama Canal,” says John Milliken, Virginia, about 4,000 containers will be moved on or chairman of the Virginia Port Authority. off the ship, more than double the number handled That means the port likely will see ships of the during an average ship call at the port’s terminals. Cosco Development’s size on a regular basis.

2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 5 Cover Story

The timing is important. In 2016, the port handled a record level of cargo, 2.65 million TEUs at its terminals, up 4 percent from the previous year. That percentage represented the second-highest growth rate among U.S. ports last year. To take some pressure off its terminals, especially as con- struction begins, the Virginia Port Authority in March voted to dredge the channel at Ports- mouth Marine Terminal to expand capacity at that facility. The port reopened the older terminal to The NIT North Gate container traffic in 2015 to relieve expansion will some of the congestion at other improve motor carrier flow into and terminals. out of the port’s largest As the port prepares for container terminal. growth, a number of projects could have a major impact on its future. Below are the most critical ongo- ing projects. For more information on road transportation projects, see Page 31, and to see rail expan- sion plans, see Page 32.

After the Panama Canal force a trend of larger ships mak- Up first: Norfolk International opened last spring, the Port of ing fewer ship calls, says Milliken. Terminals North Gate Complex Virginia saw an immediate jump He notes the port already has seen The completion of a new gate in the size of the ships visiting its fewer ships while handling more complex this spring should help terminals. Now the port is serving cargo. the Port of Virginia navigate the ships able to carry 10,300 20-foot- “And the alliances allow the flow of truck traffic more efficiently equivalent units, or TEUs, a ship owner to be much more cer- in and out of Norfolk International standard metric of cargo capacity. tain that they can actually fill their Terminals (NIT), its largest con- Previously the port had been serv- ships, because they can carry the tainer terminal. ing ships of the 9,600-TEU size. cargo of two or three or four ship The $31 million NIT North Gate Cosco Development repre- lines that are part of that alliance,” expansion will add 26 truck gates sents a much bigger leap in size. says Milliken. as part of an effort to reduce traffic Its capacity is 13,000 TEUs. Port officials say it is prepared congestion at the terminal. The The ship also will be the first to for the wave of larger ships project is expected to be com- visit the port as part of new service because of its deep channels and pleted in June. under the Ocean Alliance. The alli- harbors, lack of overhead clear- The gate complex eventually ance is a vessel- and slot-sharing ance problems and large ship-to- will tie into the Virginia Depart- agreement involving four shipping shore cranes capable of reaching ment of Transportation’s Interstate lines — China Cosco Shipping, across massive vessels. 564 Connector project. Evergreen Line, CMA CGM, and But as the port pushes its cur- When completed, the highway OOCL. rent capacity limits, it is preparing will connect directly to NIT as well Ocean Alliance is one of three to handle more growth. The next as Norfolk Naval Station. That partnerships that began April 1 three years will see a construction will allow trucks to travel directly allowing shipping lines to book boom at the port’s two largest from the highway to the terminal, cargo on each other’s vessels. terminals, as it expands its overall removing truck traffic from Hamp- While their full impact on inter- cargo capacity by 40 percent. The ton Boulevard. The connector national shipping remains to be historic investment totals almost is expected to be completed in seen, the alliances likely will rein- $700 million. mid-2018.

6 A publication of Virginia Business magazine Photo courtesy Port of Virginia Opening in phases: crane operation. nearly double its current volume. expansion at NIT In November, the Port of The $320 million expansion will The expansion of Virginia finalized a $217 million extend the terminal’s berth by 800 NIT South will increase contract with the Finnish company feet, increase the size of its rail its cargo capacity by Konecranes. It will build and yard and add four ship-to-shore 46 percent, or 696,000 deliver 86 specialized, automated, cranes, 13 containers stacks and TEUs. The project will container-stacking cranes that will four inbound truck gate lanes. The be conducted in three be used in the expansion projects terminal serves Norfolk Southern Milliken phases, with the first at NIT and VIG. The contract is the and CSX railroads through the planned for comple- largest one-time order for auto- short-line Commonwealth Railway. tion in mid-2018. “We should be mated stacking cranes in industry The port’s new 50-year lease of able to reopen phase one of the history. Sixty of those cranes will be the privately owned VIG paved the revamped Norfolk International used at NIT, while 26 will go to VIG. way for expansion. Terminal by the summer of 2018,” Delivery will take place from 2018 Until last year, the port oper- says Milliken. “So that will take a to 2020. ated the technologically advanced lot of the immediate capacity pres- Construction on the project terminal under a 20-year lease. sure off.” will begin this fall. The investment Built in 2007 by APM Terminals, The entire project is expected is backed by $350 million in bonds the facility was sold in 2014 to a to be completed in 2020, about approved by the Commonwealth group of investment funds man- the same time that expansion is of Virginia. aged by Alinda Capital Partners finished at Virginia International and Universities Superannuation Gateway (VIG), a privately owned, Virginia International Gateway: Scheme Ltd. high-tech terminal in Portsmouth Doubling a high-tech operation The change in ownership operated by the port. Already under construc- gave the port the opportunity to Under the expansion plan, tion is the expansion of VIG in renegotiate its lease, which Gov. the cargo container stacks at NIT Portsmouth. Terry McAuliffe said was one of the will be packed higher and more The project will increase its worst lease deals he’d seen. After densely in a rail-mounted gantry cargo capacity to 1.2 million TEUs, two years of arduous negotiations,

Last year, the port renegotiated its lease of the privately owned Virginia International Gateway in Portsmouth. An expansion project will nearly double its capacity.

Photo by Mark Rhodes 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 7 Cover Story

the port signed the new lease last 55 feet and also will suggest the size of the vessel being used to year. length and location of wider sec- forecast the correct depth of the In addition to extending the tions in the channel. harbor as well as the makeup agreement to 50 years, the new The disagreement will cause at of the future fleet expected to agreement gives the port the least a six-month delay in complet- visit the port. Those measures option to purchase the facility. ing the three-year study and add are important in the $800,000 to its cost, for a total of economic modeling Dredging to 55 feet: $4 million. Under the new timeline, used by the Corps to Project timeline extended the study is expected to be com- determine the optimal One of the port’s most critical, pleted in December 2018. depth based on a cost- long-term projects has hit a tem- The delay will not affect a sec- benefit analysis, says porary snag. ond study in which the Corps and Klein Richard Klein, project The Hampton Roads maritime port authority also are partners. manager at the Corps, community long has advocated That study looks at the possibility which is charged with leading dredging the Norfolk harbor to of dredging the Southern branch dredging projects in the U.S. “The 55 feet. Channel depth is a criti- of the Elizabeth River from 40 to 45 port was not comfortable with the cal component of ports’ ability to feet. That branch is largely home assumptions we were making on handle the larger ships visiting to breakbulk terminals. the future of the project, and the marine terminals today. Norfolk has had congressional composition of the future fleet, However, the funding partners approval since 1986 to dredge its and the corps tends to be more on a study for the dredging project main channels to 55 feet. But revis- conservative in their predictions,” — the Army Corps of Engineers iting the project required a general he explains. and the Port of Virginia — disagree re-evaluation study, which the port In trying to pinpoint the most on the size of the future fleet that authority and the Corps began in cost-effective channel depth, should be considered in the study. June 2015. the Corps’ study will estimate The project could recommend The disagreement on the the economic benefits achieved dredging the channel deeper than 55-foot project centers on the in completing the project. “We

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8 A publication of Virginia Business magazine have to come up with a plan that White. “We know from experience ing a bottleneck in an area used maximizes the net benefit, the dif- that the vessel size has always heavily by commercial and Naval ference between the benefits and exceeded the most educated pre- vessels. the cost of the plan, and that’s why dictions of the day.” Another obstacle for the proj- we look at different depths,” says The Port of Virginia once had ect could be funding for the Corps. Klein. “There’s a point where it’s the deepest channels on the East President Donald Trump has optimal, and the study will come Coast, but many ports caught up proposed a $1 billion cut, or 16.3 up with a recommendation.” with it in the race to prepare for percent, to the Corps’ funding. But with increasingly larger bigger ships coming through the The project will take at least six ships calling on Virginia, the port expanded Panama Canal. South years to complete once the study wants to ensure the proper-sized Carolina, for example, is dredging is finalized. That timeline includes vessel is considered. the channel in the Charleston Har- three years for engineering and The Virginia Maritime Associa- bor to 52 feet. then another three for dredging. tion has made deeper, wider chan- Dredging to 55 feet and widen- “Obviously it’s not nels its primary goal. David White, ing its channel would help Virginia moving as fast as we vice president of the association, ensure it could handle the next would like it to, but pointed to a recent study by the class of big ships, particularly when we’re still committed U.S. Coast Guard advocating for they are full. The channel mostly to this,” says Art Moye, a wider channel to improve safety would need to be widened along executive vice presi- conditions at the Thimble Shoal a 6-to 8-mile stretch from the Moye dent of the Virginia channel. He says it’s important not Chesapeake Bay-Bridge Tunnel to Maritime Association. to underestimate the size of the Thimble Shoal Light, a lighthouse “We can build all these capital vessels likely to visit the port. “If in the Chesapeake Bay. improvements at VIG and NIT, but you look back over time, we have Modeling has shown, for exam- if we don’t have the adequate consistently underestimated the ple, that 14,000-TEU ships would channels for safe, efficient naviga- rate ... of how quickly we’ll see not be able to pass each other in tion in and out of this port, all of larger vessels visit our port,” says the Thimble Shoal channel, creat- that is a moot point.”

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2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 9 ROUNDUP: News from and around the port Revitalization on the river Port of Virginia upgrades Richmond Marine Terminal to Richmond or vice versa. While that Enhancements to the terminal might sound like a long time compared include an upgraded river barge. to the few hours it might take a truck to make the same trip, cargo shippers can ship more cargo at once by barge and can load overweight containers without worrying about the weight restrictions that would apply to trucks on interstate highways. The barge service’s custom- ers also can avoid traffic congestion around the port. In decades to come, the Port of Vir- ginia and city economic development officials believe that the Richmond Marine Terminal will evolve into the same sort of economic powerhouse as the Virginia Inland Port, which has by Richard Foster attracted about $800 million in outside ew investments are breath- $2 million new barge, the “Richmond investment and created roughly 10,000 ing new life into Richmond’s Express,” replacing the facility’s out- jobs since its establishment in 1989. Nriver port. As container traffic dated barge. Richmond is looking to market increases at the terminal, economic “We’re continuing our investment surrounding properties to advanced development officials envision a future in Richmond because we think it has manufacturing firms that would use the in which the Richmond Marine Terminal such a bright future,” Harris says. terminal to import components and could become a regional economic The Richmond terminal is “becom- raw materials and export products, says driver similar to the Virginia Inland Port ing more important as we undergo Jane Ferrara, chief operating officer in Front Royal. these large expansion projects at the of the Richmond Department of Over the last year the Port of [marine] terminals in Hampton Roads,” Economic & Community Development. Virginia has invested $6.2 million to he adds. However, economic development purchase a new, improved river cargo While the port currently has no strategies focused around the terminal barge and harbor crane, and the port is plans to add more satellite terminals are going to be a regional effort, she eyeing an upgrade to the terminal’s rail like the Richmond Marine Terminal and says, due to the fact that there is more infrastructure in the near future. the Virginia Inland Port, Harris describes land in the counties to accommodate “We have seen very steady growth both as “important relief valves” for large distribution centers. So far the at Richmond, and our expectations moving cargo to and from the larger economic development effort is still are for this to continue,” says Port of marine terminals in Hampton Roads. in the planning stages, though, with Virginia spokesman Joe Harris. “We (The Port of Virginia saw an overall no developments yet pegged to the think it’s really taken root with a lot of growth of 4.2 percent in container traf- improved Richmond Marine Terminal. the ocean carriers.” Harris notes cargo fic in 2016, reaching a record for the “We routinely market the Rich- traffic at the Richmond Marine Terminal amount of cargo handled at the port.) mond Marine Terminal as a differentiat- increased by 33 percent in calendar While the Richmond Marine ing asset for the city and the region,” year 2016, growing from 14,760 contain- Terminal’s new barge can handle the Ferrara says. “There aren’t too many ers in 2015 to 19,602 containers in 2016. same cargo volume of 125 TEUs (20- areas I can think of on the East Coast Traffic at the Richmond terminal was up foot equivalent units) per trip as its that have the nexus of transportation 56 percent this February over the same predecessor, it features upgrades that assets that include Interstate 95, a port, time period in 2016. allow it to carry refrigerated cargo units rail access — it’s really every mode of The Port of Virginia took over man- and to be loaded and off-loaded more transportation right there, and [it’s] agement of the 121-acre Richmond ter- efficiently. visible from one of the most-traveled minal from the city government in 2011, A wide variety of clients, including interstate highways in America. and in February 2016 the port signed a Altria, Philip Morris USA, Lumber Liqui- “We know there’s an opportunity 40-year lease. dators and the Lidl grocery chain utilize there, and we’re working on some plan- Last year, the Port of Virginia the Richmond Marine Terminal. The ning studies to determine what kind of installed the terminal’s new $4.2 million Richmond terminal runs its barge three infrastructure investments are really harbor crane and early this February the times a week, which takes about 12 needed to maximize the Richmond ter- port launched an upgraded 409-foot, hours per voyage from Hampton Roads minal as an industrial asset.”

10 A publication of Virginia Business magazine Photo courtesy Port of Virginia Data under the sea Three transoceanic, subsea cables planned to connect to Virginia Beach by Richard Foster trio of high-capacity trans- oceanic internet communi- Acations cables are turning Virginia Beach into a “digital port” — a destination hub for tech com- panies and data-server farms. Spanish telecom firm Tele- fónica announced last year that it is constructing the 7,000-mile-long BRUSA undersea fiber-optic cable connecting Brazil to Virginia Beach and is partnering with Microsoft and Facebook on the construc- tion of a 4,000-mile-long cable called Marea (Spanish for “tide”) that will connect Spain to Virginia Beach. Telefónica also is erecting a 21,000-square-foot subsea cable connection station and data cen- ter in Virginia Beach’s Corporate The BRUSA undersea Landing Business Park, all of which fiber-optic cable should be operational by early will connect Virginia 2018. Beach to Brazil. And in March the Dutch tech firm NxtVn announced it will invest between $1.5 billion to $2 billion to build the Midgardsormen subsea cable connecting a data park in the Netherlands to a new data center hub NxtVn will build in Virginia Beach to connect companies that want a high-capacity connection between the United States and Europe. Content providers their Facebook page or email. Virginia. like Facebook and In his State of the City address City economic development Microsoft are invest- in February, Virginia Beach Mayor director Warren Harris says the ing in subsea cables Will Sessoms spoke of his city subsea cables will attract interest to plan for future becoming “the East Coast’s fiber from many business sectors that infrastructure needs, transmission hub.” want faster, better connectivity Mauldin explains Alan Mauldin, The city will host the only across the Atlantic, including data research director transoceanic fiber optic hub on the centers, financial services indus- with Washington, D.C.-based Mid-Atlantic coast, sandwiched tries and big data firms: “There telecommunications research firm between similar data hubs in New are going to be multiple business TeleGeography. York and Florida. Virginia Beach applications that tie into this.” Additionally, Mauldin says, has been working in recent years For instance Virginia Beach- the cables will mostly be used by with South Boston-based Mid- based Globalinx Data Center the content companies for cloud Atlantic Broadband Communities announced in December that it computing and synchronizing data- Corp. (MBC) to build a high-speed would be building a $2 million, bases across continents, so that fiber infrastructure in the city that 138,000-square-foot data center in vacationing Americans in Germany, will connect to networks and data the business park to take advantage for instance, could easily access centers in Northern and Southern of the international connectivity.

Graphic courtesy TeleGeography.com 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 11 Roundup Expanding trade Virginia group forms to support elimination of Cuban embargo by Joan Tupponce new group in Virginia is sup- in 40 years. porting expanding trade The Cuban embargo has “Virginia is one of the Aopportunities with Cuba. ort o rie been in effect since 1962. states that has been the most Just a year after the Virginia active and supportive of trade Port Authority signed a trade with Cuba,” says James Wil- agreement with Cuba’s Port of liams, president of Engage Mariel, the Engage Cuba Virginia Cuba, a Washington D.C.- State Council was formed to pro- based advocacy organization mote new trade opportunities focused on advancing federal with the island nation. The coun- legislation to lift the Cuban cil, which is urging Congress to lift embargo, which has been in the U.S. embargo with Cuba, includes soybeans, soybean meal and poultry, effect since 1962. Virginia is the 16th university professors, members of Vir- to the country, which buys approxi- state to join Engage Cuba. ginia’s executive branch and a vari- mately $2 billion in agricultural prod- Over the past two years, the ety of representatives from Virginia ucts a year. Obama administration initiated a agribusiness. Agricultural trade with Cuba series of regulatory changes through The non-binding trade agreement opened up after the Trade Sanctions executive orders that have eased signed between Cuba and the Virginia Reform and Export Enhancement Act travel and trade restrictions with Cuba. Port Authority is aimed at strengthen- of 2000. The law allowed the export But a new administration can mean a ing ties between the two ports. of medicines and medical devices change in policy. Virginia is the third-largest U.S. as well as agricultural products. Two Williams is hopeful that change exporter of agricultural products to years later, former Gov. Mark Warner, could be positive. “President Trump is Cuba. Last year the state exported now a U.S. senator, signed an agricul- a businessman,” he says. “He recog- $28.5 million worth of goods such as tural export deal with Cuba, the first nizes the significant opportunities for American companies in Cuba. We’re confident that his desire to remove job-killing regulations and stimulate job creation and private-sector growth across the country will outweigh his CELEBRATING 35 YEARS desire to appease a handful of politi- cians in South Florida.” Marine & Industrial Engine Services At press time, the Trump admin- & istration had not announced any Industrial Standby Power changes to Cuban policies, but Trump spokesman Sean Spicer said during a Providing: February press briefing the administra- Service ▪ Parts ▪ Technical Assistance to Operators & Facilities Managers Worldwide tion was in the middle of “a full review Specializing In: of all U.S. policies towards Cuba.” Main Propulsion Overhauls & Repairs ▪ Auxiliary Generator Sets The 2000 law that allowed the export of agricultural commodities to Cuba included “restrictive prohibitions on extending credit to sell to Cuba,” Williams says. “As a cash-poor coun- try, Cuba has looked elsewhere for more competitive financing terms.” In February Warner cosponsored legislation that would lift restrictions www.baydiesel.com on private financing for U.S. agricul- 800.215.4005 | 757.485.0075 tural exports to Cuba. “Senator Warner’s bipartisan legis- Richmond | Roanoke | Chesapeake | West Virginia lation would allow Virginia farmers to regain lost market share in Cuba’s $2 billion agricultural import market and create jobs across the common- wealth,” Williams says. “This is so timely because there is a real opportu- nity to increase trade.”

12 A publication of Virginia Business magazine File graphic Virginia, Georgia port authorities seek unique information-sharing agreement by Jessica Sabbath ajor changes are on the horizon The Georgia Ports Authority operates the become more efficient through the in international shipping, and second-largest port on the East Coast. acquisition and utilization of joint mar- Mthe port authorities in Virginia keting materials and sharing best prac- and Georgia want to work together to tices in areas such as terminal operat- help navigate the changes. ing systems, training, cargo handling, The ports have filed a request with access, turn-times and infrastructure, as the Federal Maritime Commission well as supporting the promotion of all- (FMC) to create the “East Coast Gate- water routes from the U.S. East Coast way Terminal Agreement,” a way to to the international marketplace via the help improve the effectiveness and effi- Panama Canal. ciencies of their terminals. Georgia and Virginia are not the Ports around the world are han- first terminal operators to file with the dling larger and larger vessels, creating FMC to share information. In Decem- challenges for landside logistics. The ber 2016, APM Terminals, DP World, port authorities want to work together Hutchinson Port Holdings, PSA Inter- to overcome the associated obstacles. New York and a lot of others. With the national, Shanghai International Port “What we determined is that our ship lines forming alliances, 90 percent (Group) Co., and the Port of Rotterdam two ports, while rivals don’t really com- of our cargo will be carried by three Authority filed the “Global Ports Group pete directly very much,” says John worldwide alliances and that means Agreement” with the FMC to promote Milliken, chairman of the Virginia Port that the ports have to do more talking the efficiency and effectiveness of the Authority. “We are very similar in struc- with each other, so this is a first step in container port industry. ture and style. We’re both independent that direction.” The Port of Savannah is the second government agencies. We operate our The agreement encourages the largest port on the East Coast, while own terminals, so we’re different than port operators to work together to Virginia is the third largest.

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Photo courtesy Georgia Ports Authority 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 13 Roundup

Offshore wind opportunities could still exist for Virginia by Jessica Sabbath espite the loss of momentum economics remain challenging.” behind an offshore wind The cost of offshore wind proj- Dresearch project off Virginia’s ects remain much more expensive coast, the commonwealth could still than onshore wind projects. play a role in the flourishing industry, One reason the economics had according to supporters of offshore become so difficult for VOWTAP wind development in Virginia. was the absence of an offshore wind Offshore wind projects up and industry supply chain in the Mid- down the East Coast are beginning Atlantic. The turbines would have to take shape, but efforts have been shipped from Europe, and stalled in Virginia. the only company in the U.S. that Last year, the Virginia Offshore fabricates offshore wind foundations Wind Technology Advancement is located in Louisiana. Project (VOWTAP), which would But as offshore wind projects have built two, 6-megawatt wind come online from Cape Cod to turbines 27 miles off Virginia’s coast, North Carolina, the economics for was dropped from a Department an offshore wind supply chain in the of Energy program that would have mid-Atlantic could start contributed $40 million toward the to make sense, says project. The federal agency decided George Hagerman, other research projects were more senior research associ- likely to meet a construction dead- ate for the Virginia Tech line of 2020. Advanced Research A study estimates the manufacturing of foundations needed for offshore wind Hagerman VOWTAP, the first offshore wind Institute. “The pipeline turbines, such as these off the coast of Rhode energy research lease approved potential exists, and Island, could create hundreds of jobs in the by the Bureau of Ocean Energy it’s really a matter of who’s going to commonwealth. Management, already faced an seize the initiative,” he says. uncertain future when the energy In December, Deepwater Wind department chose to advance other completed the Block Island Wind ables bid $9 million for a lease from projects. Dominion Virginia Power Farm, the country’s first commercial the federal government for an area had originally estimated the project offshore wind farm. The five-turbine off Kitty Hawk, N.C., to build an off- would cost $230 million. But after the development provides electricity shore wind development. Avangrid, company went through two rounds to the resort island. In January, the a subsidiary of a Spanish energy of bids, the project was going to cost same company received approval conglomerate, operates the onshore an estimated $300 million to $380 from the Long Island Power Author- Amazon Wind Farm near Elizabeth million. ity to build 15 turbines capable City, N.C., which powers the com- In addition to the research of powering 50,000 average-size pany’s data centers. project, in 2013, Dominion won a homes. That is only part of the Hagerman argues that regard- competitive bid process to lease 256-square-mile parcel that Deepwa- less of offshore wind development 112,800 acres off Virginia’s coast for ter Wind could develop for offshore in Virginia, the commonwealth is in a future development of an offshore wind. prime position to build the founda- wind farm that could hold about 300 Virginia’s neighbors also are tions that are needed to hold these wind turbines. VOWTAP was seen moving forward on offshore wind massive turbines above water. He as an important precursor to that projects. The Maryland Public Ser- says Virginia’s advantages include its development. vices Commission will decide by May high concentration of steel welders When asked about the current whether to move forward with one of related to the shipbuilding industry, status of offshore wind development, two offshore wind developers vying a large amount of land available to Dominion responded: “We are to receive $1.9 billion in subsidies manufacture these massive founda- evaluating all our options and speak- over 20 years to build offshore wind tions and the absence of overhead ing with interested parties, but the farms. In March, Avangrid Renew- restrictions on the water. The foun-

14 A publication of Virginia Business magazine AP Photo/Michael Dwyer dations are shipped vertically on tical miles. The foundations used in ply chain on the East Coast, he says. barges. Block Island took about two weeks Joan Bondareff, chairwoman In addition, he points out that to travel from the Gulf. Hagerman of the Virginia Offshore Wind Virginia has a federally approved argues that the demand for a closer Development Author- research area — VOWTAP would fabrication facility could be made, ity (VOWDA), which have only taken up a small portion especially when Hurricane season is was developed by of that space. “These are compel- taken into consideration. Virginia to coordinate ling ingredients our neighbors don’t With all the East Coast projects, the development of have,” he says. it could make sense to have a manu- offshore wind projects A study from the Virginia Depart- facturing location closer, he says. Bondareff in Virginia and their ment of Mines, Minerals and Energy “At some point someone’s going to related supply chains, estimated the manufacturing of want to have these foundations a lot says the authority is committed to these massive foundations could cre- closer,” says Hagerman. “If we had a offshore wind in Virginia and con- ate more than 500 jobs in Virginia. fabrication facility in Hampton Roads tinues to seek opportunities for the Currently, offshore wind devel- we could get to some of these proj- commonwealth. opment projects, such as the one in ects in a day and a half. And Virginia “VOWDA continues to support Block Island, R.I., must use founda- is in a prime position to capture the offshore wind development off the tions manufactured in the Gulf of market unless we were to let the coast of Virginia, and whether work- Mexico. That meant the barges that opportunity slip by.” ing with Dominion Virginia Power or carried the foundation substructures Leaders from the Mid-Atlantic other companies, we’ll be consider- from the Gulf Island Fabrication in states would benefit from working ing all options to accomplish this Houma, La., had to travel 1,800 nau- together to help create a robust sup- goal,” she says.

2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 15 SHIPBUILDING

President Donald J. Trump speaks to a crowd of more than 4,000 U.S. Navy sailors and employees of HII’s Newport News Shipbuilding division aboard the aircraft carrier USS Gerald R. Ford.

Huntington Ingalls Industries sees higher profits in 2016 Work ramps up at Newport News Shipbuilding by Veronica Garabelli board the USS Gerald R. Ingalls Industries (HII), the parent process begin to churn, we’ll have Ford earlier this year, during company of Newport News Ship- the workforce ready; we’ll have the Aa visit to Newport News Ship- building and the largest military facilities ready; and we don’t see building, President Donald Trump shipbuilding company in the U.S. that as an issue for the buildup.” called for a great rebuilding of the Virginia, home to the nation’s high- Petters said he’s more con- United States military, including the est concentration of workers in the cerned about the preparation of Navy. shipbuilding and ship repair industry, the 5,000 suppliers that support “I just spoke with Navy and also could see a significant impact HII’s shipyards. industry leaders and have discussed from a ramp up of the Naval fleet. “They’ve been under a lot of my plans to undertake a major In an earnings call strain over the last 15 years, and expansion of our entire Navy fleet, held in February, Hun- if I thought there was a risk in the including having the 12-carrier Navy tington Ingalls Presi- process, I think it’s probably in the we need,” he said. dent and CEO Mike supply chain,” he added. “How Trump has asked for a 10 per- Petters said the com- do you get those folks to ramp up cent increase in defense spending pany would be able their production in order to sup- in his 2018 budget proposal, which Petters to meet demand for port us? At the end of the day, if must be approved by Congress. He a Navy buildup faster we don’t have the equipment from also wants to increase the size of than the government could. the suppliers to build on time, that the Naval fleet from about 270 to “We’ll be ready before they ends up impacting the ships.” 350 ships. can get the money appropriated, A ramp-up in the number of If fulfilled, that promise could from the shipbuilder standpoint,” Navy ships may be uncertain, but mean big things for Huntington he said. “Once we start to see the HII anticipates an increase in work

16 A publication of Virginia Business magazine Photos courtesy Huntington Ingalls Industries at Newport News Shipbuilding in The new, $1 billion technical 2017, which expects to add 3,000 Newport News solutions division also will allow workers. That’s a welcome change Shipbuilding expects the combined companies to com- from 2015 and 2016 when the com- to add 3,000 workers pete for work previously restricted to its shipyard in 2017. pany had layoffs impacting roughly to subcontractors. In addition to 1,200 workers. Camber, the new division includes HII also reported a surge in AMSEC, Continental Maritime, profits from 2015 to 2016. Net earn- SN3, Newport News Industrial, ings jumped from $404 million to Undersea Solutions Group, and $573 million during that period. UniversalPegasus. Andy Green is Earnings for the fourth quarter serving as head of HII Technical nearly quadrupled — rising from Solutions. He has been with the $50 million in 2015 to $197 million company since 2011, most recently in 2016. serving as corporate vice president “Huntington Ingalls Industries’ of corporate development. operational performance in 2016 was solid,” Petters said when the formed a new technical solutions Camber is a government ser- earnings were released. “Excep- division made up of former HII sub- vices company that was founded in tional execution on mature pro- sidiaries unrelated to ship and sub- 1990. Its services include informa- grams at Ingalls lessened the marine building. tion technology solutions; impact of the ongoing transition “We believe that the estab- unmanned systems support; intelli- between programs at Newport lishment of this new division will gence analysis and operations; and News and drove the strong financial not only create a strategic focus engineering and management ser- results for the year.” on these businesses, but will also vices for federal and commercial In December, the company also improve performance transpar- customers. With the acquisition, acquired Huntsville, Ala.-based ency,” Petters said prior to the HII now has 37,000 employees, Camber Corp. for $380 million and acquisition. including 20,000 in Virginia.

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2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 17

COFFEE Caffeine buzz Port of Virginia’s ICE Exchange Port designation attracts coffee-related investment its “diverse and skilled workforce is “Success breeds the perfect location for establish- success for coffee ing a roastery that supports our companies that have high-quality standards while ensur- migrated to this area,” says Charlie Cortellini, ing that the freshest beans are a vice president at made available to our East Coast Massimo Zanetti consumers much more quickly than Beverage USA. today,” says company CEO Dave Burwick. “Additionally, The Port of Virginia is certified as an exchange port for coffee imports and is the only one in the Mid-Atlantic.” Before a port can receive the ICE designation, the exchange has to inspect facilities that can store coffee for futures trading. “You have to go through an approval process, and that process is com- plicated,” Hughes says, noting that the announcement about the designation was made in 2014 but didn’t go live until last year. “The designation was part of our mar- keting discussion points when we were working with Peet’s.” Prior to the ICE designation and an influx of coffee companies moving to the area, if coffee was rejected at the port for any reason, “the importer would have to move by Joan Tupponce the coffee because there weren’t he Port of Virginia’s official ment the roasters with continued other companies in the area to designation as an ICE opportunity, we can bring in more take it,” Charlie Cortellini, vice Texchange port is helping companies and industries involved president of research and develop- Kevin Hughes market Suffolk’s in coffee operations.” ment for Massimo Zanetti Bever- “caffeine capital” culture. The Currently the coffee industry age USA, says. “In major ports like designation, effective last Septem- in Suffolk represents an annual New York, New Orleans and the ber, allows for exchange-graded economic impact of $500 million. West Coast, if someone rejects the green (unroasted) Arabica coffee “That’s about 6 percent of the eco- coffee, then they will have other beans that come through the port’s nomic impact for the whole city,” coffee companies that will take it.” terminals and are stored in local, Hughes says, adding that Suffolk Massimo Zanetti Beverage USA exchange-licensed warehouses to has 500 people employed in the is the nation’s largest supplier of be held for futures trading. coffee industry. “That includes sup- store-branded packaged coffee “From our standpoint what the pliers, importers, roasters, etc. We with retail brands that include ICE designation does is solidify the will have an additional 135 people Chock full o’Nuts, Segafredo port as an asset to people doing in 2018 when Peet’s Coffee & Tea Zanetti, MJB coffee, Kauai coffee, roasting and to all things related opens.” The California-based Hills Bros. Coffee and Hills Bros. to coffee. It’s adding multiple company announced its decision Cappuccino. It also produces reasons for coffee roasters to be to establish an East Coast manu- proprietary and private label cof- here,” says Hughes, director of facturing operation in the city last fee, tea and drink mixes for retail, Suffolk’s economic development December. workplace and foodservice markets department. “If we can comple- Peet’s chose Suffolk because throughout North America.

20 A publication of Virginia Business magazine Photo by Mark Rhodes The company purchased the in the area, he adds. “It’s like getting product in affordably Suffolk roasting facility, now its success breeds success for coffee and efficiently and getting it out headquarters, in 2005. Originally companies that have migrated to affordably and efficiently. That’s built in 1985 as Hills Bros. Coffee, this area.” the name of the game.” the facility has been subse- Coffee imports at the Port Coffee is the second-largest quently owned by Nestlé, Sara of Virginia have grown 34 per- commodity traded in the world, Lee and now Massimo Zanetti. cent over the past three years. behind oil. Buying green coffee Massimo Zanetti’s decision to Coffee-related companies in the can be more complicated than open a manufacturing facility in area also include Keurig Green buying a stock on the stock mar- Suffolk was based on a variety of Mountain and J.M. Smucker, ket. “It’s so complicated that we factors, such as the area’s avail- whose coffee brands include have commodity departments ability and quality of the workers, Folgers and Dunkin’ Donuts. The that deal with that access to the port, good distri- port is anticipating higher cargo part of the busi- bution channels and the large volumes going forward because ness,” Cor- number of nearby universities of the ICE designation. “Ports in tellini says. and community colleges. New Orleans and New York are “It’s a sig- A major factor was the city seeing some decline in futures,” nificant and the port’s willingness to work Cortellini says. “We are in a part of our with the company. “While the growth mode in the Norfolk and business port had never received a bag Suffolk area.” when you of green coffee, they were open Logistics are always a big consider most for discussion and willing to work driver for companies. Virginia’s of the costs with our vendors,” Cortellini says. central location is more efficient are tied up in The port’s designation repre- for coffee companies. “Ulti- the purchasing sents a long-term benefit for all mately that’s what it comes down of green cof- of the coffee-related companies to,” Hughes says. “It’s about fee.”

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CVI VA Biz ad 7.5Wx4.75H.indd 1 3/18/15 4:33 PM 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 21 EXPORTS Finding new markets Exporting creates new opportunities for Virginia businesses hink there’s an overseas market for your product University students to the two-year VALET (Virginia or service, but not sure where to start? Leaders in Export Trade) program, companies can T Luckily, there are a number of state and fed- benefit from a wide range of sources when it comes eral resources to help companies navigate the com- to selling overseas. plexities of exporting. Ranging from a market intel- Below are sources available for companies inter- ligence and research program with George Mason ested in exporting.

STATE RESOURCES Virginia Economic Development Partnership (VEDP) – Inter- Virginia SBDC national Trade: Virginia’s main point of entry for companies (Small Business Development Center) interested in exporting. The VEDP – International Trade website The Virginia SBDC Network offers export programs for companies is packed with information about exporting and includes contacts that want to break into specific markets in three to 18 months. for local International Trade Managers. www.exportvirginia.org • Virginia Trade Alliance University Research Program: This • International Market Research: The VEDP - International program provides companies with market intelligence and Trade offers Virginia businesses access to international con- research to improve export readiness and performance In sultants in more than 75 countries around the world. These consultation with an international trade manager. Firms that experts provide valuable in-country market research specific are accepted into the competitive program receive more than to your product or service. They also arrange match-making 100 hours of dedicated research by George Mason University appointments with potential distributors and customers. students and 20 hours of consultation from private-sector www.exportvirginia.org/international-market-research experts. • Trade Missions and Trade Shows: Face-to-face meetings FEDERAL RESOURCES:* are as important to international business as they are to domestic marketing. VEDP - International Trade helps Virginia U.S. Department of Commerce companies meet potential customers and partners through • Export.gov: Hosted by the U.S. Department of Commerce’s participation in trade missions and trade shows. Trade mis- International Trade Administration, Export.gov combines the sions are well-planned visits with business meetings arranged federal resources to help American businesses plan interna- on your behalf and pre-qualified based on your export market tional sales strategies. The site includes market research and objectives. Trade shows provide a way for Virginia companies trade leads from the Commerce Department, export finance to connect with new customers and grow international sales information from the Export-Import Bank and the Small Busi- by exhibiting their products and services at international ness Administration, and agricultural export assistance from trade shows. http://www.exportvirginia.org/need-help/ the United States Department of Agriculture. www.export. travel-to-market gov

• Going Global Defense Initiative (GGDI): The GGDI helps • U.S. Commercial Service: The U.S. Commercial Service Virginia defense companies diversify into new international helps companies start or develop the export of their products markets. More than 300 companies have participated in the and services with trade counseling, market intelligence, busi- program, receiving international market research, finding new ness matchmaking and commercial diplomacy. 2016.export. customers overseas, and receiving assistance with topics such gov/virginia as export compliance. http://exportvirginia.org/defense • Exporting 101: A Basic Guide to Exporting helps businesses • State Trade Expansion Program (STEP): Designed to find information about establishing and developing overseas increase the number of small businesses that are exporting markets for their products and services. https://www.export. and to raise the value of those exports, STEP provides a gov/article?id=Why-Companies-should-export range of trade-related resources and services to small busi- nesses. The program is funded in part through a Cooperative Small Business Administration (SBA) Agreement with the U.S. Small Business Administration (SBA). • SBA Export Planner: Detailed information about everything http://exportvirginia.org/step from creating an export business plan to financing, account- ing and useful technology for exporting. www.sba.gov/ • Virginia Leaders in Export Trade (VALET): VEDP - Interna- exportbusinessplanner tional Trade’s comprehensive, two-year business acceleration program assists companies in expanding their international *At press time, the Trump administration had proposed cutting business. Twenty-five (25) qualifying companies per year some federal export programs, including the Export-Import receive $30,000 toward export-related expenses and help Bank, the U.S. Trade and Development Agency and the Interna- with creating an international sales plan to enter new foreign tional Trade Administration in its 2018 fiscal year budget. How- markets. http://exportvirginia.org/valet-program ever, the budget had not been finalized at press time.

22 A publication of Virginia Business magazine EDUCATION Boosting the workforce Maritime careers are in high demand

by Greg Kremer ewport News Shipbuilding, Newport News Shipbuilding is looking the largest military shipbuild- for younger workers, like Evan Danz, to Ning company in the U.S., is replace older workers who are retiring. preparing to ramp up its workforce in the next 18 months as work increases on U.S. Navy aircraft carriers and submarines. Most of the new hires, however, likely will not have experience working at a shipyard. “It will be up to us to turn them into shipbuilders,” says Susan Jacobs, vice president of human resources and administration at Newport News Shipbuilding, which is expecting to add 3,000 workers to its shipyard in the next year and a half. New positions will include welders, ship fitters, architects and technology professionals. Like many companies in the shipbuilding and ship repair industry, recent report by Reuters. program, they become Newport Newport News Shipbuilding is look- Newport News Shipbuilding, News Shipbuilding employees and ing to recruit younger workers. a division of Huntington Ingalls are paid for work at the shipyard “We’ve got to replace our aging Industries and the largest industrial and time spent in academic classes. workforce,” says William W. “Bill” employer in Virginia, spends $80 After graduating from the Crow, head of the Virginia Ship million per year training and retrain- school, most apprentices continue Repair Association ing its 20,000 employees. It helped working for Newport News Ship- (VSRA), an organization the VSRA develop the curriculum building. Such is the case for Evan that represents more for its Pre-Hire Training Program, Danz, 29, who graduated from the than 250 companies in which prepares workers for careers school earlier this year and works the industry, including in the shipbuilding and ship repair at the company as a naval archi- Newport News Ship- industry. Courses are offered at tect. Danz already was a college Crow building. Crow notes local community colleges in weld- graduate when he came to The that the average age ing, electrical and coatings trades, Apprentice School in 2013, but he of workers in the shipbuilding and and VSRA is looking to add classes was looking for a career that would ship repair industry is over 50. More to train pipefitters and outside combine his education and passion industry workers also will be needed machinists. Students pay $250 to for working with his hands. if President Donald J. Trump’s plan attend the program but are reim- Danz was one of 184 students to increase the U.S. Naval fleet bursed if a VSRA member company who graduated in February. He was comes to fruition. In his 2018 budget hires them. awarded the Homer L. Ferguson outline, Trump has proposed a 10 For almost 100 years, an Award for earning the highest percent increase in defense spend- apprentice school has been a key grade-point average for required ing while increasing the size of the way to train workers for the New- academic and craft grades com- Naval fleet to 350 ships. Today, the port News shipyard. Today, New- bined. The school receives thou- Navy has around 270 ships. port News Shipbuilding’s Appren- sands of applications every year for A supplemental budget pro- tice School trains students for 19 less than 200 slots that are available posal for fiscal year 2017 also has different shipyard careers and eight annually. Overall, The Apprentice at least $433 million reserved for optional advanced programs. Once School enrolls 800 apprentices. military shipbuilding, according to a apprentices are accepted into the Beyond shipbuilding and ship

Photo by Mark Rhodes 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 23 Education

in management with a specializa- Edward Nanartowich is tion in maritime logistics. president of the Mid-Atlantic Next year, SMART Center is Maritime Academy in Norfolk, which offers more expanding to Virginia a program than 90 maritime-related enabling people to earn American classes. Production and Inventory Control Society (APICS) credentials for sup- ply chain careers. In the near future, the center also plans to bring a dual enrollment program to the com- monwealth allowing high school students to earn APICS credentials. Norfolk’s Old Dominion Uni- versity (ODU) is another resource for people interested in maritime careers. Around 100 students receive undergraduate degrees in maritime and supply chain manage- repair, the Hampton Roads region is centers around the country that work ment from the university each year. home to many institutions providing to strengthen the skills of maritime Last year, ODU also began offering education and training for a variety technicians in the U.S. Locally, the a master’s degree in that field. of maritime careers. The Southeast center partners with Tidewater The Norfolk-based Mid-Atlantic Maritime and Transportation Center Community College on a program Maritime Academy (MAMA) trains at Tidewater Community College in that allows students to stack cre- workers that are new to the industry Virginia Beach is one of more than 40 dentials leading to an associate and mariners looking to advance National Science Foundation (NSF) degree in maritime technologies. their careers. It offers more than 90 Advanced Technological Education TCC also offers an associate degree classes, including U.S. Coast Guard- approved courses. One new offering is a free boot camp aimed at young adults between the ages of 18 to 24 who TIDEWATER COMMUNITY COLLEGE have few job prospects. Graduates of the program receive an Entry Level Merchant Mariner Certificate Maritime Logistics Program for Oceans from the U.S. Coast Guard’s National Maritime Center. The certificate qualifies people for entry-level jobs aboard ships. As Maritime Logistics manager, For more information Edward Nanartowich, MAMA presi- dent, says that about 70 percent you are an integral member of a please contact: strategic supply management team of students graduating from the Calvin R. Scheidt, Jr., Director program find employment aboard focused on planning, implementing Military Contract Programs ships. The program, which has and controlling the efficient Maritime Logistics Program graduated roughly 100 students, flow and storage of goods, Lead Faculty also sets up internships for students services and related information [email protected] with shipping companies. from the point of origin to the (757) 822-7702 Since 2012 MAMA also has operated a program that qualifies point of consumption. veterans to receive a merchant marine license from the U.S. Coast Guard. This license can lead to TIDEWATER COMMUNITY COLLEGE jobs paying between $80,000 and CENTER FOR MILITARY & $150,000. About 100 students VETERANS EDUCATION graduate from this program every TCC is accredited by the Southern Association of Colleges and Schools to award the associate’s degree. year. “They might work all over the Graduates of the maritime logistics program may enter or continue employment in the field of logistics management in maritime or traditional business environments. world but everything comes back to Virginia,” Nanartowich says.

24 A publication of Virginia Business magazine Photo by Mark Rhodes FEES A change in demurrage and detention fees? Federal Maritime Commission could consider petition for new rule on demurrage and detention charges Staff reports proposed rule submitted for Late charges aim to review by the Federal Maritime help terminals reduce ACommission (FMC) could have congestion. wide-reaching implications for the international shipping industry. The FMC may consider adopting a rule to clarify when ocean carriers and marine terminal operators can charge shippers and motor carriers fees when they are delayed picking up cargo and returning containers. The proposed rule would address conditions when the terminals are inaccessible due to port congestion, weather or labor disputes. “A new rule from the Federal Maritime Com- mission would impact all freight forwarders, customs brokers complexity [of a new rule] will greatly the significant players in and third-party logistics companies, increase the amount of litigation over international marine ship- filed a petition asking the FMC to free time and demurrage/detention ping,” says Dustin Paul, adopt a rule regarding the assessment issues.” a partner and member of of demurrage and detention charges Terminal operator Ports America Paul the Transportation Law when ports are congested or other- suggests the proposal would “erode group at Norfolk-based wise inaccessible. and interfere with the market-driven law firm Vandeventer Black. “In light The petition suggests the commis- allowances and contract risk-allocation of the profit margins in the shipping sion should require ocean carriers and mechanisms used around the world to industry, the allocation of the costs for terminals to extend free time during encourage efficient terminal use.” demurrage and detention charges can any period in which cargo cannot be Most of the responses to the significantly impact profitability.” tendered for delivery or equipment petition have come from logistics Shippers have a certain amount of returned, regardless of the cause of companies and trucking associations time to pick up cargo once it reaches a the delay. supporting the petition. As a whole, port terminal called “free time.” After The rule proposed by the coalition they attest to a host of unfair charges that period terminals can begin to levy also would prevent charges during that have been assessed. demurrage charges. Similarly, ocean such periods, even if the free time Tidewater Motor Truck Association carriers add detention charges when had previously expired. “Adopting (TMTA) President Marilynn Ryan sent a shippers do not return shipping con- the proposed rule will not only curtail response that says motor carriers had tainers within a specific amount of time. unjust and unreasonable demurrage, “repeated incidents of severe con- The late charges, which are detention and per diem practices, but gestion at the Port of Virginia.” She designed to help terminals reduce it will also provide meaningful incen- stated that “port delays were beyond congestion, can be significant. For tives to help reduce and mitigate port the control of drayman” and that “too example, the Port of Virginia charges congestion,” the petition states. frequently shippers and truckers are more than $600 each day for a stan- The FMC is seeking comment on being charged demurrage and deten- dard-size container not picked up in the issue before deciding whether tion penalties for late pickup or return time, with the penalties growing after to open a rulemaking proceeding. of containers when it is not their fault.” three days. By mid-March, the commission had Paul of Vandeventer Black says: According to a petition with the received more than 100 comments. “When there are delays in moving FMC, freight forwarders say ocean Opponents of the rule change cargo or returning equipment, there carriers and terminal operators have argue it is unnecessary and could are going to be cost impacts. Anyone been unfairly applying the fees when impede port operators’ efforts to who ships goods or uses the area’s situations beyond their control prevent move cargo efficiently in and out of ports should be paying attention to truckers and shippers from retrieving terminals. potential changes coming from the their cargo or returning containers on The National Association of commission.” time. Waterfront Employers (NAWE), The Federal Maritime Commission In December the Coalition for Fair which represents terminal operators, does not have a timeline on a decision Port Practices, a group of 26 trade suggested in public comments that on whether to open rulemaking on associations representing shippers, the “uncertainty and the resulting detention and demurrage fees.

Photo courtesy Virginia Department of Transportation 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 25

COMMENTARY The need for stability in ocean shipping by Bill Smith he ocean container shipping Over 150 ships of the 10,000 MSC, Hyundai), Ocean Alli- sector has seen better days. TEUs to 22,000 TEUs (20-foot ance (CMA, Cosco, Evergreen, T Low freight rates and lackluster equivalent units) capacity are OOCL) and The Alliance demand resulted in approximately $5 expected to be delivered in (Hapag-Lloyd, K-Line, MOL, billion in losses for the top 20 container the next two years, according NYK, Yang Ming). Not to men- lines in the last year, according to the to Alphaliner. tion a few independents (Zim, Wall Street Journal. Many new ship deliveries PIL, WanHai, SM Line) that Last year saw the collapse of one of have been deferred in previ- always make things interesting. the largest ocean carriers, Hanjin Ship- ous years due to insufficient Add to this the impor- ping, which was a wakeup call for an demand, but the lines cannot tance of shippers conducting industry that has been plagued by recur- postpone their deployment any longer. financial risk assessments and due ring themes of record losses, cutthroat New ship deliveries outstrip demand diligence on carriers in the wake of competition and overcapacity. Will 2017 growth by a factor of 2:1. And while Hanjin’s demise. And the complexity of be a watershed year, one in which the ocean carriers are taking measures to ongoing industry consolidation, such as ocean carriers stand on more stable counter this imbalance by scrapping proposed mergers between the three footing and turn the corner toward older vessels, idling ships and laying up Japanese carriers (MOL, NYK & K-Line) profitability? Shippers agree that a service strings during the slack season, and another between Hapag-Lloyd and healthy ocean shipping sector is vital for it’s still not enough to stem the tide. UASC, and you’ve got an environment international trade and today’s global Alphaliner reported that 1.5 million where shippers have a tremendous supply chains. But the jury remains out TEUs of new tonnage is expected in number of variables to consider this on whether the ocean lines will be able 2017 compared to 750,000 TEUs worth ocean contracting season. to right the ship, at least in the short of planned scrapping. The overcapacity So what are shippers to do? I’d term. situation is more acute on some trade say the British motivational saying, I recently attended the Trans-Pacific lanes with the Far East to U.S. West “keep calm and carry on,” applies Maritime (TPM) conference in Long Coast and Europe being the most prob- here. Logistics companies should stay Beach, Calif. This annual gathering lematic. The Asia to U.S. East Coast abreast of such developments, to better of ocean carrier executives, major trade will also see a capacity increase serve the shipping community and help shippers, various logistics industry but on a smaller scale. By some esti- customers navigate industry dynamics. representatives (freight forwarders and mates it’ll take several years for this The portfolio strategy is a proven way to brokers, intermediaries, etc.) and trade capacity hangover to work through the manage risk in investing, and the same media provides a kickoff forum for the system with Alphaliner pointing to 2019 principles apply to the ocean shipping annual freight contracting cycle in the as the year when a supply/demand bal- industry. Having a balanced approach, Trans-Pacific. And while TPM has been ance is reached. with at least one stable, well-qualified on my agenda for the past 10 years, This glut of tonnage led to carrier in each alliance, is prudent. never have I been so eager to consider unhealthy ocean freight rate levels in Shippers have greater transparency various presentations, panel discussions 2016, and the industry suffered the con- than ever into spot-rate levels, which and meetings/networking opportunities sequences. These financial losses came can change dramatically over the course on the latest factors affecting our indus- despite a carrier alliance strategy, which of the year. Best-in-class shippers build try. Topics such as new carrier alliances, promised to save billions on annual flexibility into their logistics strategy, so industry consolidation, financial risk and operating costs by sharing vessel space, they have different options to execute, potential changes to trade policy are equipment, terminal facilities and mar- according to changing market condi- weighing on the minds of transportation keting resources. Instead, the alliances tions. In this way they optimize both decision makers, so conference attend- have further exacerbated the ongoing service levels and their transportation ees were engaged and keen to learn the liner price war, which dates back to dollars. latest. 2011 when the first mega ships (those Logistics providers should help On the topic of capacity, I consider capable of transporting more than shippers achieve supply chain stability the ocean shipping research firm 10,000 TEUs) were introduced. Now and consistency, despite the erratic Alphaliner to be my true north. The shippers are sorting through new alli- nature of the ocean shipping industry. firm estimates total global fleet capac- ance structures, which take effect April Let’s hope the maritime transportation ity will grow by 4 percent per year (on 2017, and include the 2M+H (Maersk, sector finds smoother seas ahead. average) in 2017 and 2018. And while that may sound modest, this comes on Bill Smith is Vice President, Business Development & Sales for CV top of current idle capacity of 7 percent. International. He can be reached at [email protected].

2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 27 PORT STATS Top 10 commodities by value

EXPORTS1 IMPORTS1 Nuclear reactors, boilers, Nuclear reactors, boilers, 1 $3,733.93 $9,402.58 machinery machinery

2 Plastics 1,926.24 Electrical machinery 3,476.85 3 Pharmaceutical products 1,904.93 Vehicles, not railway 2,570.38 4 Vehicles, not railway 1,169.21 Furniture and bedding 2,458.33

5 Organic chemicals 1,119.42 Pharmaceutical products 2,239.20

6 Misc. grain, seed, fruit 1,062.02 Plastics 1,838.88

7 Tobacco 1,047.54 Toys, games, sports equipment 1,484.33

Optic, photo, etc., medic or 8 968.60 Apparel, knitted or crocheted 1,447.80 surgical instruments

9 Electrical machinery 928.86 Beverages, spirit and vinegar 1,263.55

10 Misc. chemical products 928.29 Apparel, not knitted or crocheted 1,063.13

1 In millions of U.S. dollars for 2016 at the Port of Virginia Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

Top 10 commodities by short tons

EXPORTS Short tons1 IMPORTS Short tons1

1 Mineral fuel, oil, etc. 23,594.99 Nuclear reactors, boilers, machinery 905.67

2 Misc. grain, seed, fruit 2,798.02 Salt, sulfur, earth, stone 873.71

3 Wood 2,767.25 Furniture and bedding 762.57

4 Woodpulp, etc. 1,787.57 Beverages, spirit and vinegar 635.87

5 Food waste; animal feed 1,590.61 Vehicles, not railway 599.77

6 Plastics 638.63 Plastics 587.82

7 Cereals 538.09 Stone, plaster, cement 448.17

8 Paper and paperboard 433.04 Mineral fuel, oil, etc. 421.95

9 Fertilizers 394.20 Electrical machinery 407.38

10 Organic chemicals 351.05 Iron and steel 398.11

1 In thousands of short tons for 2016 at the Port of Virginia. A short ton equals 2,000 pounds. Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority

28 A publication of Virginia Business magazine Top 10 trading partners 2016 Trade overview by total value TOTAL Short tons Metric tons (thousands) (thousands) EXPORTS1 IMPORTS1 Total cargo 50,313.70 45,643.88 1 China $2,525.83 China $10,878.26 General cargo 20,869.31 18,932.33 2 Belgium 2,038.44 Germany 5,027.17 Container cargo 20.664.89 18,746.88 3 Germany 1,660.38 India 2,728.76 Breakbulk cargo1 204.42 185.45

United 4 1,586.52 Italy 2,221.87 Container units 1,503,886 Kingdom TEUs 2,655,705 5 Netherlands 1,549.37 Japan 1,911.15 Total cargo dollar United $69,991.93 6 Japan 1,038.53 1,589.39 value (millions) Kingdom

7 Brazil 1,012.49 Brazil 1,478.28 EXPORT Short tons Metric tons 8 Saudi Arabia 946.52 France 1,450.56 (thousands) (thousands) 9 India 883.87 Vietnam 1,432.81 Total cargo 38,661.73 35,073.37 General cargo 10,874.99 9,865.62 10 Austria 789.44 Malaysia 1,364.35 Container cargo 10,848.47 9,841.57 1 In millions of U.S. dollars for 2016 at the Port of Virginia. Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Breakbulk cargo 26.51 24.05 Virginia Port Authority

Container units 805,903 Top 10 trading TEUs 1,428,962 Total cargo dollar partners by total cargo value (millions) $25,846.79 EXPORTS1 IMPORTS1 IMPORT 1 Brazil 5,573.04 China 2,516.26 Short tons Metric tons 2 China 3,626.52 Germany 952.01 (thousands) (thousands) Total cargo 11,651.98 10,570.51 3 Netherlands 3,147.06 Brazil 726.61 General cargo 9,973.60 9,047.90 United 4 2,514.40 India 709.97 Kingdom Container cargo 9,816.41 8,905.30 5 India 2,019.87 Italy 518.08 Break-bulk cargo 157.19 142.60

6 Italy 1,878.41 Turkey 415.64 Container units 697,983 TEUs 1,226,744 7 South Korea 1,570.64 France 399.31 Total cargo dollar 44,145.13 8 Japan 1,417.16 Vietnam 354.88 value (millions)

9 Turkey 1,341.99 Spain 312.58 Vessel calls 2,549 Coal loadings 1 10 Ukraine 1,321.12 Netherlands 260.56 22,024.16 (short tons) 1 In thousands of short tons for 2016 at the Port of Virginia. A short ton equals 2,000 pounds. 1 Coal loadings and breakbulk cargo include international and domestic shipments Sources: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Source: U.S. Department of Commerce, U.S. Census Bureau; Virginia Maritime Associa- Virginia Port Authority tion; American Association of Port Authorities; Port of Virginia

2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 29 Port Stats

Export/import East Coast port TEUs handled at market share

1 Market Port of Virginia Port TEUs share 1 New York/New Jersey 6,251,953 32% Export Import Total empties Total TEUs 2 Savannah, Ga. 3,644,521 19 2016 1,006,119 1,174,893 474,694 2,655,705 3 Port of Virginia 2,655,706 14 2015 997,828 1,082,520 468,922 2,549,270 4 Charleston, S.C. 1,996,282 10 2014 1,034,526 1,017,879 340,633 2,393,038 5 Port Everglades, Fla. 1,058,687 5 2013 998,843 934,119 290,571 2,223,532 6 Miami 1,030,758 5 2012 936,809 870,318 298,579 2,105,887 7 Jacksonville, Fla. 981,347 5

2011 855,334 768,874 293,821 1,918,029 8 Baltimore 869,485 4

2010 824,331 766,680 304,007 1,895,018 9 Philadelphia 459,701 2

2009 791,831 689,931 263,466 1,745,228 10 Wilmington, N.C. 260,493 1

TEU: Twenty-foot equivalent unit Source: Virginia Port Authority 1 TEU: 20-foot equivalent unit

Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, Virginia Port Authority, American Association of Port Authorities

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PortsEcnmcDvlpmnt 1/2 Pg. Ad.indd 1 1/25/17 1:25 PM 30 A publication of Virginia Business magazine TRUCKING Unlocking congestion Transportation projects should help relieve congestion by Jessica Sabbath xpect to see a lot of construction which would add an additional two on Hampton Roads’ roads over lanes, is scheduled for completion in Ethe next few years. 2031. Backed with an annual regional tax Another major project on the hori- collection of $160 million from regional zon is the expansion at the Bowers Hill gas and sales taxes and contributions interchange – where seven highways from the Virginia Department of Trans- meet. “It’s a very drawn out and com- portation’s new construction fund- The expansion of the plicated interchange,” says Page. ing formula, Smart Scale, the Hamp- Hampton Roads HRTAC has approved spending $4 Bridge-Tunnel is expected ton Roads Transportation Account- to be completed by 2024. million to do an environmental study ability Commission (HRTAC) is moving on the project, which would bring the forward on a number of projects that interchange to six lanes and then even- could have big impacts on the region’s lanes likely will be high-occupancy toll tually to eight. That would tie into clogged roads, bridges and tunnels. lanes, or HOT lanes, with existing lanes improvements to the Routes 460/58/13 Perhaps the most significant mile- remaining free for motorists to use. connector, which would be completed stone for the region’s transportation Under the current timeline, the project by 2035. system came late last year with the would be completed by 2024. Other improvements will have decision by a regional transportation The expansion will require VDOT more immediate effects, and motor group and the Commonwealth Trans- to secure federal permits. In the mean- carriers are eager to see some relief. portation Board to expand the Hamp- time, HRTAC is refining geotechnical Recent efforts have relieved some traf- ton Roads Bridge-Tunnel, which con- analysis for the project and beginning fic congestion at the port, but it still nects Hampton and Norfolk. preliminary engineering. The commis- can be congested during busy peri- For more than two decades, the sion already has approved spending ods. “It’s obviously gotten better since region has been analyzing the best way $30 million to start those efforts. 2015, but quite frankly it’s not where it to add capacity at harbor crossings, but While the expansion marks a major needs to be yet,” says Frank Borum, it had no money to do anything. But milestone in the region’s transportation vice president of Atlantic Intermodal with a regional funding source avail- planning, a series of other transporta- Services. “There’s still some pain with able and new money under a statewide tion projects are planned to improve the larger vessels coming into port, transportation plan, VDOT decided traffic conditions in Hampton Roads. and the steamship companies have in 2015 to conduct an environmental Expansion of Interstate 64, which is reduced the free time allowed to move impact study that analyzed four alter- being completed in three segments, those boxes, so you’re getting less natives for harbor crossings. The study already is underway on the Peninsula. time to move them off before custom- also analyzed expanding the Monitor- The first six-mile segment is scheduled ers or trucking companies are being Merrimac Memorial Bridge-Tunnel and to be finished at the end of December penalized.” adding a third harbor crossing. 2017. The expansion will cover a total The completion of the North Gate At $4 billion, expanding the Hamp- of 21 miles. Complex should ease traffic entering ton Roads Bridge-Tunnel was the least However, a range of projects will the port’s largest container terminal, expensive option and also least envi- more directly affect port traffic, which Norfolk International Terminals (NIT). ronmentally damaging. The alterna- tends to use I-64 on the Southside and The project will increase the number tive was endorsed by a local group leave the region via Route 58. “We’re of truck gates to 26. The gate complex of mayors and other officials in Octo- preparing the next steps of how to will make an even bigger impact on ber and approved by the state’s Com- unlock this region, not only for conges- congestion when VDOT’s Interstate 564 monwealth Transportation Board in tion relief, but also to be prepared for Intermodal Connector links the high- December. what’s coming with the expansions at way to the Port of Virginia, providing “We looked at the areas in need the Port of Virginia,” says Page. trucks a direct route to enter NIT. of the most congestion relief and HRTAC is gearing up for the first To mitigate some of the conges- [the bridge-tunnel] seemed to have phase of improvements to High Rise tion, the port is opening terminals early. the greatest return on investment for Bridge, a $600 million project that will Virginia International Gateway opens at congestion relief,” says Kevin Page, build a bridge parallel to the existing 3 a.m., while NIT opens at 5 a.m. executive director of HRTAC, which is bridge and expand I-64 in Chesapeake. “Some of those drivers can come in charged with handling the financing of The project timeline calls for construc- early and still make the early-morning the project. tion to begin within 12 to 18 months deliveries that they used to have to pull The project would add a third tun- and be completed by 2020. The proj- out the night before,” says Borum. nel, expanding capacity of the bridge- ect received $100 million from VDOT’s “You’re getting things out quicker in tunnel from four to six lanes and Smart Scale formula. the early morning, and it takes it out of expanding I-64 for 12 miles. The new The second phase of the project, the regular day congestion.”

Photo by Tom Saunders, 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 31 courtesy Virginia Department of Transportation RAIL New double-stacked train service heading to Midwest by Jessica Sabbath

ouble-stacked container The Virginia Avenue Tunnel project made roads that access the port’s marine termi- trains are now moving clearances for double-stack intermodal nals. Norfolk Southern Corp. has offered Dalong CSX Corp.’s rail- container trains. double-stacked service since 2010 when way between Portsmouth and its Heartland Corridor project created the Midwest. clearances between Norfolk and the In December, CSX Corp. Midwest. completed the first phase of Freight movement also will benefit its Virginia Avenue Tunnel proj- under Virginia’s Atlantic Gateway corri- ect, which allowed clearance dor project, which includes $165 million to for double-stacked container improve the Interstate 95 corridor. Those trains. A second tunnel will be completed in mid-2018. plans include building a third main line track along CSX’s That means CSX can move twice as many trains corridor in Northern Virginia to add freight rail capacity. along a route, where single-stack service between the Rail connections are a critical component for the Port Mid-Atlantic and Midwest had created a bottleneck for of Virginia. In 2016, 36.7 percent of cargo heading to and intermodal traffic. from the Port of Virginia’s terminals came via rail. The Port The Virginia Avenue Tunnel is the last of 61 clear- of Virginia moves more cargo via rail than any other port ances that made up CSX’s $850 million National Gateway on the East Coast. Initiative, which focused on opening up its railways for Because the port doesn’t have a large population in the double-stacked container trains. area surrounding its terminals, its intermodal access to the CSX now operates double-stacked intermodal trains Midwest is key to its future growth. In his State of the Port to and from the Portsmouth terminal seven days a week. address last year, the Virginia Port Authority’s executive Each train is full, averaging about 200 intermodal con- director, John Reinhart, said rail could make up as much tainers per train, according to Laura Phelps of CSX. as 45 percent of cargo at the Virginia port over the next CSX and Norfolk Southern are the two Class 1 rail- 20 years. SOLUTIONS

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32 A publication of Virginia Business magazine Photo courtesy CSX Transportation AIRPORTS Newport News/Williamsburg awaits audit results by Veronica Garabelli his year has been a mixed bag Meanwhile, the airport still is ate seven existing dining facili- for the region’s airports. involved in a legal dispute with res- ties. The new restaurants include T The biggest news came taurateur Tom McDermott, who The Local, a gastropub featuring from the Newport News/Williams- says his restaurant lease at the local fare from farmers and brewer- burg International Airport. airport was illegally terminated. ies, and Here’s To Heroes, a part- The commonwealth is audit- McDermott ran food services at nership with beverage and brewing ing the airport after The Daily Press the airport, including the Blue Sky company Anheuser-Busch InBev to reported the airport used $4.5 mil- Café, which was shut down last year honor the U.S. Military. A third res- lion in taxpayer funds to pay off to allow for the construction of a taurant, MKT, will sell fresh food to a loan guaranteed to an airline consolidated security checkpoint travelers on the go. that had gone out of business. and new restaurant and bar area. This summer should also see the The news led the commonwealth News at Norfolk International return of two nonstop flights. Delta to halt funding for the airport, Airport hasn’t been so turbulent. Airlines’ daily flights from Norfolk to since $3.55 million in state funds The airport has been working on Minneapolis will run from June 12 were used to pay off the loan. The several upgrades, including $3.5 through Nov. 3. Southwest Airlines rest came from local government million in improvements to the also is bringing back weekend flights funds ($700,000) and federal funds departures terminal it expects to from Norfolk to Denver from June 4 ($300,000), prompting Hampton complete in October. That includes to Sept. 29. The airline offered flights and James City County to stop renovating public restrooms and a from Norfolk to Denver last summer contributing to a regional commit- family convenience room and add- but only on Saturdays. tee that funds the airport. ing three “Mother’s Rooms.” “That’s an encouraging sign that The Peninsula Airport Com- HMSHost also is upgrading the the market is reacting well to it and, mission has since said it regretted dining facilities at Norfolk Interna- hopefully, someday we’ll have daily the deal, would cooperate with the tional. The food service company service,” to Denver, says Charles W. state audit, and supported legis- is opening three new restaurants at Braden, Norfolk International’s lation approved by the General the airport and continuing to oper- director of market development. Assembly to reform airport state funding, according to a story pub- Passengers at lished in The Daily Press in March. Air cargo handled The airport has been dealing with at Hampton Roads Hampton Roads declining passenger traffic since airports1 airports 2012 when AirTran stopped provid- ing service. Year NIA NNW Year NIA NNW Ken Spirito, Newport News/ Williamsburg’s executive direc- 2016 54,810,117 160,762 2016 3,209,185 411,641 tor, also has been placed on paid 2015 69,080,061 28,835 2015 3,703,664 418,889 administrative leave during the audit. Sandy Wanner, the airport’s 2014 55,637,623 29,121 2014 2,965,306 532,655 interim executive director, says 2013 58,113,441 34,042 2013 3,112,355 544,031 his main focus is getting the com- mission past the audit. After that, 2012 70,424,886 39,124 2012 3,299,712 646,550 his goal is to help Elite Airways 2011 64,354,839 37,994 2011 3,193,388 1,058,505 launch its planned nonstop ser- vice from Newport News to Long 2010 63,212,040 56,106 2010 3,332,466 1,062,007 Island and New Jersey. The airline 2009 59,015,963 38,094 2009 3,409,456 1,019,336 was set to start its service in March but delayed those plans after the 2008 64,083,225 73,440 2008 3,549,204 1,045,369 audit was announced. Wanner 2007 70,056,727 33,626 2007 3,714,323 1,056,303 says the airline is still dedicated to coming, but neither party wants 2006 68,778,934 26,602 2006 3,703,664 1,052,946 Elite’s arrival overshadowed by the NIA: Norfolk International Airport 1 In pounds NIA: Norfolk International Airport NNW: Newport News/Williamsburg International Airport NNW: Newport News/Williamsburg International Airport turmoil. Source: Individual airports Source: Individual airports

2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 33 FOREIGN TRADE ZONES Foreign-trade zone expands into North Carolina by Jessica Sabbath or almost 15 years, Canon Vir- can defer, reduce or eliminate duties ginia Inc. has used the benefits on imported products when the Fof a Foreign Trade Zone (FTZ) duty rates on imported materials are to remain competitive with overseas higher than the duty rate on the fin- manufacturers. ished product. These federally designated zones Canon has used Foreign Trade Zone Merchandise within these areas allow Canon to import duty free the benefits for almost 15 years. can be assembled, cleaned, dis- raw materials — toner, chemicals played, destroyed, processed, and plastics — it needs to manufac- eign Trade Zone allows us to sig- repackaged, repaired, sampled, ture toner cartridges at its manufac- nificantly lower our duty obligations stored and tested. In addition, there turing operations in Newport News. because our finished product is at a are no time restraints to how long Without the program, Canon would much lower duty rate than the raw products can remain in an FTZ. have to import the raw materials with materials.” In November, the U.S. Depart- higher duty rates. That process would Canon Virginia Inc. is part of For- ment of Commerce approved put the company at a disadvantage eign Trade Zone # 20, which is the extending FTZ # 20 into northeast when foreign companies can import most active FTZ in Virginia with 17 North Carolina. The approval clears their completed goods into the U.S. warehouse/distribution and produc- the path for inclusion of Elizabeth City for 0 percent. tion locations and 71 firms utilizing and Camden, Chowan, Currituck, “It allows a manufacturer to man- general purpose sites. The Port of Vir- Gates, Hertford, Pasquotank and Per- ufacture under the same conditions ginia is the grantee of the zone. quimans counties in the FTZ. The as their foreign competitors, except FTZs are geographic locations zone already included Chesapeake, to do the manufacturing in the U.S. near ports of entry that are consid- Franklin, Hampton, Newport News, with U.S. labor,” says Cornelia Stein- ered outside the U.S. Customs and Norfolk, Poquoson, Portsmouth, Suf- ert, program manager, international Border Protection territory. Com- folk, Virginia Beach and Williamsburg trade for Canon Virginia Inc. “So in panies operating within these sites and Gloucester, Isle of Wight, James our situation we manufacture toner only pay duties on productions if City, Mathews, Northampton, South- cartridges, and we are able to take and when they enter the U.S. mar- ampton, Sussex, Surry, York counties advantage of the program. The For- ketplace. That means companies and part of Accomack County. Foreign trade zones

Site ACTIVE SITES Number Site City 3 Givens Chesapeake Usage-driven 25 Cargoways Logistics/ Norfolk Marine Terminal Suffolk sites 35 Katoen Natie Norfolk Inc. Norfolk

9 Cavalier Industrial Park (Usui International Corp., Becker Hydraulics USA, Chesapeake Magnet sites Continental Terminal Inc.) 21 Virginia Regional Commerce Park (Sumitomo) Suffolk 20E Stihl Inc. Virginia Beach Subzone site 20D Canon Virginia Inc. Newport News 20F Keurig Green Mountain Inc. Suffolk

Site NON-ACTIVE SITES Number Site City Usage-driven site 36 Grandwatt Electric Corp. Suffolk 19 Shirley T. Holland Commerce Park Windsor 23 Virginia Commerce Center Suffolk Non-active sites 24 Westport Commerce Center Suffolk 34 Suffolk Intermodal Center Suffolk 1 Magnet sites are usually located at ports or industrial parks. They are open to multiple zone users. Subzones/Usage-driven sites are approved for a specific company/use. Source: Port of Virginia

34 A publication of Virginia Business magazine Photo by Mark Rhodes ECONOMY Maritime law firms Law firm 1 Number of City Website/email Phone number maritime lawyers2 Vandeventer Black Norfolk www.vanblacklaw.com 446-8600 18 Davey Brogan & Meals Norfolk www.dbmlawfirm.com 622-0100 5 Willcox & Savage Norfolk www.willcoxsavage.com 628-5500 5 Crenshaw Ware & Martin Norfolk www.cwm-law.com 623-3000 4 Rutter Mills Norfolk www.ruttermills.com 622-5000 3 Troutman Sanders Virginia Beach www.troutmansanders.com 687-7500 3 Ventker Henderson Norfolk www.ventkerlaw.com 625-1192 3 Berkley III, Law Office of Waverley L. Norfolk [email protected] 625-2230 1 Bouffard, Law Office of Henry P. Norfolk www.hbouffardlaw.com 663-7572 1 Burnette, Law Office of Lawrence M. Newport News [email protected] 930-0322 1 Dalcher, Law Office of Bruce Norfolk www.dalcher-law.com 995-4425 1 Daniel R. Warman PLC Norfolk [email protected] 623-6962 1 Furr, Law Office of Carter B.S. Norfolk [email protected] 622-2258 1 Green Hampton & Kelly Chesapeake www.bghklaw.com 548-2323 1 McGuireWoods Norfolk www.mcguirewoods.com 640-3700 1 McKenry Dancigers Dawson Virginia Beach www.va-law.org 461-2500 1 Patten Wornom Hatten & Diamonstein Newport News www.pwhd.com 223-4540 1 Pender & Coward Virginia Beach www.pendercoward.com 504-7344 1 Serpe, Law Office of Richard J. Norfolk www.serpefirm.com 233-0009 1 TaylorWalker Norfolk www.taylorwalkerlaw.com 625-7300 1 Waters Law Firm Norfolk www.waterslawva.com 446-1434 1 1 All phone numbers are (757) area code. Source: Maritime Law Association of the United States 2 This list includes only Hampton Roads-based lawyers who are members of the Maritime Law Association of the United States. General counsel attorneys are not included.

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2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 35 INTERNATIONAL FIRMS

Industry breakdown for region’s Global companies dock in international firms Hampton Roads

Number of Percent Industry companies of total Service 68 39%

Manufacturing 64 37

Distribution 43 25

TOTAL 175

Sources: Virginia Economic Development Partnership, Hoovers, Inc. and Hampton Roads Economic Development Alliance analysis

International firms with operations in Hampton Roads

Number of Percent Country companies of total Germany 31 18%

Other* 27 15 Anheuser-Busch opened its Japan 24 14 Williamsburg brewery in 1972. United 17 10 Kingdom France 12 7 ampton Roads is home Many international firms have to a diverse mix of had a long-term presence in Canada 11 6 companies, including Hampton Roads. Tokyo-based several international firms. Canon, for example, opened its Switzerland 11 6 HAnheuser-Busch InBev, Canon Newport News facility in 1987, and Stihl Inc. are just some of the and German power-tool maker Netherlands 10 6 big international companies that Stihl Inc. has called Virginia Beach operate in the area. Overall, there home for more than four decades. Sweden 10 6 are 175 foreign firms in the region, Meat processing company Smith- according to the Hampton Roads field Foods was established in Italy 9 5 Economic Development Alliance Isle of Wight County in 1936, but (HREDA), a Norfolk-based business has been owned by China-based China 5 3 development organization. Ger- Shuanghui Group since 2013. Austria 4 2 man companies have the biggest As international companies presence in the area with 31 busi- become established in the area, Denmark 4 2 nesses, or 18 percent of total for- many have expanded. Hampton eign firms. Other countries with a Roads also continues to attract for- TOTAL 175 large presence in Hampton Roads eign businesses looking to estab- include Japan, United Kingdom lish U.S. operations. The next page *Other includes Australia, Belgium, Brazil, Finland, Greece, Hong Kong, Iceland, Israel, Liechtenstein, Malaysia, Norway, and France. HREDA data show that shows a sampling of newcomers to Spain, Turkey, United Arab Emirates. most of the companies are in the the region, according to data from Sources: Virginia Economic Development Partnership, Hoovers, Inc. and Hampton Roads Economic Development service or manufacturing sectors the Virginia Economic Develop- Alliance analysis followed by distribution. ment Partnership.

36 A publication of Virginia Business magazine Photo courtesy Anheuser-Busch New players Two Spanish companies recently have announced plans to establish operations in Hampton Roads. Barcelona-based Sanjo Corte Fino is building its $17.5 mil- lion North American headquarters in Virginia Beach. The company, which will supply specialty, metal components to Stihl Inc., expects the project to create 85 jobs during the next three years. Sanjo’s new Sanjo Corte Fino’s North American headquarters in Virginia Beach is expected to be operational by December. facility is expected to be opera- tional by December. Atarfil also is investing more Mexico, Turkey and the United Arab long-term commitment to North than $5 million to set up its first Emirates. America,” Claude Fuger, managing U.S. manufacturing and distribu- Last year, Haulotte opened its director of Haulotte North America, tion facility in Suffolk. The project North American headquarters in said in a statement at the time of is expected to create 15 jobs. Virginia Beach. The French com- the opening. Granada-based Atarfil makes pany relocated the headquarters The $600,000 investment was thermoplastic geomembranes and from Frederick, Md. expected to create 66 jobs within other complementary products “Our Virginia Beach facility now three years when it was announced for use in environmental protec- features the space and resources in 2015. Haulotte is the third-largest tion, integrated water manage- we had been looking for to main- manufacturer of aerial work plat- ment, public works and building. tain a competitive edge and to fur- forms, such as industrial scaffold- The company has operations in ther demonstrate Haulotte Group’s ing and lift systems.

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Rendering courtesy City of Virginia Beach 2017 Hampton Roads MARITIME & INTERNATIONAL TRADE Guide 37 INVEST IN THE FUTURE.

FOR EVERY $1 EXPENDED BY THE HAMPTON ROADS ECONOMIC DEVELOPMENT ALLIANCE, AN IMPRESSIVE $24 IN NEW CAPITAL INVESTMENT IS BROUGHT TO THE LOCAL ECONOMY.

That’s because every year, our team travels the globe to bring new business to Hampton Roads. Since 2010, we’ve held over 2,500 meetings with business leaders on three continents to discuss the value of opening operations in Hampton Roads. These efforts have resulted in 35 announcements, 4,735 new jobs and $441.8M direct capital investment in our region.

A stronger regional economy means everyone wins. To learn more about your investment opportunities with the Alliance, visit www.hreda.com/investors.