Open for business
Port of Virginia a key selling point in attracting international firms

by Richard Foster
for Virginia Business
May 2007

Shanghai Touchroad Inter­national Trading may not be the largest global company to open a U.S. headquarters in Hampton Roads, but it might be the most symbolic.

Touchroad is the first company from mainland China to base its U.S. operations in the region, and location played a big part in helping Hampton Roads get the nod.

“Hampton Roads is in close proximity to a number of our major markets in the U.S., while the Port of Virginia will serve our international transportation requirements,” He Liehui, managing director of Touchroad International Holdings (USA), said in announcing the company’s move. Touchroad, a jewelry and textiles manufacturer with $45 million in sales in 2005, opened a 5,000-square-foot warehouse and showroom in Chesapeake last year. An international trade delegation sold He on Hampton Roads and the Port of Virginia during a 2005 trade mission to Shanghai, and He visited Virginia later that year.

C. Jones Hooks, president of the Hampton Roads Economic Development Alliance (HREDA), says that Touchroad’s move was especially significant, consider­ing it could influence other Chinese busi­nesses to locate in Hampton Roads.

Adding to Virginia’s attractiveness to Chinese firms is the fact that Washington Dulles International Airport in Northern Virginia is the only airport in the mid-Atlantic and Southeast U.S. to offer nonstop flights to and from Beijing.

In fact, having a port and an international airport is a big plus for Virginia in attracting international trade. “The port is almost always a draw for any company that decides to come to Virginia,” says Christie Miller, communications manager for the Virginia Economic Development Partnership (VEDP), “because in today’s global economy they’re going to need that kind of a gateway. Virginia’s fortunate that we have an international port and [a major international] airport within our boundaries, and not many states can say that.”

Some 165,000 jobs, $762 million in business revenues and $61 million in state taxes can be traced to the Port of Virginia. It consists of three seaports (Norfolk International Terminals, Portsmouth Marine Terminal and Newport News Marine Terminal) plus the intermodal Virginia Inland Port in Front Royal, which handles truck and rail shipments.

Port cargo travels to about 240 warehouse and distribution centers statewide with about 60 million square feet of storage. “This port and its related industries are a true economic engine for the commonwealth,” says Joe Harris, spokesman for the Virginia Port Authority. “Taken as a whole, these assets are a very real recipe for growth, and growth will bring jobs and economic development to Virginia.”

The Port of Virginia hit a milestone in 2006. Virginia’s port did its biggest business ever, surpassing the 2 million annual TEUs mark. (The TEU, or 20-foot equivalent unit, is the standard measure of cargo containers. Most cargo containers used today are the equivalent of two TEUs). “Our growth is consistent, and we see it continuing that way,” says Thomas Capozzi, the VPA’s senior marketing director.

Another accolade recognized the port’s management. The Virginia Port Authority (VPA), the state agency that owns the Port of Virginia, was named the top port authority in the world last year by the London-based shipping trade publication Containerisation International. VPA also obtained the highest bond rating of any East Coast port, becoming the first to receive a “double-A” bond rating.

Along with these positive developments came a change at the top. Jerry Bridges, former executive director of the Port of Oakland, took over as the Virginia Port Authority’s new executive director this February, replacing the retiring J. Robert Bray, who had run the port for almost 30 years (and worked there almost 40) and will officially retire in December 2007.

Yet, the port met some challenges in 2006. Its solid growth wasn’t enough to keep the Port of Virginia in its spot as the second busiest East Coast cargo port. (The No. 1 spot belongs to the New York/New Jersey port.) It fell to No. 3, behind Georgia’s Port of Savannah.

Georgia and South Carolina are discussing the formation of a bi-state port authority to create a port in Jasper County, a move that could provide competition to the Hampton Roads port during its quest to become the No. 1 port on the East Coast. Various state officials have been saying for some time that the Port of Virginia will surpass the New York/New Jersey port’s cargo eventually, especially after the VPA opens its fourth terminal. (The first phase of the Craney Island facility in Portsmouth is scheduled to open in 2017 with completion expected by 2032.)

But the VPA isn’t worried by the moves in Georgia and South Carolina. “It’s noteworthy, but it hasn’t accelerated our plans,” says Harris. “We’re still of the firm belief that in 10 to 15 years we’ll be the leader on the U.S. East Coast.” That’s in part because the South Carolina/Georgia port is hardly a done deal: It will require the approval of both state legislatures and Congress. Furthermore, the proposal comes in the midst of an ongoing court battle between the states over a proposed port on the state line. Plus, the scope of cooperation between the states is still unclear, says Harris.

Meanwhile, port capacity at Hampton Roads will grow significantly starting this summer, when APM Terminals Virginia will open the first phase of a new $450 million deepwater container terminal. When completed, the APM facility will double the region’s current cargo capacity. APM is a subsidiary of the Copenhagen, Denmark-based A.P. Moller-Maersk Group, the world’s biggest container ship operator.

It is just one of several international shipping lines and companies that have located their U.S. headquarters or made a significant operational investment in the Hampton Roads area in recent years.

NYK Logistics, a Japanese-owned shipping logistics company, announced late last year that it would expand its Hampton Roads operations with a new $26 million, 120,000-square-foot distribution facility in Chesapeake. In 2001 Zim-American Israeli Shipping Co. Inc. moved its U.S. headquarters to Norfolk in a fortunate move from its World Trade Center headquarters in New York City before the 9/11 terrorist attacks. French shipping company CMA-CGM moved its North American headquarters to Norfolk in 2004.

Over the last year the port has signed several long-term deals with international shipping concerns, further showing the port’s stability and popularity. For example, last year the Port of Virginia signed a 10-year, $175 million deal to continue serving as a port for its third largest customer, the Asian shipping conglomerate New World Alliance. “I don’t think any other port on the East Coast has more than 80 percent of its business tied up in 10-year agreements,” says Harris.

And more international business is coming all the time. “A little over 50 percent of our projects are international right now,” says Hooks of HREDA, “and that’s a trend we’ve seen continue. … We are certainly banking on it [to grow].”

HREDA works with VEDP and other local economic development agencies to woo foreign companies such as Touchroad and Zim. VEDP has offices in Belgium, Hong Kong, Mexico, Brazil, Korea and Japan, and hires agents in other nations such as China. “We are working hand in glove in marketing Virginia in India, in China, in Japan, in Europe, in Korea,” says Paul Grossman, the VEDP’s international trade and investment director.

Former Virginia Secre­tary of Commerce and Trade (and former Newport News Mayor) Barry E. DuVal is now president and CEO of Kaufman & Canoles Consulting LLC. The group has helped some relocating companies move to Virginia, such as client NYK Logistics. “These projects are locating here for a number of reasons. The first and foremost is the connectivity of Hampton Roads,” says Duval.

The rail and highways from the port are convenient for shipping, and the forthcoming Heartland rail-improvement project will make it easier to ship products from the Port of Virginia to the Midwest. (See story on page 20 for more information on the project.)

The Port of Virginia’s central East Coast location is a huge advantage, says Harris, and it offers the only deepwater terminal on the coast that can accommodate the world’s largest container ships. The area’s three underwater traffic tunnels — though renowned for causing traffic congestion on land — are a boon for water-going traffic: There are no bridges or other overhead obstructions to shipping into the Port.

Helping to attract business, says Harris, is the area’s work force and the pro-business policies of state and local governments. Indeed, the lower cost of doing business in Virginia, and the quality of life in Hampton Roads is attractive to companies relocating headquarters from such large cities as New York and Los Angeles.

“Virginia is a winner in globalization because of assets like the Port of Virginia,” says Grossman. “International trade about 50 years ago was about 6 percent of this nation’s gross national product. And recent figures say it’s about 26 percent now. … We are only going to be more international tomorrow than today, and the fact that we have assets that allow us to capture a portion of this trend really positions Virginia well for the future.”