2019 Maritime Guide by Virginia Business

P U B L I C A T I O N

O F

V I R G I N I A

B U S I N E S S

M A G A Z I N E

Making waves Deeper channels, terminal expansions to have big impact across Virginia

INSIDE Inland ports’ growth • Executive insights • Wind energy Export resources • Cybersecurity • IMO 2020 • ODU’s new innovation hub

“The prosperity of Virginia’s ports is important to the prosperity of all of Virginia.” - Harry M. Thompson, VMA’s First Executive Vice President

Increase your voice, your reach, and your growth with the VMA! Since 1920, The Virginia Maritime Association, The Voice of Port Industries, has continued to bring trade, logistics, and maritime industry professionals together statewide to effectively promote, protect, and encourage commerce through Virginia’s ports.

www.VAmaritime.com

ashley@vamaritime.com

(757) 628-2678

A note from the publisher

Welcome to the 2019 Virginia Maritime Guide! This is the second year we’re distributing this publication to all of our subscribers statewide, highlighting the role the maritime and logistics industries play across the entire Commonwealth of Virginia. There’s a lot to write about this year. The expansion of Virginia International Gateway (VIG) is nearing completion, while the first phase of Norfolk International Terminals’ expansion already is in use. See a photo spread of the projects on Page 8. And after more than a decade of advocacy, plans to deepen and widen the Norfolk Channel are underway. The project will re-establish the Port of Virginia as the deepest port on the East Coast and will allow two-way navigation to return when ultra-large container vessels travel to and from the port. We take a look at the project on Page 4. We also highlight the growth of the Richmond Marine Terminal and Virginia Inland Port in Front Royal. See Page 20. The guide features potential growth opportunities for the industry. Virginia officials believe the commonwealth could play an important role in a supply chain for offshore wind farms on the East Coast (Page 12). In addition, we take a look at the impact of the International Maritime Organization’s 2020 low-sulfur regulations, and whether that could create opportunity for Virginia. The successful growth of the Port of Virginia is inextricably tied to the growth of the entire commonwealth. We invite you to use the 2019 Virginia Maritime Guide to learn more about Virginia’s maritime industries. It is a valuable resource on major companies providing services to the port community. To compile this guide, we worked closely with the Virginia Maritime Association and the Port of Virginia. We thank them for their assistance. — Bernie Niemeier

President & Publisher Virginia Business

CONTENTS 4 Dredge away by Jessica Sabbath 8 Massive projects pave the way

for new capacity by Jessica Sabbath 10 Executive insights 12 Offshore wind by Beth Cooper 14 Detention and demurrage investigation in final stages

by Jessica Sabbath

Malware: A persistent threat to the maritime industry by Jonathan V. Gallo

Cover photo by Mark Rhodes

The IMO 2020 impact

by Jessica Sabbath Inland ports by Richard Foster

20 22 Port of Virginia expands

refrigerated cargo capacity 23 Maritime law firms 24 Education initiatives by Veronica Garabelli

26 Building the shipbuilding

workforce by Hershal Chaddha 27 Overseas prospects by Michael O’Connor

2019

Highlighting the maritime industry’s statewide impact

virginia guide A PUBLICATION OF VIRGINIA BUSINESS MAGAZINE

www.VirginiaBusiness.com

President & Publisher Bernard A. Niemeier Editor Managing Editor Special Projects Editor Assistant Editor Intern

Robert C. Powell III Jessica Sabbath Veronica Garabelli Michael O’Connor Hershal Chaddha

Contributing Writers

Beth Cooper Richard Foster Jonathan V. Gallo Rachel Shames

Art Director ontributing Photographers C

Adrienne Reaves-Watson Caroline Martin Mark Rhodes Norm Shafer

Production Manager Kevin L. Dick Circulation Manager Karen Chenault Marketing Services Manager Lisa Niemeier CENTRAL VIRGINIA 1207 East Main Street, Suite 100, Richmond, VA 23219 (804) 225-9262 Fax: (804) 225-0028 Vice President of Advertising Hunter Bendall Account Manager Lindsey Swain HAMPTON ROADS 4211 Monarch Way, Suite 104, Norfolk, VA 23508 (757) 625-4233 Fax: (757) 627-1709 Sales Manager Sara Gray ROANOKE 210 S. Jefferson St., Roanoke, VA 24011-1702 (540) 597-2499 Sales Manager Lynn Williams VIRGINIA BUSINESS MEDIA LLC Bernard A. Niemeier, Chairman & CEO

28 Export resources 31 Port stats and trade overview 32 Trucker appointment system drives down turn times

by Jessica Sabbath

33 I-81 corridor to receive dedicated funding

34 Transportation roundup 36 Column: Volatility returns by Rachel Shames

2019 VIRGINIA MARITIME GUIDE 1

COVER STORY

Dredge away

Project will help port regain its status as deepest on East Coast

by Jessica Sabbath

n May 2017, Virginia celebrated the arrival of Cosco Development, the first “ultra-large container vessel” (ULCV) to visit the Port of Virginia and the U.S. East Coast. Now these massive vessels — almost as long as the Empire State Building is tall — visit the port regularly. On a single day in March, two behemoth vessels were

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berthed at the port’s Virginia International Gateway terminal in Portsmouth. When these massive ships travel to and from the

The CMA CGM J. Adams, an ultra-large container vessel, calls on the port in March. These vessels displace so much water that the U.S. Coast Guard restricts the channel to one-way navigation when these ships travel to and from the port.

port’s marine terminals, the U.S. Coast Guard restricts the Thimble Shoal Channel to one-way navigation for up to four hours. That restriction can create a bottleneck for a busy waterway used by container, bulk, breakbulk and U.S. Navy ships. Now the Port of Virginia and the U.S. Army Corps of Engineers are working quickly to alleviate the issue. They are aggressively working through the preliminary engineering and design stages of the $272 Photo by Mark Rhodes

million Norfolk Harbor Deepening Project that will dredge the main Norfolk channel to 55 feet and widen the Thimble Shoal Channel to 1,400 feet. When completed, the Port of Virginia once again will reign as the deepest port on the U.S. East Coast. That distinction is increasingly important as ocean carriers continue to deploy larger ships. “Two-way navigation 24-7 is something that no other port on the East Coast will match,” says David 2019 VIRGINIA MARITIME GUIDE 3

COVER STORY White, executive vice president of the Virginia Maritime Association. “No other port on the East Coast will have the same White ease of transiting in and out without any overhead obstructions. It will create the safest environment that there is for ships to navigate.” The dredging project also comes at a time when the Port of Virginia is undergoing expansion and modernization projects at its two largest terminals, increasing the port’s overall capacity by 40 percent. (See Page 8 for details.) “Our infrastructure projects and our wider, deeper, safer projects are both designed to attract ultra-large container vessels,” says John Reinhart, executive director and CEO of the Virginia Port Authority. “So, the frequency of these ultra-large container ships is continuing to increase. And all of our building of infrastructure is welcoming them so we can handle them along the berths with the modern cranes.

And what the widening, deepening will do is allow us to have two-way traffic [with ULCVs.]” Priority for more than a decade ULCVs underscore the need for wider and deeper channels, but the Norfolk dredging project has been a priority for Virginia’s maritime community for more than a decade. Ocean carriers continue to build and use larger ships to squeeze efficiencies out of transporting goods around the globe. Deeper channels can accommodate these larger vessels safely and allow them to come in more fully loaded. “These larger vessels, they cost less to transport a certain volume of commodity versus a smaller vessel,” says Robert Pretlow, the project manager in the U.S. Army Corps of Engineer’s Norfolk office. “So, that’s how we justify the projects. We look at a reduction in the transportation cost of moving commodities into the port.” Virginia received federal

authorization to dredge its Norfolk channel to 55 feet in 1986. But, ultimately, the commonwealth decided to dredge its channels to only 50 feet because of budgetary concerns. Still, at 50 feet, Virginia for years could say it had the deepest port on the East Coast. But over the past decade, East Coast ports began dredging projects to accommodate larger ships. The Panama Canal Authority had embarked on plans to widen its channels, which would allow the bigger ships to travel through the canal from Asia. Now ports such as New Jersey/New York and Miami have matched Virginia’s 50-foot mark. The Port of Charleston also is undergoing a project that will dredge its channels to 52 feet. “Other ports have caught up to us, and it was a real competitive advantage for us when we were the deepest port on the East Coast,” says White of the Virginia Maritime Association. In 2015, the Port of Virginia and the Norfolk District

NORFOLK HARBOR & CHANNELS DEEPENING PROJECT

The dredging project will take place in four segments.

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Graphic courtesy Port of Virginia

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COVER STORY office of the U.S. Army Corps of Engineers embarked on a three-year study to determine if the 55-foot depth was still viable. The study not only recommended a 55-foot depth for inner harbor channels, but also dredging to 56 feet in the Thimble Shoal Channel in the Chesapeake Bay and to 59 feet in the Atlantic Ocean channel. Since then, the port and the Corps of Engineers have worked together to move the project forward. It received approval last year from the corps’ leadership on an accelerated timeline. “We have a very strong and close relationship with the Port of Virginia, and because of that relationship we are able to move ahead with this project in such an accelerated and efficient method,” says Pretlow. The project last year also received a critical boost from the state. The General Assembly agreed to spend $20 million to fund design and engineering work on the project and $330 million in bond authorization for its construction.

Accelerated work The money allowed the port and Corps of Engineers to jump-start work on the project. In a unique arrangement, the port is serving as project manager on the first portion of the project. That move allowed the port to move forward on the first segment while it works to receive what is called “jump start” designation from the federal government that will help the project receive federal funds. Funding for the project ultimately is expected to be split between the corps and the commonwealth. With the state money available up front, the port has moved ahead on the engineering for the first segment of the project, dredging the western part of the Thimble Shoal Channel. That includes simulating ships’ impacts on the channels, searching for sunken vessels that could affect dredging operations, sampling sediment and evaluating how during construction to protect the Chesapeake Bay BridgeTunnel, which runs under the channel.

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The port is on schedule to issue a request for proposal for the dredging contract this summer, with dredging on the first Reinhart segment beginning in January. “We’re trying to pull everything and push for [the entire project] to be done in 2024,” says Reinhart. “We’re trying to take a year to 18 months out of the schedule, and everything is tracking quite nicely.” In addition, the corps and the port have signed an agreement for design and engineering of the entire project, which will allow them to complete the design work while involved in dredging for the first phase. “The way we look at it is: We always want to be ready for the next construction phase,” says Pretlow. “After we finish one, we want to be ready to move onto the next.” The corps recently completed an engineering evaluation on the project, which determined its basic schedule. Once the Thimble Shoal Channel West dredging is complete, the next phase is Thimble Shoal Channel East, with widening, then dredging the Atlantic Ocean and finally the Norfolk and Newport News channels. “These are really significant dredging efforts,” says Pretlow, with many portions expected to take years. Opportunities on the Southern Branch Ships carrying bulk and breakbulk cargoes, like grain and minerals, also have been increasing in size. So, the Port of Virginia and Army Corps of Engineers also have plans to dredge the Southern Branch of the Elizabeth River. That project would cost $159 million. The Southern Branch is home to more than 50 private terminals. The group includes large terminals, such as Perdue Agribusiness, which has the largest grain elevator on the East Coast, and Enviva Partners LP, which makes wood pellets for renewable energy. Bulk cargo vessels often receive less press than the massive container ships, but the terminals along the Southern Branch of the Elizabeth River handle

a variety of commodities, such as road salt, pumice, grain and wood pellets. “Nowadays the workhorse of the bulk fleet are Supermaxs, which are being light-loaded to come into the Southern Branch,” says Cees van de van de Mortel Mortel, senior commercial officer of T. Parker Host, a Norfolk-based maritime agency and stevedoring company for many terminals on the Southern Branch. “Deepening will really benefit them because now you can come in much more fully loaded, which will lower freight rates. Improved efficiency should lead to more cargo.” Plans for the Southern Branch include dredging the channel from 40 to 45 feet between Lamberts Bend and Perdue Farms; from 40 to 42 feet to the Norfolk Southern Lift Bridge; and 35 to 39 feet from there to the Gilmerton Bridge. The schedule for the project has not yet been determined.

Potential impacts The dredging project should drive growth at the port’s terminals, providing a boost to the Hampton Roads and Virginia economy, industry officials say. Reinhart says larger ships increasingly will call on the Port of Virginia as carriers continue looking for efficiencies. Deeper channels combined with the modernized terminal projects should be attractive to ocean carriers. “They’re all trying to fill the full breach and reach of a vessel, and it just makes it so much more efficient,” says Reinhart. “They want to go where they won’t be delayed.” The dredging project also will allow vessels to come into the port heavier. That means Virginia could be more likely to be a “first-in,” or “last-out,” stop on shipping lines’ routes. That is when ships are heaviest, full of imports or exports, meaning more cargo flowing through Virginia’s terminals. Bill Cofer, president of the

Virginia Pilot Association, concurs. Pilots are responsible for navigating commercial and Navy vessels from the ocean through the channels to marine terminals. Cofer says the pilots plan on conducting simulation training on the next size class of vessel in case carriers deploy even larger ships than those already visiting the port. But he expects the ULCVs holding around 14,000-TEUs to become increasingly common for East Coast ports. A TEU is a 20-foot equivalent unit. Those currently are the biggest ships visiting the Port of Virginia. The port, he says, will be best prepared to handle heavier ships as many other ports face tidal restrictions. “This will bring businesses to Virginia,” says Cofer. “This will bring manufacturing. Companies wanting to get established in the United States look to ports, look to getting their cargo. This isn’t just about Hampton Roads and the port, this is going to be the game-changer for the commonwealth.”

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THE PORT OF VIRGINIA

Massive projects pave way for new capacity

1. New container stacks at NIT 2. Suez-class, ship-to-shore cranes arrive at VIG. 3. Rail-mounted gantry cranes delivered to NIT. 4. The expansion doubled VIG’s container capacity. 5. Norfolk International Terminals South expansion area.

The Port of Virginia’s two largest terminals are undergoing massive expansions. When completed, the $700 million investments will increase the overall containerized cargo capacity of the Port of Virginia by 40 percent, or an additional 1 million container units annually by 2020. Much of the expansion at the Virginia International Gateway (VIG) in Portsmouth already is complete. The VIG project doubled capacity of the terminal, which can now process 1.2 million container lifts a year. Norfolk International Terminals also is undergoing an expansion. The $375 million project is bringing the semi-automated container stack technology to the terminal. The project will expand the terminal’s throughput by 400,000 container units to 1.25 million container units, a 46 percent increase.

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• 800-foot wharf expansion • Four additional Suez-class, ship-to-shore cranes • 13 additional container stacks (to create a total of 28) • 26 additional rail-mounted gantry cranes • Four additional inbound truck inbound gate lanes • 19,600 feet of new rail track after completion

• Construction of 30 semi-automated container stacks (12 already operating) • 60 new rail-mounted gantry cranes • Construction began in January 2018 • Additional six stacks will go online in late 2019 • Early 2020: 12 new container stacks go online • 28 stacks at completion • Two additional Suez-class, ship-to-shore cranes

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Gate Expansion • Four additional inbound gate lanes • 17 inbound and 13 outbound gate lanes when complete 8

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2019 VIRGINIA MARITIME GUIDE 9

EXECUTIVE PROFILES

The maritime and logistics industry is a fast-paced, dynamic business that is responsible for transporting goods across the globe. We asked leaders in the industry for their insights (as well as a few fun facts.)

Devon C. Anders

President, InterChange Group Inc. Chair, Virginia Maritime Association Valley Logistics Chapter Harrisonburg

VB: What are upcoming initiatives/ goals for the Virginia Maritime Association’s Shenandoah Valley chapter? Anders: We are focused on growing our membership and becoming the source for logistics information and advocacy in the Shenandoah Valley. We are currently in the planning stages for a Port Familiarization Tour for our elected officials, economic development professionals and industry leaders. The tour will showcase the ocean terminals. VB: What kind of activity is the company seeing at its Portsmouth Logistics Center? Anders: InterChange’s Portsmouth Logistics Center leased 45 percent of its space as construction was completed. The balance of the facility is being used to handle various customers and is busy and full with import goods coming and going every day. Fun facts: First job: I started working in a butcher shop at age 9, selling prime beef in suburban Philadelphia. My professional career started as a CPA at PB Mares in Harrisonburg. Favorite book: “Make Your Bed,” by William McRaven On the weekends you’re likely to find me: Running or hiking

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Kimberly Clark

Logistics coordinator, Hooker Furniture Chair, Virginia Maritime Association Southern Chapter Martinsville

VB: What are upcoming initiatives/ goals for the Virginia Maritime Association’s Southern Virginia chapter? Clark: The VMA Southern Chapter serves the southern piedmont region of Virginia as well as northern North Carolina. Our mission is to become a leading voice by educating and raising awareness of the value proposition created by international trade including the impact it has on our region. Our chapter will address issues that affect our region, which could hinder the flow of goods through the Port of Virginia by involving leaders that support import/export, manufacturing, distribution, logistics providers and other businesses that are involved in international trade. In addition to quarterly meetings, we are in the process of planning seminars directly related to topics that impact our chapter participants. VB: What are the biggest challenges today for importers? Clark: The biggest challenge we seem to face is rate consistency due to the volatile market for importers, reliable communication and the stress from pending tariffs. Fun facts: Recently read book: “Girl, Stop Apologizing,” by Rachel Hollis On the weekends you’re likely to find me: Enjoying family time and activities with my three kids (ages 12, 6 and 1). Contributed photos

John Reinhart

CEO and executive director Port of Virginia Norfolk

VB: With additional capacity coming online, what is the growth potential at the Port of Virginia? Reinhart: I’m really proud of how our team is working through improving service and our product. We’re still building that capacity, seeing some positive reactions from the market. With some of the upticks in our volume, we’re pivoting to be a little more aggressive to get additional volume through the port and to create jobs through Virginia. The economic development activity has not been hotter in the five years I’ve been here. VB: What is the importance of the port’s inland ports in Front Royal and Richmond? Reinhart: As we continue to bring in these bigger ships, we need as many outlets as we can to move freight forward. We brought in a second barge, so we are doubling the capacity we are bringing to the Richmond Marine Terminal. We had Brother International open up right across the street from us. They moved out of New Jersey and took up almost a half million-squarefoot facility. Bissel moved into the southern part of Richmond to use the Richmond Marine Terminal. Those two companies alone will put another 7,000 containers through Richmond in a year. I’m really positive about what we’re seeing both in Richmond and Front Royal. In Front Royal we are adding three rail tracks and making it safer so we can continue to attract more freight in Front Royal and Northwestern Virginia.

Cornelia Steinert Senior manager, international trade Canon Virginia Inc. Newport News

VB: How do Foreign-Trade Zones benefit manufacturers like Canon? Steinert: Most manufacturers will need to obtain low-cost materials at some point in their cycle. A Foreign Trade-Zone enables a manufacturer to bring these materials into their zone and pay a lower duty rate on the final, finished product. The inverted duty savings and savings on documentation fees help manufacturers compete globally while supporting U.S. labor, partner U.S. industries and service providers. VB: How can companies determine whether they will benefit from FTZs? Steinert: A company should look at the duty rates they are paying both on direct and indirect imports. If they are manufacturing, they should review those rates against the duty rate of their finished products. They should also look at their volume of scrap and exports. Their local FTZ Grantee (we have five of them in Virginia covering the entire state) can assist with a feasibility analysis. Fun facts: Recently read book: “My Grandmother Asked Me to Tell You She’s Sorry,” by Fredrik Backman On the weekends you’re likely to find me: Furiously trying to catch up on my personal life and hanging with my granddaughter.

David White

Executive vice president Virginia Maritime Association Norfolk

VB: The VMA has been a major promoter of efforts to deepen and widen our channels. What is it like now to be on the brink of seeing it come to fruition? White: We won’t be celebrating until the work is done, but this is a very exciting time! At the present depth of 50 feet, our deep channels gave Virginia a competitive advantage over other states that allowed our port to be the economic engine that is responsible for over 530,000 jobs statewide. Other ports that are closer to larger population centers have been deepening their channels, but when we’ve completed dredging to 55 feet to offer the widest, deepest, safest channels on the East Coast, our competitive advantage to attract the largest ships fully laden will be restored. VB: Virginia has put a lot of money into port projects, and VMA is opening chapters around the state. Do you think there’s a better statewide perception of the importance of the maritime/logistics industry? White: In recent years, the Virginia Maritime Association and our colleagues at the Virginia Port Authority have been traveling the state demonstrating how the supply chain that flows through the port benefits every corner of Virginia. We have seen increasing recognition and support across the state from lawmakers, and we’re thankful for it. Fun fact: First job: Flipping burgers at Wendy’s.

2019 VIRGINIA MARITIME GUIDE 11

WIND ENERGY

Spinning potential

Virginia wants to play big role in offshore wind supply chain by Beth Cooper

housands of wind turbines could be spinning off the U.S. East Coast over the next decade, and Virginia is leveraging its harbor in a bid to become a hub in the offshore wind industry’s supply chain. Experts say that 2,000 to 3,000 wind turbines could be installed in East Coast waters during the next two decades, with the first offshore wind projects already ramping up in the Northeast. The 30-megawatt Block Island Wind Farm, the first U.S. offshore wind project, began operating off the Rhode Island coast in 2016. Rhode Island has another project in the works, while Maryland and Massachusetts are moving ahead with their first commercial offshore wind projects. Virginia soon will have two offshore wind turbines in its waters. Dominion Energy Virginia is working with offshore wind developer Ørsted Energy of Denmark to build two, 6-megawatt research wind turbines 27 miles off the coast of Virginia Beach. The turbines will provide operational, weather and environmental data that eventually can be used to develop an offshore commercial wind farm in an adjacent, 112,000-acre site that Dominion currently leases. However, U.S. projects currently rely on a European supply chain to produce and deliver components to produce the massive wind turbines. For example, the wind turbines being installed for the Dominion project will stretch 600 feet tall from the waterline, according to Ørsted. The blades will be manufactured at Siemens Gamesa’s Denmark facility, while the nacelles will be produced in Germany. Nacelles are located on top of wind turbine 12

The 6-megawatt Siemens Gamesa wind turbine, the model which will be installed for Dominion Virginia Energy’s Coastal Offshore Wind Project.

towers and house the gear box and shafts. Shipping turbines, blades and towers across the Atlantic is expensive and risky, says George Hagerman, a senior project scientist in Old Dominion University’s Hagerman Center for Coastal and Physical Oceanography. Virginia could fill that gap, he adds. “Virginia is a lot closer to New England,” where

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the first large-scale wind projects will be developed, he says. “Even though our offshore wind industry is five to 10 years from being developed, we can provide certain components, particularly foundations, at more costeffective prices than anyone else.” The Port of Virginia is in a good position to ship large components, such as foundations, onshore substations and towers, to offshore wind projects ramping up off the northeastern U.S. coast. According to a 2018 report produced by BVG Associates, a consulting firm working with Virginia to advance offshore wind, the commonwealth’s central location on the Mid-Atlantic seaboard, along with its pro-business climate, dock capacity and 50-foot channels, give it a competitive advantage to drive the offshore wind supply chain. The port is preparing to seize that opportunity, says Chris Gullickson, economic development manager for the Port of Virginia. “The port does a lot of container business, but we serve all facets and functions of freight. We’re making sure that we’re taking care of our current customer base but looking at how we can grow.” Seeking to expand its customer base, the port is collaborating with the Virginia Department of Mines, Minerals and Energy (DMME), the Virginia Ship Repair Association, the Virginia Maritime Association, the Virginia Economic Development Partnership and Old Dominion University to develop a plan to establish the commonwealth as a vital cog in the offshore wind supply chain. “It’s a transformative opportunity to drive new industries to the commonwealth,” Gullickson adds, citing the region’s robust shipbuilding Photo: Businesswire

and repair industries and skilled maritime workforce. “Look up and down the waterway at the existing marine facilities here. Existing ship repair facilities have the skill sets applicable to the emerging offshore wind industry and could easily produce different components.” The port has hosted site visits over the past two years for global offshore wind project developers, procurement and logistics specialists, foundation and substation fabricators and offshore platform builders. Officials point out the port’s strengths, including its status as the only East Coast port federally authorized to dredge its channels to 55 feet and its unlimited air draft, a plus when moving large components into and out of the harbor. “What really excites us are the shapes and sizes of these components,” Gullickson says. “We have a tremendous opportunity to serve as a loadout center for the East Coast.” In addition, Hampton Roads’ open shipping channels and navigational flexibility keep congestion at a minimum. By comparison, the entrance channel at the Port of New Bedford, Mass., is constricted by a 150-foot wide hurricane barrier gate opening. “Virginia has a robust infrastructure with its port and deep harbor,” says John Warren, director of the DMME. “It has a distinct advantage in readiness, while the ports up north are more constrained.” In 2015, the DMME commissioned BVG Associates to evaluate 10 Virginia terminals for their readiness to accommodate offshore wind manufacturing and construction activities, including blade, generator, tower, submarine cable and foundation manufacturing and nacelle assembly. The firm also assessed five Virginia commercial shipyards to determine their ability to manufacture offshore electrical substations. BVGA found that although offshore wind activity places more demands on port infrastructure than traditional commercial port activities, Virginia ports have a high degree of readiness. According to BVGA, Virginia

Port Authority facilities Portsmouth Marine Terminal and Newport News Marine Terminal, along with privately owned Peck Marine Terminal, Virginia Renaissance Center and BASF Portsmouth, could potentially be used for one or more offshore wind activities, although each port would need various upgrades. The Portsmouth and Newport News terminals have the highest level of readiness to take on offshore wind activities, according to the report. With the port investing $700 million to expand handling capacity at Norfolk International Terminals and the Virginia International Gateway in Portsmouth, container traffic will shift to these facilities, leaving Portsmouth Marine Terminal and Newport News Marine Terminal with abundant space to store the huge foundations before they are shipped to offshore wind projects. The BVGA report concluded that the terminals each would need up to $10 million in upgrades to be ready for major offshore use.

Peck Marine Terminal in Chesapeake could accommodate some offshore wind manufacturing activities, but lack of overhead navigation clearance would prevent it from building and staging foundations. The Virginia Renaissance Center in Norfolk also has navigational constraints, although BVGA noted the facility could be used for blade and submarine cable manufacturing. BASF Portsmouth has the potential to become an offshore wind superport, according to BVGA, but the facility would need to undergo a large infill project and add new waterside infrastructure. All in all, officials predict that Virginia will play a prominent role in the offshore wind supply industry. “There are very good prospects for Virginia’s involvement in offshore wind,” says DMME’s Warren. “When you look at the infrastructures Virginia has and what needs to be done, there’s a lot less that needs to be done than in other states.”

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2019 VIRGINIA MARITIME GUIDE 13

DETENTION

Detention and demurrage investigation in final stages by Jessica Sabbath

fact-finding investigation into disputed fees designed to keep commerce flowing has entered its final stages. Rebecca Dye, a commissioner of the Federal Maritime Commission (FMC), is evaluating whether to streamline the assessment of these fees, especially when delays are out of the control of shippers and motor carriers. Detention and demurrage fees are used by ocean carriers and marine terminal operators to keep cargo moving in and out of terminals. When containers arrive at port terminals, motor carriers have a set number of days — called free time — to pick them up before fees are charged. In addition, after retrieving the containers, motor carriers must return the carrier-owned containers to port terminals within a set amount of time before fees accrue. Dye conducted a nine-month investigation, called Fact-Finding No. 28, into the application of those fees. In her final report, Dye recommended that the FMC organize innovation teams that would improve “commercially viable” detention and demurrage approaches in the following areas:

●● Transparent, standardized language for demurrage and detention practices; ●● Clear billing practices and dispute-resolution processes; ●● Explicit guidance regarding evidence relevant to resolving demurrage and detention disputes; ●● Consistent notice to cargo interests of container availability. The fact-finding mission found that concerns raised by shippers were far-reaching and did not reflect isolated incidents. The FMC began addressing the issue more than two years ago. In December 2016, the Coalition for Fair Port Practices, a group of 26 trade associations repre14

Federal Maritime Commissioner Rebecca Dye is leading an investigation into the application of detention and demurrage fees.

senting shippers, motor carriers and freight forwarders, petitioned the commission to adopt a rule that would clarify what constitutes “just and reasonable rules and practices” governing detention and demurrage fees. In response, the commission received 110 comments from shippers, motor carriers and freight forwarders, many of whom had issues with the assessment of fees. Most disputed charges come from truck drivers unable to get an appointment within free time; terminal closures; congestion outside terminal gates; insufficient equipment; buried containers; or containers in closed terminal areas. Delays with U.S. Customs and Border Patrol also can cause holdups. The FMC heard testimony from all affected parties before deciding to launch the investigation. Over nine months Dye interviewed importers and exporters, maritime attorneys, motor carriers, freight forwarders and

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port executives. In her findings, she found “that the concerns expressed in the original Coalition for Fair Port Practices petition and at subsequent public hearings that preceded the investigation go beyond a few severe episodes of inclement weather or labor-related port congestion problems. The record also shows that these concerns are relevant to more than just a small subset of major ports.” Dye’s report determined that shippers often faced a lot of confusion about detention and demurrage fees. Industry officials could not even agree on their definition. Shippers also needed a simplified method to dispute fees, saying confusion often resulted in additional fees. “Those contacting the Fact Finding 28 through the dedicated email routinely expressed confusion over whom to contact and what documentation they needed to supply the marine terminal or carrier,” Dye said in her report. “They also described delayed responses that exacerbated problems that led to additional charges.” Dye also found that detention and demurrage fees were important tools to help improve the movement of cargo. She determined that “demurrage and detention are valuable charges when applied in ways that incentivize cargo interests to move cargo promptly from ports and marine terminals.” Thomas Berkley, an attorney with Pender & Coward in Virginia Beach, says it appears from the report that the FMC is siding with shippers on the issue, but says FMC should stay out of private contracts. “What I think it comes down to is it’s really a transportation and infrastructure problem outside of the terminal gates,” says Berkley. A final report to the FMC is due by Sept. 3. It is to include reporting by the innovation teams, Dye’s findings and any potential recommendations. Photo courtesy Federal Maritime Commission

CYBERSECURITY

Malware: A persistent threat to the maritime industry by Jonathan V. Gallo

any industries have fallen victim to cyber attacks over the past several years, and the maritime industry is no different. Consider the following: In 2017, A.P. Møller-Maersk, the largest container shipping company in the world, fell victim to NotPetya, a destructive malware. As a result, the company was forced to buy 4,000 new servers, 45,000 new PCs and 2,500 applications, costing the organization between $250 million and $300 million. In summer 2018, the shipping giant COSCO announced it was hit with a ransomware attack affecting its U.S. shoreside operations. In fall 2018, Austal, the Australian ferry and defense shipbuilder, fell victim to a cyberattack and extortion attempt. In March of this year, one of the world’s largest aluminum producers, Norsk Hydro ASA, fell victim to the LockerGoga ransomware, causing the company to switch to increased manual operations for a time. The maritime industry is vulnerable Malware is a type of malicious software that is designed to disrupt, damage, or gain unauthorized access to a computer system. Types of malware include viruses, worms, trojans, spyware and ransomware. Whether launched by cyber criminals, cyber terrorists, insiders, or foreign states, the maritime industry is vulnerable to attack. As the industry’s use of automation, interconnectivity and cyber systems grows, so do its vulnerabilities. Malware attacks not only affect shipping companies, but ports as well. Last year the Port of San Diego fell victim to a ransomware attack. These attacks can be delivered through phishing emails designed to convince the recipient to click on a link, or through network security vulnerabilities, as alleged in the attack at the Port of San Diego. Individual ships also are vulnerable to a malware attack. With the expansion of operational technology (OT),

Photo courtesy Vandeventer Black

integrated with information technology (IT), and linked to the internet, ship systems present increasing vulnerabilities. Whether through outdated and unpatched software systems or the widespread use of unsecure flash drives and other personal devices connected to ship computers, malware can be introduced into a ship’s systems, and from there, quickly carried to shore-based networks, where it can do further damage. Take protective measures Several industry publications provide guidance for the industry, including: International Maritime Organization’s (IMO) “Guidelines on Maritime Cyber Risk Management;” the United States National Institute of Standards and Technology’s (NIST) “Framework for Improving Critical Infrastructure Cybersecurity;” and the recent “Guidelines on Cyber Security Onboard Ships” published in 2018 by industry associations. Following are specific measures maritime businesses can take to reduce their risk: ●● Keep all software and systems up to date with the latest versions to ensure all known vulnerabilities are patched. ●● Install and update reliable anti-malware software. ●● Prepare and implement a comprehensive information security program consistent with a recognized standard, such as the NIST

standards. ●● Prepare and practice a robust and effective disaster recovery and business continuity plan, in the event the organization falls victim to malware. ●● Backup all data regularly. ●● Limit access to network systems based on user roles. ●● Secure all networks and firewalls, including closing unused ports and securing routers, to prevent unauthorized access. ●● Monitor and limit the use of external media, such as USB drives and other devices consistent with a comprehensive information security policy that includes a “bring your own device” (BYOD) policy. Ideally, removable media should only be used if it has been properly scanned for malware. ●● Train employees to recognize phishing and social engineering attacks. Software training packages are available to test effectiveness of these training efforts. ●● Establish and enforce a remote access policy addressing use of both organizational and personal devices. ●● Validate all software prior to installation. ●● Consider purchasing appropriate cyber liability insurance to mitigate any damages. While counter-measures can’t completely eliminate the risk of malware infections, implementing these bestpractices can help reduce an organization’s overall risk of a significant threat to the maritime industry. Gallo is a member of Vandeventer Black’s Cybersecurity and Data Privacy Group, and the Construction and Government Contracts Group. He concentrates his practice primarily in the field of technology law, advising clients on a range of matters related to data privacy and security, data breach planning and response, cyber risk liability and compliance, software development and licensing, and other technology related issues.

2019 VIRGINIA MARITIME GUIDE 15

NEW REGULATIONS

The IMO 2020 impact

Low-sulfur emission regulations could have ripple effect CMA CGM announced in late 2017 that it would build nine future ships with engines using liquefied natural gas.

by Jessica Sabbath

new limit on global sulfur emissions for ships will have a major impact across the logistics industry. Starting Jan. 1, 2020, the International Maritime Organization (IMO) will limit sulfur emissions from ships to 0.5 percent. The current limit is 3.5 percent. Known as IMO 2020, the regulation is designed to reduce the environmental impact of shipping. The new regulations could cost ocean carriers $15 billion in additional fuel costs, which likely will mean an increase in freight rates for shippers. Currently, most ships run on a residual fuel that releases heavy contaminants into the environment. “If they don’t use that high-sulfur fuel in the marine industry, it’s usually applied in the power sector or other industrial

applications,” says Keegan Plaskon, director of business development, Eastern Americas for the American Bureau of Shipping (ABS). ABS provides vessel classification and vessel registry services. Ocean carriers will have three options to meet the new standards: ●● Using more expensive low-sulfur fuel ●● Installing “scrubbers,” or systems that “clean” emissions before releasing them into the atmosphere ●● Retrofitting or building ships that run on liquefied natural gas (LNG). Each option carries its own risks. While some carriers have an nounced how they will comply with the new regulations, many have not. And that makes it difficult to determine how the market will react. There

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are some questions about whether there will be enough low-sulfur fuel available. “There’s concern that a huge demand for lower sulfur fuel is going to cause prices to increase,” says Will Fediw, vice president of industry and government affairs for the Virginia Maritime Association. “There’s concern that it could cause a fuel shortage here in the U.S. for other fuels like heating oil.” Installing scrubbers on ships costs millions of dollars, and Maersk has announced it will use the technology on some of its ships to help meet the new sulfur limits. But it is difficult to determine whether the investment is worthwhile without knowing the price differential between low and high-sulfur fuels. “The problem is that nobody knows what the market’s going to do,” says Plaskon of ABS. “Will there be a Photo by Mark Rhodes

big price differential? How long will it last? Will the high-sulfur fuel even be readily available anymore?” The use of LNG is growing slowly. French container shipping liner CMA CGM has announced it will use LNG as a fuel for some of its future vessels because of the environmental benefits, such as reducing sulfur and nitrous oxide pollution by 99 percent compared to bunker fuel. Overall, however, CMA CGM is planning to use a mix of available methods to meet the new regulations. “We have elected to use LNG, scrubbers, and low-sulfur fuel to meet IMO 2020 compliance and mitigate price volatility,” the company wrote in an email to Virginia Business. “We are reducing our reliance on any given fuel type and lessening exposure to potential price volatility as IMO 2020 ramps up.” “LNG as a fuel is starting to gain traction,” says Plaskon. “But that is a slow process… That’s not something that a lot of people are going to be able

to just turn the switch on and have a vessel like that ready to rumble come Jan. 1, 2020. It would meet sulfur emissions limits. But the infrastructure for LNG bunkers is not well-established.” Virginia’s maritime community is evaluating whether LNG bunkering would be feasible in Hampton Roads. The Virginia Maritime Association last fall held a roundtable discussion on LNG. The association has created a working group to explore the feasibility of establishing LNG bunkering in the region. “Ultimately the ocean carrier market is going to have to decide if they want it, but we want to position ourselves to say ‘Hey, we’re open to it,’” says Fediw. “We understand LNG. We have a favorable regulatory and legislative ecosystem. We’ve already begun to lay the groundwork for merchant LNG firms to come and invest in the infrastructure and for vessels to start using it.” The low-sulfur regulations won’t be completely new for ocean carriers. Currently, they are required to meet an

even stricter 0.1 percent sulfur emissions rate when entering Emission Control Areas, or ECAs. That includes areas on the U.S. East Coast, as well as regions in the Caribbean, Baltic and North Sea. That means when ships are within 200 nautical miles of the U.S. East Coast, they are limited to 0.1 percent sulfur emissions. The rate in the ECAs will remain the same after Jan. 1. Most switch to a low-sulfur fuel when entering ECAs. Industry reports have speculated whether IMO’s new sulfur limit will cause ocean carriers to change routes to try and save on fuel, reducing the number of port calls they make. While none of the carriers have announced such plans, Virginia’s efforts to dredge its channels and expand its terminals should help it remain attractive. “We’re one of many links in the supply chain, and everything that we can do to expedite our part and keep ships moving is beneficial,” says Kit Chope, vice president, sustainability at the port.

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2019 VIRGINIA MARITIME GUIDE 17

INLAND PORTS

Inland bound

Cargo traffic surges through Richmond, Front Royal ports

The Port of Virginia recently added a second barge to its service that transports cargo between its Hampton Roads terminals and the Richmond Marine Terminal. by Richard Foster

hen the Port of Virginia launched its barge service on the James River in 2008, it got off to a slow start. The barge moved only 149 containers between Hampton Roads and the Richmond terminal in its first year. When it celebrated its 10-year anniversary last year, the port’s barge cargo business had grown exponentially since the port signed a long-term lease and invested millions in improvements for the facility. Over 10 years, the barge ferried a total of 130,000 containers. In 2018 alone, carriers shipped about 30,000 containers via the river barge service, which has gone from a weekly barge

voyage to running three days a week. In response, the port recently added a second barge that will allow the port to expand the service to five days a week. Eventually, port officials say, it could be running simultaneous cargo barges. The port estimates that the terminal, which also processes rail and truck cargo, could ultimately handle as many as 60,000 containers a year, says port spokesman Joe Harris, “and our goal is to find the ceiling. There are a lot of positive developments happening at Richmond Marine Terminal, and we don’t expect that to change.” The Richmond port and the Vir-

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ginia Inland Port in Front Royal offer a critical inland pipeline for expediting cargo deliveries to and from the Hampton Roads marine terminals to points across the United States, particularly along the East Coast and the Midwest. Cargo traffic at Richmond Marine Terminal was up 31.5 percent to 31,544 containers in calendar year 2018, and the Virginia Inland Port saw a 7.8 percent increase in traffic to 38,540 containers over the same time period. By comparison, container traffic for the overall Port of Virginia system was up 0.5 percent last year. “Richmond Marine Terminal and Virginia Inland Port are both growPhoto courtesy Port of Virginia

ing in terms of their cargo volumes, their capabilities and their efficiency, which means they’re also growing in importance for the Port of Virginia,” Harris says. The Port of Virginia is currently undergoing a $700 million expansion to significantly increase capacity at its two largest container-handling terminals in Hampton Roads. By the time the project is completed next year, Norfolk International Terminals will see its annual cargo capacity increase by 46 percent — from 850,000 containers to 1.25 million containers. And that means that a lot more cargo also will be heading to the two inland port facilities, both of which have also been undergoing significant improvements. The Virginia Inland Port is in the middle of a $26 million enhancement project, including $15.5 million in federal funding to construct a new bridge on state Route 658. The Port of Virginia also is investing $11 million to expand cargo capacity and improve operations by adding three new railroad tracks (increasing the inland port’s total capacity to a total of eight tracks) as well as two new hybrid, low-emission, diesel-electric cargo movers. The Front Royal cargo facility has been “a catalyst for significant economic development initiatives” in the region, says Devon C. Anders, president of InterChange Group Inc. and the chair of the Virginia Maritime Association’s Valley Logistics Chapter. Richmond Marine Terminal, which has been adding a 24-hour cargo drop gate for trucks, is also investing $570,000 (including $456,000 in federal grant funding) to purchase a new top loader, a piece of conveyance equipment used to unload containers on and off the chassis of trucks. Located right off Interstate 95, the Richmond port has been a beacon for the development of nearby warehouse projects in the last couple years. Newport Beach, Calif.-based Panattoni Development Co., which has been building 1 million square feet of warehouse space near the terminal, announced its first tenant earlier this year: Brother International Corp. A Photo by Norm Shafer

Cargo volume at the Virginia Inland Port in Front Royal grew 7.8 percent last year.

leading global manufacturer of printers, fax machines, sewing machines and other equipment, Brother is leasing a 461,700-square-foot warehouse from Panattoni as a distribution center for the East Coast and portions of South America. Additionally, about two miles

away from Richmond Marine Terminal, Richmond-based Hourigan Development has been building a 1.5-million-square-foot warehouse park called Deepwater Industrial Park on 110 acres near Philip Morris USA’s Richmond Manufacturing Center on Interstate 95.

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2019 VIRGINIA MARITIME GUIDE 21

REEFER CARGO

Port of Virginia expands refrigerated cargo capacity

ort of Virginia officials hope more fruits and vegetables will pass through its terminals. The port is increasing its refrigerated (reefer) cargo capacity by 66 percent. Each of its largest terminals, Norfolk International Terminals and Virginia International Gateway in Portsmouth, now hosts almost 900 reefer units. In addition, the port can handle refrigerated freight on the Richmond Express barge, which hauls cargo between its Hampton Roads and Richmond terminals. In 2017, the port invested in a 40-plug power unit for the barge. The expansion could mean new market opportunities for the region. “We have the necessary federal approval and capacity to help develop Virginia into an export and import center for refrigerated cargo,” says John Reinhart, CEO and executive director of the

Virginia Port Authority. The port recently completed a federal program that should bring cheaper and fresher fruit to grocery stores around the region. In October 2017, the port began participating in the U.S. Department of Agriculture’s (USDA) pilot program to allow specific fruit imports from South America. Under the program, Virginia could import cold-treated containers of blueberries, citrus and grapes from Peru; blueberries and grapes from

Uruguay; and apple, blueberries and pears from Argentina. The program allows containerized imports to enter the port after a twoweek cold treatment process. Cold treatment provides a safeguard against fruit flies and other insects and keeps fruit fresh during required USDA clearances. Previously, these shipments were required to travel through a Northeastern port for cold treatment and clearance. “We do believe the refrigerated cargo will grow, both on the import fruits and vegetables side, but I also think on some of the export side as the tariff issues soften, you may see more export of refrigerated product as well,” says Reinhart. “So we’re trying to be prepared to be a very efficient refrigerated container terminal. And that’s very attractive cargo because it pays a higher rate to the carriers.”

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2019 Virginia Business - Virginia Maritime Guide.indd 1

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3/4/2019 10:33:04 AM File photo/ING Images

MARITIME LAW

Maritime law firms

Phone number

Number of maritime lawyers

vanblacklaw.com

757-446-8600

Norfolk

willcoxsavage.com

757-628-5500

Crenshaw Ware & Martin PLC

Norfolk

cwm-law.com

757-623-3000

Davey Brogan PC

Norfolk

dbmlawfirm.com

757-622-0100

Virginia Beach troutman.com

757-687-7559

Ventker Henderson PLLC

Norfolk

ventkerlaw.com

757-625-1192

Rutter Mills

Norfolk

ruttermills.com

757-622-5000

McGuireWoods

Norfolk

mcguirewoods.com

757-640-3700

Law firm

City

Website

Vandeventer Black

Norfolk

Willcox & Savage

Troutman Sanders

Note: This list only includes law firms with at least two members of the Maritime Law Association of the United States in Virginia. Source: Maritime Law Association of the United States

MARITIME & ADMIRALTY LAW GROUP Vandeventer Black has a tradition of representing maritime clients for over 135 years. Our team represents domestic and international interests in virtually all areas of maritime law. We offer a diverse range of maritimerelated legal services and have the depth and experience to handle the full spectrum of legal issues that arise. • • • •

Collision Pollution Cargo Damage Customs Law

• Vessel Sales/Financing & Documentation

• Terminal Operations

• Personal Injury Defense

• Ship Repair

• Charter Parties & Bills of Lading

• Multimodal & Logistics

• Coast Guard Matters

• Offshore Renewable Energy

• Maritime Litigation & Arbitration

757.446.8600 VIRGINIA | NORTH CAROLINA | GERMANY VANBLACKLAW.COM

2019 VIRGINIA MARITIME GUIDE 23

EDUCATION

Team work

New collaborations aim to find solutions for the maritime industry The ODU Innovation Hub for Ports Logistics & More will be located in the new building for the university’s Institute for Innovation & Entrepreneurship.

by Veronica Garabelli

Norfolk-based entity will be dedicated to growing innovations in the maritime and other related industries, such as flooding resilience, sea-level rise and aquaculture. The Innovation Hub for Ports, Logistics & More will be a place where inventors and entrepreneurs can test whether their ideas are comFiler mercially viable, says Larry “Chip” Filer, Old Dominion University’s associate vice president for entrepreneurship and economic development. The initiative is one example of how universities in Hampton Roads are helping companies in the maritime industry address challenges. A place to see if ‘ideas have legs’ What types of issues does the innovation hub hope to tackle? Filer

anticipates helping large companies, shipping lines and freight forwarders solve logistical challenges, as well as studying technologies related to flooding resilience and automating port terminals. “We don’t really have a lot of startup activity in this industry and new technology,” Filer says. “We’re just trying to do our little part to fill that hole.” The innovation hub is part of Old Dominion University’s Institute for Innovation & Entrepreneurship (IIE). The institute’s goal is to support entrepreneurial efforts in the region and the commonwealth. The IIE is moving from the university campus in Norfolk to the city’s downtown district in August. The new building will house the hub and IIE’s other initiatives, which include the Strome Entrepreneurial Center, Innovation Center Norfolk, the Veterans Business Outreach Center, the Women’s Business Center and the Procure-

A publication of Virginia Business magazine

ment Technical Assistance Center. ODU is investing $1 million in the 7,800-square-foot building, while Norfolk is providing $200,000. The facility will feature conference rooms, where companies can have meetings with clients and investors. There also will be a 35-seat training classroom. The location won’t include office space for companies. (IIE has a coworking space for startups at the Innovation Center, also located downtown.) The Institute for Innovation & Entrepreneurship will house 15 staff members, including the hub’s executive director and program manager, which the university anticipates hiring by the time the new office is open. The hub hopes to collaborate with about 30 companies at a time, onboarding 10 companies per year. “This is the Wild West. We have no clue,” how many companies will participate, Filer says. “We are prepared for a whole bunch of [people] to have really cool ideas that they’ve been ticking around and just had no place to go to see what people thought of it.” A game changer Another ODU initiative is developing and testing new technologies to power marine vessels. ODU is teaming up with Anacortes, Wash.-based LAVLE USA Inc. to open the $12 million Marine Electric Propulsion Simulation (MEPS) Laboratory. LAVLE plans to develop batteries at the lab, which is under construction and opening next year. The batteries are designed to power all-electric and hybrid Navy and commercial vessels. “It’s a game-changing technology,” says John Ockerman, LAVLE’s chief technology officer and co-founder of Ockerman AutoRendering courtesy Old Dominion University

mation, which he owns with his wife, Joan. “We’re packaging that into very specialized vessels that go very fast and use a lot of endurance … This is the only battery that offers that possibility at the moment.” LAVLE already has set up shop in downtown Newport News. It’s occupying an office next to the future MEPS lab, as well as a temporary lab at the Jefferson Lab Applied Research Center. The company has hired more than a dozen employees and plans to add two dozen more by the end of 2020. The lab will be used to train LAVLE’s workers, as well as employees from other companies associated with the electric propulsion of ships. “There’s only handfuls of people in North America that understand how to do this type of work,” Ockerman says. “By building the [lab], we have the ability to Ockerman support our own needs,” as well as others.

Building the workforce In October 2018, Tidewater Community College opened the Skilled Trades Academy in Portsmouth, designed to train workers in construction and manufacturing trades. The college opened the 20,000-square-foot facility after outgrowing a 5,000-square-foot space, which focused on shipbuilding and ship-repair industries. The new location expands training to other trades, including roofers, bricklayers and fork lift operators. “This space is totally flexible,” which was done on purpose, says Corey L. McCray, the college’s vice president for workforce solutions. “We want to have a space where when McCray the demand for a certain skill set starts to wane then we can move that skill set out of this facility and go into whatever the next demand will be.” The academy prepares workers to

earn career certificates and certifications — for instance, the American Welding Society certification for welders. The academy also holds classes tailored to industry needs. Stanley Black & Decker, an industrial-toolsand-hardware manufacturer based in Connecticut, has donated more than $250,000 in equipment. It’s becoming more important for manufacturing and logistics companies to recruit skilled laborers, as half of trade workers in the U.S. are expected to retire within the next decade, McCray says. The industry often fights a misconception that tradesmen don’t make enough money, but they earn between $18 to $20 per hour on average, he says. “This is how people become supervisors and foremen,” he says. They start out by earning credentials and certificates in their fields and eventually move up to management positions. “In many cases, they can do that with what starts out as a threeweek training course.”

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2019 VIRGINIA MARITIME GUIDE 25

SHIPBUILDING WORKFORCE

Building the workforce Naval fleet expansion, retirements spur initiative

Newport News Shipbuilding spearheaded an effort to define future jobs in the ship building and ship repair industries. “There’s positions in this industry that we don’t even know yet what they will be,” says Keisha Pexton, the company’s director of learning and workforce development. by Hershal Chaddha

new alliance aims to fuel the regional supply of shipbuilding and ship repair workers. The Navy plans to expand its fleet of ships from 289 to 355, which means more workers will be needed to modernize and maintain those ships. The industry also continues to need to replace older workers who are reaching retirement age, says Bill Crow, head of the Virginia Ship Repair Association. As a response, Newport News Shipbuilding started the

America Builds and Repairs Great Ships initiative about a year ago. While the shipyard spearheaded the effort, the alliance now includes more than 100 industry stakeholders, including companies, as well as government and education entities. “The shipyards are looking at the potential numbers of employees they need,” and there aren’t enough in Virginia, says Larry “Chip” Filer, associate vice president for entrepreneurship and economic development at

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Norfolk-based Old Dominion University, one of the organizations in the alliance. “Part of this effort is also a branding effort. It’s to put [Virginia] on the map as the place to go if you’re interested in this kind of a job.” The initiative also seeks to define future jobs in the shipbuilding and ship repair trades, especially as they incorporate technology and digitization. “There’s positions in this industry that we don’t even know yet what they will be,” says Keisha Pexton, director of learning and workforce development at Newport News Shipbuilding. An advisory council has been formed to come up with more specific initiatives for the alliance. More than 60 organizations are part of the council, which meets quarterly. Additionally, a team of about a dozen people will meet monthly to ensure the council’s tasks and goals are achieved. “The primary goal of this initiative is to produce actionable regional solutions,” Pexton says. The alliance currently receives no direct funding from state or local governments. However, members hope to get to a point where government entities provide financial support to expand the initiative. Photo by Mark Rhodes

EXPORTING

Overseas prospects Virginia trade grows despite tariff pressure by Michael O’Connor

hile Virginia companies continue to sell more goods overseas, the ongoing trade war between the U.S. and China continues to squeeze exporters. In fact, Virginia is feeling the sting twice as much as many other states, says Paul Grossman, vice president of international trade at the Virginia Economic Development Partnership (VEDP). China buying fewer Virginia soybeans also means fewer exports traveling through the state’s supply chain. “That has a double effect because we’re selling less soybeans to China, and soybeans are shipped, so there’s less soybean traffic through the ports in Virginia,” Grossman says. “If we were in Kansas we wouldn’t have the impact of the freight movement, but we benefit when freight’s moving. We suffer when freight is reduced.” The Trump administration and Chinese officials have wrangled for months over an economic dispute that is affecting markets around the world. Both countries have imposed tariffs on billions of dollars in goods and threatened to add more tariffs if the two sides can’t reach a deal. The Trump administration

Photo by Caroline Martin

Paul Grossman of the Virginia Economic Development Partnership says exports are growing in Virginia despite negative pressure from tariffs.

delayed a tariff deadline earlier this year but no deal has been reached with China. Grossman says there isn’t much the state can do to mitigate the effects of the trade

war. “International trade negotiations are the purview of federal government,” Grossman says. “We can certainly make our congressional delegation aware of the impact.”

2019 VIRGINIA MARITIME GUIDE 27

EXPORTING Exports are important to any economy because they create jobs, increase the state’s corporate tax revenue and boost distribution-logistic jobs needed to move products, Grossman says. “It’s unsettled times because we have these tariff disputes going on,” Grossman says. “Apart from that disruption, international trade is growing.” Virginia’s total commodity export value for manufactured products increased 11.2 percent from 2017 to 2018, according to figures from VEDP. Meanwhile, the volume of Virginia manufactured products exported to China decreased by 29.21 percent in the same period. Still, China remained the second-largest export destination for Virginia manufactured goods in 2018. Canada continues to be the top destination for Virginia’s exported manufactured products. In 2018, $18.3 billion worth of Virginia products were sold to Canada, representing 17.23 percent of the state’s exports. Proximity, historical ties and common languages contribute to Canada’s high number of Virginia exports, Grossman says. It’s a similar story for Mexico, the third-largest destination

for Virginia exports of manufactured products. These numbers don’t reflect companies that export services and digital goods. VEDP helps businesses find potential markets all over the world. For Ensco, a Springfield-based technology firm, that meant participating in a trade mission to South Africa last year. In the early 1980s, Ensco developed a security system called Laudeman MicroSearch, which uses seismic sensors to detect whether people are hiding in cargo containers, says Todd Laudeman, director of security products at Ensco. MicroSearch has been popular with prisons and at international ports and border crossings, where officials are concerned about people being smuggled in shipping containers. Annual sales for MicroSearch have ranged from $1.5 million to $2 million, with 70 percent going overseas. China is a top destination with interest picking up in eastern Europe. MicroSearch also is sold in the U.K., Europe, North Africa, Australia and

New Zealand. Laudeman saw a potential market for the technology in South Africa, with its ports, prisons and mining operations. Still, it wasn’t much to go on for a Virginia company looking to diversify its export business in a new country on the other side of the Atlantic. “I was going in cold,” Laudeman says, adding he contacted VEDP for help. “The goal for our strategy is to basically boost sales and reach into the individual markets within each of these countries that we might have not addressed previously,” Laudeman says.” VEDP lined up meetings with more than six potential companies. Things went poorly at first because the initial companies were more similar to Home Depot-like operations, and Ensco likes to partner with firm’s that offer more post-sales support. Eventually, though, Laudeman connected with a company he says was “exactly the right partner” and Ensco was working to finalize a deal with the firm in March. “I’m still very positive about the results of that mission,” Laudeman says.

STATE RESOURCES

the world. These experts provide in-country market research specific to a company’s product or service. They also arrange match-making appointments with potential distributors and customers.

visits with business meetings arranged on a company’s behalf and pre-qualified based on the company’s export market objectives. Trade shows provide a way for Virginia companies to connect with new customers and grow international sales by exhibiting their products.

Virginia Economic Development Partnership (VEDP) – International Trade:

Virginia’s main point of entry for companies interested in exporting. The VEDP – International Trade website is packed with information about exporting and includes contacts for local experts that can help your company achieve its international goals. www.exportvirginia.org

International market research: VEDP – International Trade: offers Virginia businesses

access to international consultants in more than 75 countries around 28

www.exportvirginia.org/services/ international-market-research

International trade missions and trade shows: Face-to-

face meetings are even more important to international business than they are to domestic marketing. VEDP - International Trade helps Virginia companies meet potential customers and partners through participation in trade missions and trade shows. Trade missions are tailored

A publication of Virginia Business magazine

www.exportvirginia.org/events

Global Defense Program (GDP): The GDP helps

Virginia’s defense companies diversify into new international markets. Eligible defense-related companies receive assistance with strategy, export compliance, matchmaking and translation. Companies can participate in on-continent vendor days with

U.S. Combatant Commands as well as training sessions held throughout Virginia to help prepare them to go global. Defenserelated companies also receive market research services such as identifying potential distributors and due diligence reports. www.exportvirginia.org/services/ programs-grants

State Trade Expansion Program (STEP): Designed

site includes market research and trade leads from the Commerce Department and a series of export education guides.

or unable to do so. http://www.exim.gov

www.export.gov

U.S. Trade and Development Agency (USTDA): The USTDA

Export-Import Bank: The Export-Import Bank (EXIM) of the United States is the export credit agency for the country. EXIM helps exporters in need of financing when private lenders are unwilling

www.ustda.gov

to increase the number of small businesses that are exporting, STEP provides a range of traderelated resources and services to small businesses. The program is funded in part through a Cooperative Agreement with the U.S. Small Business Administration (SBA).

connects American businesses with opportunities in the world’s fast-growing economies. The agency targets opportunities in the energy, transportation and telecommunications industries.

“ WHEN LOCAL BUSINESS THRIVES, WE ALL SUCCEED.”

www.exportvirginia.org/services/ programs-grants

Virginia Leaders in Export Trade (VALET): VALET is a two-

Rob Shuford, Jr. President & CEO Old Point National Bank

year international business acceleration program. This program offers a combination of capital resources provided by the commonwealth and professional services from expert, private-sector partners. Program benefits include executive training, international sales plan development, educational events and customized research. Only 25 companies per year are accepted into the VALET program. www.exportvirginia.org/services/ programs-grants

FEDERAL RESOURCES

Local Matters to Us

U.S. Department of Commerce

OldPoint.com 757.728.1200

Export.gov: Hosted by the

U.S. Department of Commerce’s International Trade Administration, Export.gov is a gateway to the federal resources to help American businesses plan international sales strategies. The

2019 VIRGINIA MARITIME GUIDE 29

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PORT STATS

Top 5 commodities by value

Trade lanes

EXPORTS1

Nuclear reactors, boilers, machinery

Pharmaceutical products

2,228

Electrical machinery

3,760

Plastics

1,899

Pharmaceutical products

3,338

Oil seeds

1,165

Vehicles, other than railway

2,981

Organic chemicals

1,005

Furniture and bedding

2,867

$2,793

$10,859

1 In millions of U.S. dollars in 2018

Top 5 commodities by short tons EXPORTS

Nuclear reactors, boilers, machinery

1,072

Oil seeds

3,234

Salt; sulfur; earths and stone

976

Wood

2,680

Furniture and bedding

923

Residues

1,912

Plastics

777

Woodpulp, etc.

1,634

Beverages; spirits and vinegar

548

$1,367

$528

Asia, Northeast

4,668

14,889

Asia, Southeast

2,149

4,812

Caribbean

191

Central America

286

126

Europe, North

8,953

16,998

India & others

1,406

3,937

Mediterranean

2,011

5,137

Middle East

1,377

589

North America

106

Oceania

255

1,680

2,026

Africa

42,151

Minerals fuels, mineral oils

Imports1

IMPORTS

Exports1

IMPORTS1

South America 1 In millions of U.S. dollars in 2018

U.S. East Coast Ports

1 In thousands of short tons in 2018

Trade overview (Hampton Roads harbor)

TEUs

East Coast market share1

New York/New Jersey

7,179,792

32.4%

Savannah, Ga.

4,351,919

19.6

Total (short tons)1

Export (short tons)1

Import (short tons)1

Total cargo

69,417

57,111

12,305

The Port of Virginia

2,855,911

12.9

General cargo

21,975

10,741

11,234

Charleston, S.C.

2,316,256

10.5

Container cargo

21,785

10,706

11,080

Jacksonville, Fla.

1,288,091

5.8

Breakbulk cargo

189

154

Port Everglades, Fla.

1,111,193

5.0

Container units

1,612,886

844,247

768,639

TEUs

2,855,904

1,505,835

1,350,069

Miami

1,085,323

4.9

$73,797

$24,583

$49,214

Baltimore

1,023,161

4.6

Philadelphia

626,036

2.8

Wilmington, N.C.

324,212

1.5

Total cargo dollar value (millions) Vessel calls Coal loadings

2,570 43,075

TEU: 20-foot equivalent unit 1 In 2018

1 In thousands in 2018 Source: U.S. Department of Commerce, U.S. Census Bureau, Virginia Maritime Association, The Port of Virginia, American Association of Port Authorities

Compiled by: The Port of Virginia, Strategic Planning & Analytics

2019 VIRGINIA MARITIME GUIDE 31

MOTOR CARRIERS

Trucker appointment system drives down turn times The Port of Virginia has added a Trucker Reservation System (TRS) at its largest terminals.

by Jessica Sabbath

ost motor carriers are traveling in and out of the Port of Virginia’s largest marine terminals at a faster clip, thanks to a year-old appointment system. The Port of Virginia’s Trucker Reservation System (TRS) was introduced in March 2018, covering just a few hours each day at Norfolk International Terminals (NIT). Now about 65 percent of all moves are completed during mandatory appointment hours, which cover almost 100 hours per week at NIT and the Virginia International Gateway (VIG) terminal in Portsmouth. TRS dictates that only truckers with appointments may drop off cargo at the Port of Virginia during designated times. The appointment system allows the port to prepare the specific container the driver needs to pick up, providing faster service. The TRS system currently covers from the time the terminals open (5 a.m. at NIT and 3 a.m. at VIG) until 1 p.m. “What it allows us to do is give predictability and give the drivers the ability to really know, and [beneficial cargo owners] to know how their freight will flow,” says John Reinhart, CEO and executive director of the Virginia Port Authority. “And it eliminates waste. You know we just continue to not have people sitting in their truck running the engine 32

waiting to get onto the terminal or spending extra time idling, waiting to get a container loaded.” The payoff has been big when looking at turn times — the time it takes for the port to process drivers dropping off or retrieving containers. Between October and February, the port saw a 30 percent reduction in turn times. More than 80 percent of truckers are moving in and out of the terminal in under 60 minutes, says Reinhart. The average turn time ranges from 42 to 45 minutes. Some trips in and out of VIG in March had processing times as low as 22 to 25 minutes. The port also is focusing on cutting back outliers, truck visits that take more than two hours to process. In October, 300 out of 7,000 truck moves would take two or more hours. On some days last February, only 40 truck visits lasted that long. “So, by continuing to not only drive down the time on every transaction with the reservation system, we’re focusing our energies on these outliers so that everybody has a good service,” says Reinhart. “We have a world-class product here in Virginia now.” The rollout certainly had its hiccups. At first, a large number of motor carriers missed their scheduled appointments, and some truck drivers couldn’t get the appointments they needed. There have

A publication of Virginia Business magazine

been improvements on both fronts, says Reinhart. Missed appointments have dropped from 25 percent in October to 7 percent in February. In addition, only about 60 percent of appointment slots are taken, he says. Although it can be more difficult to get appointments at busy times of the day. Those factors, combined with phased opening of new container stacks at NIT and VIG, have helped improve the system. “It’s dramatic when you look at the improvements,” says Reinhart. “It’s the contribution of two things: everybody getting used to muscle memory and getting used to the new reservation system and more stacks and more capacity to receive and deliver the containers, particularly at VIG,” whose expansion is almost complete. Marguerite Bates-Frier, president of the Tidewater Motor Truck Association, agrees the system has been improved since it was rolled out. “Given the size and scope of this project, given the magnitude of this project, there’s clearly going to be some challenges associated with it. And rolling it out during peak season added to those challenges. “I can say that as it stands today the appointment system is working.” Motor carrier drivers prefer having appointments over the free-time system. “You still have challenges where a particular contractor will have a bad day,” says Bates-Frier, “but given the sheer volume going through there, a handful of challenges a day is to be expected.” She also says the appointment system does not work as well for motor carriers who have less flexibility in their schedules. The association is working with the port and the Virginia Maritime Association to improve the process. “We’re all in this together,” says BatesFrier. “I want the Port of Virginia to win business. I want Virginia to win business. I want the economic development team to win business. I want cities to win business, so we can continue to haul this freight for them.” Photo courtesy Port of Virginia

INTERSTATE 81

I-81 corridor to receive dedicated funding From staff reports

fter years of inaction, the General Assembly approved dedicated funding for improvements on Interstate 81 during its annual veto session. The legislature in April agreed to raise gas taxes and other fees that are expected to generate about $150 million annually for the corridor. Gov. Ralph Northam introduced the measures through amendments to legislation that previously had not provided any funds for the highway. The amendments also include funding for improvements to other highways. The amendments included a 2.1 percent regional motors fuel tax in localities along the I-81 corridor and an increase in the state diesel tax and truck registration fees. “I-81 is the Valley’s major artery and lifeline and is a core economic development asset that cannot be neglected,” says Devon Anders, president of InterChange Group Inc., in Harrisonburg. He also chairs the Virginia Maritime Association’s Valley Logistics Chapter. “I-81 has unique factors, and VDOT’s study highlighted that it is not just congestion but its design and terrain that create incident points. These incidents cost lives and interrupt commerce in the Shenandoah Valley and well beyond. “I am thankful that the governor and the legislators heard the constituents and have advanced a significant portion of the recommended improvements,” he says. “This is good for Virginia and our future.” I-81 runs through bucolic western and southwestern Virginia, and is the commonwealth’s busiest commercial thoroughfare. But the interstate, which stretches from Tennessee to the Canadian border and runs 325 miles through Virginia, is plagued by a long history of crashes and congestion. The interstate accounts for 42 percent of statewide interstate truck traffic with an estimated 11 million trucks traveling on it each

year, according to a report from Virginia’s Commonwealth Transportation Board (CTB). I-81 averages 2,000 crashes a year, with about 45 major crashes each year that take more than four hours to clear. The two-lane interstate is hindered by a restricted configuration, lack of possible detour routes, rolling terrain and lack of capacity. The interstate needs $4 billion in construction projects, including $2.2 billion in priority projects, according to a CTB study released in December 2018. Legislators from the area introduced bills in the 2019 General Assembly to fund the projects with tolls. The proposed tolls were controversial, however, and legislators agreed only to create an Interstate 81 Corridor Improvement Transportation Committee

and an unfunded Interstate 81 Corridor Improvement Fund. Despite I-81’s conditions, the Shenandoah Valley is seen as a hot market for future growth. Earlier this year, Colliers International included the Shenandoah Valley on its list of top Emerging U.S. Industrial Markets to Watch in 2019. It was the only Virginia region to make the list. Other markets included Greenville-Spartanburg-Anderson in South Carolina, Lehigh Valley in Pennsylvania and Savannah, Ga. The region offers a cheaper alternative to major metro markets but is close to ports, rail lines and labor markets. The Shenandoah Valley also has plenty of land available for development and is located near population centers such as Washington, D.C., Baltimore and the Ohio Valley, the report said.

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2019 VIRGINIA MARITIME GUIDE 33

TRANSPORTATION ROUNDUP

Highway projects around Virginia Construction crews are busy along Virginiaâ&#x20AC;&#x2122;s highways. Below are some of Virginiaâ&#x20AC;&#x2122;s largest projects underway: the project includes Dragados USA and Schiavone Construction Co. LLC. The tunnels are being built with a tunnel boring machine, which allows construction to be done with less disturbance to commercial and military ships and less wind and wave action during construction. Hampton Roads BridgeTunnel expansion

The Chesapeake Bay Bridge-Tunnel Commission is adding a parallel tunnel.

Chesapeake Bay Bridge-Tunnel The Chesapeake Bay BridgeTunnel (CCBT) provides a 23-mile picturesque link between South Hampton Roads and the Eastern Shore. The CCBT carries more than 4 million vehicle trips each

year. The CCBT commission is currently building a $756 million parallel tunnel under the Thimble Shoal Channel in the Chesapeake Bay. The new tunnel eventually will carry two lanes of traffic southbound and the existing tunnel will carry two lanes of traffic northbound. The design-build team for

The Virginia Department of Transportation has chosen the team that will build the largest construction project in its history. The Hampton Roads Bridge-Tunnel expansion, which will cost more than $3 billion to build, will add new, two-lane tunnels and widen the four-lane sections of Interstate 64 in Hampton between Settlers Landing Road and the Phoebus shoreline. New York-

RICHMOND MARINE TERMINAL A port that transported 31,544 containers in 2018. 1,825,000 square feet of new industrial and warehouse space. Rental costs that average $1 per square foot less than surrounding areas. And all close to Interstates 95, 85 and 64.

A publication of Virginia Business magazine

Photo courtesy Chesapeake Bay Bridge-Tunnel

based Dragados USA is the leader contractor for the joint venture, called Hampton Roads Connector Partners, that received the design-build contract. The team also includes Coloradobased Flatiron Constructors, Francebased Vinci Construction and Dodin Campenon Bernard, a construction company also based in France. The funding for the project is coming from the Hampton Roads Transportation Accountability Commission (HRTAC). HRTAC is covering 95 percent of the project through regional sales and gas taxes. Other project funding includes $200 million from Virginia’s Smart-Scale program and $108 million from VDOT to replace the South Island Trestle Bridges in Norfolk. The project is expected to be completed by 2025. I-64 High-Rise Bridge and road widening The I-64 Southside Widening and High-Rise Bridge project is valued at $409.8 million. The contractor on the project is a joint venture involving three companies called Granite-Parsons-Corman. The project will widen nearly nine miles of Interstate 64 in Chesapeake and construct a new high-rise bridge over the Elizabeth River that will have a 100-foot

vertical clearance. The first phase of the project is slated to be completed in July 2021. Once the project is finished, the existing bridge will carry only I-64 East traffic. The new bridge will carry I-64 West traffic toward Virginia Beach. The project is being paid for with a combination of funds from the Hampton Roads Transportation Accountability Commission and the state’s SMART SCALE program. Interstate 64 Widening - Peninsula The widening of Interstate 64 has been a key project for reducing congestion on the Peninsula. The project includes widening the highway from four to six lanes on a 21-mile stretch through Newport News and York and James City counties. Constructed in three phases, the final phase is scheduled to be completed by 2021. I-66 outside the Beltway Work continues on this public/private project for a 22.5-mile stretch of I-66 from I-495 to near Route 29 in Gainesville. Under a 50-year agreement with Virginia, I-66 Express Mobility Partners is required to pay $800 million for transit service in the corridor and $350 million for other

projects to improve the I-66 corridor. I-66 Express Mobility Partners is a consortium of Cintra, Meridiam Infrastructure, John Laing Group Plc and APG. The design-build contractor for the project is FAM Construction, a joint venture of Ferrovial Agroman US and Allan Myers. I-66 Express Mobility Partners awarded Virginia with a $579 million concession payment, which includes $500 million to fund additional corridor improvements. The groundbreaking for the project was in November 2017. New express lanes are scheduled to open in late 2022. I-64 widening in Henrico and New Kent counties The purpose of this $54 million project is to improve safety and traffic flow as well as increase vehicle capacity. Corman-Branch, a joint venture, is the contractor. Construction began in 2017 and is scheduled to be completed in 2019. Plans call for the widening of a four-mile section of I-64 in Henrico and New Kent counties. The project will extend between the Interstate 295 interchange located at mile marker 200 and the Bottoms Bridge/Quinton interchange at mile marker 205. The existing bridge over the Chickahominy River will also be widened.

2019 VIRGINIA MARITIME GUIDE 35

COMMENTARY

Volatility returns

Ocean carrier rates expected to increase by the end of 2019 by Rachel Shames

n the heels of the industryâ&#x20AC;&#x2122;s most profitable year in nearly a decade, 2018 brought new challenges and stalled momentum for ocean carriers. The transpacific eastbound market, representing the Asia to U.S. trade, experienced an unusually strong peak season spurred by U.S. protectionist trade policies. American importers rushed to stockpile cargo ahead of scheduled tariffs on goods from China, resulting in a major capacity crunch between July and November. Ocean carriers were able to levy premiums on space during this period, but the gains were short-lived. Low contract rates negotiated in the spring prevailed for most of the year, making for a less-than-stellar annual performance. Slowing global economic growth, particularly in Europe and China, has once again left carriers searching for strategies to regain stability, if not profitability. However, there are signs that the industry is learning from the past. Drewry is forecasting container demand growth of 4 percent in 2019, with supply set to increase by only 2.5 percent. Carriers have struggled with this balance for years, only recently making significant cutbacks on new ship orders. Over the last year, they have reduced capacity in the market by combining services and utilizing blank-sailing programs to drive up rates. These tactics have proven effective, so much so that they are being employed during the current

annual contract negotiation season, typically a slow period, in an effort to maintain healthy rate levels for the coming year. Expectations in the market indicate likely rate increases in the double digits for the 20192020 contract year. As always, discipline in the area of rate negotiations will be critical to carriersâ&#x20AC;&#x2122; success, especially in light of the sluggish global economy and recent U.S.-China trade developments that have alleviated additional tariff concerns for now. While the U.S. economy is stable, the National Retail Federation is forecasting a decline in imports for 2019. Coupled with an already struggling export trade, a U.S. economic slowdown over the next 1-2 years certainly seems possible, though far from guaranteed. The wild-card factor for rates this year is the International Maritime Organizationâ&#x20AC;&#x2122;s (IMO) low sulfur fuel regulation, which will require all ocean liners to reduce the content of sulfur fuel from 3.5 percent to 0.5 percent by Jan. 1, 2020. All global ocean carriers will face increased expenses, which ultimately will be passed to shippers. Carriers are exploring options to comply with the IMO regulations, but one thing is certain: rates will increase significantly by the end of 2019. Current estimates say the new regulations will cost the industry $10 billion to $15 billion. Shippers need to be prepared and factor an additional unknown per container cost into their annual freight projections. Technology remains a vitally

important factor in the management of international ocean shipments. Systems integration is becoming an essential tool for shippers who are closely monitoring each phase of the transportation process, customs compliance and documentation. While Blockchain technology, once assumed to be a game-changer for the industry, has proven less effective than anticipated for the sector, new business intelligence tools are helping to reshape the value propositions within the maritime industry. To reach the goal of complete visibility, service providers and shippers alike are placing great emphasis on digitalization. Major ocean carriers, such as Maersk, are exploring ways to streamline and integrate operationally, eager to provide a one-stop shop service model for managing the freight process from start to finish. Visibility of the transportation and customs process provides substantial benefits to shippers of every size, offering a clear picture of reliability and bottlenecks in the supply chain. When combined with the partnership of a service provider who collaborates to identify efficiencies and develop solutions, the value of logistics technology increases exponentially. A good relationship with a freight forwarder and customs broker who understand your logistics needs is as critical to success. The devil is in the details, and navigating the complex world of international shipping efficiently requires experienced oversight at each stop of the journey.

Rachel Shames is director, pricing and procurement at CV International Inc., a freight forwarder, customs broker, and non-vessel-operating common carrier headquartered in Norfolk. She can be reached at rshames@cvinternational.com.

A publication of Virginia Business magazine

Photo courtesy CV International

MAKE WAVES

in MARITIME TECHNOLOGY

OpenSeas Technology Hub OPENING IN DOWNTOWN NORFOLK THIS SUMMER

Old Dominion University will launch the OpenSeas Technology Hub in partnership with the Port of Virginia, Virginia Maritime Association and City of Norfolk. This incubator space will grow new businesses in the maritime technology field to improve working and living with water. By connecting entrepreneurs and startups to the resources of research universities, labs and private sector industry partners, the hub will spark breakthroughs in maritime, logistics, aquaculture and resilience in the local water-based ecosystem. ODU and OpenSeas will accelerate research and innovation to further Virginia’s leadership in maritime technology. Through the world-renowned International Maritime Institute, ODU offers undergraduate and graduate degrees in Maritime and Supply Chain Management to propel commerce through education and research. 100% of program alumni are employed in the industry.

odu.edu | #odu Old Dominion University, located in Norfolk, is Virginia’s entrepreneurial-minded doctoral research university with more than 24,000 students, rigorous academics, an energetic residential community and initiatives that contribute $2.6 billion annually to Virginia’s economy.

UNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK •

QUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT

UNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE •

ANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY •

FFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON •

RTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY •

WPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN

AMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK •

GINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH

OUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS •

RFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH • CHESAPEAKE • FRANKLIN • HAMPTON • ISLE

WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON COUNTY • SUFFOLK • VIRGINIA BEACH •

ESAPEAKE • FRANKLIN • HAMPTON • ISLE OF WIGHT COUNTY • NEWPORT NEWS • NORFOLK • POQUOSON • PORTSMOUTH • SOUTHAMPTON