The Port of Virginia and Economic Development RODNEY W. OLIVER, CHIEF FINANCIAL OFFICER VIRGINIA PORT AUTHORITY 1
EAST COAST / WEST TRADE BALANCE 2
AN IMPORT PARADIGM SHIFT The West Coast has traditionally handled the bulk of containerized import cargo in the US. Recent economic developments and shifts in population and manufacturing are changing this paradigm. 3
WHY THE SHIFT IS OCCURRING Population growth in US South and Midwest West Coast Labor issues on 2014 Manufacturing shift from China to Asia/India New Suez and Panama Canal projects East Coast Rail infrastructure projects to feed Midwest markets Shipping companies achieving efficiencies with larger ships and alliances 4
THE BIG SHIPS ARE COMING 5
PANAMA VS. SUEZ CANAL 6
SHIFTING ASIA SUPPLY ROUTES 7
for local market as well as discretionary Midwest battleground The Mid-Atlantic s Global Gateway rail access is critical THE LAND OF OPPORTUNITY Source: Chain Store Guide Source: Chain Store Guide, National Retail Federation Battleground highlighted 12 in green 8
Significant growth in distribution centers in Gulf and Atlantic port RETAIL ranges have driven DISTRIBUTION growth in all-water services LOCATION Top 25 Retailers 26-50 Retailers Source: Chain Store Guide, National Retail Federation 9 9
MARKET SIZE / PORT POSITIONING Competitive port performance Port FY 2014 Imports % change vs. FY 2009 FY 2014 Exports % change vs. FY 2009 FY 2014 Total Loads % change vs. FY 2009 Port of Virginia 949 29% 958 39% 1,907 34% NY/NJ 2,828 18% 1,357 7% 4,185 15% Baltimore 332 10% 195 13% 527 11% Wilmington, NC 101 (18)% 112 10% 213 (6)% Charleston 702 21% 651 26% 1,353 24% Savannah 1,217 25% 1,236 31% 2,453 27% The Port of Virginia Strongest volume growth among competitors since the recession Better trade balance than NY/NJt 10
MARKET SIZE / PORT POSITIONING The Port of Virginia s market reach is competitive in size to NY/NJ & Savannah: All three ports able to serve a market potential of +50 million people. Without a large, local population base, The Port of Virginia s trade prospects are substantial, but very competitive. Source: Colliers, population categories defined by R K Johns Primary: population proximate enough where the port is the preferred or exclusive gateway (based on inland distances) The Port of Virginia needs to be savvy in its economic development efforts Secondary: the discretionary population in areas that overlap in regards to the opportunity to be served by competing ports Population figures include 16 states (AL, CT, DC, FL, GA, KY, MD, NC, NJ, NY, OH, PA, SC, TN, VA, WV) 11
VIRGINIA: AN EXPORT ECONOMY Source: Brookings Institution, Export Monitor 2015 12
ECONOMIC DEVELOPMENT Interchange Group announces expansion in City of Portsmouth Investment of $5 million 3PL provider based in Harrisonburg Operations in Harrisonburg, Waynesville, Front Royal and Winchester More than 1.6 million sq. ft. of warehouse space throughout the Commonwealth 13
ECONOMIC DEVELOPMENT Site Selectors from around the nation Discussed ideas of projects to bring to Virginia 14
ECONOMIC DEVELOPMENT: FY2015 Announcements: 44 Square Footage: More than 4.9 million Investment: More than $1.5 billion Jobs Created: 3,600 15
TOP IMPORT CUSTOMERS USING THE PORT Greater Roanoke Area UTTERMOST ADVANCE STORES MCAIRLAIDS DYNAX AMERICA BACOVA GUILD COOPER CROUSE HINDS GRAND HOME FURNISHINGS VIRGINIA TRANSFORMER ELIZABETH ARDEN ROANOKE VALLEY WINE COMPANY 5% in 2014 over 2013 16
TOP EXPORT CUSTOMERS USING THE PORT Greater Roanoke Area ATI INTERNATIONAL ELIZABETH ARDEN G E DRIVES AND CONTROLS TENCARVA MACHINERY COMPANY GALA INDUSTRIES 140% in 2014 over 2013 17
TOP 15 ACCOUNTS COMBINED 37% in 2014 over 2013 STAUNTON 18
TOP CONTAINERIZED AGRICULTURAL PRODUCTS Other Agricultural Products Unmanufactured Tobacco Grains, Soybeans, Starches, and Animal Feed Poultry and Meat Preserved/ Prepared Food Logs/Lumber and Articles of Wood 19
Top Agricultural Export Commodities Paper and Paperboard Wood Pulp Logs and Lumber Soybeans and Products Pet and Animal Feeds Grocery Products Mixed Metal Scrap Auto Parts Meat Poultry 20
Growth Track NS CSX ROANOKE Both CSX and Norfolk Southern are upgrading their rail network in order to send double-stack trains from east coast ports like Virginia to the mid-west. 21
EAST COAST PORT DEPTHS Cu r r e n B a l t i mo r e B a l t i m o r e 5 0 / 5 0 T h e P o r t o f V i r g i n i a 5 0 / 5 5 C h a r l e s t o n 4 5 / 5 0 S a v a n n a h 4 2 / 4 7 Ne w Y o r k / Ne w J e r s e y 4 5 / 5 0 M i a m i 45 / 50 NY/NJ Project cost: $1.6B New Depth: 50ft Timing: End of 2015 Funding: $882M fed / $752M non-fed Approvals: All obtained Charleston Project cost: $509M New Depth: 52ft inner harbor; 54ft harbor entrance; 48ft at northern portion Timing: 2019 Funding: $307M set aside by SC Approvals: All obtained; more upon issue of final report Savannah Project cost: $706M New Depth: 47ft Timing: 2020 Funding: $231M from state; $1.52M fed Approvals: All obtained; work is underway Miami Project cost: $220M New Depth: 50ft channel; 50-52ft entrance Timing: Done Funding: $112M state; $108M Miami-Dade County Approvals: All obtained 22
BOXSHIP EVOLUTION: 1988-2013 23
USEC VOLUMES / GROWTH 24
DREDGING: A STRATEGIC APPROACH 25
DEEPER. WIDER. SAFER. 55 55 CIEE 45 57 26
CONSOLIDATED OPERATING REVENUE 27
CONSOLIDATED OPERATING RESULTS A swing of +$30M in one year. $13.6M 28
INVESTING FOR THE FUTURE Invested more than $30 million in FY2014 Investing $135 million in FY2016 Optimizing our landside facilities Ensuring our channels can accommodate the larger ships 29
RTG SOLUTION 30
STRATEGIC PLANNING 31
THE FUTURE 32
Containers % of Rail Cargo The Mid-Atlantic s Global Gateway DEMAND AND CAPACITY (CARGO TYPE) 3,500,000 100.00% 90.00% 3,000,000 80.00% 2,500,000 70.00% 2,000,000 1,500,000 1,000,000 500,000 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% Rail projected to grow to 42% of total cargo volume by 2030. - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 - Rail Capacity Gate Capacity Rail Volume Gate Volume Rail % of Total Cargo 33
NIT NORTH GATE 34
PHASE 1 NIT SOUTH CONVERSION 35
PHASE 1 NIT SOUTH CONVERSION Phase I includes North Gate, 3 rd Street rail and the South Yard conversion $350 million capital needs First stacks complete by 2017 All 30 stacks complete by 2019 Increases capacity by 400,000 containers (696,000 TEUs) annually 36
Containers Axis Title The Mid-Atlantic s Global Gateway CAPACITY vs CE REPORT GROWTH 3,500,000 120.00% 3,000,000 NIT Central/Rail RMG Conversion 100.00% 2,500,000 NIT North RMG Conversion 80.00% 2,000,000 NIT South RMG Conversion 60.00% 1,500,000 1,000,000 40.00% 500,000 20.00% - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Capacity Volume @ CE Report Growth (4.73%) Utilization - 37
VIG II CONCEPT 38
TEUs The Mid-Atlantic s Global Gateway VIG II CAPACITY TIMELINE $320 million investment needed 2,500,000 2,000,000 1,500,000 1,000,000 500,000-2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Capacity Demand 39
Containers % Utilization The Mid-Atlantic s Global Gateway FULL POV BUILD OUT 4,000,000 120.00% 3,500,000 100.00% 3,000,000 2,500,000 NIT North RMG Conversion NIT Central/Rail RMG Conversion 80.00% 2,000,000 1,500,000 VIG II Expansion and NIT South RMG Conversion 60.00% 40.00% 1,000,000 500,000 20.00% - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Capacity Volume @ CE Report Growth (4.73%) Utilization - 40
THE PORT OF RICHMOND 40-year lease Expanded barge service $1 million in equipment 8 bills of lading New harbor crane coming MPO-approved grant funding Economic development strategy 41
VIRGINIA INLAND PORT Economic engine for the Commonwealth 39 major companies have located near VIP Investment of $748 million More than 8 million sq. ft. of buildings Employment of more than 8,000 people 42
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