Tariffs, pandemic slow port volumes
The Port of Virginia’s cargo volume was off by more than 181,000 twenty-foot equivalent units (TEUs) in fiscal year 2020, with the decrease attributable to the trade tariffs during the first half of the year and the ongoing impact on world trade of the COVID-19 virus through the year’s end.
The port completed Fiscal Year 2020 (July 1, 2019 to June 30, 2020) having handled 2.75 million twenty-foot equivalent units, which is a volume decrease of 6.2%, when compared with the prior year.
“Accurately measuring the results of a year turned upside-down by a pandemic is a significant challenge,” said John F. Reinhart, the chief executive officer and executive director of the Virginia Port Authority. “Total cargo volume and revenue are our usual primary metrics, but to get a true picture of what was accomplished in FY20, it is important to take into account our accomplishments beyond the numbers. As we looked more closely at the work we did prior to and during the pandemic — and outside of our normal metrics — we came away with a unique picture of success in a year of obstacles.”
During the first half of FY20, cargo volumes were flat at 1.48 million TEUs when compared with the same period in FY19. The negative effects of the U.S.-China trade war were evident, but trade talks yielded some resolution on agriculture exports. The port entered January believing that once it got past the normal slowdown in trade that accompanies the Chinese New Year, volumes would increase. The rebound never came and trade slowed even more as the virus spread and began taking its toll on shipping and the global economy.
“Our trade in the last half of FY20 fell off significantly, with overall TEU volumes being down more than 12 percent, or 180,000 units,” Reinhart said. “Our average monthly TEU volume during the last half of the fiscal year was 212,000 units, versus 242,000 units for the same period in FY19. During the height of the pandemic there were 57 regularly-scheduled vessel calls to Virginia that never happened because there wasn’t enough volume.”
Though volumes suffered, there were areas of business that boomed. The amount of cargo moving by barge to Richmond Marine Terminal and the overall barge volume grew. In FY20, container volume at RMT was up 22.5%, an increase of more than 7,500 units. Total barge volume was up almost 9%, or nearly 4,800 units.
Private investment inside the terminals grew. In January, Ørsted, a Europe-based renewable energy company, leased a portion of Portsmouth Marine Terminal. That lease could result in upgrades to the site to prepare it for pre-assembly, staging and loading of wind turbines for offshore power generation and drive the development of a new industry throughout the Commonwealth. Similarly, two international grain shippers, Scoular and Fornazor, invested in grain shipping operations inside RMT and Norfolk International Terminals, respectively.
The investments made at Virginia International Gateway and NIT on capacity expansion and overall modernization showed their value. Rail cargo was processed in an average of 40 hours or less, which is well below the industry standard. Likewise, truck drivers spent less time on terminal, about 40 minutes, on average, which is about 20 minutes below the industry standard.
The number of workdays lost to injury at an all-time low and well-below the federal government standard.
“We’ve made significant progress on the capacity expansion at NIT, and we’re on target for completion there in the fall,” Reinhart said. “The widening and deepening of our commercial shipping channels (to 55 feet) is running ahead of schedule. We are in the final stages of planning to expand the rail operation at Virginia Inland Port. And though volume was off, the continual focus on efficiency is producing real results.”
“We did a lot of things right this past year and keeping each other and our labor partners safe while maintaining the flow of cargo was among the most important accomplishments,” Reinhart said. “The cargo will come back, but it is going to take effort and patience. We’re working with our customers and cargo owners to understand their needs and to ensure we are ready to meet them. There is a lot of work ahead of us and we are up to the task.”