The Port of Virginia: A Crucial Link in Vital Supply Chains

Expanding Connectivity and Attracting More Traffic

Like an airline hub, a port’s connectivity is important to shippers because direct service means less time in transit and less money tied up in inventory. In Virginia Beach, STIHL, Inc., a leading manufacturer of outdoor power equipment, is one of those longtime clients, having operated in the city since 1974. The Port of Virginia is a critical link in STIHL’s global supply chain, handling both imports and exports of parts and finished products to more than 80 countries.

“The Virginia ports have done a lot of automation to improve their efficiency,” said Mike Broz, STIHL’s senior manager of distribution logistics. “Our overall business has seen double-digit growth over the last year. One of the highlights of STIHL’s supply chain around the world has been our ability to get access in and out of The Port of Virginia.”

Modernization has put Virginia in a good position to handle cargo destined for, or originating from, the Midwest. Widening the Panama Canal in 2016 meant that New Panamax vessels from Asia carrying as many as 15,000 twenty-foot equivalent unit (TEU) containers had direct access to the U.S. East and Gulf Coasts.

In 2020, the surge in imports related to the COVID-19 pandemic meant waits as long as eight days just to unload at Los Angeles and Long Beach — plus congestion surcharges, shortages of truck chassis, and extended times to pick up and deliver containers at those ports. Surging ocean freight rates reduced the “Panama Spread,” the difference in spot market pricing from Shanghai to the East Coast instead of the West Coast, to less than a 20% premium.

Virginia’s investments in speed and efficiency proved prescient. Virginia terminals can discharge a container from a ship and have it on a train and on its way in less than 40 hours, days ahead of the extended delays seen in more congested ports.

“The investments made to increase capacity at The Port of Virginia have provided new opportunities for Trex to better service our customers thanks to increased capacity on critical lanes,” said Michael Reger, director of distribution and transportation at Trex Company, Inc., a manufacturer of wood-alternative decking and other outdoor items based outside Winchester in Frederick County.

Reaping the Benefits, Prepared for the Future

“The port was proactive. They made the necessary investments at the right time, and they are reaping the benefits,” said Mike Pilot, corporate director at Universal Corporation in Richmond, a large user of the ports for both exports and imports. “They are ahead of the game and they are prepared for the big ships.”

Stephen Edwards took over as CEO of the Virginia Port Authority in January. As he looks to the future, he sees nothing but opportunity. As more 20,000–22,000 TEU ULCVs are added to the East Asia to Europe trade lanes, more of the 14,000–18,000 TEU ships will be shifted to the North Atlantic lanes, and more New Panamax ships will come to the East Coast via the Panama Canal. That volume will go to the ports that are prepared to handle it.

“The Port of Virginia’s modernization positions the state superbly to capture more of that traffic,” Edwards said. “That will be great for Virginia businesses.”

Private Terminals Provide Value Options for Exporters

Companies don’t even have to use VPA facilities to take advantage of the widening and deepening of the shipping lanes. No fewer than 50 private companies — as varied as CITGO Petroleum, Morton Salt, and Perdue Agribusiness — take advantage of the deep waters of the Elizabeth River to operate their own terminals where ships call directly.

One of those companies is Enviva, the world’s largest producer of sustainable wood biomass and one of Virginia’s largest exporters. Since 2011, the company has operated a terminal on the Elizabeth River in Chesapeake, where it loads wood pellets in bulk from its Southampton County plant and two plants in northeastern North Carolina onto ships bound for Europe. According to Enviva, the Chesapeake terminal has all the elements essential to the company’s success: vicinity to a rich and growing wood basket, a skilled and experienced labor force, and a geographically advantaged location for the export terminal.

“Enviva’s deepwater marine terminals are strategically located to decrease transportation time, costs, and energy expenditure through the supply chain,” said Aaron Anseeuw, regional port manager for Enviva. “They are important assets that enable us to precisely control our product every step of the way.”

The Enviva terminal can accommodate vessels up to a 42-foot draft and includes two storage domes, each capable of holding 45,000 metric tons of material. In January 2021, the terminal received the Sustained Distinguished Performance River Star Business Award from the Elizabeth River Project for its efforts to improve water quality and reduce energy use.