Identifying and Applying Lessons Learned from the Recent Supply Chain Disruption
Speaker: Stephen Edwards, CEO and Executive Director of the Virginia Port Authority
“The Port of Virginia’s diverse talent, agile use of technology, and command of our ever-changing industry sets the pace for the supply chain of today, while plotting the course for its tomorrow,” said Stephen Edwards, CEO and Executive Director of the Virginia Port Authority, quoting the port’s vision during his keynote address at the Surface Force Projection Conference (SFPC).
The port’s vision emphasizes the necessity to have new people and understand an industry that is changing rapidly—and especially within the last 24 months. The question Edwards posed was how the Port of Virginia and other ports like it protect these publicly-owned but privately-operated assets.
Two Sides of Sustainability
How to continue performance and operations is a primary consideration in business continuity planning. Since the beginning of the COVID-19 pandemic, the Port of Virginia continued operations—never shutting down or ceasing operations for even a single day. In fact, across North America, this was the norm at the ports. This was an impressive feat across the industry, which Edwards attributed to extensive collaboration between the ports and their partners.
The war in Ukraine added an additional challenge. As a marketplace, this crisis was insignificant to US ports. However, there was significance in the increased US military sealift cargo going out on US flag carriers.
The other side of sustainability are the demands of getting to carbon zero. The Port of Virginia has set a goal to reach net carbon zero emissions by 2040. This is a goal the port has set for itself voluntarily, but it is one that is compatible with the goals of many sealift carriers.
Economic Impact of Ports
Ports through the pandemic were a very stabilizing impact on the economy. While they went through an initial two-month shock, ports surged business. So, their impact on the economy is up considerably. Transportation took a huge gain during the pandemic.
“I think transportation and warehousing across the Nation, although we’ve created a lot of headline news, we’ve actually been really really good for the economy,” said Edwards.
US East Coast Gateway
US East Coast gateways differ from their West Coast counterparts in that they go to a wider number of destinations and are not as singularly focused on Asia. Despite this, China remains their top trading partner.
During lockdown, orders went to China because it was the only country that had the capability to produce the volume being ordered. However, due to tariffs, the goods being purchased were higher priced. Even with higher-priced goods, production trends are still moving towards South East Asia and India.
“Our fastest growing trading partner is India, our second fastest is Vietnam,” said Edwards. “For this port [Port of Virginia], China is still the dominant player.”
The Port of Virginia terminals include the Newport News Marine Terminal, which is a SDDC strategic asset; Richmond Marine Terminal, one of the marine highway ports; and the two large container terminals Norfolk International Terminal and Virginia International Gateway. Its Portsmouth Marine Terminal is an old facility being reconditioned into an offshore wind home.
The Port of Virginia hits everywhere in the Midwest by rail. To keep cargo moving, the port worked with its rail partners to maintain fluidity, accelerating parts of its network to accommodate slowdowns in other areas.
Speed to market and e-commerce demands mean more freight is being deconsolidation local to the port and then trucked to its destination. This change is probably permanent. This reduces the Nation’s ability to pivot to quicker distribution patterns when problems arise. Transload capacity is being built to provide the ability to pivot.
The Port of Virginia is both the port authority and marine terminal operator, which provides the ability for robust integration and utilization for surge capacity. “We are a technology integrator. So, all the technologies that are deployed, all of our operating systems they’re ours,” explained Edwards. “But, it’s a single point to market. It’s a single truck reservation system. It’s a single ‘where’s my container’ position. Single integration with the railroads. All the assets and equipment are ours, so cranes and any other equipment that is needed are ours. We also run the intermodal chassis pool.”
In addition to integration, to keep things moving during times of congestion, the Port of Virginia and others like it made changes to their operating procedures. Rather than accepting ships based perfectly on the contracted days, ships were taken in the right order for port fluidity. And, in some cases, a port may choose to protect certain ships or cargo. Terminal operators must closely consider the relationship between dwell time and capacity to optimize operations.
Using state and federal funding, projects are underway to deepen and widen the Port of Virginia. This will help the port accommodate deeper cargo ships and to provide the ability to have two-way traffic through the port increasing birth capacity.
Another infrastructure project includes building a $19 million central rail yard at one of its terminals. This rail yard will utilize automation, taking the port’s annual rail lift up to 610,000 lifts and providing ample surge capacity. In addition, the port has plans for automating a portion of another terminal. The investment of $650 million will provide 800,000 lift capacity.
“You’ll end up with the port having the three most modern terminals on the East Coast to keep cargo moving in the same way, through automation, giving us better truck service, giving us the better ability to handle ships that are on or off schedule,” explained Edwards.
Finally, while not a port infrastructure project, the Hamptons Roads Bridge Tunnel is being expanded from four to eight lanes. As one of the area’s largest freight arteries, this is of huge significance to the Port of Virginia. With this project, the port will realize greater resiliency. And, together these investments will mean improvements to the roads, rail, channels, and modernized terminals.
Edwards summarized key takeaways for the audience:
- Sustainability goals are fully compatible with strong operations
- There is a need for agility – you must be able to adjust your operations constantly and look for the common good to keep the trade moving
- There must be modernized gateways
- Buffer and surge capacity are no longer for Just-in-Time, they are needed for Just-in-Case
- We must sustain investments
- We must foster stakeholder collaboration and knowledge