Virginia is developing as a major location for international trade largely, in part, to container terminals operated by the Port of Virginia as well as its Virginia Inland Port (VIP) in northern Virginia and Richmond Marine Terminal (RMT) in central Virginia.
The state is also well served by Class I railroads Norfolk Southern and CSX, as well as an interstate highway system that links Virginia up and down the East Coast and to points in the Midwest.
Consequently, companies that import and export large quantities of goods have located to the Commonwealth to take advantage of these world-class logistics networks. Among them are Fortessa Tablewear Solutions, headquartered in Ashburn, Virginia, not far from the VIP; Amazon, which operates a 1 million square foot distribution centre in Chester outside of Richmond; Lumber Liquidators, which operates a 1 million square foot warehouse outside of Richmond and is North America’s largest specialty retailer of hardwood flooring; and Dollar Tree, a Fortune 200 retail company headquartered in Chesapeake in southeast Virginia, where it also operates an adjacent 400,000-square foot warehouse.
Fortessa Tableware Solutions does business with 160 different factories worldwide and exports its finished products to just as many. Product is customized and decorated according to customer specifications. With customers like Amazon, Pottery Barn, William Sonoma and Pier 1 Imports, the company holds 30% of the retail market.
“Our campus in Winchester, Virginia, is growing at double digit rates,” says Rose Ann Domenici Hamberger, chief marketing director at Fortessa.
Fortessa imports its glassware from Germany, Holland and Italy, and its dishware from South Korea, India, Indonesia and China. Containers are trucked to the company’s facility in Winchester 350 kilometres northwest from Port of Virginia terminals in southeastern Virginia. While the company used to use the nearby Virginia Inland Port in Front Royal, Hamberger says trucking is faster. Containers coming to northern Virginia from the Virginia Port Authority’s (VPA) major terminals at Norfolk and Portsmouth take around four hours via truck, depending on traffic, versus 12 hours by rail.
“Due to customer demands, we operate a tight supply chain with a 12-week lead time,” she says. “Our customers need product fast.”
Corporate officials keep a close eye on any changes in tariffs. Hamberger adds, however, that the US-China tariff wars don’t have a big impact since imports from China make up a small percentage of its business.
“We price our products accordingly in case we are hit with higher tariffs down the road,” she adds. “We look at everything on the books.”
Currently, the company is considering using the inland port again for glassware imports because of tax credit incentives the state is offering to companies that increase their rail or barge usage. “And it’s amazing how quickly containers are turned around at the VIP Terminal due to straddle carriers and automation,” she says.
Russell J. Held, vice president of economic development for VPA, explains that tax credits for barge or rail usage (BRU) is US$25 per TEU, 16 tons of noncontainerized cargo or one unit of roll-on/roll-off cargo in excess of the number of containers shipped by barge or rail by the taxpayer during the immediately preceding taxable year. The credit is US$50 per TEU in excess of the base cargo.
VIP is served by Norfolk Southern Railroad, with intermodal service available to Harrisburg, Pennsylvania, and to the New York/New Jersey region. Containerized rail service is provided five days a week to VIP from both Norfolk International Terminals and the Virginia International Gateway in Portsmouth.
Held points out that prior to the opening of VIP, the Port of Baltimore handled four times the number of container traffic than the Port of Virginia. “Today the situation has reversed with Virginia seeing four times more traffic than Baltimore,” he says.
In 2018, VIP handled 38,000 TEUs, which represents an 8% growth over 2017. Recently, VIP received US$23 million in grants to expand its capacity for containers. This means additional ground space, three more tracks (bringing the total to eight), and two three-high end straddle carriers, bringing its total to six. Part of those funds include a US$15.5 million federal grant to be used to improve traffic flow and build a highway bridge that will run above existing railroad tracks.
“Currently, VIP handles 80% imports that are manufactured into finished goods, and 20% in exports – all agriculture related,” Held adds. “Shipments are consolidated here.”
In addition, VIP operates as a free trade zone and has its own customs facility, features that are attractive to Fortessa. “VIP’s beauty is its simplicity,” Held says.
Amazon’s distribution centre in Chester is able to serve a 500- to 800-kilometre radius within one day.
“We bring in freight from Norfolk and more from rail across the United States,” says Dan Miller, director of operations and general manager at Amazon. The Richmond area has the advantage of being at the crossroads of interstate highways 95 and 64, rail served by Norfolk Southern and CSX, and is in close proximity to the Port of Virginia.
Unique to Richmond is the inland Richmond Marine Terminal (RMT). Adjacent to Interstate 95 south of downtown, RMT has 300,105 square feet of warehouse space and a 1,570-foot wharf. RMT handles barges carrying containers, temperature-controlled containers, breakbulk, bulk, and neo-bulk cargo.
Richmond Express barge service operates overnight service between Norfolk and Richmond. Last year it moved some 31,500 containers. A growing number of ship lines now issue bills of lading directly to RMT. Officials expect volumes to jump given the state’s tax incentives.
The facility is owned by the City of Richmond and leased to VPA for 40 years. “The VPA is investing millions of dollars into RMT, including a US$4.2 million mobile harbour crane, to increase efficiencies,” says Held.
One of the biggest customers at RMT is Lumber Liquidators, which transports 100% of its imports from the Port of Virginia to Richmond by barge. The journey averages 90 nautical miles with the barge taking 12 hours upriver to Richmond and 12 hours downriver to Norfolk.
“We took 100% of our imports through the RMT last year,” said Chuck Weigand, transportation vice president at Lumber Liquidators. “We take advantage of incentive tax rebates for using barge.”
The company distributes all of its products from the warehouse via truck to stores throughout the eastern US and as far west as the Dakotas and east Texas.
Weigand said that three-quarters of the company’s ocean traffic comes via Shanghai, with the remainder from Europe, South America and elsewhere in Asia. When asked about the Trump administration’s threats of increased tariffs, Clark said: “We are looking at every option for sourcing, pricing and cost negotiations.”
Dollar Tree operates its adjoining headquarters and warehouse – one of many – in Chesapeake just south of the Port of Virginia’s Norfolk International Terminals (NIT) in Norfolk and Virginia International Gateway (VIG) in Portsmouth. The company sources 40% of its products internationally, much of it from China.
Besides the Port of Virginia, Dollar Tree also utilizes the ports of Savannah, New York-New Jersey, Los Angeles-Long Beach and Seattle-Tacoma.
Both VIG and NIT have been the recipient of major expansions. VIG has been undergoing a three-year, US$320 million expansion project, which is nearing completion with its recently opened on-dock rail yard and 20,000 feet of new track and four cantilever rail-mounted gantry cranes (RMGs). When complete, the VIG expansion will increase the port’s overall annual container capacity by 40%, or 1 million TEUs, by 2020.
Phase 1 of the US$375 million capacity expansion is complete at NIT. In March, 12 new container stacks began operation there. The centerpiece of the expansion is the construction of 30 semi-automated containers tacks at South NIT, served by 60 new RMG cranes. All totaled, the project will expand NIT’s annual throughput capacity by 400,000 TEUS bringing it to a capacity of 1.25 million container units, a 46% increase.
“The ongoing investment in the Port of Virginia puts it in the best position to become the US East Coast’s premiere port: a true gateway to world trade and a catalyst for commerce in Virginia,” says John F. Reinhart, VPA CEO and executive director.
By Karen E. Thuermer
Correspondent | Washington
