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Friday, August 23, 2019

INSIGHTS: John F. Reinhart, CEO, Virginia Port Authority (VPA)

John F. Reinhart is the CEO and executive director of the Virginia Port Authority (VPA). He is responsible for the broad programmatic areas of business development and growth, strategic marketing, finance, and operations of Virginia’s marine terminal facilities: Virginia International Gateway, Newport News Marine Terminal, Norfolk International Terminals, Portsmouth Marine Terminal, Richmond Marine Terminal and the Virginia Inland Port.

Under his leadership, the goal has been to reinvent and accelerate the evolution of the port in order to become a catalyst for commerce and economic development and improve competitiveness in a global marketplace. Most stakeholders would agree that he is well on his way to doing just that. Reinhart comes to the commonwealth with deeps roots in liner shipping and the greater supply chain. Prior to joining the VPA, John worked for the Maersk organization for 23 years. He served from 2000-2014 as CEO of Maersk Line, Limited (MLL) and a member of the board of directors. During his career with Maersk, he held the positions of President, UMS, senior vice president and regional director. John received his bachelor’s degree in general studies and political science from Ohio University and later earned his Executive MBA from the University of Michigan.

Last month we caught up with Mr. Reinhart, and he provided insights into what is driving business in the commonwealth of Virginia today, and where the port resides in that greater strategy.

As the environment becomes ever more important, ports like LA/LB on the West Coast have been given marching orders for a ‘zero emissions’ future, starting in 2030. What is your port complex doing about its environmental footprint today?

We use the Chesapeake Bay and local waterways every day and we see it as our duty to be good stewards of these public assets. Additionally, we work to be good, clean and responsive neighbors in the cities where our terminals reside. In that effort we employ very proactive sustainability and environmental policies and are taking the necessary steps to comply with, or get ahead of, any local or state mandates. Our Environmental Management System (EMS) is an industry-leading commitment to improving efficiencies and preserving our environment in accordance with International Organization for Standardization (ISO) guidelines. In fact, in 2018 we completed the migration of our facilities to the newest standard. After being recognized as the first East Coast port to meet and exceed requirements for the ISO 14001 standard 11 years ago, our port now meets the most current ISO 14001:2015 standard. And unlike most U.S. ports, our ISO program covers everything within the fence lines at every one of our terminals.

Port of Virginia Environmental Commitments

The Port of Virginia is the first and only major port on the East Coast to have all its cargo handling facilities ISO 14001 Certified for Environmental Management

The James River Barge Line service utilizes tugboats powered by low emission engines reducing emissions by 38% on cargo moves to Richmond, VA.

The Port of Virginia utilizes two 2,000-horsepower ultra-low emission gen-set locomotives, which reduce nitrogen oxide emissions by 80% and consume 50% less fuel, compared to conventional diesel locomotives.

In 2018, The Port of Virginia’s James River Barge Line eliminated 31,544 containers from interstate highways, reducing congestion and 3,671 tons of ozone contributing pollutants.

The Port of Virginia is the first port in North America to introduce hybrid shuttle carriers into its operating fleet, funded through a grant from the EPA.

Air quality from The Port of Virginia operations improves annually by as much as 10%. We’ve cut our emissions by more than 50% over the last decade despite a 12% increase in business.


You are currently one of the deepest ports on the East Coast and planning to get deeper. How deep will the port get and what will be the ultimate impact of these improvements?
The effort to make The Port of Virginia the deepest and safest port on the U.S East Coast is advancing and we are preparing to issue an RFP shortly for the first phase of dredging. We expect to see dredges in the water by January 2020 and have the project complete by late 2024. The result of our Wider, Deeper, Safer effort will allow the largest ships in the Atlantic trade to call Virginia safely, without tide restrictions and have two-way, unimpeded passage to and from the harbor. The dredging project will take the channels to 55 feet deep and widen them in select areas up to 1,400 feet to allow for two-way traffic of ultra-large container vessels. The deeper harbor also gives ocean carriers the opportunity to load their ULCVs to their limits and therefore maximize the investment they have made in their ships. That reality, combined with the land-side investments at VIG and NIT will drive more ocean carriers to make Virginia a first-in or last-out port call. Such decisions allow exports and imports flowing across Virginia to reach their markets/destinations more quickly. When Wider, Deeper, Safer: the Norfolk Harbor will be without rival on the USEC.
 
Your other terminals (NIT in particular) are looking at automation as well, aren’t they? Tell us about that development.
We are using technology to our advantage to drive efficiency and predictability across all phases of our operation and at all of our terminals. Behind the technology are jobs and our long-time labor partner, the ILA. The technology we are using at NIT mirrors what we are using at VIG: Navis N4 is the unified, terminal-wide operating system; ProPass; the truck-gates are 21st century, so technology allows drivers to quickly enter and exit; the new container stack yard is driven by 60 new rail-mounted gantry cranes (RMGs) that are remotely operated. Having operations that largely mirror one another allows for greater interchangeability of people between terminals and creates a better environment for data collection/sharing, comparison, problem-solving and operational management.
 
A port is only as weak or as strong as the modes that connect it to the final mile. How important are the inland ports – Richmond and Front Royal – and what are the future plans for these facilities?
The inland terminals are critical to our success and efficiency. Our cargo volumes are growing and ability to take a significant amount of cargo and immediately push it to an inland destination (or collect it at that destination and push it to the Norfolk Harbor) in a single train or barge move is important. Our plans are to continue to invest in these facilities to ensure we have the necessary capacity and capability to meet demand. The port is investing $26 million in two projects at VIP designed to improve traffic flow and safety on a local road and expand the terminal’s overall cargo handling capabilities. The port is funding the projects through two infrastructure grant programs, one federal and one state.

The road project will be built using a U.S. Department of Transportation BUILD (Better Utilizing Investment to Leverage Development) grant. Specifically, $15.5 million will be used to build a highway-bridge, grade-separation at the at-grade crossing on State Route 658 (Rockland Road). The project involves building a new bridge on State Route 658 that will run above the existing railroad tracks.

Inside the terminal, the port is investing $3.3 million that will be matched by $7.7 million from the state’s Rail Enhancement Fund. The $11 million project will expand capacity and improve cargo flow at VIP. The optimization project consists of building three new railroad tracks on terminal (bringing to eight the total number of railroad tracks at VIP), lengthening existing track and purchasing two pieces of hybrid, low-emissions cargo moving equipment.

We are committed to the Richmond Marine Terminal (RMT) and are investing there. Currently we are developing a secure, outside-the-gate drop lot for motor carriers that need to operate past normal business hours. In addition, we have purchased a new mobile harbor crane and a heavy-capacity forklift. We have invested in repaving, improvements to the on-dock rail, maintenance dredging at the berth, repairs to the wharf, improvements to the truck gate and technology upgrades. Many of these upgrades have been made using grant money from the state or federal government that gets matched with port dollars.

We have ample capacity to grow business at RMT and think a realistic ceiling is somewhere in the 60,000(+/-) containers-a-year mark. We are continuing to invest in the terminal and there may be new technology available that allows us comfortably and efficiently push past that ceiling. An important aspect of the barge that is sometimes overlooked is its environmental benefit. From an environmental standpoint the barge helps to reduce diesel emissions: since 2008 when the service began, the truck volume on I-64 has been reduced by more than 250,000 truck trips: had it not been for the barge, every one of those containers would have gone onto a truck and moved between RMT and the Norfolk Harbor and most would have been a roundtrip move. The barge also helps to reduces wear-and-tear and congestion on I-64.
 
The completion of the VIG rail expansion is almost complete. What percentage of your total cargo (TEU’s) depart and arrive via rail (as opposed to trucks)?
The work at VIG was completed in May and now we are addressing normal punch-list items. We are focusing on growth and now have the necessary infrastructure to grow our rail product. Our near-term goal is to have 40 percent of our total cargo volume moving by train and the longer-term target is 50 percent. Our goal is to hit that 40 percent mark in by 2022 and thus far in FY2019 we are moving nearly 35 percent of our total cargo volume by rail and that number has been as high as 37 percent (in FY2017).

VIG has also nearly doubled its capacity for refrigerated cargo. That’s important, given the billion dollar agri-business that exists within 250 miles of your front gates. How much more reefer traffic are you hoping to capture?
We will offer more than 2,300 total reefer plugs (VIG - 1212, NIT - 887, PMT - 120, RSA - 100) when construction is finished. We have not yet put a number on that area of focus, because we first needed to have the infrastructure. Now the infrastructure is in place and we are aggressively marketing our capabilities in this area. A significant amount of reefer cargo traditionally flowed over ports in the Northeast and was moved by truck into other markets. With the USDA’s In-Transit Cold Treatment Program in place here, Virginia is now a destination and we can compete on a more level playing field.

This development has the potential to drive import volumes and could create opportunities for Virginia-based cold-storage warehouses and distribution centers to be trans-load destinations for this type of cargo: the cargo comes to a local warehouse (vs. one in the Northeast), gets loaded into trucks and moves to its destination. An off-shoot of that is more equipment in the region: the reefer containers, the equipment needed to keep them cold, the folks to maintain that equipment -- and possibly more new cold-storage investments. In addition, increased reefer business means the possibility of more USDA inspectors in the market and having that availability creates efficiency and can be a factor in driving this business in Virginia. When that equipment/support/infrastructure is readily available in the market, it creates opportunities for exports and we become more competitive on that side of the business.