The Port of Virginia's $450 million plan aims to be a leader in the era of super-sized ocean containerships.

• The Port of Virginia, with major retailers such as Walmart and Lowe's among its primary customers, is set to become the largest port on the U.S. East Coast by early 2025 after a $450 million dredging project in Norfolk Harbor is completed.
• Port operators are facing a significant financial challenge with the increasing demand for ultra-large containerships capable of carrying more than 20,000 twenty-foot equivalent cargo units.
• The large size of these ocean vessels restricts traffic to one-way, reducing the number of ships that can be "turned" at a terminal, resulting in no revenue for ports from transit into and out of port.

The Port of Virginia is set to become the widest and deepest port on the U.S. East Coast by early 2025, with Norfolk Harbor being the only waterway channel on the East Coast with Congressional authorization for 55-foot depth from end to end and side to side. Despite other East Coast ports being wider, they are not uniformly deep from end to end and side to side, regardless of tide.

The Port of Virginia's $450 million dredging project, which commenced in 2019, has completed its widening measures in March, allowing two ultra-large container vessels (ULCVs) to pass each other simultaneously. An ULCV can carry over 20,000 twenty-foot equivalent (TEU) cargo units. The dredging project is anticipated to be finished in Fall 2025, making the Port of Virginia the deepest and widest harbor on the East Coast. Once completed, Virginia will have unrestricted vessel size access, with two of these super-sized containerships able to move through the channel at once.

Stephen Edwards, CEO of the Port of Virginia, stated that ultra-large container vessels have posed a challenge to every port. He explained that these ships cause ports to operate as a one-way traffic system, with a ship leaving the port having to travel the entire length of the channel before the next one can enter.

"We generate revenue by turning ships on the berth, not while they are in transit," Edwards stated. The completion of the project will enable us to turn the berth more quickly, allowing us to increase capacity both on and off the berth, according to Edwards.

The expansion will aid the port's relationship with multiple industries.

Edwards stated that we can improve the efficiency of two-way transits in the coal trade, cruise market, or military by making them more efficient as a whole.

By reducing the time vessels spend at the port by up to 15%, the wider shipping channel is also decreasing emissions from ships that idle while waiting for the channel to clear.

The $450 million channel deepening project is part of the $1.4 billion the port is investing to modernize operations and increase capacity. The port is still in the process of adding more ship berths and cranes to handle the ultra-large vessels. New, taller cranes are required to move more containers off these ships, while the total number of berths, currently two at each port terminal, will be expanded to five. The port is currently the sixth-largest port in the U.S. and is also home to the world's largest naval base, as well as a shipbuilding and repair industrial base.

"Edwards stated that approximately one in 10 jobs in the Commonwealth are related to the activities of the organization. These jobs are primarily direct employees, and the organization aims to expand its gateway, which encompasses all road networks and logistics businesses within Virginia."

The port has experienced a 7% increase in container volumes compared to 2020 levels, and has seen significant growth in the first quarter of 2024. Instead of sourcing goods from Northeast Asia, the port is now seeing a rise in shipments from South and Southeast Asia, with India being the strongest contributor. The port's primary customers include Walmart, Lowe's, and other top retailers, with marble and garment manufacturing being among the top products arriving at the port.

The Houthi attacks on vessels in the Red Sea have affected the India to East Coast trade, causing major ocean carriers to avoid the Suez Canal and opt for the longer trip around the Cape of Good Hope. Although trade has stabilized, the port is closely monitoring the cost of fuel, said Edwards.

"We anticipate that the volume will remain stable, and as long as fuel prices remain reasonable, the cost of the Suez Canal transit offset against the voyage cost will not have a significant negative impact."

If fuel prices increase, the economics will shift. Maersk, the world's second-largest ocean carrier, stated in its recent earnings report that the Red Sea disruptions could continue until the end of 2024.

Baltimore port reopening plans

The Port of Virginia has experienced an increase in trade due to the closure of the Port of Baltimore, with up to six weeks of freight in the Baltimore pipeline needing to be coordinated. Edwards stated that the port was able to quickly absorb Baltimore freight because of the overlap in ocean carrier service when calling on the Port of Virginia, Baltimore, and Port of New York/New Jersey.

On a weekly basis, there are approximately 9-10 services that visit the Port of Baltimore, while we have 34 services. The tragedy occurred on a Tuesday morning, and that evening we were discharging Baltimore freight because a ship was alongside, destined for Baltimore from Virginia.

Despite a decline in overall U.S. container volumes, the Port of Virginia's port-owned and operated truck scheduling system facilitated the pickup and drop-off of additional Baltimore freight. Unlike some landlord ports that have separate scheduling systems for each terminal, which can hinder truck efficiency due to incompatible systems, the Port of Virginia's terminals allow truckers to use a single system and plan multiple moves.

The Port of Virginia has been expanding its rail capacity, with its central rail yard expansion set to be completed by the end of the year. D'Andrae Larry, head of intermodal at Uber Freight, stated that the strategic development of rail capacity at the port has led to a significant increase in volume being moved from ships to port facilities.

"Larry stated that throughput is the ultimate goal for ports. Over time, the Port of Virginia has improved and modernized its technology and operations for its central railyard. By establishing an efficient and adaptable model from the beginning, the port has become a preferred destination for demand that shifted away from Baltimore."

To facilitate the movement of increased cargo capacity, the Commonwealth of Virginia has invested more than $5 billion in its tunnels, highways, and bridges. These improvements, which include three project partnerships with the Virginia Department of Transportation, will add efficiency to the flow of trade.

Planning for net-zero carbon port operations

The Port of Virginia is making significant progress towards its 2024 goal of being net-zero carbon, as it continues to grow in size and cargo volume.

In 2023, the port achieved a 70% reduction in total carbon emissions from its 2017 baseline by replacing half of its aging equipment with electric or hybrid equipment. Additionally, the port became the first East Coast port to power all its terminals with 100% clean energy in January 2021, eight years ahead of its 2032 target.

Dominion Energy and Rappahannock Electric Cooperative have power purchase agreements with the port.

"Edwards stated that they are only purchasing clean energy, specifically clean electric, and their options include nuclear, wind, or solar. These agreements are long-term and expandable."

The port has 116 electric container yard semi-automated stacking cranes, four rail yard cranes, 27 electric ship-to-shore cranes, over 100 hybrid shuttle carriers, and the first zero-emission utility tractor rig on the East Coast.

As the port continues to optimize the North Berth at Norfolk International Terminals, the fleet of all-electric equipment will expand, resulting in a total of 152 electric stacking cranes, seven electric rail cranes, and 31 electric ship-to-shore cranes.

Moving ahead on massive offshore wind project

The Port of Virginia received approval for a $9.8 billion project to build up to 176 wind turbines off the Virginia Beach coast, which will be the largest offshore wind farm in the U.S. This announcement came on the same day that offshore wind projects Ocean Wind 1 and 2 in New Jersey were shut down by Danish wind giant Ørsted due to supply chain issues and rising interest rates affecting project finance economics.

The Virginia Offshore Wind Commercial Project is facing legal challenges from eight separate lawsuits, which aim to delay the Bureau of Ocean Energy Management's approval of four offshore wind projects. The BOEM has filed its opposition to the motion and, along with Dominion Energy, submitted a joint status report with five mitigation plans requested by the U.S. District Court for the District of Columbia.

""ClearView's power sector coverage leader, Timothy Fox, believes the court will likely reject the motion to halt construction and find that petitioners did not meet the burden of demonstrating that they meet the difficult criteria to warrant a preliminary injunction. A ruling is expected as soon as next week," said Timothy Fox."

Edwards stated that he is not worried about the project or a potential Trump presidency that may hinder future wind farm investments. In fundraisers and rallies, the former president has criticized alternative energy.

"Edwards announced that they will proceed with building 176 wind turbines. The loading of monopiles, a structural element for offshore turbines, began on Thursday. "This project is firm," he said. "What comes after this project, that's where we'll bring back flexibility." If it's more offshore wind, they will work with Dominion."

Virginia's offshore wind plan is still on schedule and the costs and timelines are consistent with the budget, as stated by Dominion, which claims to be the first electric utility in the U.S. to own an offshore project.