Perspectives on The Port of Virginia

Mr. John Reinhart CEO, Executive Director Virginia Port Authority

July 18, 2014

AGENDA

Overview of the Port Performance

Economic Engine Looking Forward

Conclusion/Questions

3

Mission of The Virginia Port Authority

• Foster and Stimulate the Commerce of the Port

• Eastern Seaboard Gateway for the Global Import and Export of Freight throughout the World

• Secure Necessary Improvements of Navigable Tidal

Waters • Perform any Act or Function that may be useful in

Developing, Improving, or Increasing Commerce

The Port of Virginia is within a day’s drive of two-thirds of the U.S.

population

5

Statewide Footprint

6

Optimizing Our Port Facilities

NIT NNMT

Future CIMT

PMT

APM Terminals

7

55 foot Channel

45 ft.

8

APM Terminals Virginia Leased and operated by the Port of Virginia

Phase 1 – Sept. 2007 Total Acreage: 231

Pier Length: 3,205 ft. Depth: 55 ft. Cranes: 8

Capacity: 1 Million TEUs CSX and NS Served

9

Norfolk International Terminals

Total acreage: 567 Wharf: 7,300 feet Depth: 50 feet Cranes: 14 that can reach 22-26 containers across Rail service via NS

10

Newport News Marine Terminal

Total acreage: 143 Cargo berths: 3,480 feet Breakbulk rail service via CSX

11

Portsmouth Marine Terminal

Total acreage: 287 Rail service with CSX; also Norfolk Southern via Norfolk and Portsmouth Belt Line.

12

Port of Richmond Terminal Land acreage: 121 Wharf: 1,600 feet Rail service via CSX; NS via local switch Barge service with NIT and APMT

13

Virginia Inland Port Five-day-a-week rail service between VIP and the Port of Virginia marine terminals

Within 1 mile of Interstate 66 and within 5 miles of Interstate 81

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Record Fiscal 2014

• The Port of Virginia set a new mark for TEU volume in fiscal 2014

• More than 2.3 million TEUs in the twelve months that closed June 30

• Increase of 6.5% over FY2013 • Eclipsed the previous fiscal year record by

140,476 TEUs Rail Containers 8.9% VIP Containers 11.9% General Cargo 8.6% Container Tonnage 8.7% Breakbulk 3.5%

15 Source: Terminal Operator CY2013

Over 2.2 million TEUs moving over the Port in 2013 were transported by:

Intermodal Gateway

4% Barges

34% Rail

62% Trucks

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• Port capacity and productivity is often measured in TEUs

• TEU stands for “Twenty Foot Equivalent Unit”

• Originally containers were 20’ long

• Today, most cargo is moved in 40’ containers

20’

One 20’ container = 1 TEU 40’

One 40’ container = 2 TEU

TEU – What Is It?

53’

Typical over the road truck

Wilmington NC -8.0%

New York/ New Jersey

3.4%

Savannah 8.2%

Baltimore 5.4%

Charleston 8.7%

Port of Virginia 8.2%

-10%

-5%

0%

5%

10%

15%

- 1 2 3 4 5 6 7

2014

vs

2013

Gro

wth

Major USEC Ports Growth

Growth: Jan-May 2014 vs. 2013; Size: CY 2014 Total TEUs

Wilmington NC New York/New Jersey Savannah Baltimore Charleston Port of Virginia

↑58K TEUs

↑72K TEUs

↑100K TEUs

↑15K TEUs

↑74K TEUs

↓9K TEUs

Source: AAPA and Port Authorities Prepared by VPA, Business Analysis and Strategy

18

Growth Track

Both CSX and Norfolk Southern are upgrading their rail network in order to send double-stack trains from east coast ports like Virginia to the mid-west.

NS CSX

ROANOKE

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2013 Top Trading Partners

EXPORT IMPORT China China Brazil Germany

Germany India Belgium Brazil

India Italy Netherlands Vietnam

United Kingdom Netherlands Japan Spain

Saudi Arabia Indonesia Indonesia Belgium

Source: PIERS

20

2013 Top Commodities

EXPORT IMPORT Paper & Paperboard, incl. waste Furniture

Wood Pulp Auto Parts Soybeans & Products Tobacco

Logs & Lumber Woodenware Pet & Animal Feeds Granite

Grains & Flour Products Non Alcoholic Beverages Grocery Products Paper & Paperboard, incl. waste

Mixed Metal Scrap Plastic Products Poultry Rubber, Natural Meat Metalware

Source: PIERS

21

2013 Top Customers

EXPORT IMPORT MeadWestvaco Walmart Domtar Paper Target

Lansing Trade Group Lumber Liquidators Archer Daniels Midland Co Red Bull North America

International Paper Home Depot Weyerhaeuser Company QVC

America Chung Nam Cost Plus Fornazor International Michelin Tire E I DuPont de Nemours Ford Motor Company

Scoular Company Lowes

Source: PIERS

22

Grains and Cereals, 27%

Wood, 26% Meat, 9%

Animal Feed, 8%

Misc. Food, 8%

Other Agricultural

Products, 22%

Port of Virginia Top Agricultural Commodities Containerized Agricultural Exports; CY 2013

Source: PIERS, Loaded TEUs

Soybeans & Products, #4

16,953

Grains & Flour Products, #8

10,530

Wood Pulp, #2 9,234

Field Seeds & Bulbs 5,092

Woodenware 4,514

Others

Export Commodities with Significant Gains via Port of Virginia CY 2013 vs CY 2012

Source: PIERS

(2013, Rank in Top Export TEUs

TEUs

TEUs

TEUs

TEUs

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Economic Engine

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Economic Impacts

• The Port of Virginia is an economic engine

for the Commonwealth

– 343,000 port and port-related jobs statewide

– $41 billion in business revenues

– $1.2 billion in state and local taxes

• Increased port growth results in more jobs

and revenues for the Commonwealth

Source: 2006 Economic Impact Study by William & Mary Mason School of Business

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Selected Distribution Facilities Using The Port of Virginia

27

2013 Announcements

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CY 2013 Totals

Total Announcements: 42 Total Square Feet: Over 4.6 million Total Jobs Created: Over 4,099 Total Investment: Over $1.2 billion

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Virginia Port Tax Credits

• Port Volume Increase Tax Credit (Code of Virginia Section 58.1-439.12.10): $50 per TEU to Virginia manufacturing-related entities, agricultural entities or

mineral or gas entities that have increased cargo volume through public or private port facilities by 5% in a single year over a base year cargo volume.

• Barge and Rail Usage Tax Credit (Code of Virginia Section 58.1-439.12:09): $25 per TEU or 16 tons of noncontainerized cargo for the usage of barge/rail to

move cargo that originates or terminates at public or private port facilities in Virginia.

• International Trade Facility Tax Credit (Code of Virginia Section 58.1-429.12:06):

Tax credit equal to $3,500 for qualified full-time employees hired by Virginia shippers OR 2% of the qualified capital investment that results from moving 10% more cargo through a Virginia Port Authority- operated cargo facility.

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Port of Virginia Economic & Infrastructure Development Zone – Cash Grant

If a company:

• Locates or expands a facility in proximity to Port of Virginia facilities

• Creates at least 25 new, permanent full-time positions

• Is involved in maritime commerce or exports or imports manufactured goods through the Port of Virginia (does not have to be the cargo owner)

Payout Formula:

25 – 49 new jobs: $1,000 per job 50 – 74 new jobs: $1,500 per job 75 – 99 new jobs: $2,000 per job 100 + new jobs: $3,000 per job

To receive the money:

• Company must agree in an MOU with the Virginia Port Authority to maintain the new jobs for at least 3 years or repay the grant money

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Alternative Site Framework (ASF)

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• $5.25 billion capital investment program to modernize and improve the Panama Canal

• $190 million channel deepening

project began in 2002 • $1.6 million project to redesign

a third set of locks

• Project delayed until 2015/2016

Expansion of the Panama Canal

33

Panama Canal Expansion - New Locks Will Accommodate Post-Panamax Vessels

180’

160’ 106’

110’

Existing Locks Post-Panamax Locks

13 containers wide

18 containers wide

Max. vessel size = 4500 TEUs Max. vessel size = 12500 TEUs

2.8X current capacity

34

Suez Canal

Mediterranean Sea Port Said

Lake Timsah

Bitter Lakes

Suez Sinai Peninsula

Overall length: 120 miles Width: 590ft / 622ft Max. permissible draft: 62ft

The canal is sea level, no locks.

35

Suez Canal

Panama Canal

Via Panama Canal

Distance: 11,021 nautical miles

Via Suez Canal

Distance: 11,705 nautical miles

Panama Canal vs. Suez Canal

Hong Kong, China Port of Virginia

Suez Canal

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Ideally Situated Population Centers and 2040 Cargo Forecasts

Less than 6,600 TEUs 6.601 - 33,000 TEUs

33,001 - 88,000 TEUs

88,001 - 198,000 TEUs

198,001 - 440,000 TEUs

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Four Priorities

Excellence in Operations Fiscal Responsibility Sustainable Growth Living Our Values

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The Future . . .

NIT NNMT

Future CIMT

PMT

APM Terminals

39

Craney Island Marine Terminal

Phase 1 – June 2025 Total Acreage: 220 Pier Length: 3000 ft. .

Cranes: 6 Capacity: 1.5M TEUs Cost: $1.2B

Thank you