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Business continues to rebound at Virginia ports

Thursday - 7/26/2012, 9:13am  ET

By MICHAEL FELBERBAUM
AP Business Writer

RICHMOND, Va. (AP) - Shipments at the Port of Virginia continue to rebound but remain below levels seen before the Great Recession, according to a report released as Virginia officials weigh proposals for private companies to take over the operation of some of the state's port terminals.

The Port of Virginia is currently the third-largest port on the East Coast, but state officials have been frustrated that it hasn't rebounded from the recession as quickly as its competitors in New York and Savannah, Ga. Republican Gov. Bob McDonnell replaced 10 of the port authority's 11 commissioners last year in an effort to spur growth.

The port saw the number of containers that came through the port increase 2 percent to more than 1.1 million units in calendar year 2011, according the annual report for the fiscal year ended June 30. And the numbers are trending more than 5 percent higher so far in 2012, port officials said. After plummeting 17 percent in 2009, the number of containers that came through the port has been rebounding, but is still below the more than 1.2 million units that went through the port in 2007.

"The economy over the last couple of years, as everyone knows, clobbered industry in general. We were not immune from that," said Joe Harris, a spokesman for the Virginia Port Authority, which was formed in 1952 to oversee the region's seaports. "We have just begun to see some significant rebounds ... we have a long way to go get back to even."

Harris said the authority has taken various steps over the last few years to reduce costs, including idling equipment, changing the number of shifts at the port, eliminating bonuses and salary increases, offering early retirement incentive packages and making changes to its security force.

Port-related business annually provides more than 343,000 jobs and $41 billion in revenues, according the annual report.

By dollar amount, China and Germany topped the list of the port's trading partners. The top exports by dollar amount were machinery and plastic, and the top imports were machinery and non-railway vehicles.

Despite the recent downturn, containerized cargo volume is expected to double, and in some cases triple, at U.S. ports over the next 20 years, the U.S. Chamber of Commerce says.

Officials believe the Port of Virginia is poised to take advantage of the anticipated increases with the expansion of Craney Island, which would nearly double the Port of Virginia's marine terminal capacity, and tax credits for those doing business at the ports. The port also is the only one on the East Coast that, at the moment, has inbound and outbound deep-water channels to attract bigger ships to Virginia.

"That's where we by far are in the best position of any port on the East Coast," said Rodney Oliver, the port authority's deputy executive director and chief financial officer.

Earlier this month, Virginia extended the deadline for privatization proposals until Aug. 13 to give several groups more time to complete their submissions. The state will notify companies about whether their proposals have been accepted or rejected by Aug. 31.

The state Department of Transportation issued a request for alternative proposals following an unsolicited one by APM Terminals Inc., a division of global shipping company Maersk.

The APM Terminals proposal calls for a 48-year agreement to operate state ports in the Hampton Roads region as well as the Virginia Inland Port in Warren County. The proposal is valued between $3.2 billion and $3.9 billion.

This isn't the first time private companies have taken an interest in operating the state's ports. In 2009, three companies submitted proposals, at least one of which was valued at $3.5 billion. The state declined to accept those offers. The state is under no obligation to accept any submitted proposals this time, either.

Oliver said the current proposal is being reviewed whether it's a "better proposition for the commonwealth than our current structure, both from the standpoint of income to the state and also any shifting or sharing of risk."

"It's great that there's interest from one of the world's largest terminal operators to give us an unsolicited proposal," Oliver said. "We're doing our due diligence on it."

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .


(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)