Box Downturn Hurts Virginia Ports

The downturn in global trade is hitting the Virginia Port Authority hard. It posted an operating loss of almost $13 million and suffered a decline in container throughput in the first 10 months of its fiscal year ending June 30, according to figures released Tuesday.

Operating revenue at the port authority's operating arm, Virginia International Terminals, is down $30 million for the first 10 months of the fiscal year, a 19.4 percent drop.

From July 1 to April 30, container volume for the facilities run by VIT was down about 18.6 percent from the same period a year earlier. Overall, container volume for the entire port dropped 11.4 percent to about 1.6 million 20-foot units.

The falloff in cargo volume is greater than the VPA anticipated. Its operating revenue for the July-to-April period of $175.1 million is $30 million below budget and $42.2 million below its revenue for the same period a year earlier, according to financial highlights released Tuesday at a meeting of the authority's Board of Commissioners. The revenue reflects the combined results of the Port Authority and its Virginia International Terminals operating subsidiary.

Port officials also attributed the declines to the opening of the privately owned and operated APM Terminals facility in Portsmouth and lost business from Evergreen, which moved its business to APM about a year ago.

"It's pretty straightforward, a reflection of where we are in this economy right now," said Jerry Bridges, the Port Authority's executive director. "We are looking to do some cost controls to keep the lights on and the bills paid."

But despite the grim numbers and a gloomy outlook by much of the trade industry, the port authority is projecting revenue in its 2010 fiscal year to increase 5.1 percent to $216.7 million.

Port officials say 2009 has been a particularly brutal year for cargo, but the month-over-month declines have begun leveling off, signaling the bottom is near. Because the final 2009 numbers will be dismal, improving upon them in 2010 isn't as large of a challenge.

While port officials expect to see cargo volumes begin to rebound later this fall, it could take until 2011 for the port to reach the heights of 2008, a record year for the Port of Virginia, said Joseph A. Dorto, president and CEO of VIT.

"And that's a maybe," he said. "When you're talking fiscal year to fiscal year, 2010 should be up slightly over 2009, but we've still got some work to do to get back to 2008 numbers."

VIT operates the terminals on behalf of the port authority and passes along to the agency all of its profits, which it makes by charging fees for handling each box. In 2008, VIT recorded net income of $65 million. In 2010, VIT is projecting net income of $45 million.

The revenue estimate is based on a projected 3.4 percent increase in volume and a projected tariff rate increase of 2.4 percent on Oct. 1.

The port authority's projected 2010 increase reflects gains from a new container service by CMA CGM and the addition of several shipping services, including the CKYH consortium of four major Asian shipping lines, which now makes Hampton Roads its first U.S. stop as part of a service providing 22-day transit between the vessels' last port of call in Asia and Virginia.

Contact Peter T. Leach at pleach@joc.com.