Local port terminals responsible for $41.1B in revenue in Virginia

Cargo operations in the port of Hampton Roads delivered a powerful economic boost to Virginia in the fiscal year ending June 30, 2006, according to a study released Tuesday by the Virginia Port Authority at its Board of Commissioners meeting.

The state-controlled authority's three marine terminals, plus APM Terminals' former facility in Portsmouth, were directly or indirectly responsible for creating $41.1 billion of business revenue in the state, the study found. Virginia's gross domestic product was $352 billion in 2005, according to the U.S. Census Bureau.

They also accounted for $13.5 billion of employee compensation paid to 343,000 employees, or 9 percent of the state's work force, the study said. And the operations led to $1.2 billion in state and local taxes.

The $86,900 study was conducted by the College of William and Mary's Mason School of Business after Old Dominion University researchers dropped the project. ODU cited concerns about what it perceived as one Port Authority official's attempt to influence the results.

William and Mary's study focused on the terminals that handle mainly cargo containers, the truck-sized boxes that carry items as varied as grain, electronics and clothes. During the study period, those facilities moved 16.4 million tons of cargo - a weight equivalent to 159 fully loaded aircraft carriers the size of the Ronald Reagan.

Authority officials said Tuesday that they were pleased the study's results were much higher than a similar 1999 report.

"I expected an increase, but the level and order of magnitude of the increase was just phenomenal for the port," said Jerry A. Bridges, the Port Authority's executive director. "I think it really speaks volumes as to the impact of having a port in our backyard and what it means to us in terms of jobs, taxes, revenue, the whole gamut."

The 1999 report, conducted by port consulting firm Martin Associates, found that the authority's operations generated $762.5 million in business revenue and compensation of $583.5 million paid to 164,258 workers.

William and Mary Chancellor Professor Emeritus Roy L. Pearson, one of the new study's leaders, said it used a different methodology than what was used in the 1999 report.

William and Mary's analysis looked at the terminals' statewide economic impact in three areas: the terminals themselves and related operations such as railroads, trucking companies and the firms that unload and load ships; companies in Virginia that produce goods for export through the port; and companies handling goods imported through the port, such as retailers, wholesalers and warehousers.

The terminals and related port operations contributed $4.5 billion of the revenue and $1.6 billion in employee compensation paid to 35,665 employees, according to the study. Virginia businesses that make products for export generated $16.3 billion in revenue and $4.3 billion in pay to 93,520 workers. Imports resulted in $20.3 billion in revenue and $7.6 billion in compensation to 213,816 employees.

Those figures include not only direct spending, but also indirect spending, such as money spent to buy utilities and services, as well as the "induced" spending as workers' paychecks were expended in the state's economy.

In Hampton Roads, the terminals' economic impact was found to be $12.3 billion in revenue plus $4.1 billion in compensation to 100,244 workers, according to the study.

The authority initially gave ODU a roughly $181,000 contract to do the latest economic impact study. But the university stopped working on the project last spring after ODU economist Vinod Agarwal received what he considered to be a troubling e-mail from Thomas D. Capozzi, the authority's marketing chief.

Capozzi wrote that since the ports of Hampton Roads and Georgia handle nearly the same number of cargo containers annually, ODU's results "should be somewhere in the ballpark" of a recent economic impact study done for the Georgia Ports Authority.

"If our results are substantially lower than theirs, it is basically useless to us," Capozzi wrote.
Agarwal replied that by suggesting the results of the study prior to its completion, the research could be compromised.

The study was then awarded to William and Mary.

Pearson said he was not pressured in any way by the Port Authority while doing his analysis.  Georgia's latest economic impact study determined that the state's ports in fiscal year 2006 directly and indirectly provided $55.8 billion in business revenue, $2.8 billion in state and local taxes, and supported 286,476 jobs.

Also Tuesday, the Port Authority's Board of Commissioners:
•   Approved $41.7 million to buy 44 straddle carriers for moving cargo containers around Norfolk International Terminals and Portsmouth Marine Terminal. The new diesel-electric units will help reduce air emissions, said Jeff Florin, the authority's chief engineer. The authority has the money to purchase 10 of the units and is hoping for an appropriation from the General Assembly to buy the rest.
•   Heard from Capozzi that the authority is projecting a 2.5 percent increase in cargo containers through the port in 2008. Shipments of cargo containers hit the equivalent of 2.13 million 20 -foot-long containers in 2007, up 4 percent from 2006.
•   Was told that work has been completed on the $5 million, 25,000-square-foot office building constructed along Norfolk's Terminal Boulevard to house some administrative offices for Virginia International Terminals Inc., the authority's operating company. Employees are expected to move in there in either March or April, Florin said.

Gregory Richards, (757) 446-2599, gregory.richards@pilotonline.com
Copyright Virginian Pilot, used with permission.