Sustainability is one of our six core values. It is also one of the driving factors behind every decision we make at The Port of Virginia®. As a key economic engine for Virginia, we must ensure we can serve that critical role for generations to come. That means we must be sustainable financially, operationally and environmentally. As Stewards of Tomorrow®, it is our mission — and our privilege — to do so.
In fiscal year 2016, we handled a record-breaking 1.46 million containers — and did so more safely, swiftly and sustainably than ever. Further, we did so profitably for the second consecutive year. We were able to grow our rail volume by double digits, reduce our turn times and improve workplace safety — our highest priority. We welcomed the first 10,000 TEU (twenty-foot container equivalent unit) vessel through the newly opened locks of the Panama Canal and continued working with our partners at the Army Corps of Engineers to ensure our shipping channels are deep enough, wide enough and safe enough for this new era of large container ships. In anticipation of the expected increases in volume, we embarked on a capacity-building project on a scale unlike anything ever done here before.
Engaging with and educating our communities remains a priority. Our Marine Incident Response Team (MIRT) welcomed its 25th class of first responders from across the globe to our world-renowned Marine Firefighting School. As reliance on technology becomes more necessary, we work with partners, including the U.S. Coast Guard, to train against cyber security attacks. In support of our mission to improve Virginia's waterways, our Aid to Local Ports Program provided $1 million to cities throughout our region for projects including dredging, dock and slip upgrades, wharf improvements and jetty rehabilitation.
We have a clear path forward and are using our values to guide us as we plan for our future. With strong support, vision and leadership from our Board of Commissioners, our General Assembly and Administration, we are using the momentum gained over the past two years to propel us forward with confidence and clarity.
Sustainability starts with our people. It takes innovation, creativity and a drive for continual improvement, but we cannot do it alone. It will take all of our efforts. We invite you to join us and become Stewards of Tomorrow.
John F. Reinhart, CEO and Executive Director
From cars to coffee beans, the cargo we handle keeps industries, businesses and households going strong, driving economic growth and job creation along the way. The continuous movement of goods is necessary for nationwide prosperity, particularly for the two-thirds of Americans who live within a day's drive of our port's facilities. But it's not just what the port moves that matters. It's also how we conduct our business and practice stewardship in the communities we serve.
In all aspects of our work, there is a focus on sustainability. To The Port of Virginia, sustainability means excelling in the areas of healthy and safe operations, environmental stewardship and social responsibility. Each of our facilities' sustainability initiatives goes hand-in-hand with an overarching commitment to financial responsibility and operational excellence.
An aspect of sustainability of which we're most proud is our role in the creation of jobs, an increase in revenue and business development across the Commonwealth. In fiscal year 2016 (FY16), port-related companies created over 3,600 jobs in Virginia, and 39 businesses announced plans to grow or expand their presence in places like Arlington, Norfolk and Roanoke. In total, we helped attract more than $733 million in investments to the Commonwealth. FY16 wasn't just a second consecutive year of financial successes for us; it was also another step forward on the path to more growth and long-term sustainability.
When we think of sustainability, we don't just zero in on making things greener. We are also investing in our communities, terminals and our people, so we can serve as an economic engine for generations to come. These investments will make our port a safer place to work, provide us the ability to handle cargo more efficiently with less environmental impact and create job opportunities throughout the Commonwealth.
Meeting all of those goals is what makes us truly sustainable.
As cargo moves toward its destination, our port moves toward a more sustainable future.
Automobiles, building materials, coffee beans and most of the things people use every day will need to continue moving as long as they are in demand – and our port's job is to ensure the supply can meet the demand. To accommodate that demand, we must first plan for a sustainable future with healthy responsible growth.
By attracting new jobs and businesses to the region, growth at The Port of Virginia equates to growth across the Commonwealth. We strive to make the most of all of our resources —especially our financial resources. That's why we constantly seek out and take advantage of available grant dollars. In fiscal year 2016, port projects supported by $16.9 million in state and federal grants added value to Virginia communities and contributed to our fiscal sustainability.
For example, a Transportation Investment Generating Economic Recovery (TIGER) grant from the U.S. Department of Transportation paved the way for an expansion of the Norfolk International Terminals' North Gate complex in 2015. When completed in summer 2017, this 26-lane gate will more than double the terminal's gate capacity. We would not have been able to undertake that project if it weren't for TIGER funding.
This year, U.S. Maritime Administration (MARAD) committed more than $476,000 in grant funds to our 64 Express barge service from our terminals in Hampton Roads to the Richmond Marine Terminal (RMT). We'll use those funds to help purchase a 52,000-pound forklift for RMT and 40-foot generator power pack for our barge. The forklift will enable RMT to process new types of inbound and outbound cargo. The generator will enable our barge to carry refrigerated cargo, expanding our service capabilities to RMT, and supporting growing grocery and wine market opportunities for the surrounding communities as well.
Using additional grant money, we purchased four previously owned rubber tire gantry cranes (RTGs) for approximately 3 million Euro. Doing so saved us half the cost of new equipment and cut the time to put into service by 15 months. New equipment was also on the agenda this year. With the newly minted 40-year lease at RMT, we were able to secure federal funding to buy a $4 million, 350-ton mobile harbor crane. It replaces old equipment and increases the velocity at which containers move on and off terminal at RMT as we drive more and more cargo along the Interstate 95 corridor.
The Maritime Incident Response Team (MIRT) maximizes federal dollars through the Port Security Grant (PSG) program. Recent PSG awards will fund our Cyber Security and Maritime Domain Awareness initiatives by upgrading Command and Control Systems at the Port Police Command Center. Additional grant monies covered our 48-foot mobile Port Authority Command 1(PAC-1) unit. PAC-1 is designed to be deployed to an incident or event to provide support command and control, communications and continuity of operations. PAC-1 features radio, satellite, cell phone communications equipment and computers to support Incident Command functions. PAC-1 is also equipped with marine radar and an Automatic Identification System (AIS) to conduct maritime operations. It is not only available for use by MIRT member agencies but also by partner agencies. Like other equipment acquired through grants, it is frequently in use, averaging one deployment every week.
Beyond the use of grants, financial stewardship means streamlining port processes to be more convenient and cost-effective. We've streamlined and standardized our schedule of rates (SOR) to align cyclical rate increases, reducing the amount of relevant paperwork annually from four documents to two. The SOR now encompasses and standardizes more rates and services for all of the facilities under The Port of Virginia umbrella.
At The Port of Virginia, financial stewardship allows us to meet our goals. We can move more cargo while serving the Commonwealth responsibly.
Automobiles, building materials, coffee beans and most of the things people use every day will need to continue moving as long as they are in demand — and our port's job is to ensure the supply can meet the demand. To accommodate that demand, we must first plan for a sustainable future with healthy responsible growth. That's where the 2065 Master Plan becomes vital.
"The Master Plan represents our commitment to Virginia taxpayers and other stakeholders to plan responsibly and budget accordingly," says Anja Sparenberg, director of management reporting for The Port of Virginia. "In the 2065 Master Plan, we chart growth opportunities and how they relate to capital investment projects, such as expansion at Norfolk International Terminals (NIT) and a long-term lease at Richmond Marine Terminal (RMT)."
It is with the support of the Governor, General Assembly, the Transportation Secretary and the Virginia Port Authority Board of Commissioners, the port entered an era of continued and sustainable growth in fiscal year 2016.
In June, the port will complete construction on the North Gate at NIT. The 26-lane gate will more than double the terminal's gate capacity and link with the I-564 Connector, a road project designed to give motor carriers faster access to market and cut emissions by reducing idle time in traffic.
On July 1, 2017, construction will begin at the south end of NIT — the port's oldest and largest facility. With the help of a $350 million investment from the Commonwealth, the port will renovate and reconfigure the area to move cargo more swiftly, safely, and sustainably than ever before. When complete in 2020, the project will increase the terminal's annual capacity by 400,000 containers — or 46 percent — without adding an inch of real estate.
The state's investment at NIT enabled the port to negotiate a new historic, longterm lease of its Virginia International Gateway (VIG) terminal in Portsmouth that gives the port oversight and operating rights at the facility until 2065.
As part of a $320 million project, the port is developing 60 unused acres inside VIG's 231-acre footprint to add 26 automated stacking cranes and expand the container yard. To accommodate the largest container vessels working in the Atlantic, the pier will be lengthened, four ship-to-shore cranes added and the rail operation expanded. The project will maximize industry-leading technology and double VIG's annual capacity to 1.2 million containers.
In fiscal year 2016, we executed a 40-year lease with the City of Richmond for the operating rights at RMT. A federal grant also allowed us to purchase a new mobile harbor crane for use at RMT, replacing an older, less efficient piece of equipment.
With each new investment from the state or federal government, we work toward a more sustainable operating future. Ultimately, these investments in our network of terminals enable our port to meet the needs of the millions of Americans we serve daily across the Commonwealth and beyond. It is long range, responsible planning for expansion projects like the ones at VIG and NIT that open the door to even more cargo and sustainable growth.
Safety is always our first priority at The Port of Virginia. We actively promote a healthy and safe work environment for employees and partners by identifying risks, developing solutions and reinforcing appropriatebehavior across our network of terminals. Knowing our strengths and weaknesses is the foundation of health and safety sustainability. One of the many tools of understanding we use to identify those strengths and weaknesses is our internal audit program.
Safety is always our first priority at The Port of Virginia. We actively promote a healthy and safe work environment for employees and partners by identifying risks, developing solutions and reinforcing appropriate behavior across our network of terminals. Knowing our strengths and weaknesses is the foundation of health and safety sustainability. One of the many tools of understanding we use to identify those strengths and weaknesses is our internal audit program.
"The single most important lesson that every member of the port team must understand is that all mishaps have a human element and, therefore, can be prevented," said Ronald Babski, vice president of health and safety at the port. "Our colleagues and partners on the ground interacting smartly and safely with each other every day demonstrate our commitment to building a safer workplace."
Our leadership must continually set the right example to foster a safer workplace. Our Executive Safety Leadership and Supervisor Safety Leadership Training Programs educate port executives and managers on the proper strategies to reduce accidents, improve employee morale and analyze incidents. In 2016, a combined 192 executives and supervisors participated in those training programs.
From the top down, all new port colleagues and patrons are required to attend a comprehensive safety orientation. The orientation complements our original document, "The Operational Standards," which details key safety procedures for all port activities.
To reinforce safe behavior at all levels, the Terminal Safety Infraction Policy (TSIP) was instituted to reward excellence and correct unsafe activity. TSIP requires all port workers, contractors, vendors and others to comply with 35 fundamental health and safety rules across all facilities. Port leadership recognizes compliance by documenting excellence, sending letters of recognition and presenting small tokens of gratitude, such as a safety vest, to team members. Meanwhile, corrections to non-compliance are provided through citations ranging from a written warning to a suspension and remedial training.
Along with TSIP, our 5:1 Program ensures safe behavior and the rewards that go along with reinforcing it on a daily basis. The 5:1 Program requires managers and supervisors to positively recognize equipment operators five times for excellence for each time an operator is decertified or retrained for non-compliance. With more than 1,200 exchanges in 2016, TSIP and the 5:1 Program are where the rubber meets the road within our health and safety strategy.
Ultimately, our commitment to health and safety across our terminals results in a more productive, sustainable workforce. While one on-the-job injury is too many, year after year, The Port of Virginia maintains a below-average number of lost work days due to injury compared to industry average.
Due to the complexity of modern port operations, even minor disruptions to normal procedures can result in costly delays. The Port of Virginia continues to lead the industry and community on initiatives to proactively identify and mitigate risk and respond to events with practiced resiliency. To prepare for everything from fluctuations in the shipping industry to rising sea levels, our port employs a thorough Enterprise Risk Management (ERM) program, which emphasizes a holistic approach to identifying and eliminating such risks. Rather than preparing for challenges at a department or agency level, we work to bridge the gap between on- and off-terminal stakeholders and to create a framework for addressing risks as a unified entity, whether those issues are related to the web, weather or worksite.
Moving cargo around the world requires more than ships, trucks and trains. It requires sophisticated software and equipment that enables that cargo to move safely, swiftly and sustainably. Cyber security is an integral part of our overall security measures. We work with the U.S. Coast Guard's Cyber Command and the Federal Bureau of Investigation to protect our facilities, employees and partners against a breach. Cyber exercises, like Cyber Crucible, a first-ever tabletop exercise program for us, are an integral part of preparing for and protecting against 21st-century threats.
Our port's location along the East Coast requires preparation for natural disasters. Hurricanes, Nor'easters, snow and ice storms — even the occasional tornado — can impact and impede port services.
The answer to these potential threats begins with analyzing our infrastructure. We identify potential vulnerabilities within our facilities and operations, allowing us to prioritize investments and harden infrastructure accordingly. For instance, an ongoing Resiliency Study seeks to map terminals against projected storm surges and flood risks. The goal is to identify infrastructure that requires strengthening or relocation, eliminate potential points of failure and assign risk grades for every imaginable scenario. It's through these efforts that an informed capital budget is created.
Sea level rise is of particular interest and concern to us. Hampton Roads is the second-most susceptible region in the U.S. to rising sea levels and because we are a Catalyst for Commerce™, disruptions to port operations can have widespread economic impacts on the region. That's why we work with off-terminal stakeholders in academia, local government, industry and the military on studies to identify threats and propose resiliency strategies for our port and the community at large.
Protecting our colleagues' health and safety is job number one. Ongoing training and an emergency notification system prepare port employees for potential threats. In 2016, we trained 136 colleagues during a simulated active shooter exercise that incorporated both personal response techniques and law enforcement response. Providing this type of situational awareness training further reinforces our core values in our colleagues.
Through our Process Excellence program, we ensure high-quality results are sustained through the creation of robust and repeatable processes. As a show of good stewardship, we optimize the use of state and federal funds to improve the efficiency and effectiveness of our internal and customer-facing processes. An example of Process Excellence at work is our ISO 9001:2015 certification which helps us focus our resources and document our processes. The Port of Virginia is the only port in North America certified to the ISO 9001:2015 standard.
By equipping port colleagues with time-tested tools and methodologies, the Process Excellence program shifts us from department-centric thinking to process thinking. Our Process Excellence program ensures that processes (old and new) are documented to drive consistency and clarity in all that we do. The focus on process helps us identify impediments and develop solutions with measurable and lasting impact. Additionally, it creates a central repository that colleagues can access on an ongoing basis. In 2016, these tools were used to empower a cross-functional team of internal and external stakeholders to troubleshoot existing issues hampering productivity on one of our marine terminals. In less than two months, the team developed and implemented practical solutions that improved productivity by more than 5 percent.
Process Excellence not only addresses our day-to-day processes, but it also links to our strategic goals. In 2016, a new process for capital prioritization was created that aligns asset planning, the master plan and budgeting efforts. As 2016 came to a close, we launched a series of organization-wide process improvement initiatives that will guide our efforts in 2017. The topics include: Looking at how we hire, continuing to optimize how we identify projects and use grant monies, and improving and standardizing how we change our Schedule of Rates.
Safety comes first at The Port of Virginia and recognition came in fiscal year 2016 (FY16) for our efforts. Because of the community engagement efforts of our one-of-a-kind Maritime Incident Response Team (MIRT), we were honored by the U.S. Coast Guard with the "Rear Admiral Richard E. Bennis Award for Excellence in Maritime Security." This biannual recognition seeks to increase public awareness and stress the importance of protecting the marine transportation system. MIRT works hand-in-hand with local, state and federal agencies to prepare for and respond to emergency situations in and around port facilities. Among its many responsibilities, the team assists in coordinating regional drills and exercises, co-sponsors the annual Search and Rescue Forum and coordinates the annual Hampton Roads Marine Firefighting Symposium. In FY16, the Marine Firefighting School celebrated 25 years of service to port communities having trained thousands of firefighters from the region, across the country and around the world. This well-rooted safety and awareness program enhances our financial, health & safety and social sustainability.
Our expansion activities at The Port of Virginia aren't limited to the reinvestment and capital improvements underway at Virginia International Gateway (VIG) and Norfolk International Terminals (NIT) to increase capacity. We also work beneath the water to maintain our position as the deepest port of the U.S. East Coast. As the only U.S. East Coast port with Congressional authorization to further deepen our channels to 55 feet, we are 18 months into a three-year study with the U.S. Army Corps of Engineers to revalidate requirements to deepen Norfolk Harbor Channel. Deeper channels will enable us to accommodate larger ships. In doing so, we can attract new business and new investment to the Commonwealth.
"Virginia is blessed with naturally deep offshore waters that provide safe access into our navigation channels and marine terminals. The size of the container ships calling here today are beyond anything I had imagined just a few years ago, and Hampton Roads will be amazed by the ultra large container vessels that will soon be calling,” said Captain J. William Cofer, president of the Virginia Pilot Association. "The Port of Virginia clearly has the future in focus as they partner with the Army Corps of Engineers to deepen and widen the navigation channels to provide safer passage for the ships."
In addition to fostering more business and increasing safety, accommodating larger vessels also offers the ability to move cargo more inexpensively and with fewer emissions, in turn passing savings on to consumers and reducing our impact on the environment. With nearly 1.5 million cargo containers moving in and out of our port's terminals in fiscal year 2016 alone, we're on track to grow those numbers and sustain them through a deeper channel passage.
Our port and the Corps of Engineers will publish the results of the study in the Chief of Engineers Report in 2018.
Our port is versatile when it comes to moving cargo. Whether by truck, train or our growing barge service, our goal is to do so as safely, swiftly and sustainably as possible. That’s why we are active partners with agencies like the Hampton Roads Transportation Planning Organization (HRTPO) and advocates of two rail projects, the Heartland Corridor and National Gateway as well as the alternative plans presented within the Hampton Roads Crossing Study. At The Port of Virginia, we rely on the robust transportation infrastructure found in our surrounding communities and continue to advocate for thoughtful expansion. The planned Norfolk International Terminals (NIT) North Gate tie-in to the I-564 Intermodal Connector is one example. All of these avenues allow us to sustain a reduction in traffic congestion and emissions in surrounding communities and maintain efficient, safe movement of cargo.
Our financial stewardship extends to conducting annual underwater surveys of each marine terminal which allow us to prioritize our budgetary requirements effectively. Although expensive, the port plans wisely to ensure there is minimal cost of maintenance dredging to Virginia taxpayers. Instead, our port has maximized the use of federal Harbor Maintenance Tax funds to defray costs. The funds have been used to pay for maintenance dredging at berths on the Norfolk International Terminals (NIT) and Newport News Marine Terminal (NNMT).
Moving cargo is what we do at The Port of Virginia. Once a container arrives on terminal, there are many ways it can get from point A to point B, but optimizing its path promotes safety and cost savings. Pairing people with technology is one of the ways we do it. We use a Position Detection System (PDS) in some of our cargo-handling equipment at Norfolk International Terminals (NIT) for gate, yard and rail moves. Currently, 87 straddle carriers are equipped with PDS, but we are incorporating the technology more and more every day. PDS ensures the closest piece of appropriate equipment to a container is assigned the move, providing great savings in terms of time, cost and emissions. Our end goal always is to move cargo as swiftly, safely, and sustainably as possible.
Our port remains committed to ensuring the safety of cargo and crew by complying with SOLAS standards – Safety of Life at Sea. In fiscal year 2016, the process for supplying a ship’s verified gross mass (VGM) shifted entirely to an electronic format, and our port led the industry by providing a seamless transition to our customers on time and without any disruption to the delivery of service.
Environmental stewardship is a key element of our port's work both on- and off-terminal. As stewards of tomorrow, The Port of Virginia prioritizes procedures and technologies that help to reduce its carbon footprint.
Environmental stewardship is a key element of our port's work both onand off-terminal. As Stewards of Tomorrow, The Port of Virginia prioritizes procedures and technologies that help reduce its carbon footprint.
At the cornerstone of our commitment to environmental stewardship is our industry-leading Environmental Management System (EMS) program. In 2008, the EMS program was recognized by the ISO by meeting all of the requirements of the ISO 14001 standard, making us the first East Coast port to operate under this certification. The Environmental Management System ensures the port's colleagues and tenant activities operate proactively with an informed ability to respond to environmental risks while improving performance through the more effective use of resources and reduction in waste. This certification affords The Port of Virginia a competitive advantage and assists port colleagues in building trust and strong relationships with our customers. With an eye to the future, our port continues its efforts under the umbrella of the EMS and has decided to include the Richmond Marine Terminal (RMT) in the certified ISO program this spring.
We also foster environmental stewardship in each of the communities we touch by participating in local initiatives. Among them, the Chesapeake Bay Foundation's Clean the Bay Day, the Elizabeth River Project's local wetlands renewal efforts and using the port's EMS program to assist with controlling storm water pollution and air emissions. We accomplish our environmental stewardship through special training, implementation of new technologies, monitoring potential environmental impacts and programmatic improvements.
This certification aligns with The Port of Virginia's existing core values of innovation, helpfulness, fortitude, accessibility, mindfulness and sustainability. Encouraging energy conservation, reducing air emissions, reducing the number of by-products in the solid waste stream, increasing employee participation in stewardship and continually improving environmental performance all leads to environmental sustainability.
"In developing and managing the EMS, we are committed to promoting the port's ongoing environmental stewardship programs, improving communication between the Virginia Port Authority and terminal operators, tracking environmental performance as well as meeting permit compliance requirements," says Scott Whitehurst, director of environmental policy and compliance for the port.
Each of these priorities will help our port reach other sustainability goals and keep us at the forefront of stewardship in our industry.
As a catalyst for commerce, our work at the port will continue to create jobs and drive investment across the Commonwealth of Virginia, thanks to future planning that leverages robust partnerships, industry-leading technology and responsible asset management.
As Stewards of Tomorrow, The Port of Virginia continually looks toward the future. Along with ongoing expansion and reinvestment at several facilities, we look to leverage new partnerships, upgrade technology and meticulously manage our assets to spur growth that sustains our operations for generations to come.
In fiscal year 2016, a new 40-year lease to operate the Richmond Marine Terminal (RMT) united The Port of Virginia and the City of Richmond through 2056. With that relationship in place and the growing use of barges to move more and more cargo, we'll turn to the Richmond community for new public-private partnerships that can drive economic opportunity and additional commercial expansion. Moving forward, we've partnered with the City of Richmond, the Richmond Transportation Planning Organization and Virginia's Office of Public-Private Partnerships to study the best use of the currently underutilized industrially zoned land around RMT. We hope by encouraging the development of what's known as the Commerce Road Corridor, we can help attract even more port users to the area.
"The Richmond Marine Terminal is a unique asset that differentiates the City of Richmond as an attractive location for logistics and manufacturing," said Jane Ferrara, chief operating officer of economic and community development for the City of Richmond. "Our partnership with The Port of Virginia connects the City to a global market and creates tremendous economic opportunity to drive new investment and high-quality jobs along the Commerce Road corridor."
To continually improve efficiency, we have also begun upgrading the terminal operating systems (TOS) throughout port facilities. In fiscal year 2015, Norfolk International Terminals installed Navis N4. In fiscal year 2017, it will be integrated the Virginia Inland Port and Pinner's Point Container Yard with the Virginia International Gateway following in FY18.
This leading-edge TOS allows for automated gate and transfer services that make operations safer for port employees and motor carriers. Navis, a system used across several ports worldwide, replaces an older, custom-built system, thereby reducing the need for a large internal management staff and costly downtime as a result of maintenance.
Also on the horizon is the development of an advanced enterprise asset management (EAM) program that will support our capital spending and strategic capital decision making. With more than $2 billion of total assets, it is important for us to manage what we have, how we maintain it and how and when we replace it. Through a well-planned EAM system, assets such as infrastructure, finances and human capital are strategically prioritized and managed to maximize investments while minimizing downtime through predictive maintenance practices.
As a catalyst for commerce, our work at the port will continue to create jobs and drive investment across the Commonwealth of Virginia, thanks to future planning that leverages robust partnerships, industry-leading technology and responsible asset management.
Leading our industry as Stewards of Tomorrow, we are proud of our accomplishments over the last year and strive to build on those.