State transportation chief assesses Va. Port Authority

NORFOLK

The freshly overhauled board of the Virginia Port Authority will look at everything, even the management structure in place since the early 1980s, as it works to make the port more competitive on the East Coast, said Sean Connaughton, the state's transportation secretary, on Wednesday.

"I don't think anything's off the table at this point," Connaughton said in an interview after a breakfast talk sponsored by the Hampton Roads Global Commerce Council at the Town Point Club. "Our issue right now is to take a look at what's been happening and where we are today and how do we end up improving the performance of the port going on from here on out."

Gov. Bob McDonnell replaced all but one of the appointed members of the 12-member panel in July, citing stagnant growth and too much emphasis on long-term capital projects.

While cargo volumes at New York/New Jersey and Savannah, Ga., the No. 1 and No. 2 container ports on the East Coast, have rebounded to prerecession levels, those at No. 3 Hampton Roads have not.

"As the shareholder of this operating entity, the decision was made that we want to go in a new direction," Connaughton said.

McDonnell is very committed to the port, he added. The governor wants to ensure that the port is well positioned to grow and take on its competitors to the north and south.

East Coast ports are jockeying for position in anticipation of a big increase in cargo volumes from Asia, once an expanded Panama Canal opens in 2014, allowing the transit of larger container ships. Currently, most Asian cargo is dropped off at West Coast ports and railed to destinations across the nation.

The dramatic changeover of the port's board "was not meant to be an insult or, you know, undermining the people that were on there before," Connaughton said. "The thing is that we just were looking at the board and saying, 'OK, how do we get the strongest board possible to deal with the situation?' "

Even as McDonnell replaced most of the Port Authority's board, Connaughton said Jerry Bridges' job as the authority's executive director was secure.

Asked Wednesday why the board's overhaul didn't reflect concern with the port's management, Connaughton said that a number of questions have to be answered.

"Is it the structure? Is it the people? Is it the focus?" he said.

The port's terminals were unified under the control of the Virginia Port Authority in the early 1970s. In 1982, the authority established a private, tax-exempt operating company, Virginia International Terminals Inc., to run the consolidated operations.

"We have to look at everything," Connaughton said. "Thirty years ago, there was a consolidation of all the operations based on certain assumptions, and policy decisions were made based on those assumptions. Are those assumptions - are they still valid today? And are those policy decisions and structure, that was made 30 years ago, is it still valid in today's market?"

Those are the issues being weighed in the governor's office and by the Port Authority board, and that will be discussed with the General Assembly, if necessary, Connaughton said.

Among other things being contemplated are ways to partner with other ports or to work with the railroads and others to penetrate better the Northeast market, he said.

It also will be a priority to make sure cargo volumes justify the port's capital spending.

The Port Authority now gets about $35 million a year from the state for capital improvements and has borrowed tens of millions more in the form of revenue bonds to fund projects.

The port's 2040 capital plan projects that Hampton Roads will have the capacity to handle the equivalent of 9.5 million 20-foot containers, or TEUs, Connaughton said. Last year, the port handled just under 2 million such TEUs, a standard measure for the containers, which come in a variety of sizes.

"To get there, that means I have to start growing - today - 250,000 TEUs per year," he added.

Connaughton also questioned the port's focus on container-ship business, given its position as a premier coal-exporting port and its status as a major mover of other bulk commodities.

The port, he said, needs to broaden its focus, looking at more than containers, to encompass a "whole mix of commodities."

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com