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TRANSPORT / OCEANmore than any other East Coast port toenhance its position by facilitating constructionof massive distribution centers near theport, it still lies far away from any majorpopulation clusters.Virginia is close enough to the covetedNortheast market and has room to grow,and a business community that understandsthe impacts of maritime activity, possiblybecause of the U.S. Navy’s history in Norfolk,Bingham said.“It may be about luck more than brains,but Norfolk’s done a good job of positioningitself,” he said. “If I’m a retailer looking toput a distribution center, there’s room atTidewater (near the Port of Virginia) justlike there’s room in Savannah.”And if a shipper is looking to move goodsvia the Suez, and using a service that employspost-Panamax vessels, then Virginiais the only logical choice right now.Premium On Rail. Capozzi said anincrease in Suez services places a higherpremium on good rail connections, becauseproducts shipped from India and SoutheastAsia can suddenly arrive via the U.S. EastCoast and be sent by rail west to the Midwestor even farther.In contrast, he said, all-water servicesthrough the Panama Canal are typicallygeared only for East Coast distribution.“You have the reverse landbridge to theWest Coast, which is great for our regionbecause you put the eastern railroad on theinitial leg rather than the receiving end,”he said.But Bingham said he doesn’t yet seethe financial sense of that arrangement,even if railroads offered reduced rates forwestbound services.“You’re still paying for a lot of extra timeand transit,” he said. “I don’t see it workingpast Chicago.”And whether Virginia can land heavybusiness on the Suez depends, in part, onthe rail efficiency.“If you’re looking to feed New York out ofSoutheast Asia, if the rail network out of theWest Coast falls apart, then the Suez looksattractive, especially for high-end valuegoods,” Bingham said. “But if rail is good,then you’d probably look to put low-valueitems on the Suez route because it does takelonger, and you’re losing money every daythe goods are on the water.”Still, the Suez presents major opportunityfor U.S. East Coast ports to tap into theSoutheast Asian market.“You’ve seen services go into Savannahas carriers are induced to call there by thedistribution centers popping up,” Binghamsaid. “The same can be said of Norfolk, too,with Wal-Mart opening up a big (distributioncenter) there. There’s a strong desireon the part of importers to diversity soyou’re not beholden to Panama or the WestCoast. It’s going to depend on your mix ofcustomers.”“As India developsinto a manufacturingcenter, that does openup the attractivenessof the Suez. We’ve beenbuilding our facilitiesto handle the growthof those markets.”Tom Capozzisenior managingdirector of marketing,Port of VirginiaSoutheast Asian cargo represents about6.4 percent of Virginia’s business, comparedwith 5.8 percent from India (its fastestgrowing market, at more than 20 percentgrowth the last three years), 3.9 percentfrom the Middle East and 30 percent fromNortheast Asia.The development of India as a tradingpartner with the United States could open upopportunities in Southeast Asian countries,Capozzi said.“As India develops into a manufacturingcenter, that does open up the attractivenessof the Suez,” Capozzi said. “We’ve beenbuilding our facilities to handle the growthof those markets.”Those developments include a plannedon-dock expansion at the port’s Norfolkterminal, container cranes that can stretchacross ships 26 containers wide, andimproved intermodal connections on theNorfolk Southern Railway.The port, which handled 1.98 millionTEUs in 2005, is also planning to morethan quadruple its throughput capacityover the next decade — first with an APMterminal in Portsmouth designed to handle2.1 million TEUs that’s due to come onlinein 2007, and then with development of a 5-million-TEU terminal on Craney Islandplanned for opening in 2017.“Nobody else has this ability to grow,”Capozzi said.Much depends, of course, on what transpiresin Panama.“If we assume that the Panamanianscontinue to have problems with expansion,then there will be a growth in fees, andoverall trade growth is large enough to pusha lot of trade through the Suez,” Binghamsaid. With an expansion in global vesselcapacity, “you have a lot more containervessel capacity to deploy somewhere andit becomes more attractive as a carrier toput capacity on that route.”That’s because the Suez route is a muchless competitive environment than, say, thetranspacific, so rates will reflect that. Butthe viability of the Suez is also dependenton Egypt.“They can change things overnight,”Bingham said. “They’ve been more flexiblein their marketing and pricing as far as tollsthan the Panamanians have been.”Capozzi agreed, especially since a significantslice of Virginia’s business movesthrough Panama.“It’s not as if the Suez will come onlineand Panama will disappear,” Capozzisaid. “Panama will remain viable and willadd capacity, but it will serve a differentmarket.”And Capozzi said there’s plenty of cargoto go around on the East Coast anyway.“If you look at the projections for futuregrowth, they’re staggering,” he said. “I rememberthe days when everyone was happyto have 3 to 4 percent growth. Now you’renot happy unless it’s double digits. There’senough to go around to keep everybodyhappy.”Aside from the China Shipping AMAXservice, six other services call on Virginiavia the Suez, and Capozzi said he expectsVirginia to land another one this year.“And in ’07, that’s when I hear all theSuez services will begin coming online,”he said.Daily News UpdatesFeature Articles & Analysisamericanshipper.comYour subscription to American Shipper brings you bothAmerican Shipper Magazine68 AMERICAN SHIPPER: APRIL 2006