A new day at the port

CEO is confronting problems with profitability and delays

Published April 29, 2014 by Jessica Sabbath

Since taking helm of the Port of Virginia in February, John Reinhart has been trying to understand its challenges firsthand.

To better address motor carriers’ complaints about delays at the port’s terminals, Reinhart rode with a trucker who was bringing goods for export.

On a Saturday Reinhart monitored rail operations at the port’s marine terminals, seeking laborers’ opinions on how to improve operations. “Wisdom doesn’t just rain down from above,” Reinhart told Virginia Business during an interview in March.

Reinhart is no stranger to the Hampton Roads’ maritime community. He’s been a longtime customer of the port, previously serving as CEO of Norfolk-based shipping company Maersk Line Ltd., a subsidiary of Denmark-based A.P. Moller-Maersk.

“He’s trying to learn everything he possibly can. Every event I go to, John’s attending,” says Capt. J. William Cofer, president of the Virginia Pilot Association. “He’s listening. He wants to hear what all the issues are.”

In addition to his hands-on approach, Reinhart has been straightforward about issues facing the port. “That’s not good stewardship,” Reinhart said of operating losses during the annual State of the Port Address in February. “That’s not fiscal responsibility. That’s not how we will run the port in the future.”

The port has lost money in its last five fiscal years, with losses totaling $120 million, according to the administration of Gov. Terry McAuliffe.

The port set cargo-handling records last year as ocean carriers took advantage of the port’s deep channels and rail connections to the Midwest. The port also is receiving more visits from massive cargo ships that are becoming more popular in international shipping. The Port of Virginia is the only port on the

East Coast with channels deep enough to handle these vessels when fully loaded. (Baltimore has one berth that has been dredged to the proper depth.)
The port’s processes, technology and infrastructure, however, haven’t been able to keep pace with the new demands. The port has been forced to pay laborers overtime to handle the influx of containers.

Reinhart has been open about the port’s need to become profitable — a new focus that aligns with calls from McAuliffe’s administration for change. In April, McAuliffe replaced five members of the VPA Board of Commissioners, citing the port’s poor financial performance.

“We should be profitable today,” says Reinhart. “When we went into this year we weren’t making money; therefore you can’t go out and get the debt to build the new structures [you need], so you’re not going to be able to serve the community in the future.”

Reinhart’s honesty has been welcomed by the maritime community. “He’s not going to describe a situation any differently than what it really is, and I think that’s comforting not only to the port community but also to port customers,” says Art Moye, executive vice president of the Virginia Maritime Association.
Reinhart has hit the ground running. The port launched a task force in February to address truckers’ congestion concerns, and a trucker appointment system is scheduled to begin in May. In addition, new equipment already has been purchased to better handle rail operations.

February’s numbers looked better, too. Operating losses dropped to $1.3 million, compared with $5 million in January, and port officials say operating losses for the current fiscal year will be less than the $23.4 million that had been predicted.

“We’re aligning our team with a sense of urgency to understand our costs, to improve our processes, to reverse the trend that started over the last number of years of losing money … and to build the platform of profitable growth for the future,” says Reinhart.