Logistics, rapid investment needed

Published August 30, 2017 by Virginia Business

This month’s front cover photo says it all — container ships play a big role in the economy of Virginia — not just big, make that supersized.  But there is much left to do to ensure the commonwealth’s future competitiveness.

Virginia’s distribution and global logistics infrastructure includes ports, railroads, air freight, interstate highways, trucking companies, intermodal facilities and distribution centers.  Employment in these industries totals more than 78,000.  According to the Virginia Economic Development Partnership, during the past 10 years 355 global logistics projects have produced more than 17,000 new-job announcements with capital investments exceeding $2.3 billion.

Virginia’s location puts it within a day’s drive of 43 percent of the U.S. population.  In addition to the ports, the commonwealth is home to Washington Dulles International Airport.  Virginia contains significant portions of the East Coast’s major north/south I-95 and I-81 interstate arteries.  Rail access is strong with Norfolk Southern and CSX, both of whom have expanded their capabilities to carry double-stacked shipping containers.

Unlike other major East Coast ports, Virginia does not have a population center on the scale of New York, Miami or Atlanta, which absorbs massive amounts of cargo.  That means much of the Port of Virginia’s growth will come from international goods headed to major markets in the Midwest.

Despite its advantages, the commonwealth has much work to do to improve its competitive ranking among U.S. states for the quality of its distribution and logistics infrastructure.

Take for an example, Memphis, Tenn.  Long recognized as a logistics leader among metro markets, Memphis is home to shipping powerhouse FedEx, making its airport No. 1 for air cargo tonnage in the U.S.  By contrast, there are more than 20 U.S. airports that rank higher for cargo than Washington Dulles.

In addition, Memphis is home to more than 400 trucking companies, and five of seven North American class-one railroads offer service there.  The Port of Memphis is the fifth-largest inland port in the U.S.

While Memphis may be somewhat of an outlier because of FedEx, Business Facilities magazine, which ranks Memphis No. 1, does not include a single Virginia metro in its top 10 list of logistics leaders.

When it comes to education, Old Dominion University offers a fine program in Maritime & Supply Chain management.  Still, a look at the top schools for undergraduate logistics programs ranked in the U.S. News & World Report’s Best Colleges list shows nary a Virginia college is among the 20 schools making up the list.

Michigan State, Massachusetts Institute of Technology, University of Tennessee, Ohio State and Arizona State are the top five.

Regardless, the three biggest incontrovertible advantages that Virginia has going for itself are location, location and location.  Hampton Roads is one of the world’s largest natural harbors. 

Because of its deep channels, the Port of Virginia used to be the only East Coast location capable of handling post-Panamax vessels, when fully laden.  Other East Coast ports, however, now are catching up, so the Port of Virginia needs to dig deeper.  Hampton Roads has a channel depth of 50 feet and has congressional authorization from 1986 to dredge to 55 feet.  The dredging project is now undergoing a required re-evaluation.

To remain competitive, Virginia must move forward rapidly on these fronts.  Dredge the channel.  Highway funding must be a priority, not just for commuters but to move freight more rapidly from the ports to I-95.  Better economic development incentive funding is needed to attract manufacturing and other industries in need of logistics to the commonwealth.  Better education funding is needed to develop a world-class logistics workforce.

In today’s global economy where so much commerce has moved from bricks and mortar to the internet, more products are warehoused, transported and delivered than at any time in history.  Amazon, for example, has several facilities in the state, including two massive fulfillment centers in Central Virginia.

Rapid investment in Virginia’s infrastructure is not just a nice-to-have thing, it is a must-do.