- Associated Press - Tuesday, May 27, 2014

NORFOLK, Va. (AP) - The operator of Hampton Roads’ port offered discounts to ocean carriers as a way to attract more rail cargo at a time when the port struggled financially despite an increase in cargo volume, Virginia’s transportation secretary said.

Aubrey Layne said Virginia Port Authority board members told him in January they had just found out about the discounts that operator Virginia International Terminals began in spring 2012.

“There were a lot of things that they said they weren’t aware of,” Layne told The Virginian-Pilot (https://bit.ly/1kbdcbJ).

Former board vice chairman Scott Bergeron said the rail incentives were “costing the port money with each box that went out on rail.”

He said other factors that led to higher cargo volume and costs included the improving economy, and congestion in New York that led to the diversion of cargo to Hampton Roads.



Gov. Terry McAuliffe ordered a review of the port’s finances in January, saying it had lost $120 million over the last five years. In April, McAuliffe announced he was replacing five board members.

New authority CEO and executive director John Reinhart said in February the port lost $15.7 million through the first seven months of the current fiscal year. He said the rail incentives, which led to higher cargo volumes, alone weren’t to blame.

Rent payments on the authority’s 20-year lease of APM Terminals’ Portsmouth facility are about $50 million annually and could grow to more than $100 million when the lease expires in 2030.

The discounts began at a time when the state was reviewing port privatization bids.

After two multibillion-dollar offers to privatize port operations were rejected, the authority’s board reorganized Virginia International Terminals’ management from an independent corporation to a limited liability company under tighter authority control.

An audit report last fall pointed to the lack of a formal review process for the incentives. It said the importance of the process became more significant “due to the increase in the number and complexity of rail incentives offered.”

“We now have control of this and we know what’s going on,” Reinhart said. “We know what they are; we’re managing them.”

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Information from: The Virginian-Pilot, https://pilotonline.com

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