Virginia’s Coffee Port of Call

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Features

By Dan Shryock

The City of Suffolk, Va., is building a coffee empire. J.M. Smucker Company is here. So is Massimo Zanetti USA. Peet’s Coffee & Tea recently purchased a site for its East Coast roastery.

“We like to call Suffolk the ‘Caffeine Capital’,” says Kevin Hughes, the city’s economic development director.

This city of 90,000 has much going for it. There’s easy access to rail and an interstate intermodal transportation network. There’s a knowledgeable workforce and city officials ready to help new businesses find homes here. Its most important asset, however, is proximity with the Port of Virginia, a dynamic state-owned shipping center 30 miles to the east.

“Coffee is a growing niche for this port,” says Joseph Harris, spokesman for The Port of Virginia. “We moved coffee and cocoa for many years and the coffee business seemed to stick because of the growth of the coffee industry in our immediate area.”

The port, located 190 miles by truck south of Washington, D.C., was the seventh largest American coffee import center in 2017. Together with Baltimore (Md.), Savannah (Ga.), and Charleston (S.C.), about a third of all green coffee imported into the United States comes into these Mid-Atlantic ports. Current operations and future expansion in Virginia signals a bright future for coffee here.

A few facts and figures:

  • The port handled 2.85 million TEUs in 2018.
  • It operates 30 Suez-class ship-to-shore cranes and 14 Post-Panamax quay cranes.
  • There are no aerial obstructions.
  • An integrated rail system allows cargo to reach Chicago and many other Midwest destinations in less than two days.
  • Container vessels are less than three hours

Green coffee import volumes have remained consistent for the past five years. Coffee TEUs (twenty-foot equivalent units) in 2018, for example, totaled 7,451. “You can look up and down the (U.S.) coastline and see the East Coast offers multiple ports,” Suffolk’s Hughes says. “We like being right in the middle.”

The port also benefits from three coffee warehouse companies licensed by the Intercontinental Exchange (ICE) for green coffee traded on ICE’s commodities exchange. Continental Terminals has three regional locations, two in Suffolk and a third in the nearby city of Chesapeake, Md.

Pacorini’s PGS (USA) has a warehouse in Suffolk and RPM Warehousing and Transportation operates in Chesapeake.

The hub in Hampton Roads

The port is a hub for commerce in the Hampton Roads region, an unofficial yet common designation for the Chesapeake Bay, the James and Potomac rivers, and the cities of Norfolk, Newport News, Virginia Beach, and Suffolk.

“The port is a point along the logistics chain,” Harris says. “We’re an economic engine to drive business in the entire Commonwealth of Virginia. If we can help drive the growth of an industry, we’re happy to help promote it and do what’s necessary.”

The Port of Virginia encompasses three entities – the Virginia Port Authority, the Hampton Roads Chassis Pool and the Virginia International Terminals. Coffee enters through Virginia International Terminals’ two portals – Norfolk International Terminals and the Virginia International Gateway.

The Norfolk International Terminals, at 567 acres, is the largest terminal at the port. It includes 14 Super Post-Panamax-class quay cranes and a main channel with a depth of 50 feet. It also provides rail access for quick delivery to Midwest markets.

The Virginia International Gateway on the Elizabeth River covers 231 acres, has 12 Post-Panamax cranes and provides fast access rail and national Interstate highways.

Getting wider and deeper

Plans are made, approvals are in place and work has begun to expand the port’s cargo capacity and channel lanes. A two-phase project already underway calls for expansion of both terminals to better accommodate ULCVs (ultra-large container vessels) and the cargo they deliver.

A $320 million investment in the Virginia International Gateway and $375 million Norfolk International Terminals project will increase its capacity by 40 percent and be able to accept 1 million more containers per year when completed in 2020.

The Norfolk Harbor channels also are planning to expand. Approvals to dredge the 50-foot channel another five feet are in place. At 55 feet, the Port of Virginia will have the deepest channels on the East Coast.

That five-year project, scheduled to start in 2020, also includes widening the passage to at least 1,300 feet, Harris says. A wider, deeper channel will become a major advantage in the future.

The widening will allow two-way channel traffic, an important advantage since the port shares the water with its neighbor, the United States Navy. The “wider, deeper, safer project,” as Harris calls it, will allow ULCVs and Navy aircraft carriers – two of the largest vessels on the seas – to pass each other en route.

“It creates efficiencies in the harbor for all types of vessels,” Harris says.

A culture of cooperation

Revealed during interviews for this article was a shared sense of mission within the regional coffee industry.

“What has evolved for all users and vendors is excellent communications,” says Larry Ewan, spokesman for coffee warehouse Continental Terminals in Suffolk and chairman of the port’s stakeholder committee. “(Port officials) will go to work and solve problems. We don’t have arguments. We have great leadership at all levels so it’s easy to function in that environment.”

That cooperation extends to labor negotiations. Ewan, Harris and others report labor disputes with the region’s longshoremen are very rare.

“The Port of Virginia has never had a work stoppage between its labor force and its work management. Never. Ever,” Ewan says. “Labor harmony with management is awfully important to keeping the port open and thriving.”

Harris concurs. “I’ve been here for 20 years and I know there has been labor peace here for in excess of three decades,” he says crediting the International Longshoremen’s Association and its 2,000 local members. “It’s a good group with forward-thinking leadership. They are supporters of what we’re doing. We don’t look at them as a union. They are a partner. Our goal is to continue that.”

Suffolk: Virginia’s ‘Caffeine Capital’

That sense of partnership also extends to local communities and their local economic development efforts. That’s rarely more evident than in Suffolk.

Kevin Hughes quickly lists big-name players in his city’s coffee production industry. Smucker’s, Massimo Zanetti Beverage USA, Keurig Green Mountain and Peet’s Coffee. Then there are the warehousers. Continental Terminals, Pacorini and RPM Warehousing and Transportation. Add a collection of local and regional roasters that help support local retail coffee shops.

Suffolk’s rise as a coffee production center began with Lipton Tea, which has been operating in the area for more than 50 years, Hughes says.

“We really started to focus in on this about eight years ago,” he says. “Lipton reached out to us on a significant ($100 million expansion) project they were considering. One of the considerations was to reinvent or rebuild the Lipton facilities.”

With support from Suffolk’s economic development office and other local agencies, Lipton’s expansion helped trigger additional interest in Suffolk.

“It was an interesting story that a lot of people could relate to because they all drink coffee and tea,” Hughes says now.

Massimo Zanetti followed Lipton Tea. So did Keurig Green Mountain. The most recent addition is Peet’s Coffee which recently purchased a site for its East Coast roastery. A key factor affecting Peet’s decision to build in Suffolk, Hughes says, was the city’s strong emphasis in coffee.

“They were looking for a coffee culture,” Hughes says. “Our workforce understands the community, even the roasting industry itself. We also have a supplier network that already is entrenched.”

Continental Terminals, which operates three warehouse facilities in the Hampton Roads region, has rights to expand its 12-acre Suffolk facility, according to Continental’s Larry Ewan. That 6.5 acres of land, conveniently located next to customer Massimo Zanetti, “provides us the ability to respond to the customer’s changing needs in very rapid fashion, within 30 minutes.”

The continued growth of coffee production in Suffolk and Hampton Roads supports warehousers and every other business in the industry, Ewan says.

“We are blessed with the fact that coffee roasters are building brick and mortar (facilities) here,” he says. “More and more coffee roasters are relocating to the Mid-Atlantic so now coffee will always be a major import commodity in (the Port of Virginia).”

Hughes says the coffee production industry’s impact on the community starts at the port and spreads throughout the Hampton Roads region. It’s literally in the air.

“I think it’s really brought more awareness to the industry itself,” Hughes says. “People will be driving through on the Interstate (highway). They say ‘I smell coffee everywhere. It smells so great.’ When industry and aroma come together here it’s a really good thing.”