RD8 - Special Report: Review of Recent Reports on the Virginia Port Authority’s Operations
*This report was replaced in its entirety by the Joint Legislative Audit and Review Commission on January 15, 2013.
The Virginia Port Authority (VPA) is an independent state agency that owns or leases five terminals operated by Virginia International Terminals, Inc. (VIT), a non-profit private corporation. As an alternative to this operating model, it has been proposed that the state consider entering into a public-private partnership to conduct port operations.
In the last two years, four consultants have evaluated VPA’s management and financial performance. This special report includes a review of these consultants’ findings. The consultant studies relied primarily on existing reports and information, and on comparisons of the Port of Virginia as a whole to other ports, such as the Port of New York and New Jersey and the Port of Savannah. In addition to reviewing the consultants’ reports, we conducted interviews with key staff at VPA and VIT and analyzed market and financial data. We also reviewed the compensation levels of VPA and VIT executive employees.
Only one of the consultants’ reports, by Drewry Maritime Advisors, reaches broad conclusions regarding VPA’s operation and performance, and was the focus of this review.
Our review of the recent studies of VPA’s operations and our additional research found:
• The Virginia Port Authority’s market performance and outlook appear to be more positive than suggested by the Drewry report when additional relevant factors are considered. VIT terminals outperformed both the ports of New York and New Jersey and Savannah after the end of the 2008-09 recession.
• The Virginia Port Authority does not appear to be financially unsustainable, as suggested by the Drewry report. The port authority is positioned to generate a net profit during the next five years, particularly given the projected growth in cargo volume during that period.
• Administrative expenses could be reduced by eliminating duplicative administrative functions shared by the Virginia Port Authority and Virginia International Terminals.
Our review of executive compensation levels found that
• Virginia International Terminals and Virginia Port Authority executives are compensated at levels higher than most other port authority executives in the United States.