Tom Capozzi

Tom Capozzi senior director of marketing services,
Virginia Port Authority

Capozzi

Among U.S. ports, the Port of Virginia is perhaps best placed to take advantage of growth of cargo volume and services moving from India to North America. That's because the port has the deepest draft on the U.S. East Coast, allowing the biggest ships transiting the Suez Canal to be able to dock there. It's also a prime cargo gateway for goods moving from India to the U.S. Midwest. But cargo is also increasingly moving from India to the Port of Virginia because the port long ago recognized the value of luring such trade to its terminals, and has gone out of its way to make sure that happens. At the forefront of this activity is Capozzi, who recently spoke with Namaste about his view of port development in India.

Namaste: VPA has seen its share of India-related throughput rise significantly in recent years. Was it a conscious effort by the port to try to attract Indian cargo, or have the port’s users just organically migrated to India as a sourcing location?

Capozzi: Both. Early on, in the late 1990s, our trade with India was growing, and this was happening without a real marketing plan for India. And it became apparent very quickly that our trade with India wasn't going to taper off. We watched India's growth as a nation, as a manufacturing center, and we watched its business climate change and mature. These things led us to the decision that India was going to be an important trading partner, so we began to build a marketing plan and presence for India. We originally started to cover India through or representative in Singapore. As part of our recent review of our global assets, we chose to close our Singapore representation and replace it with representation in India. We have a lot of confidence that our effort there is going to worth the investment.

Namaste: What factors will enable India-U.S. East Coast trade volumes to substantially increase over the next 10 years?

Capozzi: I believe the growth of the size of vessels in that trade lane will be a major factor. These post-Panamax vessels coming from India can transit the Suez without any issues and head across the Atlantic to the U.S. East Coast. The factor that weighs most heavily in favor of the Port of Virginia is that we're the only East Coast port that has water deep enough to handle these vessels. We're at 50 feet right now and have the federal authorization to go to 55 feet. This is why we feel we have the most to gain from India's emergence as a manufacturing center. Once India starts to produce the volumes of cargo that would justify the deployment of post-Panamax vessels on the India/U.S. trade, we are the only port that could handle the largest of these vessels fully loaded.

Namaste: In terms of exports, which types of goods will allow India to succeed as a manufacturing region, and secondly, what goods typically arrive at VPA from India these days?

Capozzi: India is a big supplier of textiles, handicrafts, coir products (made from the husks of coconuts), cashews, pickles, iron and steel products, granite, machinery, tea and tobacco. They are making great inroads in the auto parts industry with the area around Chennai now being referred to as the 'Detroit of India.'    They import from the U.S. wastepaper, chemicals, newsprint, machinery, cotton and metal scrap.

Namaste: Are you seeing VPA customers looking at India as a cargo destination in the future, or is it primarily an origin point for cargo?

Capozzi: Like many nations, India today is the recipient of a lot of American-made goods and raw materials. As its manufacturing base and transportation infrastructure grow we'll see a lot more goods coming from India. There is a lot of upside for both parties and on both sides of the issue.

Namaste: Which ports in India are the most efficient, and do you see a difference in efficiency between terminals operated by the government and those operated by private terminal operators?

Capozzi: All areas of infrastructure development are probably the biggest challenge faced by India. Ports, rail, roads and air have all been neglected and are nowhere near the level of development you now see along the coastal areas of China. However, as the Indian government has become more open to private investment and control of these areas, there are a number of major projects underway by companies like DP World and APM. There is great disparity among the ports as far as productivity. We met recently with the DP World folks at the terminal they recently took over in Cochin. In a short time, they had been able to double the vessel productivity levels from where they were when it was government run. It is still not up to the standards you see in Asia, or even here in the U.S., but they are making progress. They were also developing a brand new terminal in Cochin known as their 'India Gateway' terminal that they hope will become a competitor to Columbo as a major transshipment point.

Namaste: Draw a comparison between port infrastructure in India and other emerging economies in Asia, such as China, Vietnam, Thailand or the Middle Eastern nations.

Capozzi: It is hard to compare because all of these nations are investing millions in their port and transportation infrastructure and each is at a different stage in its growth. The question will be can they sustain the investment — will it be long-term — and will there be as much investment and support, both public and private, for the manufacturing base that makes the goods for export. The other challenge India faces that countries like China and Vietnam don't, is that it is a democracy. In China, the central planners just decide where is the best place to put a port, how much money is needed, and they move forward. In India, all of these projects are subject to the foibles of democracy. This does not provide the most stable environment to make such long-term planning decisions. Governments and policies can change radically in the course of one election.

Namaste: What inroads is the VPA making in securing cargo from other Subcontinent countries aside from India, such as Sri Lanka, Pakistan and Bangladesh?

Capozzi: Right now our emphasis is on India as we view that as the largest market. We also receive a great deal of textiles from Sri Lanka, Pakistan and Bangladesh, but those markets are smaller and we don't have the resources to be everywhere. Our agents, P.L. Shipping, are very familiar with the trade throughout the whole region, so if we had a specific opportunity or targeted a push in any of those countries, they would be able to assist us.

Namaste: Is there a great deal of competition between U.S. East Coast ports in terms of vying for Indian cargo, and if so how does it manifest itself?

Capozzi: Yes, there is a lot of competition. We are not the only port on the U.S. East Coast benefiting from India's growth. The competition is traditional: what port offers the best economics, service, has room for growth and most efficient means of getting to the major markets. We believe we have an advantage over all of our competitors in all of these areas. The competition also involves building relationships. We have been in India a lot in the last two years and we've established a marketing presence there. Halifax, Savannah and Charleston have representation in India. Halifax even paid for an Indian business delegation to come to Halifax to tour the area and look at that area as a place to set up their North American distribution. We have seen our competitors at the major trade shows in India.

Namaste: VPA recently announced it has established an agent on the ground in India to lure more cargo to the port. Why was this decision made and what are the authority’s goals for this project?

Capozzi: In 2006, the VPA's terminals handled 62,860 TEUs coming from or headed to India. In 1994, the VPA's trade with India amounted to 8,490 TEUs. The average annual growth in trade between Virginia and India, since 1994, has been 17 percent. And, in 2006, India ranked No. 6 in total container volume. We looked at those numbers and knew there was potential for even greater growth and we decided a marketing presence there was the right move. We have specific goals for our agents in India that include cargo growth, but those terms are confidential. Needless to say, we want to see a return on the investment we are making, and we are very confident that we have the right partner in PL Shipping and India is a market that is ripe for strong growth.

Namaste: As a two-way trading nation, what do you see as India’s strengths within Asia?

Capozzi: It has a has a progressive yet stable democracy, there is an emphasis being placed on manufacturing and trade, there is a genuine effort — investment — being made to update the transportation infrastructure and it has a young, growing, educated labor force.