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Commentary: Va. ecosystem supports growth

It has been almost four years since I began leading economic development and innovation efforts at George Mason University, and what a whirlwind! This is an exciting time to be in Virginia, and getting to do this job every day feels like winning the lottery.

It all started with the Amazon.com HQ2 win in 2018, leading to the buildup of George Mason’s Institute for Digital InnovAtion on our Mason Square campus in Arlington, and the opportunity to leverage the 10 programs George Mason operated to support the entrepreneurs of today and tomorrow.

Focused on continuous improvement and building an ecosystem with more partners, bringing in more resources to Virginia, George Mason now has 24 entrepreneurial support programs — and growing — to match the pace and type of technologies expanding in Virginia.

Here’s what the Virginia ecosystem looks like through the eyes of a not-so-newbie who came here from Michigan:

1. Northern Virginia’s transient culture has made it very welcoming. This creates a nice culture that extends to attracting entrepreneurs from outside Virginia. I’m eternally grateful to all the people in the business and economic development communities who provided introductions and offered to help. When we launched the large-scale annual Accelerate Investor Conference in 2022, it was a marvel to see how the community came together to help pull in, screen and prep tech companies to pitch investors nationwide.

2. Public universities have significant opportunities to leverage assets and collaborate. There is no 800-pound research university gorilla in this state. This means the door is open to mutually beneficial collaboration across institutions. The people involved in moving laboratory technologies to market come from an incredible array of world-class educational, business and government backgrounds. Virginia does a great job of leveraging the government as a customer (the world’s LARGEST customer).

3. The commonwealth has core assets that other states dream of having. Virginia’s economic development talent at the local and state levels is very impressive. The counties play a large role here in developing the regional economy, and I am blown away at their capacity to collaborate. I get really excited when we all discuss the buildup of the knowledge economy here and each “next” exciting program to leverage our assets.

4. We have the same problems but more opportunities than everyone else. I get together a couple of times a year with leaders of tech economies in the nation’s hot spots. Every region in the country will tell you they can’t get enough talent. That’s why I particularly love working for a university where most students are from the region and stay here after they graduate — that’s a real economic growth cycle. George Mason was the first to offer cybersecurity and cloud computing as degrees that were built in partnership with the businesses located here. Also, our faculty and students seem to seamlessly move between joint classes, certifications and entrepreneur programs.

5. We are at the epicenter of the next evolution in tech. Large companies and startups alike are joining in the AI race, and Virginia is singularly at the center of policy, law, defense and digital innovation in a way that other economies wish they could be.

We’re in a global race, and if we want to take a global role, we need to execute strategies that lead the way. Amazon HQ2 is the perfect example of a collaboration between state and regional governments that turned the tide for this economy by leaning heavily into the universities to build out and reach their potential as powerhouses.

Paula Sorrell is associate vice president for innovation and economic development at George Mason University. She directed the University of Michigan’s Economic Growth Institute before joining George Mason in 2020.

Commentary: Navigating risk

After the chaos of the pandemic years, 2023 brought a sense of normalcy and familiar market dynamics. By December, however, the industry was reminded of the fragility of global trade. Low water levels constrained transits at the Panama Canal, and the Suez Canal became virtually impassible by global container carriers due to terrorist attacks. As of this writing, the cargo ship Dali’s March 26 collision with the Key Bridge in Baltimore halted ship traffic at the Port of Baltimore potentially for months, putting pressure on neighboring East Coast ports. Nevertheless, the industry has adjusted remarkably well to these developments. Recent capacity investments by carriers, which were expected to throw the balance of supply and demand in favor of shippers by a significant margin, have proven surprisingly critical to supply chain resilience.

The impacts of geopolitics have been on the industry’s mind for several years now, beginning with the China import tariffs, continuing through the pandemic, and especially since the onset of the Ukraine-Russia war. It is clear now that these risks to global trade are here for the foreseeable future. At the Transpacific Maritime conference in early March, the annual gathering of shipping industry players organized by S&P Global, the prevailing message was one of continued disruption and fragmented supply chains. Between rising global tensions, growing protectionist policies, and black swan events, international trade is changing and facing more risks than ever before.

The coming year brings a variety of uncertainties to shippers trying to plan their networks. The diversions from the Suez Canal are expected to continue until the attacks on commercial vessels cease, meaning longer transit times around Africa for shippers utilizing this route. The more common route from Asia to U.S. East and Gulf Coast ports, the Panama Canal, is running without significant delays inbound, though export transit times are experiencing longer transits than usual; the situation could improve or deteriorate this year, depending on weather at the canal.

Overall, with longer transits around Africa absorbing extra capacity in the market, ocean freight supply is better balanced to the expected demand this year. Ocean carriers expect modest freight rate increases to account for higher operational costs and the supply/demand balance resulting from these disruptions. Rates remain relatively favorable to shippers, with recent highs still far below the extreme peaks reached during the pandemic period. One dynamic to watch in early 2025 is the shifting ocean carrier alliance landscape. The largest carrier, MSC, will be operating on its own. Maersk and Hapag-Lloyd will kick off their new alliance, the Gemini Cooperation, which will feature a hub-and-spoke network. The OCEAN Alliance will continue with its current members, and the remaining existing alliance, THE Alliance, may bring on a new partner or retool its network as well. The overall structure is in a state of flux, and it will be difficult for shippers to plan for changes too far in advance.

On the domestic front, labor contract negotiations covering U.S. East Coast and Gulf Coast ports are underway ahead of a Sept. 30 deadline. There are concerns that these discussions could become contentious and potentially lead to labor slowdowns. If that occurs, or if sufficient concern builds and convinces shippers to shift cargo to avoid potential slowdowns, the U.S. West Coast gateways will feel the pressure of a cargo surge. Further, any deterioration of conditions at the Panama Canal could put similar pressure on West Coast infrastructure.

There are plenty of risks ahead. Most industry experts agree that while the global market is showing significant resilience considering recent developments, any additional major disruption could push the system over the edge and create bottlenecks reminiscent of the pandemic era. Supply chain managers are advised to stay close to information, close to partners, and constantly evaluate contingency plans. Strong partnerships are always a good idea, and they will be more critical than ever as the global trade landscape changes.

Rachel Shames is vice president of pricing and procurement at CV International, a freight forwarder, customs broker and non-vessel-operating common carrier headquartered in Norfolk.

Commentary: Compete to win through innovation

Innovation and startups are key elements of a vibrant and healthy economy. Startups are responsible for most of the significant technological breakthroughs in recent years, and these new businesses create jobs, drive market competition and lead to a higher standard of living.

Virginia has helped launch many great innovation success stories in key industries, including Embody Inc. in life sciences, ID.me Inc. in cybersecurity, Babylon Micro-Farms​ in agtech, DroneUp LLC in unmanned flight, Electra Aero Inc. in aerospace, and Attune in energy.

Recognizing the significant role that innovation contributes to Virginia’s economic future, Gov. Glenn Youngkin recently released a comprehensive economic development policy — “Compete to Win.” The policy includes innovation as one of six strategies to accelerate economic development in Virginia.

Youngkin’s plan will strengthen a statewide culture conducive to entrepreneurship by enhancing connections between businesses, universities, investors and talent, and by reducing burdensome regulations for small businesses and early-stage companies.

Connecting innovators with opportunity is the mission of the nonprofit Virginia Innovation Partnership Corp. (VIPC). VIPC is the operating arm of the Virginia Innovation Partnership Authority (VIPA), which was formed by the General Assembly to focus support for technology innovation and new company formation in the commonwealth. VIPC is committed to establishing Virginia as a top state for emerging technology businesses through new industry development, ecosystem building and commercialization via universities and the private sector, and equity investments that leverage follow-on venture capital.

VIPC’s investment programs include Virginia Venture Partners (VVP), which invests in early-stage companies by providing the seed funding necessary for an idea to take root and grow. VVP has invested in nearly 300 new companies, which created more than 9,000 jobs, mobilized more than 1,300 investors and leveraged $1.3 billion in third-party capital. Recent funding from the U.S. Department of Treasury’s State Small Business Credit Initiative (SSBCI) adds significant new opportunities for founders — particularly those from underrepresented demographics.

Similarly, the grant opportunities VIPC offers are valuable resources to help budding entrepreneurs find their footing. The Commonwealth Commercialization Fund (CCF) is Virginia’s primary grant program designed to get new products off the bench and into the market. Since 2012, VIPC’s CCF has awarded more than $47 million to Virginia-based startups, entrepreneurs and university-based inventors. These grants assist innovators with critical early technology testing and market validation to reach customers with their innovative products and services.

VIPC has also established several strategic initiatives to advance nascent technology industries. For instance, the Virginia Smart Community Testbed in Stafford County explores solutions based on the Internet of Things (IoT). It is fully integrated with 5G broadband wireless communications and other new and emerging technologies for collaboration with smart cities around the country. 

 In 2019 and 2020, Virginia was named the best state in the country for unmanned aircraft systems (UAS) by Business Facilities magazine. This recognition was accomplished through pilot projects by VIPC’s Unmanned Systems Center and VIPC’s Public Safety Innovation Center, which is assisting with the development and implementation of new technologies for first responders.

VIPC programs and initiatives support the life cycle of innovation, from translational research to commercialization in support of regional and statewide innovation ecosystems and networks.

“Virginia must commit to taking strong action that builds upon a best-in-class business environment to attract far more new businesses, help our existing job creators grow, unlock world-class entrepreneurial creativity and reverse population losses,” Youngkin said when he released his economic development policy. “Now is the time to hit the accelerator and compete to win.”

At the Virginia Innovation Partnership Corp., we are excited about accepting that challenge.

Bob Stolle is president and CEO of the Virginia Innovation Partnership Corp. He was Virginia’s secretary of commerce and trade under Gov. George Allen.

Choppy waters for ocean shipping

What a difference a year makes. In March 2022, ocean freight rates were at record highs, with capacity straining under the weight of historic U.S. import demand. High inventories and economic uncertainty prompted importers to pull back over the summer months, and volumes slowed.

A spectacular rate collapse in the ocean freight market from Asia to the U.S. followed; freight rates are now below pre-pandemic levels on many trades — even below ocean carrier break-even levels —  and import demand growth continues to slow.

Shippers and ocean carriers now find themselves in a familiar situation, reminiscent of the pre-2020 years marked by overcapacity and low rates that were favorable to shippers. The carriers, flush from the past two to three years of record profits, have new vessels on order that are expected to contribute to an overall net capacity increase of 8% to 9% globally and a continuation of overcapacity on most trades.

Within the past year, the Ocean Shipping Reform Act and consumer-focused positions taken by the Federal Maritime Commission have contributed to optimism among shippers; the current shipping environment seems, in many ways, more favorable to shippers than any in recent memory.

While the dynamic feels familiar, a variety of risks abound that define a new international shipping landscape. The impacts of COVID-19 disruptions — especially in China — and geopolitical concerns are prompting more shippers to diversify their sourcing where possible and consider near-shoring.

A long-awaited labor contract for U.S. West Coast ports has been under negotiation for a year, with no deal in sight; many shippers have shifted their routings to avoid West Coast uncertainty. Port congestion has improved significantly since volumes have slowed, but the pandemic volume surge revealed infrastructure vulnerabilities that threaten to disrupt supply chains in the future if left unaddressed. 

The world’s two largest ocean carriers, Maersk and MSC, announced in January they will wind down their alliance over the next two years, and changes to the other two main shipping alliances, both formed in 2017, are expected to follow. Dissolution of the alliances would likely lead to carrier consolidation in the coming years, meaning even less competition on the supply side. MSC, now the largest and fastest growing global carrier, is positioned to dominate. 

Diversification, always important, will play a critical role in the new landscape. Utilizing a variety of logistics providers, sourcing options and routing flexibility will be essential to maintaining a healthy, efficient supply chain. The past few years of supply chain extremes have proven that almost anything is possible and that long-term partnerships are still key to successful global trade.

Rachel Shames is vice president of pricing and procurement at CV International Inc., a freight forwarder, customs broker and non-vessel-operating common carrier headquartered in Norfolk.