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Tag: trade

US trade war could raise prices, economists say

Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau managed to separately negotiate a monthlong pause on Monday with U.S. President Donald J. Trump on a trade war that was scheduled to begin on midnight Tuesday.

However, as of late Monday afternoon, the Trump administration was still prepared to impose a 10% tariff on China, though Trump was said to be planning to hold talks with Chinese leader Xi Jinping.

On Saturday, Feb. 1, citing illegal immigration and fentanyl trafficking, Trump announced he would be levying 25% tariffs against Mexico and Canada, with a 10% tariff carve-out for Canadian oil, natural gas and other energy products. Initially, Canada pledged to retaliate with a 25% on American goods, aimed particularly at red states that supported Trump. Meanwhile, over the weekend, Mexico and China were said to be mulling their trade responses.

But in a post to X Monday, Sheinbaum posted that she and Trump had reached a deal to hold off the tariffs for 30 days, saying that the U.S. agreed to help crack down on “the trafficking of high-powered weapons” over its southern border, while “Mexico will immediately reinforce the northern border with 10,000 members of the National Guard to prevent drug trafficking from Mexico to the United States, particularly fentanyl.”

Later Monday on social media, Trudeau wrote that he too had reached a temporary deal with Trump, promising that Canada would implement its $1.3 billion border plan, including “enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border.”

However, if Mexico and Canada aren’t able to ultimately come to an agreement with the Trump administration after the 30-day postponement, the impact of a prolonged trade war with China and our closest neighbors could result in higher prices for consumers in Virginia and nationwide, a fact that Trump had acknowledged could result in “pain” for Americans.

“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump posted to social media. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

Meanwhile, in a Sunday BBC interview, Trump threatened to levy tariffs “pretty soon” against the European Union nations over their trade practices.

If the administration were to move forward on tariffs against Canada, Mexico and China, said Stuart Malawer, distinguished service professor emeritus of policy and government in the Schar School of Policy and Government at George Mason University, Virginia’s farmers might be hit the hardest.

During the first Trump administration, the United States imposed tariffs on about $370 billion worth of Chinese products. Former President Joe Biden kept those in place, adding tariffs on $18 billion more in Chinese imports.

“Those tariffs remain in place, pretty much and were indeed expanded,” said Malawer, a former member of the Virginia Advisory Committee on International Trade.

Virginia’s top five export markets for agriculture in 2023 were China, Canada, the United Kingdom, Taiwan, and Belgium, according to the Virginia Department of Agriculture and Consumer Services.

Virginia’s agricultural exports to China in 2017 amounted to approximately $1.7 billion. The state exported $1.45 billion in agricultural exports to China in 2022.

Prime Minister Justin Trudeau said Saturday, Malawer pointed out, that Canadians should consider Canadian rye over Kentucky bourbon or skip buying Florida orange juice. Both states have Republican U.S. senators, and Canada has aimed its tariffs primarily at the red states that supported Trump.

“We’re kind of fortunate to have Senators Warner and Kaine in office because … they don’t support [the] tariffs,” Malawer said.

The Port of Virginia could feel impacts from the tariffs, but it’s too early yet to know to what extent, according to Joe Harris, the Port of Virginia’s spokesperson.

“The Mexico issue has sorted itself out to a certain extent,” Harris said. “Trade with Canada is overland trade — it doesn’t have a lot of bearing on us at the port. And then [with] China, it remains to be seen.”

The American Association of Port Authorities, based in Washington, D.C., bluntly called tariffs taxes Monday.

“Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses and increase costs for hard-working citizens,” AAPA President and CEO Cary S. Davis stated in a news release. “Instead, we call on the administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and exempt items critical to national security from tariffs, including port equipment.”

After Trump promised to impose tariffs on Canada, Mexico and China in November 2024, many importers likely hustled to send goods to the United States prior to his inauguration, according to Ricardo Ungo, director of the Maritime, Ports and Logistics Management Institute at Old Dominion University.

“I expect that many of them, they already took action and advanced some of those shipments,” he said.

In Virginia, Hampton Roads-based health care system Sentara Health purchases about $1.6 billion in medical supplies from Mexico, China and Canada, according to Aubrey Layne Jr., Sentara’s executive vice president and chief administrative officer. Last week, Sentara leaders learned that tariffs might have a $40 million to $50 million impact on the health system, he said, adding that Sentara plans to conduct a more extensive analysis on the potential impact this week.

“We’re looking through what our options are in terms of either finding other vendors or somehow getting other supply,” Layne said.  “I suspect there are a lot of companies around the commonwealth … [that are] doing the same thing this morning.”

As for the impact on fuel, Canada’s oil predominantly goes to the West Coast and the Midwest, “so Virginia is less exposed to the impacts of the 10% tariffs on crude oil coming from Canad,” said Bob McNab, chair of Old Dominion University’s Department of Economics and director of the Dragas Center for Economic Analysis and Policy.

The cost to buy a new house, however, could increase in Virginia if tariffs remain in place, according to Ryan Price, chief economist for Virginia Realtors.

More than 70% of the imports of softwood lumber and gypsum, which is used for drywall, come from Canada and Mexico, according to the National Association of Home Builders.

“We would see lumber prices increase,” Price said. “We would see drywall prices increase significantly, which would then likely be passed on to the consumers.”

Additionally, Price pointed out, “tariffs tend to put upward pressure on mortgage rates,” which could further impact Virginia’s sluggish real estate industry.

Virginia consumers, said Virginia Tech economist David Bieri, will probably see spikes in inflation, as anticipated nationwide if tariffs go into effect and persist. And while Virginia’s economy is “more resilient than that of other states,” Bieri said, “this tariff experiment is so unprecedented and far-ranging that it is simply too early to say anything about its impact.”

In the short term, McNab cautioned Virginians to stay calm.

“Uncertainty is high, and my best recommendation is not to panic, not to make ill-advised moves in the short term that could harm your retirement or your business,” he said. “Much like every other sort of crisis that occurs, we have to get away from the immediacy of the now and take a deep breath and kind of engage in long-term planning, which is very difficult when the news is changing on an hour-to-hour basis.”

Virginia Business Associate Publisher and Editor Richard Foster contributed to this story.

Trump White House says tariffs will be enacted Feb. 1

The Trump administration says it will impose tariffs on Canada, Mexico and China beginning Saturday, Feb. 1.

“The president will be implementing tomorrow 25% tariffs on Mexico, 25% tariffs on Canada and a 10% tariff on China for the illegal fentanyl that they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans,” White House Press Secretary Karoline Leavitt said during Friday’s briefing.

She did not provide details on the tariffs, instead stating that information would be available for the public in 24 hours.

U.S. Sen. Mark Warner, Virginia’s Democratic senior senator, responded a little after 3 p.m. Friday in a video statement posted on X, saying that voters elected President Trump because he promised to lower the cost of living, and increasing tariffs will not accomplish that.

“That’s going to mean higher prices for American cars,” Warner said in a video. “It’s going to mean higher prices for avocados. It’s going to mean a host of higher prices that you will see literally as soon as next week if this cost increase gets pushed onto you.”

U.S. Sen. Tim Kaine, Virginia’s junior Democratic senator, and Sen. Chris Coons, D-Delaware, introduced a bill Friday that would require Congress’ approval before the president could impose new or additional tariffs on U.S. allies and free trade agreement partners. Kaine said the tariffs are expected to raise costs of gas, cars, groceries and home goods.

“Virginians want costs to go down, not up. But President Trump’s plans to impose broad-based tariffs would raise the price of everyday goods and hurt our economy,” Kaine said in a statement. “It’s time for Congress to make it clear that no president should abuse existing tariff authorities designed to protect America’s national security from threats posed by our adversaries to slap tariffs on our allies and closest trading partners. I’m proud to introduce this legislation with Sen. Coons to take that step to protect Americans’ pocketbooks from sharp price hikes and safeguard our relationships with our allies.”

To speculate on the impact tariffs could have on the commonwealth and the country, Bob McNab, chair of Old Dominion University’s Department of Economics and director of the Dragas Center for Economic Analysis and Policy, said Friday that he would need to know whether oil imports will be included in the policy.

“We’re sort of in a wait-and-see mode until we know exactly what goods from Canada, Mexico and China would be subject to a 25% tariff for Canada and Mexico and a 10% tariff for China,” McNab said.

Broad-based tariffs, according to McNab, could lead to an increase in prices in Virginia and across the United  States. “Given that inflation has been somewhat sticky over the last several months, this would likely lead to higher rates of inflation in the short term,” he said.

As for Virginia-specific consequences, McNab pointed out that China is one of the countries with the highest volume of imports at the Port of Virginia.

“Even a 10% tariff on a broad volume of goods from China would lead to higher costs for importers through the Port of Virginia, and potentially lower demand through the port over time,” he said.

Talking turkey: Va. is nation’s sixth largest producer

As we prepare to sit down to a turkey dinner on Thanksgiving, let’s consider where those birds come from and where they’re going.

Virginia raises 7.1% of all U.S. turkeys, or 15.5 million turkeys a year, according to a new study by Trace One using U.S. Department of Agriculture data. That’s 429 million pounds of turkey produced at an average weight of 27.7 pounds per turkey, with a value of $403.5 million annually. Virginia is the sixth largest producer of turkeys in the nation, the November study found.

Also, turkeys bred for food are larger than they were decades ago, and fewer turkeys are raised now; in 1996, U.S. farmers raised 303 million birds, and in 2023, 218 million turkeys were raised nationwide. But turkeys now average 32 pounds per bird, nearly double the average of 18 pounds in the 1960s. That’s due to different nutrition and breeding practices, Trace One researchers say.

Although turkeys are a significant part of Virginia’s poultry industry, the biggest seller is broiler chickens. Farmers in the commonwealth produced 284.5 million broiler chickens in 2021, according to the Virginia Poultry Federation. Total poultry and egg sales in 2021 produced a direct economic impact of $5.8 billion in Virginia.

More than 85% of U.S. turkey production takes place in 13 states, and North Carolina is the nation’s top producer, accounting for 15.3% of turkeys by weight. North Carolina’s birds are very large on average, at 36.9 pounds per turkey.

Hobey Bauhan, president of the Virginia Poultry Federation, notes that the average weight per bird can be affected by “heavy toms” — male turkeys that can weigh in at 45 pounds or more. “You never get a heavy tom on your Thanksgiving table,” he said, noting that such large birds are used instead for cold cuts. “The traditional Thanksgiving bird that you’re going to have is smaller.”

In 2023, India and the United States came to an agreement to reduce India’s tariffs on U.S. turkey products, allowing Virginia’s poultry producers to export turkey to India more affordably. On Nov. 12, U.S. Sen. Mark Warner, a member of the Senate India Caucus, announced the first shipment of Virginia turkey to India via the Port of Virginia, whole birds raised by the Virginia Poultry Growers Cooperative, the Hinton-based organization of nearly 200 farmers in the Shenandoah Valley. The co-op processes about 7.5 million turkeys a year and offers organic and antibiotic-free products. VPGC produced an organic turkey breast product specifically for the Indian market, according to the co-op.

“This shipment is a tremendous opportunity for Virginia’s poultry producers and a huge step forward for U.S.-India trade,” Warner said in a statement. “As co-chair of the Senate India Caucus, I look forward to the ongoing cooperation between our two nations and to seeing a wealth of new opportunities open up for Virginia’s poultry producers.”

Tariffs are, of course, in the news again as President-elect Donald Trump has vowed to impose 25% tariffs on all goods from Mexico and Canada on “day one” after his Jan. 20, 2025, inauguration as well as an additional 10% tariff on China. However, Trump has not mentioned increasing tariffs on India since his re-election, and he and Indian Prime Minister Narendra Modi have close ties.

Although Virginia ships turkey and other poultry products all over the world, including Africa, Asia, the Middle East, Canada and Mexico, entering the Indian market is “a big deal,” Bauhan said. “The turkey industry is a significant part of Virginia agriculture, directly employing about 4,000 people.”

Bauhan declined to speculate on the impact of new U.S. tariffs on Virginia’s poultry industry or the tightening of immigration regulations (including the likelihood of some immigrants being deported under the Trump administration), but he noted that Virginia’s poultry industry employs “a diversity of workers,” including many immigrants.

“We were one of the early industries to adopt E-Verify,” the federal platform that determines whether a person is able to be legally employed in the United States, Bauhan said. “We’ll continue to do that. Our economy needs immigrants, but we need to have reforms and pass federal legislation that will secure the borders and allow for legal immigration. The system has not been overhauled and addressed in many decades.”

As dockworkers strike continues, experts weigh potential supply chain impacts

The situation remains at a stalemate following the first day of a historic strike by the International Longshoremen’s Association (ILA) at ports from Maine to Texas.

Thousands of ILA members joined the picket line as a midnight deadline passed Monday evening — with no deal reached between ILA and the United States Maritime Alliance (USMX), which represents the ports. The union is calling for a significant wage increase as well as assurances on automation at the port.

ILA President Harold Daggett joined members on the picket lines at Maher Terminal in Port Elizabeth and APM Terminals and Port Newark Contain Terminal Tuesday. The union says it intends for demonstrations to continue round-the-clock for as long as it takes for USMX to meet its demands for rank-and-file members.

“We are now demanding $5 an hour increase in wages for each of the six years of a new ILA-USMX Master Contract,” said Daggett. “Plus, we want absolute airtight language that there will be no automation or semi-automation, and we are demanding all Container Royalty monies go to the ILA.”

Opposing sides

Thousands of members joined in solidarity on picket lines at all the major ports on the Atlantic and Gulf Coasts. In a show of international solidarity, Bobby Olvera Jr., president, International Longshore and Warehouse Union, appeared with with Daggett and ILA Executive Vice President Dennis Daggett when the strike commenced overnight.

“When we fight, we win,” said Olvera. “Brother and Sisters, on behalf of all the members of the ILWU, from Alaska to San Diego, British Columbia, and most definitely from the Islands of Hawaii, the ILWU stand with ILA. We are family – WE ARE ONE!”

Meanwhile, USMX stood by its most recent offer and expressed a desire to continue bargaining.

“USMX is proud of the wages and benefits we offer to our 25,000 ILA employees, and strongly supports a collective bargaining process that allows us to fully bargain wages, benefits, technology, and ensures the safety of our workers, day-in and day-out,” USMX said in a statement updating the status of the negotiations on Oct. 1. “We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike. Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy.”

“We look forward to hearing from the Union about how we can return to the table and actually bargain – which is the only way to reach a resolution,” USMX closed its statement.

The state, region and country are bracing for the fallout, which would intensify as it drags on. As NJBIZ reported Tuesday, officials have prepared in anticipation of the shutdown.

Supply chain concerns

NJBIZ heard from sector and subject experts about the different ramifications and how they are adjusting to the disruption.

“We are in constant contact with our customers. As you would expect, many are still in the planning stages,” said Carter Andrus, chief operating officer, Prologis, a leader in logistics real estate, with facilities in New Jersey, New York, Savannah, Baltimore, and Florida. “We saw a rush to get as much product out of the port by Sept. 30, and we are working with customers to provide some overflow parking and storage areas to temporarily store inventory. Other customers are evaluating different options and will consider adjusting operations pending how the situation evolves.”

“This strike, which affects 36 ports and is the first by the union since 1977, threatens to disrupt the nation’s supply chain, potentially raising prices on various goods like food, toys and cars,” Robert Dowler, president, and Benjamin Lowe, immediate past president, said in a statement on behalf of The Association of Supply Chain Management Greater North Jersey Chapter. “The impact of the strike could be significant, potentially costing the economy up to $5 billion per day and causing delays in essential goods, especially as the holiday shopping season approaches.

The organization noted that the strike could also affect international trade and more.

“While some operations, like cruise ships and the transportation of certain fuels and essential goods, are expected to continue, the strike could lead to delays in shipments of items such as cars, fruits, and holiday merchandise, exacerbating supply chain pressures,” the statement closed.

Making plans

Kristin Pothier, KPMG US sector leader, Life Sciences, said that when it comes to the pharma industry, there are two points to consider.

“There is always a knee jerk reaction to say that any strike at a port will affect all aspects of every industry and could be very serious in life sciences especially for therapeutics,” said Pothier, before introducing the topics. “Pharma is not an industry that is heavily reliant on shipping ports. The strike is not a surprise and has been on the horizon for a couple of years. Many companies have already done the work to reroute and build stock in whatever mitigation tactic is necessary.”

She said that the pharmaceutical companies and distributors have extensive risk planning teams that kick alternative plans into gear for situations like this.

“There may be periphery items (gowns, gloves, masks etc.) that could potentially impact the health care sector which ultimately may impact the overall Pharma/Life Sciences industry,” she added.

Ash Shehata, KPMG US sector leader, Healthcare, said that since the pandemic the health care industry has been preparing for supply disruptions and conducting ongoing reviews of supply chain resiliency between distributors and health systems.

“Many of these systems were put in place during the COVID-19 pandemic. Healthcare volumes are up post-pandemic so there is little room for error,” said Shehata. “These supply disruptions will drive more visibility of the existing issues in critical major hubs like NYC, the west coast, and other major metro areas. Additionally, health systems have already experienced high medical cost inflation – second to labor inflation driving reduced margins. Supply shortages will worsen this margin impact. Supply chain disruptions could eventually impact staff and patients adversely in an already fragile environment.”

This story was originally published in NJBIZ, a BridgeTower Media publication.

RELATED STORY: U.S. port strike starts; Port of Va. stops cargo operations

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Youngkin to embark on Northern Europe trade mission

Gov. Glenn Youngkin will leave on his third international trade mission next week, visiting Germany, Denmark, Finland and Switzerland, his office announced Wednesday.

According to the news release, he will meet with Finnish President Alexander Stubb, along with officials in Frankfurt, Stuttgart and Munich, Germany; Copenhagen, Denmark; Helsinki; and Zurich, from April 28 through May 3.

“This economic development trade mission with strong European partners will build on business relations, our shared priorities and highlight the commonwealth’s capabilities,” Youngkin said in a statement. “Virginia’s strong workforce, incredible business environment, robust transportation system and world-class education institutions make the commonwealth uniquely positioned to attract businesses around the globe. Germany, Denmark, Finland and Switzerland represent critical markets that will advance economic growth and prosperity in Virginia. In strengthening these relationships, we are not only reaffirming our commitment to economic development in the commonwealth but also strengthening the spirit of Virginia.”

In April 2023, Youngkin embarked on his first international trade mission as governor, meeting with Taiwan’s president and visiting Japan and South Korea, and in December 2023, he traveled to France, where he attended the 2023 International Paris Air Show, where he met with aerospace executives and other defense officials.

According to the governor’s office, there are 119 German-owned companies with presences in Virginia, as well as 30 Swiss corporations, 13 Danish companies and eight Finnish businesses. Denmark-based Lego Group is building a $1 billion manufacturing facility in Chesterfield County, the state’s largest economic development win announced during Youngkin’s administration. It’s expected to be operational in 2027, the toymaker said in February.

Widening of Port of Virginia shipping channel is complete

The Port of Virginia’s shipping channel is now wide enough for two ultra-large container vessels to pass at the same time, concluding a significant part of the $450 million dredging project to make the port the widest and deepest harbor on the East Coast. According to the Friday announcement, the port expects to finish the deepening segment of the project in fall 2025, a delay from its previously announced deadline of late 2024.

The dredging project began in 2019, and in 2022, the Port of Virginia and the U.S. Army Corps of Engineers signed a cost-sharing agreement on the dredging project. As of Friday, the shipping channels are up to 1,400 feet wide in some areas, and the commercial shipping channel and the Norfolk Harbor will be 55 feet deep, while the ocean approach is set to be 59 feet deep.

In previous announcements, the whole dredging project was expected to be finished by the end of 2024, but Port of Virginia spokesman Joe Harris said Friday that federal permits allowing beach replenishment in Virginia Beach had to be renewed, causing a delay of a few months in the deepening segment of the project. Dredge material, a byproduct of the dig, will be used to build up regional beaches, port officials have said.

Harris said it’s possible that dredging will be finished before fall 2025, and noted that the widening is important to ship pilots who travel in and out of the port’s terminals in Norfolk. He added that the port is ahead of schedule on deepening the Thimble Shoal channel, and work is ongoing in the Norfolk Harbor.

The widening of the Thimble Shoal West Reach Channel will allow two ships to pass through the shipping channel at the same time, instead of just one at a time, Harris said in an interview with Virginia Business. “It’s basically making a one-way street a two-way street.” The port expects the expansion to reduce the amount of time an ultra-large container vessel spends on berth by 15%, which will improve efficiency and speed.

Capt. Jenn Stockwell, commander of the U.S. Coast Guard’s Virginia sector, issued a business rules memo for the wider channel Friday, removing the one-way restrictions.

“This is a true advantage for anyone delivering to or from America,” said Stephen A. Edwards, CEO and executive director of the Virginia Port Authority, which runs the Port of Virginia. “Our wider channel sets the Port of Virginia apart by allowing for consistent vessel flow, increasing berth and container yard efficiencies, and further improving harbor safety.

“Ocean carriers are putting larger vessels into their East Coast port rotations with additional ULCVs on order, and our partners know their vessels will not outgrow our capabilities. In Virginia, there is no concern for channel width, overhead draft restrictions, capacity or cargo handling infrastructure.”

Included in the funding of the project is $72 million in federal money allocated in the Bipartisan Infrastructure Law, also known as the 2021 Infrastructure Investment and Jobs Act. The federal government and the port agreed to a 50-50 cost share in 2015, when the Army Corps began evaluating the economic value of a deeper and wider harbor and commercial shipping channel.

“The completion of this project is a testament to the collaboration of all port stakeholders in Virginia,” Capt. Whiting Chisman, president of the Virginia Pilot Association, said in a statement Friday. “It is a momentous achievement. The focus of the project more than a decade ago was on creating a channel wide enough and deep enough to safely accommodate a class of [ultra-large] container vessels that were not expected to call the U.S. East Coast for years to come. This port is ready for the future.”

 

Biden executive order on Chinese cranes affects Port of Va.

President Joe Biden issued an executive order Wednesday addressing cybersecurity and espionage concerns over Chinese-made cranes in use at U.S. ports, including the Port of Virginia. Additionally, the Biden administration announced a plan to invest $20 billion on infrastructure security at U.S. ports, including support for domestic manufacturing of ship-to-shore cranes.

National security concerns about espionage and other cyber crime risks associated with ship-to-shore cranes manufactured by Shanghai Zhenhua Heavy Industries Co., known as ZPMC, became public in March 2023 following a report from The Wall Street Journal. ZPMC is owned by the Chinese government, and its major shareholder is China Communications Construction Co.

In a press briefing on Tuesday, Rear Adm. John Vann, commander of the U.S. Coast Guard Cyber Command, said: “The People’s Republic of China-manufactured ship-to-shore cranes make up the largest share of the global market and account for nearly 80% of cranes at U.S. ports. By design, these cranes may be controlled, serviced and programmed from remote locations. These features potentially leave PRC-manufactured cranes vulnerable to exploitation.”

Federal officials would not disclose if there have been any known cybersecurity incidents associated with the ZPMC cranes.

The issue is so critical, Vann said on Tuesday, because “America’s system of ports and waterways accounts for over $5.4 trillion of our nation’s annual economic activity, and our ports serve as a gateway for over 90% of all overseas trade.”

All 27 of the Port of Virginia’s ship-to-shore cranes were manufactured by ZPMC, according to Cathie Vick, the Virginia Port Authority’s chief development and public affairs officer. The port also has four cranes on order from ZPMC that will be delivered to the Virginia International Gateway terminal in December 2024 and another four cranes that will be delivered to Norfolk International Terminals in August 2025, Vick said Wednesday.

Biden’s executive order expands the Coast Guard’s authority to address cybersecurity concerns. Additionally, the Coast Guard will issue a maritime security directive listing risk management steps for owners and operators of Chinese-made ship-to-shore cranes.

“Before any new cranes are put into service they are subject to a detailed forensic cyber analysis that is performed by one of the nation’s federal law enforcement agencies,” Vick said in a statement. “New cranes awaiting analysis are isolated with dedicated firewalls to ensure there is no contact with port networks or the internet.

“At the Port of Virginia, we take the issue of cybersecurity very seriously and work continuously to protect our operations against outside threats,” Vick continued in the statement. “As part of this effort, we undertake regular cybersecurity exercises that include close collaboration with several federal entities [and] partners in Hampton Roads to ensure readiness for multiple types of cyber events or threats. We are confident that our protocols will satisfy the requirements of the executive order.”

Biden’s executive order broadens the Coast Guard’s authority to address cyber threats, including granting the authority “to control the movement of vessels that present a known or suspected cyber threat to U.S. maritime infrastructure,” according to the White House.

Some of the cybersecurity regulations implemented in the executive order, including mandatory reporting of cybersecurity incidents or active cyber threats and inspections of relevant vessels and facilities, were already voluntarily included in the Port of Virginia’s protocols, Vick said.

The Biden administration will also direct more than $20 billion to port infrastructure investments over the next five years, including supporting domestic manufacturing of cranes, according to a White House news release. That will include funding to help Paceco, a U.S.-based subsidiary of Japanese company Mitsui E&S Co., to manufacture ship-to-shore cranes in the United States. Paceco previously manufactured cranes in the U.S. from 1958 until the late 1980s, according to the White House.

Currently, no cranes comparable to ZPMC’s are manufactured in the U.S., according to reporting from The Wall Street Journal, and an alternative crane used by some U.S. ports from Finnish company Konecranes costs about a third more.

Speaking to reporters Tuesday, Anne Neuberger, U.S. deputy national security advisor for cyber and emerging technologies, said that the administration is not looking at a “rip and replace” strategy for ship-to-shore cranes already in use, but instead was focused on setting cybersecurity requirements “to secure the existing infrastructure” and to also make sure that ports “can go [back] to buying trusted cranes and to bringing back [crane] manufacturing to the United States, given how important cranes are to port operations.”

At this time, the Virginia Port Authority does not have plans to replace its ZPMC-made cranes, and port officials have not had any discussions with the federal government about that, Vick said.

Neuberger said that while the executive order “certainly ties to particular concerns about Chinese cyber activity, we also have concerns regarding criminal activity.” She cited a criminal ransomware attack that disrupted the Port of Nagoya in Japan for more than two days in July 2023.

There have been no reports of cybersecurity breaches affecting Port of Virginia cranes, according to Vick. The federal government has not alerted the port to any instances of cranes in Virginia being used for espionage.

“We are confident that all of the cranes owned and operated by the Port of Virginia are safe and secure and will already comply with the parameters set forth in the executive order,” Vick said in a statement. “We employ best practices and will continue to collaborate with multiple federal law enforcement agencies to ensure the equipment we purchase, own and operate is here for its intended use, which is to move cargo.”

Fed’s Fifth District economy sees mild expansion

Economic activity in the Federal Reserve’s Fifth District (a multistate region including Virginia, North Carolina, South Carolina, West Virginia and Maryland) expanded mildly in recent weeks, according to the latest edition of the Federal Reserve’s Beige Book, released Wednesday.

Published eight times per year, the Beige Book is based on anecdotal information about economic conditions gathered from the nation’s 12 Federal Reserve Banks. It is compiled from reports by bank and branch directors, as well as information gathered from business contacts, economists, market experts and other sources. Wednesday’s release is an update from the Fed’s Nov. 29, 2023 report.

Here’s what the most recent Beige Book edition revealed about the direction the economy is taking:

Employment in the Fifth District grew moderately in the past few weeks, although the tight labor market continued to put upward pressure on wages. Some respondents reported operational changes as a result, like a specialized software company that expects to cut investment plans this year because salaries increased by 15% of the firm’s total revenue and the company needs to continue hiring workers to meet customer demand.

Price growth continued to slow slightly, according to the Fed, but year-over-year inflation remained “somewhat elevated.” Service providers saw a 3.8% increase in prices received, down half a percentage point from the previous reporting period. Manufacturers reported a 2.8% increase in prices received, up slightly from the previous report.

Manufacturing activity in the region slowed in recent weeks. While contacts in some industries tied to consumers’ discretionary spending reported declines, like a wine producer who reported a 30% drop in sales, some contacts saw unexpected increases in demand. An automobile fabric manufacturer reported an uptick in new orders, notable because its customers historically have pulled back on spending each December.

Fifth District ports’ trade volumes were down in recent weeks. Imports were lower year-over-year as wholesalers continued to work on reducing high inventory levels. Loaded exports, though, were up. Spot shipping rates to the East Coast increased because carriers had issues at the Panama Canal and the Red Sea. Container dwell times fluctuated.

Freight volumes for trucking firms were slightly lower than in the prior report, and firms did not see a seasonal uptick. In the full truckload segment, food, medical, automotive and retail shipments provided the greatest demand. Trucking companies did not experience significant backlogs on new equipment orders but occasionally had issues receiving some parts.

Retailers in the Fifth District reported steady to slightly increasing demand and revenues. Travel and tourism respondents reported steady to increasing sales, hotel occupancy rates and passenger air travel.

Residential real estate activity declined modestly due to an expected seasonal slowdown. Home prices increased moderately, while days on the market increased slightly but remained below historic averages. Construction costs had moderated, builders reported, but shortages of some building materials and specialty subcontractor labor continued.

Commercial real estate market activity was flat in the previous few weeks. The retail segment remained strong, particularly among fast casual restaurant chains. Class A office space tightened as firms upgraded their space and moved away from central business districts. Construction projects were largely limited to the industrial and multifamily sectors.

In the financial sector, loan demand continued to soften modestly. The biggest slowdown in demand was in residential mortgage lending. Deposit balances remained flat, and institutions continued to see competition for available funds.

Overall revenues and demand for services for nonfinancial service providers in the Fifth District remained stable. Competition put pressure on pricing and maintaining current clients. Firms reported wages and workforce availability were continuing challenges.