Fitch Ratings’ Briefing Says U.S. Ports Remain “Stable”

While the expanded Panama Canal locks went into operation in mid-2016, the impact of that development has yet to be fully measured, say analysts for Fitch Ratings LTD, a nationally recognized investment consultancy. In its latest “sector briefing,” experts note that port capital improvements continue to center on capacity enhancements to accommodate larger container ships being routed through Panama, and for the even more massive “mega” vessels on all-water routes.

Nine ports have water depths sufficient to handle post-Panamax ships: Los Angeles, Long Beach and Oakland, CA; Seattle and Tacoma, WA; New York/New Jersey; Norfolk, VA; Baltimore; and Miami.

“There were no major surprises in our research,” says, Stacey Mawson, Director, Fitch Ratings. “Performance across the sector was mixed last year due to the Hanjin bankruptcy that created a backlog which has largely been cleared.”

She adds, however, that renegotiated trade agreements or newly implemented tariffs under the Trump administration could result in changes to import and export volumes, along with the relative importance of affected trade routes. Furthermore, U.S. withdrawal from the Trans-Pacific Partnership may adversely affect cargo volumes.

“The full effect of any changes would extend beyond 2017,” she says. “We'll continue to monitor throughput and service frequency.”

Fitch Ratings maintains 16 stand-alone revenue-backed ratings across 15 U.S. ports. It also rates ports where debt is supported by tax revenues. Fitch's outlook for U.S. port ratings is “stable.” Indeed, the “A” category remains the most common rating level for stand-alone U.S. ports, reflecting the sector's relatively low credit risk and the resilience of cash flows despite volume fluctuations during economic downturns.

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