Subscribe to our free, weekly email newsletter!


AAPA explores new ways of funding

Last week’s biennial Port Administration and Legal Issues Seminar in San Francisco featured an in-depth discussion on port funding and public finance management. And while many paths can be taken toward achieving a financing goal, most speakers advised a “go slow” approach.
By Patrick Burnson, Executive Editor
April 18, 2011

As all of our nation’s major ocean cargo gateways attempt to expand their footprints and compete with enhanced infrastructure, finding the money for many such projects continues to be a daunting challenge.

Last week’s biennial Port Administration and Legal Issues Seminar in San Francisco (sponsored by the American Association of Port Authorities) featured an in-depth discussion on port funding and public finance management. And while many paths can be taken toward achieving a financing goal, most speakers advised a “go slow” approach.

“It is crucial that one set priorities with all the port stakeholders before moving forward,” said Karl Pan, chief financial officer for the Port of Los Angeles. “Before getting started, make sure you understand the risks and whether you are staffed with the administrative skill sets to the get the job done.”

According to Pan, interest costs are not the only concern ports should have when borrowing money. There are debt service reserve fees; financial covenants; and unique reporting requirements.

“So when you are trying to sell your plan to a Board,” he said, “it’s important to avoid financial jargon.” Pan also insisted that complete transparency be provided in any presentation, as “there is no place to hide.”

Given the economies of scale that most ports are now under, financial advisors are “a must,” said Pan.

“We must always remember that advisors are in this business for one main reason – to make money. But because our ports are so sorely stretched thin, they are absolutely essential,” he said.

Jessica Soltz Rudd, senior director with Frasca & Associates, LLC, concurred, noting that advisors can help ports navigate the intricacies of the financial marketplace.

“Back in the ‘go-go nineties’ ports were bringing in so much cargo that money for expansion was a given,” she said. “The growth multiples were three times or more each year, and given the capital intensive nature of port operations, money was not that hard to raise.”

But in the wake of a severe recession, and with consumer confidence now just beginning to gain traction, ports are under pressure to justify investment before trying to raise money.

“Even with a bond rating like LA’s – ‘triple A’ with Moody’s, S&P, and Fitch – it’s not an easy thing to do,” said Sotlz Rudd. “And once you get the funding, it’s important to stay on your guard, and remain proactive. You are only as good as your credit.”

Fro related articles click here.

 

 

 

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The Port of Oakland has undertaken a series of measures in recent years to attract more import volume.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 8.2 percent from September 2013 to September 2014 at $102.2 billion.

NS said that the D&H lines it plans to acquire connect with the NS network at Sunbury, Pa. and Binghamton, N.Y. and give NS single-line routes from Chicago and the southeast U.S. to Albany, N.Y., which is in close proximity to NS’ Mechanicville, N.Y.-based intermodal terminal.

This follows a 1.6 cent decrease last week, which was preceded by a 5.4 gain the week before and stands as the first increase going back to the week of June 23, when the weekly average headed up 3.7 cents to $3.919 per gallon.

BNSF said that its 2015 capital expenditures will be allocated towards various areas of its business, including maintenance and expansion of the railroad to meet the expected demand for freight rail service, with 2015 representing the third straight year BNSF has invested a record annual capital expenditures investment.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA