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 ·

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

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 [email protected]

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!

Latest Whitepaper
Voice of the Driver 2: Best Practices for Recruiting and Retention
For the past decade and a half, those who predicted the driver shortage have offered their advice on curbing the shortage.
Download Today!
From the August 2017 Logistics Management Magazine Issue
Which carriers, third-party logistics providers, and North American ports have crossed the service excellence finish line ahead of their competitors? Our readers have cast their votes, and now it’s time to introduce this year’s winners of the coveted Quest for Quality Awards.
BMW Takes the Inland Road to Efficiency
Global Logistics: No Shortcuts to Security
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...
2017 Top 50 3PLs: Investment and Consolidation Maintain Traction
The trend set over the past few years for mergers and acquisitions has hardly subsided, and a fresh...

2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...