Fitch Ratings tells logistics managers to expect trade policy impact on U.S. ports

Global logistics managers may see more rating changes for some U.S. ports over the next 12 months in the wake of an unusually active year of movement for the sector, say industry analysts at Fitch Ratings.

In its latest U.S. Ports Peer Review, analysts note that there is potential for rating adjustments in the next review cycle due largely to factors “idiosyncratic” with select ports, though some broader market developments could play a factor as well. 

“Trade policy and recent tariffs are areas that will no doubt have an impact on select U.S. ports in the coming months,” said Senior Director Emma Griffith.

In an interview with Supply Chain Management Review - a sister publication - Griffith added that there is certainly some concern that there is duplicative capacity being added to the system; should changes to trade policies/imposition of tariffs result in reduced cargo volumes for imports/exports longer term, this mismatch may be exacerbated. 

“In the absence of a port development strategy at the federal level, the various ports, which are generally governed either at the state or municipal level, seek to develop their infrastructure to further their own economic development goals,” she said. 

In fact, commodity exposure and tariff concerns were in part why Fitch kept its Rating Outlook for the Port of Alabama at Negative following its last rating review.

This comes following an active year of rating movement for U.S. ports over the last 12 months. As projected in its 2017 peer review, Fitch upgraded ratings for a handful of ports throughout the country over the last year. The performance upswing continues for Hawaii’s port system, which Fitch upgraded to “AA” following an upward Outlook revision to Positive the year prior. 

Fitch also upgraded the North Carolina Ports Authority (to A-) reflecting robust financial performance and increased flexibility from state appropriation funds. 

The seaports in the Northern Mariana Islands were also upgraded (to BB) in the last year, following sustained financial performance in excess of Fitch’s forecast expectations.

Conversely, Broward County’s Port Everglades saw a reversal of sorts with Fitch revising its Rating Outlook back down to Stable after a move to Positive in 2016. 

“Port Everglades is undertaking a significant capital plan that requires additional borrowing in excess of that initially anticipated, with some uncertainty remaining regarding the timing and final amount of the debt issuance,” said Director Stacey Mawson. 

Elsewhere, Fitch downgraded the Port of Houston’s GO bonds to “AA” from “AAA,” on parity with the Issuer Default Rating.