The Covid-19 trade downturn is taking an increasing toll on US ports with more calls for aid as container shipping revenue plummets.
The Federal Maritime Commission (FMC) sounded the latest alarm with a letter to the US Senate last week asking for help with the “financial gaps that could jeopardise continued healthy operation of the nation’s domestic marine terminal industry and maritime transportation industry.”
The FMC’s letter said marine terminals face a tough time in renegotiating lease payments with local port authorities. Leases for space at landlord ports are typically based on minimum cargo volumes, which are “facing unprecedented headwinds due to disruptions in international trade caused by the Covid-19 outbreak,” the FMC said.
But ports are also constrained in lowering their lease payments due to meeting the needs of their outstanding debt obligations. Moody’s analyst Moses Kopmar, who issued a negative outlook for US port finance in late March, said that ports under his coverage have some US$7.5 billion in outstanding debt.
California’s Port of Oakland wants to tap federal aid due as its “coming to grips with a severe revenue shortfall,” the Port said in a statement, as it “expects to report steep financial losses in fiscal years 2020 and 2021.”
Oakland faces as double hit as it operates the city’s airport, which accounts for over half of its revenue, along with the seaport. Passenger traffic through the airport is down 95% and container volumes dropped 11% in March.
“We can no longer expect any semblance of business as usual in our operations,” said Executive Director Danny Wan.
The port’s US$840 million in revenue bonds are still rated “A+” or “A1” by major credit agencies. But both Fitch and Standard & Poor’s issued a negative outlook for Oakland’s debt at the beginning of April. Oakland’s 2012 bonds traded at six-year lows in April.
To the south, the Port of Los Angeles saw shipping services revenue for the fiscal quarter ending March of US$76.1 million, down 22% from US$97.2 million a year ago.
Fees for container handling account for the largest revenues, with year-to-date container volumes in Los Angeles down 18.5% from the same period a year ago.
Los Angeles, which has some US$745 million in bonds payable at the end of March, still has a double-AA rating on its debt, but S&P also issued a negative outlook for the port.
Northwest Seaport Alliance, which manages the ports of Seattle and Tacoma, said first quarter container revenue fall 11% as volumes handled fell 19%.