Happy days again for Southern California ports
Everyone reckons they are having a 'AA' time
All is serene in the ports of Los Angeles and Long Beach with growth back on the path of the experts have laid out. According to a study released this month by the Los Angeles County Economic development Corporation (which falls under the wing of the city council but also carries out independent studies and forecasts), total container traffic at the two ports this year will reach 14.8 million TEU. In 2012, volumes will increase 5.2 percent to 15.5 million TEU.
At least 75 percent of these will involve China trade, which was $190 billion in 2010 – more than three times that of Japan at $53 billion.
For the maritime industry, the main point of interest is empties and repositioning, something that is again being ignored by the shipping lines. As an indication, volumes of empties at LA and Long Beach in April rose 2 percent and 3.2 percent respectively, whereas the overall box totals were 3.7 percent and 14.6 percent.
Actual trade patterns have a habit of confounding expectations. Sean Strawbridge, managing direct of international trade relations and port operations at Long Beach, reckons that volumes at the two ports will grow by an average 5.2 percent and reach 20 million by 2020. (This year, Long Beach forecasts its growth to be 7 percent).
This is a much more modest growth rate than the 2007 forecast of 6.3 percent.
Credit ratings of the two ports are good. Fitch has stuck 'AA' plus an outlook of "stable" Long Beach's $735 million harbor revenue bonds and harbor revenue refunding bonds issued by the City of Long Beach. The agency cites healthy liquidity position (1,518 days cash on hand) along with "experienced" and "proactive" management.
Los Angeles also gets 'AA' and "stable" rating for $110 million series 2011A and series 20011B Harbor Department of the City of Los Angeles refunding revenue bonds. The port also had unrestricted reserves, representing 769 days cash on hand. Rave reviews are given for the port's "modern and well-invested" terminal facilities and the financial stability provided by long-term leases with the largest tenants.
Long Beach says its capital development program (spread over about four years) is expected to add 70,000 jobs to the city – a tall order, given the overall economic stagnation of California.
Sean Strawbridge says development disparity will grow between ports throughout the country he terms "fiscally sound" and "those who cannot attract necessary capital."