Moody's raises its outlook on U.S. ports to positive

Moody’s Investors Service on Wednesday revised its outlook on U.S. ports to positive from stable as cargo activity increases.

The agency expects cargo volume to rise between 5% and 7% over the next 12 to 18 months, but added that growth may slow a bit toward the end of this year.

Moody’s said the recovery in cargo demand is due to the COVID-19 vaccination rollout and federal fiscal aid, which will support imports.

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“The ports sector is experiencing exceptionally strong cargo activity,” Moses Kopmar, Moody’s analyst, said in a statement. “Volumes have grown at double-digit rates for the last six months and currently exceed 2019 levels at most gateway ports. Retail imports are forecast to grow 25% in the first half of 2021, driving activity to record or near-record levels.”

Moody’s also said cruise operations are starting to look up for this year.

“We expect cruises will resume at modest levels in the second half of 2021 and that operations will ramp up in 2022,” Moody's said.

While U.S. cruising operations have been suspended since the Centers for Disease Control and Prevention’s "no sail order" was put in place in March 2020, Moody's said there are strong indications operations could resume later this year.

The restart would be especially supportive since current cruise-related revenue is negligible, Moody’s said, adding that most cruise line customers have declared "force majeure under minimum revenue agreements with ports."

Moody’s expects there will be more than enough pent-up demand to fill the cruise ships for this year and next.

Looking long-term, Moody’s expects when the pandemic is under control most people will become comfortable with traveling again and demand will return to 2019 levels.

“However, the recovery will be longer than those of the past and will take at least three years,” Moody’s said.

The agency said higher cruise activity will benefit ports in Florida, such as the Canaveral Port Authority, rated A3 with a negative outlook, the Broward County Seaport Enterprise, rated A1 with a stable outlook, the Miami-Dade County Port Facility, rated A3 with a negative outlook, the Palm Beach Port District, rated Baa2 with a stable outlook, and the Jacksonville Port Authority, rated A2 with a stable outlook.

Also benefitting will be ports in the Gulf of Mexico, such as the Port of New Orleans, rated A2 with a negative outlook, and the Port of Galveston, Texas, rated Baa1 with a negative outlook as well as in Hawaii for the Hawaii Port Facility, rated Aa3 with a stable outlook, according to Moody's.