Port ratings have remained resilient during previous periods of volume declines, with revenues typically outperforming volumes due to contractual revenue buffers, stable revenues and rate flexibility. However, a prolonged and intensified trade war could significantly reduce volumes, thereby exerting increased pressure on revenues and credit quality, Fitch Ratings said in a new report.
Tariff pressures on ports are compounded by declining goods demand amid an economic slowdown. In one of its earlier reports, Fitch has forecast global growth to slow to 1.9 per cent in 2025, from 2.9 per cent in 2024. This assumes that the US effective tariff rate (ETR) on China remains above 100 per cent for some time, before decreasing to 60 per cent in 2026, while the ETR on other trade partners is 15 per cent.
Global port ratings range from ‘AA to B’, with most investment grade. Highly rated ports are generally diversified across cargo types, business segments, or clients, and possess strong revenue profiles, leverage profiles, and structural debt protections, or government support.
The Port of Los Angeles and the Port of Long Beach, both rated ‘AA’/stable, are amongst the most vulnerable to US-China tariffs, but have strong financial cushions to weather a severe decline in shipping related revenue this year.
Fitch-rated Chinese ports benefit from implicit government support, insulating them from trade volatility. Other Asian ports may see increased trade and transshipment volumes as cargo is rerouted and supply chains reconfigured, added the report.
Some port volume losses due to reduced trade with the US will be compensated by increased trade with other countries. Latin America ports have diverse trading partners, and Fitch-rated European ports’ trade volume exposure to the US is below 10 per cent.
ALCHEMPro News Desk (SG)
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