Fitch Ratings has reported a negative outlook for the Jacksonville Port Authority (Jaxport) and stated the port is too dependent on automotive imports at a time when it is planning to increase vehicle throughput by 40%.
The ratings firm said the revision in the outlook from ‘stable’ to ‘negative’ reflects near-term downward pressure on debt service coverage ratios due to, amongst other things, “the underperformance of key revenue segments when compared to prior projections”.
However, Jaxport retains an A rating, reflecting a growing diversification of maritime operations, strategic location with good intermodal connectivity and nearby infrastructure.
And according to Jaxport spokesperson Nancy Rubin, it is this diversification of trade that gives the port business confidence in its outlook.
"Our auto business represents about 24% of our overall business and we are confident in o ur diverse trade and cargo mix," she told Automotive Logistics News. "Indeed, we are seeing success in growing our container numbers, although the recession has reduced those volumes from our original predictions."
Jaxport is predicting the increase in its car throughput in the 2010 fiscal year compared with 2009. The increase would boost traffic by about 180,000 vehicles to a total of around 600,000, not far off the 2008 record, according to Jaxport's Roy Schleicher, making it the second-busiest vehicle-handling port on the East Coast after New York/New Jersey.
But Fitch’s indication of negative outlook and vehicle import dependency raise questions about the prudence of this increase in imports and whether Jaxport might revise the development of additional storage space, as reported in Automotive Logistics News in April.
According to Rubin it will not and there are no plans to alter either the increase in imports or the space allocated. "Our FY2010 numbers have already been exceeding last year's and we are predicting even better numbers for the auto business next year," she said. "Our Nissan, Ford and Toyota figures are trending upward."
Rubin added: "We don't see any impact from the outlook revision and indeed remain hopeful that as the economy picks up our outlook will warrant a revision back to stable."