Challenges for Asian rated port operators

Moody’s findings were released in a new report, Rated Port Operators – Asia: Challenges on the Rise.

Port operators in the region are said to be grappling with slowing growth in cargo volumes due to China’s slowdown, sluggish growth in Europe, and persistently weak commodity prices.

Ray Tay, a Moody’s vice president and senior analyst, said: “While the rated port operators in Asia have scope for cost cuts and are generally supported by their dominant market position, their resilience is being tested by these challenging operating conditions.”

“The port operators also have substantial capex commitments as they seek to cater to ever-larger ships entering service, while overcapacity in the liner industry is making it harder for ports to pass on these capex costs to their customers,” added Mr Tay.

Moody’s notes transshipment ports where containers are reloaded onto new vessels are more affected than gateway ports where containers reach their final destination. This is because transshipment ports are more subject to competitive pressure.

It expects that the port operators that it rates across Asia have sufficient headroom to weather these trends for the next one to two years.

The full report, Asia: Challenges on the Rise, can be found on the Moody’s website.