Port Investment and Finance
Port Finance Reports
Over many years the Maritime Administration has worked closely with the port industry association, the American Association of Port Authorities (AAPA), on a number of different projects, including a variety of publications and a port economic impact model. Two reports – Public Port Finance Survey and U.S. Public Port Development Expenditure Report – are published annually. They are prepared by the Maritime Administration, using finance and expenditure data collected by AAPA from the association’s corporate membership. A third report, Port Risk Management & Insurance Guidebook, is published on an as-needed basis.
Port and Terminal Infrastructure Investment Roundtables
The Maritime Administration cosponsored two Port and Terminal Infrastructure Investment Roundtables to bring together key stakeholder decision-makers in a national dialogue to address the resources needed to meet maritime intermodal infrastructure requirements based on projected growth in trade, and investment risks and opportunities. The two events, held in New York City and Oakland California, provided an opportunity for a diverse group with interest in maritime intermodal transportation to present a cross section of ideas concerning infrastructure investment for the purpose of finding potential solutions to meet anticipated capacity requirements.
As provided in recent Maritime Administration reports capital expenditures for U.S. public port development from 1946 through 2005 totaled over $30.1 billion, which funded improvements to port facilities and related infrastructure. During this 60-year period, the average yearly investment was $501 million. From 2001 – 2005, the average investment had jumped to $1.5 billion per year. These investments covered expenditures for the construction of new facilities and the modernization and rehabilitation of existing ones.
During the past several years a number of private entities have invested in marine terminals at public ports. American International Group purchased terminal leases in six U.S. ports from DP World, as well as the operations of Marine Terminals Corporation. A deutsche Bank subsidiary has purchased Maher Terminals, the Port of New York and New Jersey’s largest container volume terminal. Goldman Sachs purchased a 49 percent stake in Carrix Incorporated, parent of SSA Marine. The Ontario Teachers’ Pension Plan bought two marine container terminal leases in the New York area.
In spite of the current financial situation funding is still available for high quality infrastructure investments because of the returns these assets provide their investors. The key challenge for infrastructure investment today is that transactions are taking longer to complete. Lenders in particular are taking more time to undertake due diligence and review. The bid process is being forced to be delayed somewhat – but investment is still occurring, because the long-term fundamental outlook for these assets remains strong due to: (1) the existing downturn in trade growth is expected to return to normal as the U.S. economy recovers, (2) trade must move through our ports, and (3) ports and marine terminals provide solid returns.
Committee on Foreign Investment in the United States
The Maritime Administration through the Department of Transportation reviews brought to the Committee on Foreign Investment in the United States (CFIUS). Items reviewed under CFIUS regulations are limited to the national security aspects of an acquisition. These regulations are entitled “Exon-Florio” regulations and are found at 31 CFR Part 800, Office of International Investment Department of Treasury pertaining to mergers, acquisitions, and takeovers by foreign persons. The Exon-Florio provision lists the following factors that the President or his designee may consider in determining the effects of a foreign acquisition on national security: (1) domestic production needed for projected national defense requirements; (2) the capability and capacity of domestic industries to meet national defense requirements, including the availability of human resources, products, technology, materials, and other supplies and services; (3) the control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the U.S. to meet the requirements of national security; (4) the potential effects of the transaction on the sales of military goods, equipment, or technology to a country that supports terrorism or proliferates missile technology or chemical and biological weapons; and (5) the potential effects of the transaction on U.S. technological leadership in areas affecting U.S. national security. Over the past several years the Maritime Administration has reviewed acquisitions by foreign entities of U.S. owned ship yard facilities, port facilities and warehouse facilities. None of these acquisitions were determined to be harmful to national security.
Robert Bouchard, Director
Office of Infrastructure Development and Congestion Mitigation
1200 New Jersey Ave., SE (MAR-510, #W21-224)
Washington, DC 20590
Tel.: (202) 366-5076
Fax: (202) 366-6988