Port of Brownsville ranked third in financial resilience

The Port of Brownsville has been ranked the third most financially resilient port in the United States by the bond credit rating firm Moody’s Investor Services. The ranking is based on Moody’s analysis of factors including financial liquidity, debt service coverage (financial ability to pay off debt obligations), and the ability to withstand substantial declines in cargo volume.

Port officials said the port’s performance in all those areas make it among the most financially stable in the nation and as a result among the best equipped to deal with the economic challenges wrought by the COVID-19 pandemic.

Among the factors working in the port’s favor is its “landlord model,” in which the port partners with tenants mainly through longterm leases, as opposed to the “operator model” in which a port handles daily operations directly for port customers. The latter model can create “high revenue volatility in times of stress,” according to Moody’s, while the landlord model has proven a more stable source of revenue historically.

The rating agency said the landlord model will help soften the blow of the financial impact it’s predicting in the form of a significant decline in cargo, which could approach or even exceed the 20 percent drop ports saw as a result of the 2008-2009 global financial crisis. According to Brownsville Port Director and CEO Eduardo Campirano, however, a major decline in cargo has yet to materialize.

“The port is busy,” he wrote in an email. “Our vessel traffic is very good.”

Campirano said the port’s truck traffic is steady though rail traffic has gone down slightly. Overall, operating revenues and cargo statistics for the first quarter 2020 are up over the same period last year, he said.

The Moody’s analysis, released May 13, also cites the port’s high Debt Service Coverage Ratio, more than double that of most other U.S. ports, which puts Brownsville’s port in a “strong position from which to absorb and manage revenue pressures.”

John Reed, chairman of the Brownsville Navigation District Commission, which governs the port, said BND takes it “very seriously” and works to “ensure we are responsible stewards of the port’s resources.”

“Even during today’s extraordinary economic climate, the (BND) commission is taking responsible steps to maintain a stable financial foundation to attract continued growth and job creation,” he said.