Moody's downgrades American ports on shrinking cargo volumes

RATING agency Moody's Investors Service has downgraded American ports from "stable" to "negative" as the downturn reduces consumer demand and cargo volumes.

"We expect the ports will be operating under challenging financial, competitive, and credit environments that could result in negative credit pressure over the next 12 to 18 months, the timeframe covered by the outlook," said Moody's analyst Baye Larsen. "Global cargo movement and port revenues have deteriorated in a trend we expect to continue into 2010."

The short-term outlook is affected by less flexibility because of heightened competition between ports for shrinking volumes and the likelihood that shipping lines and operators will seek rate relief, generating even less revenue.

"The breadth and depth of the economic downturn may result in fundamental shifts in trade patterns, and negatively affect the competitive position of some ports," said Mr Larsen.

Source: News and Data Online