Diversification in funding sources and income avenues is helping ports achieve more financial stability and security, as well as boosting the bottom line.
By Sandy Smith
When Hurricane Katrina – and a 24-foot storm surge – destroyed the Port of Gulfport in 2005, the port had a choice: rebuild the port back to its original layout, or take this as a once-in-a-lifetime opportunity to rebuild, restructure and grow.
While the port received a $570 million grant through the U.S. Department of Housing and Urban Development (via the state of Mississippi), it was just the drop in the bucket of what would be needed to capitalize. That set a path of exploring a variety of funding options, using the HUD grant as just the starting point.
“The only thing we haven’t done is hold a bake sale,” said Jonathan Daniels, the port’s executive director and CEO.
There is no need to polish brownie baking skills – at least not yet. Ports these days are exploring a variety of options when it comes to diversifying their funding sources and for good reason.
“Ports are capital intensive and it’s not only the docks and wharfs and need for bigger cranes,” said David C. Miller, managing director of PFM Financial Advisors, LLC. “It’s also about providing efficient rail and highway access. Most ports aren’t generating the lease revenue and tariffs to pay for all the capital they need. They’re looking for help, whether it is federal grants or state and local money or private sector participation.”
To be sure, most ports are sitting on a potential gold mine of opportunity – if they can get the funding to invest. “With the cost of energy and changes in the shipping industry, there is some opportunity for ports,” said John Pauling, national director of ports and harbors for Cardno. “It’s not a static or declining market. It’s a dynamic and growing market.”