+1 862 207 3288 Students are required read chapter 5 of text book and above hand out regarding various types of port investments.
Write a description of your thoughts not less than 150 words.
Port Management. Week 6
Port infrastructure investment creates growth opportunities and it facilitates industrial growth and opportunities. A poor port infrastructure could be a critical chocking factor in supply chain.
Investing in port infrastructure involves huge sums of money. The traditional financier of such projects such as MARAD and DOT are increasingly retreating from that role due to budget constraints. This role has been taken over by established financiers such as investment banks or venture capitalists.
Bank investments are subject to government regulations, and are very prudent in this sector, venture capitalists tend to think for short term dividends, whereas port investments yield over a longer period of time.
One alternative way of financing such projects is through sale of bonds linked to specific projects.
In USA such Bonds are called Build America Bonds (BABs). It was a scheme launched in April 2009 by President Obama’s U.S. Economy stimulus package. BABs are popular Municipal Bonds that carry a tax credit and federal subsidies, and are used to finance road and Ports infrastructure.
The retreat in port investment began decades ago amid rising labor costs and slow growth. Foreign and local institutional investors and U.S.-based private equity funds, spotting value, in investing various sea port terminals, thus rushed in.
After Sept. 11, 2001, this new generation of investors realized that competing demand for finite, premium space along seaports meant that developing new terminals or expansion of existing ones was unlikely. Essentially, urban planners had rediscovered the inherent value of popular, alternative waterside attractions that trumped terminal expansion, in a best-case scenario, or replaced these noisy, industrial operations, in a worst-case one, with more public or investor-friendly uses.
New stringent environmental rules governing waterside terminal expansion significantly increased the difficulty and cost to build or expand these facilities. It can take a decade or more from initial project planning to the completion of a project, as costs continued to escalate, as was the case in Tacoma, Washington. This “optimistic” scenario assumes the developer can secure local, state and federal project approvals quickly.
“It took 16 years to get permits from the Army Corps of Engineers to dredge the harbor in Savannah, Georgia. At least 10 federal and state agencies in Georgia and South Carolina weighed in. Finally work began in 2015.”
The new generation of investors generally consider marine terminals an attractive, viable opportunity, especially if targeted investments in cargo-handling automation equipment and software control systems increase volume and productivity, and lowering the per-unit cost. “The opportunities for well-run foreign terminal operators to grow in the United States are clear and encouraging. Hence marine terminal investment multiples mushroomed as much as fourfold, to 20 in the several years before the 2008-2009 economic crisis.
The local glaring example is that of Maher Terminal in Port Elizabeth N.J. which was taken over by German Invetment Bank and improved its productivity by injecting cash and modernizing its infrastructure.
Nations worldwide have recognized the need to invest significantly in their freight networks to accommodate increasing volumes, larger vessels and be competitive.
It’s vital that the United States invest significantly in its ports and freight network.
“America’s seaport activity accounts for over a quarter of the national economy and supports more than 23 million jobs. Local ports and their private-sector partners plan to invest nearly $155 billion into infrastructure over the next five years. Leveraging federal investments in seaport and freight-related programs will yield huge dividends in the form of economic growth, maintaining and creating jobs, enhancing America’s international competitiveness and sustaining a healthy environment.”
Students are required read chapter 5 of text book and above hand out regarding various types of port investments.
Write a description of your thoughts not less than 150 words.
