Seaports Magazine - Fall 2014 - (Page 32)

CRAFTING FuNDING SOLuTIONS FOR PORT PROjECTS By Lori Musser I t isn't impossible, but it can be daunting. Calculating seaport project funding possibilities, and then assessing and strategically matching financing methods with projects and securing the funds, is a challenge. There are greater infrastructure needs than ever before. Serving growing global markets and addressing aging infrastructure is a heavy burden for many ports. Fortunately, there are now more financing alternatives than ever before. The Global Infrastructure Funding Shortfall Having a greater variety of methods of financing doesn't necessarily lead to the delivery of more port financing. Banks are wary of making long-term loans and THE BOTTOM LINE Ports have a greater need for new and updated infrastructure than ever before. Securing financing for those projects can be a challenge, but there are a number of strategic funding options available, ranging from government grants to private partnership. 32 AAPA SEAPORTS MAGAZINE assuming too much risk. The McKinsey Global Institute calculates that it will cost $57 trillion to build and maintain the world's roads, power plants, pipelines and other infrastructure - including $700 billion for ports - between now and 2030. Governments in developed countries have been shying away from these investments. With only 0.8 percent of their funds already invested in world infrastructure, and an estimated $50 trillion cache available, according to McKinsey, long-term investors (i.e. insurers, pensions, and sovereign-wealth funds) may be the first to come to the rescue. However, to secure these funds ports will first have to hone the appeal of their projects, allaying concerns about construction delays, cost overruns and profit promises. Comprehensive Funding Strategy Any seaport capital investment decision requires a comprehensive funding strategy that reflects port objectives and deadlines. Taking into consideration the unique attributes of each project or slate of projects, ports evaluate credit positions and possible investment opportunities, undertake due diligence (legal, risk, market and other evaluations), build strategic financial plans, and then set them in motion. The strategic goals of each project ultimately drive the approach to capital investment. Although each project is unique, better investment decisions are predicated on a common set of deliberations and evaluations. U.S. Seaport Financing U.S. seaports and their partners are building and refurbishing infrastructure at a rate of close to $10 billion per year, but even that level of investment may be inadequate to compete effectively in the world market. A modernization of the freight network across modal and logistic channels is hastening global trade growth. According to Metro Freight, a report released in October by the Global Cities Initiative of Brookings and JPMorgan Chase, the three key developments expediting trade are: the continuing dissolution of international trade barriers; telecommunications and technology improvements offering new opportunities to network globally; and freight innovations that cut shipping costs. The lag in putting newer more efficient transportation infrastructure in place is stymieing trade growth.

Table of Contents for the Digital Edition of Seaports Magazine - Fall 2014

AAPA Seaports Magazine
From the President’s Desk
The Big Ship Race – Is Bigger Better?
Shipping Lines Partner to Stay Afloat
Cruise Lines Set Sail for Growth
Bulk Cargo Ports Valuable to the Community
Crafting Funding Solutions for Port Projects
Sister Agreements Spread Cultural Wealth
Strong Financial Ratings Open the Door of Opportunity
Customer Service a Key to Strong Bottom Line Results
Plug in to the Fuel of the Future: Electricity
Houston Thinks Outside the Box With Non-Traditional Lines of Business
Ohio Port Authorities Know How to Rock Economic Development
XXIII Congress of Latin American Ports
Index of Advertisers

Seaports Magazine - Fall 2014