President Trump's unveiling of his promised agenda of tariffs aimed at boosting American manufacturing and pumping money into Treasury coffers has analysts watching the nation's ports for the first signs of financial stress.
"The cumulative impact of tariff policies can have an adverse impact on U.S. import volumes, which if persistent, could have a negative impact on the U.S. ports sector," said David Kamran, assistant vice president, analyst for Moody's Ratings.
"In combination with the proposed U.S. trade representative fees on Chinese-operated and Chinese-built commercial ships, the U.S. ports sector is exposed to material shifts in trade patterns."
Moody's believes the immediate impact will be felt by smaller or secondary regional ports, handling small and medium-sized ships and lower-value cargo.
Ports can operate in a "landlord" model where the port provides basic services, but the terminals are managed by another company that leases the terminal or as an "operating" seaport that manages the land, port and employs the dockworkers.
Moody's believes the operators will face more exposure.
"Operator ports' revenue is generally more directly tied to cargo volumes, making them more exposed to the adverse effects of declines in cargo volumes," said Kamran.
"Landlord ports derive revenue from renting facilities to shippers under lengthy contracts, and therefore their revenue is shielded from short-term volatility in cargo volumes."
The Port Authority of New York and New Jersey and the Port of Virginia are operator ports, the Port of Los Angles is a landlord port managed by the Los Angeles Harbor Department.
The Port of Los Angles combined with its neighbor in Long Beach account for about 40% of the country's imports and about a third of the exports.
Gene Seroka, executive director of the Port of Los Angeles notes that many suppliers may be one step ahead of the tariffs.
"We saw the beginning of this last summer," he said. "Some large companies started to front load or advance their inventories into the United States in the event this administration carried through with its promise on tariffs, and now we're seeing that come to light."
"We've seen peak season months for about eight of the last nine, hopefully to leverage down prices."
According to the Baltic and International Maritime Council's chief shipping analyst Niels Rasmussen, "The container sector will be affected the most. Many tanker and dry bulk commodities have so far been exempted from the tariff increases but most goods shipped in containers will face import tariff increases."
S&P Global Ratings tracks ports using a municipal bond index evaluating 1,102 constituents that's currently showing a 3.31% return for the year.
Ports were the only sector to earn a B grade in the American Society of Certified Engineers' Infrastructure Report Card that was published in March.
According to ASCE, "Recent federal investments nearly doubled annual funding levels for programs such as the Port Infrastructure Development Program to $450 million per fiscal year, allowing America's ports to more robustly assess, balance, and address their waterside and landside needs."
The public and private sectors team up to keep the country's ports bustling. Waterside infrastructure including maintenance dredging, are paid for through the federal Harbor Maintenance Trust Fund that collects revenue through a 0.125% user fee on the value of the cargo shipped.
