U.S. and Canadian ports will see cargo volumes level off in the coming months with the broader economy inching closer to a possible recession, according to Fitch Ratings in its latest peer review for the sector.

Fitch economists are calling for a mild economic recession to materialize sometime between the tail end of 2023 and early 2024. This has manifested in softening U.S. cargo volumes in the last year, with cargo volumes down 24% for West Coast ports through 1H23 and 16% lower for East and Gulf Coast ports relative to highs seen during the pandemic. Even with this year’s volume declines, TTM volumes through June 2023 remain up 2.7% relative to the same period ending June 2019, reflecting continued baseline growth for the sector.

“Cargo ports will gradually revert to normalized volume trends following a volatile three years brought on by the pandemic, but the sector in general remains in a solid position fiscally,” said Senior Director Emma Griffith. “From a ratings standpoint, this will likely translate to rating affirmations for ports over time.”

In contrast, cruise activity is continuing to ramp up significantly in 2023, with full recovery to 2019 levels expected by 2024. This proved to be a catalyst in Fitch raising the Rating Outlook for three Florida-area cruise ports over the last year (Port Canaveral and Port Tampa Bay to Positive from Stable; PortMiami to Stable from Negative).

All three Outlook revisions reflect strength in operating performance due to the robust resumption of cruise activity and enhanced financial stability driven by resilient cargo performance indicating continued favorable metrics are likely.
Source: Fitch Ratings