Coal news and updates

Slowing coal shipments will undercut Port of Stockton revenue

    Stockton’s port enjoyed record revenues and net income in the fiscal year ending Tuesday, but officials cautioned the next 12 months will be “a transitional year” because of lower demand for coal exports and fertilizer imports.

    Port commissioners reviewing the agency’s budget Monday heard that shipments of those two major commodities could fall by 30 percent in the coming fiscal year.

    Port Director Richard Aschieris explained the agency is taking a conservative approach, counting only on cargoes currently contracted to move through Stockton.

    Global coal shipments are particularly volatile.

    After seeing nearly 1.7 million metric tons move through the port in the current fiscal year, the projection for the next 12 months is less than 400,000 tons of coal shipments.

    “After September, there’s nothing scheduled,” Aschieris said, based on talks with the port’s shipping customers.

    In addition, fertilizer imports are expected to sag as California farmers fallow acreage due to the drought.

    Thus the port expects total revenues to slip to just more than $50 million for the 2015-16 fiscal year, from $51.7 million this year.

    And together with projections of higher expenses, the port’s operating income is expected to drop next year to $14.9 million from the current $19.4 million. Those additional expenses include cost-of-living wage increases as well as the addition of two new employees, and the start of required drainage projects.

    Port officials also are planning an ambitious schedule of capital improvements in the coming year, with a total outlay of $25.3 million.

    Major components of that capital spending include a rail expansion on Rough and Ready Island, construction of a new Navy Drive bridge to the island and a new railroad underpass on Navy Drive, to accommodate the Crosstown Freeway extension.

    Much of the capital budget will be covered by grants and bond funds. But the port expects to apply about $8.7 million in operating funds toward the improvements.

    As a result, the agency’s net income for the coming year is expected to total about $2.2 million, down sharply from nearly $11 million this year.

    In unanimously approving the budget, commission members were convinced the spending plan was solid.

    “The port remains quite sound,” said Gary Christopherson, commission chairman.

    R. Jay Allen, vice chairman who was part of the budget review committee, said, “It’s a realistic budget.”

    Port Controller Michelle Bowling said she expects the agency to increase its cash on hand from $13.7 million to $14.4 million by next June 30. That’s enough to keep the port running for about five months.

source: http://www.recordnet.com