Port of Mobile ahead of budget as steel and coal shipments exceed forecasts

The Port of Mobile is cruising through a banner fiscal year, with performance metrics across the board outstripping initial projections. From steel and coal to grain and lumber, the hub is moving significantly more cargo than its operators anticipated.

Surpassing Financial Goals

In his recent report to the Alabama Port Authority board, Director and CEO Doug Otto highlighted a massive fiscal success. Through the first nine months of the fiscal year, the authority logged a gross income of $72.7 million—a figure sitting $30.3 million ahead of the budget and $26 million higher than the previous year.

While the overall fiscal picture remains bright, June brought a unique set of operational challenges. Monthly expenses hit $15.9 million, exceeding the budget by $3 million. Otto noted that although year-to-date expenses remain 7% under budget, the increased costs in June largely offset the month's gains, providing a clear look at the complexities of port logistics.

The Coal Factor

Coal served as a major engine for revenue, specifically due to a spike in internal railroad volume. The McDuffie Terminal processed 212 barges and 8,972 railcars in June alone. A primary catalyst for this growth is the new mine opened by Warrior Met, which shifted coal transport onto Norfolk Southern lines, according to information shared with 205focus.com sources. Warrior Met's expansion meant the port's internal railroad moved roughly 20,000 to 21,000 cars in June, far exceeding the projected 13,000 to 14,000.

However, the influx of coal wasn't without headaches. Heavy rains throughout the state in June turned pulverized coal into a sticky slurry, causing mechanical issues and clogs in the conveyor systems. The port had to pivot quickly, leasing extra equipment and mobilizing crews to manually manage the material, driving up operational costs significantly.

Strategic Shifts in Steel

The steel sector also saw a dynamic turnaround. After receiving early projections of decreased slab imports for the ArcelorMittal mill—which is vital for industrial use—the port authority initially trimmed shifts. When the mill's outlook shifted toward increased demand, the port had to scramble to rehire and retool, demonstrating agility in a fluctuating market.

Industry Recognition and Future Growth

This momentum hasn't gone unnoticed by major credit agencies. In June, S&P Global Ratings boosted the port's credit rating to an A. Following that, Fitch Ratings upgraded the authority’s Dock Facilities Revenue Bonds to an A-, citing strong debt service coverage and successful revenue diversification.

As the fiscal year enters the home stretch, the port is funneling these excess profits directly into an aggressive capital improvement program. Projects include container terminal expansions, modernization at the coal terminal, the construction of a new container transfer facility in Montgomery, and the overhaul of a historic 1920s-era pier.

"All this profit we’ve made this year, all this extra income, we are rolling 100% of that back into capital improvements at the port," Otto said. "It has really allowed us to accelerate our capital improvement program."