Issues Around Shipping, Ports Could Cost Hospitals in Terms of the Supply Chain
According to a new study published by Fitch Ratings, global port activity is facing challenges from escalating trade tensions and a slowdown in global economic growth. However, the effect on the creditworthiness of the global port sector is expected to be limited, thanks to contractual and financial mechanisms that help cushion the impact on volumes and revenues. The implications are considerable in terms of the healthcare supply chain, given the preponderance of imported goods in hospitals and other healthcare facilities.
Janette Wider, Editor-in-Chief of Healthcare Innovation’s sister publication, Healthcare Purchasing News, wrote the report on the Fitch study. And she quoted a Fitch press release that stated that “Port ratings have remained resilient during previous periods of volume declines, with revenues typically outperforming volumes due to contractual revenue buffers, stable revenues and rate flexibility. Nevertheless, a heightened, prolonged trade war could lead to a material erosion in volumes, which could place greater pressure on revenues and credit quality.”
The Fitch report notes that “Tariff pressures on ports are compounded by declining goods demand amid an economic slowdown. Fitch forecasts global growth to slow to 1.9 percent in 2025, from 2.9 percent in 2024. This assumes that the U.S. effective tariff rate (ETR) on China remains above 100 percent for some time, before decreasing to 60 percent in 2026, while the ETR on other trade partners is 15 percent.”
Further, the report notes, “Global port ratings range from ‘AA’ to ‘B’, with most investment grade. Highly rated ports are generally diversified across cargo types, business segments, or clients, and possess strong revenue profiles, leverage profiles, and structural debt protections, or government support. The Port of Los Angeles and the Port of Long Beach, both rated ‘AA’/Stable, are amongst the most vulnerable to U.S.-China tariffs, but have strong financial cushions to weather a severe decline in shipping related revenue this year,” Fitch noted.
The implications for U.S. patient care organizations are considerable, as the White House’s proposed tariffs could increase dramatically the prices that hospitals and other healthcare facilities will have to pay for the bulk of their supplies.
The full article can be accessed on the HPN website, here.
