This report does not constitute a rating action.

Rated ports in Australia and New Zealand have the stomach for the tariff rollercoaster. Our stress tests show they can withstand a 5%-10% decline in trade revenues (equivalent to 10%-15% decline in container trade) over 12-24 months with minimal counter measures. It may get bumpy if tariff negotiations drag on or outcomes remain unclear.

Pacific port operators have only modest direct trade with the U.S. Up to 70%-75% of their trade exposure is to Asian economies; they handle the goods Asia needs and vice versa. On the other hand, several Asian countries have significant trade with the U.S. But therein lies risk: secondary effects of a potential slowdown among Asian trading partners, until their output finds other markets.

Market changes and risk over the next few years mean preserving balance sheet strength will become more important than ever.

Why Economic Conditions In Asia Matter

Australia and New Zealand direct much of their trade to Asia. Their economies are consequently linked to Asian manufacturing trends and to demand for Australian agricultural products (see charts 1 and 2).

Australia's export mix plays a crucial role in fueling Asia's industrial base, but its composition may be vulnerable to trade shocks. This trade comprises 65% minerals, ores, coal, metals, and liquefied natural gas--key inputs for Asia's energy-intensive industries and manufacturing hubs. We anticipate that in a brief slowdown, Asian manufacturers would redirect their output to other markets.

Agricultural products account for 14% of Australia's exports from Australia. Most of this goes to Asian markets and has increased in the past 10 years. New Zealand exports a higher proportion of forestry and farm exports (diary, fruit, meat, logs, woodchips), granting it potentially greater resilience to tariffs.

Imports from Asia to Australia and New Zealand are varied and high-value products. Australia and New Zealand have limited alternatives, and their domestic economic conditions will largely determine import volumes. These imports comprise a mix of crude and refined fuel, household goods, pharmaceuticals, chemicals, plant and equipment, motor vehicles, and construction material.

The bulk of the imports are higher-value containerized goods and motor vehicles. These come through the eastern seaboard states of New South Wales, Victoria, and Queensland--there are limited alternatives.

Within Asia, trade is relatively well distributed across countries, although there is some concentration with China. At Australia's eastern seaports, imports and exports involving China account for 22%-27% of total trade by dollar value, according to the Department of Foreign Affairs and Trade. New Zealand ports show slightly lower exposure, with China making up 20%-25% of trade.

For Australia overall, the share of exports to China increases to 37% when including iron ore and coal shipments from the western states--the country's primary export commodities.

Commodity Mix And Property Income Reduce Risk

Several factors will offset any downside risk to rated Australian and New Zealand ports:

• Most rated ports have modest to sizable income from non-trade-linked property assets, and lease rentals are indexed to local inflation or market reviews and are usually for seven to 10 years or more;
• Most of the rated ports have a trade mix of container, bulk or motor vehicles providing some earnings diversity;
• About 15%-20% exports through rated ports (except Port of Newcastle) comprise agricultural produce, which is resilient to short-term downturns;
• Demand for coal (exports from Port of Newcastle and small volumes from Port Kembla) is growing in Asia and notably India, and market substitution is also possible, as seen during a China embargo in 2020;
• If China implements fiscal stimulus focused on consumer spending it may spur demand for Australian exports;
• High tariffs imposed by U.S. and European countries on electric cars from China may boost motor vehicle exports to Australia;
• Increased sales of renewable energy equipment--driven by rising investment in Australia, and the U.S.'s exit from the Paris Agreement--may boost bulk trade at Australia's east coast ports; and
• Dedicated coal export ports, such as Dalrymple Bay and Newcastle Coal Infrastructure Group (NCIG) have contracted capacity and carry no volume risk.

Further, global consumer demand is unlikely to shrink. This demand will be met directly or indirectly through shifting supply chains. For instance, goods from Asia originally bound for the U.S. may instead go to Europe, Canada, and Latin America since competitive manufacturing in these regions could take years to evolve.

Several countries in Asia have large trade exports to the U.S. (see chart 7). The manufacturing output from these countries will depend on an agreed 90-day pause and the extent to which tariffs remain in place or are waived.

Chart 7

The U.S.-China trade balance will have some indirect impact on Asia. Any surplus manufacturing capacity or output in the region will have to find alternate markets. Rerouting of trade within Asia or to other markets will occur. But whether it can become sustainable and by when, remains unclear.

Other variables can affect port operations, such as ship calls, routes, and freight rates. Declines in ship size or frequency of calls can affect navigation revenue at ports. These impacts, while meaningful, are likely to be temporary.

Stress Tests Show Adequate Buffers And Financial Discipline

Our stress tests show rated ports would face minimal impact from a 5%-10% decline in trade revenues over fiscal 2026 and 2027 (see table 1). They have different buffers due to their size, amount of property income, and commodity mix. Prolonged or greater stress (say a 15% decline in trade revenue) would require pre-emptive decreases in dividend distributions and capital expenditure.

Our stress-test is based on stressing trade revenues rather than trade volumes. Our analysis assumes that both container and bulk trade are affected. In our analysis, the property income is not stressed. It provides stability and buffers the impact on certain rated ports.

Our stress tests suggest:

Container ports have more buffer to withstand a 5%-10% decline in trade revenues. We refer here to operators such as NSW Ports Finance Co. Pty Ltd. and Port of Brisbane (rated entity QPH Finance Pty Ltd.). Port of Brisbane can withstand greater stress because it derives 45% of its income from its property portfolio.

In the above case, a 5% impact on trade revenues equates to about 10% decline in container volumes over the next two years. However, this is an extreme scenario. At the height of the pandemic in 2020, supply-chain problems caused a decline of only 3%-5% for the two ports.

Port of Newcastle can manage a moderate shift in coal volumes (current annual volumes of 150 million metric tons per annum, mtpa). The ability to recover lost revenues through pricing adjustment offers some protection. To put this in perspective, coal volumes through the Port of Newcastle would need to fall to about 135 mtpa each in fiscal year 2026 (year ending June 30) and fiscal year 2027 before our target metrics for the rating are affected. This would be lower than the 136 mtpa exported in 2022, when bad weather disrupted operations in the Hunter Valley.

Port of Tauranga is smaller and can consequently withstand only a 5% decline in trade revenues without any offsetting measures. A large proportion of uncommitted capex and dividends provides flexibility should the impact be greater. The port's greater proportion of logs, diary, and agriculture produce suggests that it should be less vulnerable to tariff dynamics.

DBT and NCIG ports should be unaffected. This is because of the contracted nature of port capacity for coal exports and a cost pass-through mechanism under their project finance structure. These features have supported strong interest from offshore investors.

Table 1

Refinance Risk Is Low

Strong banking relationships and liquidity in the region should facilitate refinancing. About 50% of the debt of rated entities is due for refinancing over calendar 2025-2028, with a higher amount in calendar 2027.

Chart 8

Port of Newcastle is notable because its A$340 million bank debt refinancing is due in calendar 2026. We believe the refinancing will occur well ahead of schedule, given its improved financial position and healthy demand for Australian coal.

NSW Ports has about A$450 million and Port of Brisbane A$240 million of debt maturities, both due in calendar 2026. Port of Tauranga has about A$200 million debt maturities due by end of 2025 and has a sound record of refinancing three to four months ahead of schedule.

Dalrymple Bay and NCIG have their next major debt maturing in calendar 2027. For both entities, maturities in calendar 2026 comprise bank debt. Additionally, over 2025-2028, these entities have about 35% debt due in the capital markets, with the balance being bank debt maturities.

Ports Have Several Financial Levers If The Indirect Impact Persists

If the trade uncertainty is severe, the corporate ports will have the option to reduce dividends below their policy levels or cut back on capex (see chart 9).

To assess the ports' flexibility, we focus on uncommitted capex, which is a greater proportion of the forward spending. Given a lead time of 12-18 months for most of the planned growth capex, companies are likely to reevaluate once trade trends become clearer. For example, a large part of the capex of NSW Ports and Port of Brisbane beyond 2026 is discretionary. Likewise, Port of Tauranga can postpone its large berth extension.

Chart 9

Discipline At Keeping Above Rating Triggers

We believe the risks to Pacific ports are limited and manageable. The ports also have a strong record of operating with some headroom above rating triggers.

They have shown restraint in the past by holding back dividends, such as during the early stages of the pandemic, when uncertainty was high. We expect this proactive approach to continue.

Writer: Lex Hall.

Digital Designer: Halie Mustow

Related Research

• Ten Charts That Matter For Asia-Pacific Trade, May 19, 2025
• Global Credit Conditions Special Update: U.S.-China Tariff De-Escalation Brings Some Temporary Relief, May 15, 2025
• Economic Research: Global Macro Update: Seismic Shift In U.S. Trade Policy Will Slow World Growth, May 1, 2025
• Asian Ports To Face Their Stiffest Test, April 28, 2025

Primary Contacts:	Parvathy Iyer, Melbourne 61-3-9631-2034; parvathy.iyer@spglobal.com
	Sonia Agarwal, Melbourne 61-3-9631-2102; sonia.agarwal@spglobal.com
Secondary Contacts:	Alexander Dunn, Melbourne 61-3-96312120; alexander.dunn@spglobal.com
	Harshvardhan Sathe, Melbourne 61-3-96312118; Harshvardhan.Sathe@spglobal.com
Research Contributor:	Prasad Chavan, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Pune ;