VI. Financial Analysis of Terminal 18 Facility
This section presents a pro forma analysis of revenues and expenses that could result from the operation of T18 by an operator under the existing lease. It is not intended to be a forecast of actual performance for the Lessee, but rather a demonstration of how the arrangements between parties may perform from an operator's perspective. Both SSA and SSAT have maintained confidentiality with respect to their business plan and projections and forecasts for T18.
A. Terminal Revenues
There are several potential sources of revenue to an operator from the operation of T18, the chief of which is a per box charge for container throughput. Other sources include rail facility and access charges, dockage fees, container maintenance charges, and container storage fees. The revenue components and the forecast of revenue from each source at T18 are discussed below.
1. Throughput Revenue
The primary source of revenue for an operator of T18 is the charge for every cargo container unloaded or loaded onto ships at the terminal. These charges arc negotiated between the operator and the vessel operators and vary with the vessel operator. For the purposes of this analysis, an avenge charge of $200 per loaded full container was assumed based on information provided by industry experts. The fee for empty containers is generally slightly lower. For this analysis, the average charge for empty containers is assumed to be $190 per container.
The calculation of forecast revenue for T18 is presented on Exhibit 1. The forecast was prepared using the Base forecast for container throughput volume in TEUs, as shown in Table 12, and an estimate of the percentages of full and empty containers, based on information by the Port and others familiar with Port operations.
Exhibit 1 shows throughput revenue increasing from $45,701,000 in 1999 to $91,826,000 in 2005. For the purposes of this analysis, estimated revenue per container is forecast to increase at the same rate as inflation (assumed in this analysis at 3.0 percent per year) . While the current container market is highly competitive, agreements between terminal operators and shippers usually allow for automatic adjustments in response to changes in operating costs. Thus, increases in labor costs and stepped rent increases in the Terminal 18 Lease can be passed on to the carriers. In addition, if demand exceeds capacity, revenues may increase at rates higher than inflation, as higher fees would be supportable.
