Services

Today’s port authorities and terminal operators must make capital planning decisions against the backdrop of an uncertain world in which there are an increasing number of risks both internal and external to a port’s business over which they have little control. Slowing and uneven trade growth, protectionism, near-sourcing, increased regulatory pressures, changing demographics and consumption patterns, consolidation and vessel upsizing in the shipping industry, technological advancement, climate change, alterations in the global energy matrix, and external shocks such as the COVID-19 pandemic, among other factors, all contribute to rapid global changes that demand smart planning by the port and maritime industry.

Fairchild Maritime helps clients plan for an unpredictable future through a unique proprietary methodology that combines traditional planning tools — market analysis, forecasting, benchmarking, and cost analysis and estimation — with scenario planning and probabilistic risk analysis. Where a traditional approach uses modeling to predict future conditions, we run the analysis backward, utilizing data analytics to model different sets of assumptions to analyze how a port’s or terminal’s plans perform in a range of possible future scenarios. This allows us to assess various scenarios in which a capital plan or project might perform well or poorly, determine if modifications are warranted to enhance viability, and conduct a trade-off analysis to see if this choice should be made. This iterative, adaptive and consensus-building process helps port authorities and terminal operators to conduct more resilient planning that can ensure growth across a range of possible scenarios, rather than necessitating that a correct prediction of the future be made. We support clients with capital planning to identify the steps they can actively take today in order to shape a future that is most beneficial to their businesses.

We rely on our experience advising port authorities, terminal operators and project sponsors on planning for port facilities to develop terminal concepts that meet level of service requirements, increase competitiveness, and add value to our clients’ businesses while mitigating the myriad risks of an increasingly uncertain marketplace. Our terminal planning services are ideally suited for clients that require planning up to the conceptual design stage, prior to engaging an engineering partner. Our approach involves careful assessment of the macroeconomic conditions that will impact a proposed terminal development. To determine the future market share that a new or expanded terminal might capture, we consider additional variables at the port level. While the specific variables selected will vary from project to project, our view is that selecting too many variables overly complicates a forecast and muddles its results.

We inform our demand projections with fleet forecasts to determine the vessels that are likely to call at the planned terminal in order to calculate its required capacity. Our approach relies on value engineering to ensure that planned capacity is phased appropriately, so that capacity grows along with demand and upfront investment needs can be minimized. Once capacity is determined, we calculate initial OPEX and CAPEX requirements, again utilizing value engineering to guarantee the terminal will have the operational functionality and flexibility required, while minimizing upfront investment costs. Finally, cost analysis is conducted and concept-level cost estimates for OPEX and CAPEX are generated. Based on the results, we can also develop alternate terminal plans that account for different demand scenarios. These plans can then be analyzed with our proprietary capital planning methodology to gain insights on how they might perform across a number of future scenarios. Doing so allows clients to select the plan that is most viable across the widest range of scenarios rather than needing to correctly forecast a most likely scenario.

Commercial and technical due diligence for transport infrastructure investments are core strengths of Fairchild Maritime. Our due diligence services include market analysis, competitiveness analysis, financial viability assessment, cost and pricing analysis, and OPEX and CAPEX analyses. When undertaking independent due diligence we also rely on our related expertise in capital projects and terminal planning. To undertake an independent review of a project’s preparation, we typically model our own demand, CAPEX, and OPEX forecasts to project revenues against which we assess a project’s financial model, test its assumptions, and conduct sensitivity analyses under varying scenarios to identify risks, propose mitigation strategies, and assess future earning potential. These analyses are complemented by market sounding and interviews with a range of stakeholders to elicit opinions and gain insights on the real commercial prospects of a proposed investment.

Our primary focus is on assessing a project’s bankability. Depending on the project this can mean identifying those risks to project that ultimately may limit its commercial attractiveness to investors and operators and devising mitigation strategies that manage these risks and enhance investability, or flagging a marginal project that will not withstand investor scrutiny and recommending changes to its business case to enable project viability. Whatever the specifics of a project, our due diligence always goes beyond assessment of financial and technical feasibility. In our experience, feasibility does not necessarily mean bankability when it comes to port investments. Thus, we also rely on value engineering to recommend approaches to development that enables a project to optimize its early stage CAPEX requirements and benefit from quick revenue generation, making the project more attractive to investors.

Leveraging our expertise in capital planning, terminal planning, and investment due diligence, Fairchild Maritime advises port and maritime clients on a range of commercial and technical matters in support of raising finance as well as for mergers and acquisitions. Our services encompass all phases of a transaction, from pre-transaction advisory to marketing and solicitation to due diligence and closing.

Our work in the pre-transaction phase typically begins with market analysis, business case development, and market sounding to provide a view of whether financing for the project is feasible. It also includes pre-marketing support to clients to develop a road map and timeline for the proposed transaction. We then work with our clients to promote the transaction — identifying potential lenders, and engaging with interested lenders with a view to arranging finance. Here we are able to add significant value for our clients through our existing partnerships with lenders who are seeking to invest in maritime and intermodal transport infrastructure. Once a lender(s) indicates that they are willing, in principal and subject to terms, to enter into the transaction, we undertake due diligence on the client and project on behalf of the lender(s). We support closing by finalizing the due diligence in accordance with lender(s) requirements.

While investment needs for ports continue to rise, public financing of CAPEX has been stagnant for years. Increased port competition, enhanced capacity and level of service requirements of larger vessels, demands of the broader economy to deliver fast, low-cost transport services, and rapidly advancing technology have all strained ports’ abilities to maintain necessary levels of asset investment. As a result, many ports today look to alternative approaches, such as private sector participation, to bridge the financing gap or supplement public funding.

Fairchild Maritime is experienced in supporting ports to pursue a variety of funding sources and types. We offer assistance to port authorities on strategy and development of applications for state and federal transportation grant funding, including required support analyses (benefit-cost analysis, market analysis, concept-level design, etc.). In addition, we work with both public and private sector clients to develop viable approaches to private sector participation that appropriately allocate risk, generate return on investment, enhance performance, and increase competitiveness. We also assist port authorities with pre-tender processes, leasing and concession strategies, institutional and regulatory analyses, and drafting terms of reference and bid terms for public tenders. Building on our transaction support experience, when required, we are able to serve as technical advisor for the procurement process itself.