MOBILE, Ala. — The Port of Mobile has handled far more steel, coal, grain and lumber than expected this fiscal year, putting the Alabama Port Authority on pace for one of its strongest financial years in recent memory.
In his latest monthly report to the Alabama Port Authority board, Director and CEO Doug Otto said that through June — nine months into the current fiscal year — the authority’s gross income of $72.7 million was $26 million better than the previous year and $30.3 million ahead of budget.
Revenue Ahead of Projections
Otto’s presentation showed June revenue of $20.9 million, which was $3 million better than budgeted. Revenue through June was $22.1 million better than budgeted and $36.8 million better than the same period in 2025.
Coal and Rail Records
The McDuffie Island coal terminal moved 1.59 million tons of export coal in June alone — 313,000 tons more than budgeted. The terminal received 212 barges and nearly 9,000 rail cars and loaded 20 vessels during the month. Coal exports for the year to date were up 68% over last year and 25% over budget projections.
The port’s railroad handled 16,881 rail cars in June, 3,044 more than planned. For the year to date, the railroad has handled 158,521 rail cars — 23% more than the same period in 2025 and 25% more than expected. Otto attributed part of the coal and rail surge to Warrior Met Coal opening a new mine and shifting shipments onto Norfolk Southern trains in addition to CSX. “And so we just had a lot more rail cars moving into the port,” Otto said. “All those cars are moved by our railroad. Just to break it down in a simplest form, every rail car we move is money for us. … We thought we’d be moving 13 or 14,000 cars a month. We were moving 20, 21,000 cars a month.”
Wet Coal Drives Up Expenses
Despite the revenue gains, June expenses of $15.9 million came in $3 million over budget, offsetting some of the month’s extra income. Otto said coal was responsible for much of that increase because heavy rains in June left much of the metallurgical-grade coal arriving at the port in a wet, slurry-like state.
“It gets heavy and sticky,” Otto said. “And what happens is, it’s so heavy that when we try to move it across our conveyor systems, it just causes mechanical breakdowns. It clogs up our chutes. It’s just a nightmare to deal with.” Otto said the port had to lease extra equipment, bring in additional crews, and manually remove the coal from barges to dry it out before trucking it to the port’s coal piles. “It happens every year to some degree,” he said. “We deal with wet coal, but in June, it was sort of a perfect storm of events and it cost us money.” He said the authority is working with the shipper to find ways to mitigate the recurring issue. Despite the higher June expenses, year-to-date expenses remain 7% below budget overall.
Steel Imports Reflect Shifting Forecasts
The Pinto Island steel terminal handled 276,419 tons of imported steel slabs in June, 86,875 tons more than planned, unloading five vessels and loading 161 barges carrying the slabs to a steel mill north of Mobile. For the year, the steel terminal is running 48% ahead of budget.
The slabs are bound for the ArcelorMittal mill north of Mobile, which broke ground in 2021 on an electric-arc furnace designed to turn scrap into steel slabs, potentially reducing its need for imported slabs over time. A year ago, the mill had told the port authority to expect significantly lower slab imports for 2026. “They came to us with some pretty drastically lower projections for 2026,” Otto said. “So we reacted. We actually laid off employees … We restructured our work hours to reflect this lower expectation.” Shortly into the new fiscal year, however, the mill’s outlook reversed. “So we really scrambled around,” Otto said. “We had to put on other shifts down there. We had to rehire people back, and we worked with them very closely to retool.”
In the port’s main docks complex, year-to-date tonnage of forest products is up 5.4% compared with the same period last year, steel tonnage is up 4.1%, and “project cargo” — equipment too large or heavy for standard shipping containers — is up 5%.
Reassessing the Budget Baseline
Otto said late summer is typically when the port authority meets with major clients to gauge their outlook for the year ahead, feedback that shapes the budget for the fiscal year beginning Oct. 1. He suggested this year’s budget-beating performance may partly reflect overly conservative client projections from a year earlier. “I questioned myself a little bit,” Otto said. “Did we lowball our estimates? I don’t think so. You know, we sat down with these customers and we tried to come up with realistic estimates of what we thought our revenue would be. And almost across the board, we, we underestimated. So it’s been a really good year.”
Credit Upgrades and Capital Investment
The port authority’s financial performance has drawn attention from ratings agencies. In June, S&P Global Ratings raised the authority’s credit rating to an A. In late July, Fitch Ratings upgraded the authority’s Dock Facilities Revenue Bonds from BBB+ to A-. “The upgrade reflects APA’s strong debt service coverage, modest leverage and greater revenue diversification in recent years,” Fitch said in its assessment, adding that it also reflects “the port’s continued execution of its capital plans without additional borrowing needs, which Fitch expects to support long-term growth and revenue diversification.”
Otto said the extra income generated this year is being funneled directly into ongoing capital projects, including expansion at the container terminal, modernization at the coal terminal, construction of a new container transfer facility in Montgomery, and an overhaul of a pier originally built in the 1920s. According to figures provided by the port authority, its 2025-26 capital budget “commits $160 million that is supporting more than $375 million in active capital investment across APA facilities.”
“We’re in the home stretch and it’s looking like a really good year,” Otto said. “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. … It has really allowed us to accelerate our capital improvement program, whether that’s the container terminal, whether that’s McDuffie, or the main docks. And so that’s been really helpful for us to be able to reinvest back into the port.”