Port Pricing & Port Tariff Analysis Essay
THE PORT PRODUCT
A chain of consecutive links, while the port as a whole may itself be seen as a link in a global logistics chain
Port costs account for only a fraction of the total costs associated with the logistics chain
The prototypical port does not exist.
Ports inevitably have an heterogeneous quality, e.g. the large number of possible market players involved (government, port management, shippers, forwarders, agents, shipping companies, trade unions, etc), each of which has specific objectives.
Generalized Port Price
Port Price per unit of throughput represents prices charged by the port for various port services, e.g. wharfage, berthing and cargo handling charges …show more content…
Port prices may also differ with respect to the value of the cargo.
Since high-valued (low valued) cargo will be less (more) sensitive to port prices, the demand for port services by shippers of high-valued (low-valued) cargo is expected to b price inelastic (price elastic).
Thus, the port may charge a higher (lower) price for a port service to shipper of high-valued (low-valued) cargo.
An increase in the price for a port service for which demand is price inelastic will result in an increase in revenue from this port service
Port Pricing Objectives
To promote the most efficient use of the facilities
To maintain the benefits resulting from investment within the country
An objective of port pricing of particular interest for ports in developing countries is to establish charges at a level that tends to retain the benefits arising from port improvements within the country
To recover sufficient revenue to meet financial objectives
Building up financial reserves to prepare for unexpected falls in revenue or rises in costs.
Other objectives of port pricing include minimizing total logistics costs; providing an incentive to port users to improve their facilities and services and ensuring that the tariff is both practical and simple.
Port Pricing – Cost Items
Three cost items of a port call
* Cargo handling
* Time in