Revisiting port pricing; a proposal for seven port pricing principles

A review of seven large landlord port authorities around the world reveals a notable diversity of pricing structures. While port authorities increasingly act as commercial undertakings, port pricing often seems to be not driven by commercial considerations. In this paper, we argue that ports can be regarded as “business ecosystems” with multiple users. This provides a valuable perspective on pricing and raises the question of whether ports can be regarded as two-sided markets. We argue this is not the case. The business ecosystem perspective provides a basis for deducing seven pricing principles for port authorities that are detailed in the paper and illustrated with cases these principles. These pricing principles are broadly follow a direct user pays approach; capture value from “non-core” tenants; price aggressively for activities with a high strategic value; differentiate pricing based on price elasticity and connectivity improvements; maximize revenue from long-term lease agreements, price port dues competitively; critically consider differentiation of charges based on environmental performance; and finally use incentives to align interests of terminal operators and shipping lines. We conclude that the ecosystem perspective is central to the understanding of pricing decisions of port authorities and that various pricing issues deserve more attention.     

The Port of Melbourne Authority's pricing policy: its efficiency and distribution implications

The objective of this paper is investigate the extent to which the new (revised) pricing policy has improved the level of efficiency at the Port of Melbourne and to assess the contributions of the underlying factors of port efficiency. Further, it attempts to examine the distribution implications of the pricing policy between the major port users (i.e. shipowners and shippers) and its revenue implication for the Port of Melbourne. Using a conceptual framework derived from economic theories, in-house data and responses from the port users, the study reveals that the efficiency impact has been considerable and varied between berths; land transport links and crane productivity improvements were the major factors of the port's overall efficiency; the initial losers have been the shipowners and initial gainers the shippers; however, the gains have been limited and in some cases have been offset by the introduction of higher port service charges; in the long run it is likely that the shipowners and shippers' situations will be unchanged while the Port of Melbourne will lose revenue due to improvements in berth productivity uncompensated by greater traffic volume.     

Influential factors in the design of port infrastructure tariffs

ABSTRACT

The main aim of this article is to examine the factors influential to the practical process of port infrastructure tariff design. The analysis is based on the survey data of 67 seaports representing the Australasian, East Asian, European, North American and South American regions. Exploratory factor analysis (EFA) was first carried out to identify the factors influential to the selection of the infrastructure tariff design model. Subsequently, confirmatory factor analysis (CFA) was used to confirm the relationship between the variables. The findings showed that demand, knowledge about pricing theories, the dynamics of port and shipping sectors (including competition and ship size), pricing objectives and port cost consideration are influential factors in infrastructure tariff design. Most ports use a mix of pricing approaches including price discrimination, cost-based pricing and market-based pricing. Ports are aware of the basic pricing approaches but have limited knowledge of their application. Based on the results of analysis, policy implications for port management in designing port infrastructure tariffs, limitations and recommendations for future research are discussed.     

Port pricing: a cost axiomatic approach

The earlier port pricing literature argued that port prices should be based uponk marginal cost pricing. However, recent literature suggests that a conflicts would arise between marginal cost pricing and full cost recovery at ports. Further, problems arise in determining or estimating marginal costs. A price structure that addresses the problems of port marginal cost pricing is cost axiomatic pricing, given the goals, objectives and constraints of ports. Fairness and cost efficiency cost axioms for ports are considered. A methodology for determining cost axiomatic prices for a marine container terminal is presented.     

Pricing strategies for port competition and cooperation

This paper analyzes the effects of integration between two neighbor ports with a third port sharing the same overlapping hinterland. The merger (integrated port) can select either the price discrimination or uniform pricing strategy after integration. Our study reveals that port integration is always beneficial to the merger and the third port, but results in the reduction of consumer surplus and social welfare, regardless of the type of pricing strategy implemented. Further analysis shows that when the inland transportation cost to the ports is relatively low or sufficiently high, a better option is for the merger to adopt the price discrimination strategy. When port pollution is considered and has a relatively large impact, the integration of the two ports improves green social welfare for the region. This finding provides strong support for the ongoing port integration in China. In terms of pricing strategy, the uniform pricing strategy generates higher green social welfare when both inland transportation cost and pollution are relatively low, or both are significantly high. Otherwise, the price discrimination strategy generates the best result for the region.     

A dynamic model for marginal cost pricing of port infrastructures

ABSTRACT

A dynamic model for marginal cost pricing of port infrastructures links costs to system performance by combining a power-law function with time-dependent queueing analysis. Additionally, the model incorporates the marginal cost of capacity, including the effects of economies of scale. This allows the calculation of the marginal cost price under a dynamic framework. The model accounts for nonlinear behaviour of port demand, which is sensitive to price and service levels. The effects over time of cost and service levels on the port’s operational performance are quantified. The proposed model allows determining the optimal timing for capacity investment. The model is a starting point for the application of marginal cost pricing to ports. However, for practical application of such pricing method it is necessary to apply a system’s approach, as productivity and costs must be assessed at the terminal’s component level. This should allow the derivation of a marginal cost function at the terminal’s component level.     

‘Tool port’ to ‘landlord port’: a game theory approach to analyse gains from governance model transformation

This study investigates potential port users’ surplus and terminal operators’ profits due to transforming port governance from the ‘tool port’ model to the ‘landlord port’ model. Although the landlord port model is one of the most adopted and successful port governance models, many ports still operate under other models. Chittagong Port, the largest port in Bangladesh, currently operates under the tool port model, while the country’s second-largest port, Mongla Port, operates under the service port model. Chittagong Port is currently facing many challenges, including capacity expansion and renovation of port facilities. Therefore, we form four hypothetical situations for port governance model transformation, assuming that Chittagong Port will transform to the landlord port model but that Mongla Port will run under the existing governance model. Estimating a Bertrand game model, we present a cost-benefit analysis for port users and terminal operators (or port authorities) in hypothetical game situations. The results reveal that privatising one of the container terminals under a landlord setting is the most profitable scenario for Chittagong Port Authority, but privatising all terminals of Chittagong Port yields the highest users’ surplus. However, privatising two of the terminals while they cooperate yields the lowest users’ surplus.     

An analysis of the overcapacity problem under the decentralized management system of container ports in Japan

This article is concerned with an analytical summary of how the Japanese container ports have been taking place overcapacity problem in a systematic way. It focuses on institutional aspects of the overcapacity problem from the viewpoint of accounting cost and opportunity cost. The first issue arises due to the port authority's accounting system and insufficient disclosures of financial statements of port business to the port users and taxpayers. The second issue is inherently related to resource allocation between the state government and local governments through the budget system and income distribution programmes. Since a proper allocation of economic resources in the port sector as a whole will depend on investment decisions being taken within a coherent framework for ensuring that costs are passed on to port users, these issues are closely related to each other in reality. Although the budget system is completely controlled by the state government, the local governments have authoritative power over port planning, financing, and management, which is assured by the Ports and Harbours Law. The overcapacity problem appears to be an inevitable result.     

An analysis of the overcapacity problem under the decentralized management system of container ports in Japan

This article is concerned with an analytical summary of how the Japanese container ports have been taking place overcapacity problem in a systematic way. It focuses on institutional aspects of the overcapacity problem from the viewpoint of accounting cost and opportunity cost. The first issue arises due to the port authority's accounting system and insufficient disclosures of financial statements of port business to the port users and taxpayers. The second issue is inherently related to resource allocation between the state government and local governments through the budget system and income distribution programmes. Since a proper allocation of economic resources in the port sector as a whole will depend on investment decisions being taken within a coherent framework for ensuring that costs are passed on to port users, these issues are closely related to each other in reality. Although the budget system is completely controlled by the state government, the local governments have authoritative power over port planning, financing, and management, which is assured by the Ports and Harbours Law. The overcapacity problem appears to be an inevitable result.     

The implications of increased competition among ports for port policy and management

The increased competition faced by ports is more focused than previously on the performance of logistics systems of which the individual terminals in ports are critical hubs. The changes in competitive conditions raise issues about appropriate public port policies and strategies of port managements. This paper argucs that the port industry should (and is) moving in the direction of more harmonized policies based on economic principles. Port policies based on cost recovery from users of port facilities and services need to be adopted as the international standard. The competitive environment favours considerable local autonomy. Port management, in addition to possible direct responsibility for terminal management, needs to focus on activities with economies of scale or scope. Such activities, which span the requirements of terminals and may even warrant inter-port cooperation, enhance the services available for many port users.     

谈港口国船舶污染物接收设施问题报告的处置

文中探讨了一起国际航行船舶关于港口国船舶污染物接收设施问题报告的调查情况,介绍了此次船舶污染物接收设施问题报告的原因分析及采取的措施,并向接收设施的提供者和使用者给出了优化建议,明确了各有关部门在港口国船舶污染物接收设施履约工作上的重点。     

Competition model of cruise home ports based on the cruise supply chain – based on China cruise market

This paper addresses issues of cruise home port competition based on the cruise supply chain. A pricing model of the cruise market is developed considering the competitive cooperation behaviors of the participants in the cruise supply chain. Furthermore, a model of cruise home port competition is developed to investigate the impacts of subsidy participants in the cruise supply chain on cruise home ports. The results indicate that subsidy policies change the market equilibrium, promote the upstream and downstream integration of cruise supply chain, and enhance cruise home port competitiveness. Subsidies to cruise line increase the payoffs of cruise supply chain and ports’ profit. Subsidies to travel agency decrease passenger costs and improve all ports’ profits. For the long-term development of cruise home port, the consequents can be used as policy suggestions.     

Improving port effectiveness through determinance/performance gap analysis

Port managers, governments, and stakeholders bring different perspectives to the challenges of port management. One of the greatest of these challenges is identifying and prioritizing investments to take advantage of the opportunities for future growth and to meet the needs of customers and users seeking value in the supply chains served by the port. Importance–performance gap analysis, based on discrepancies between performance effectiveness and user expectations, has been illustrated to be one means of guiding these decisions while determinance scores offer another. However, user perceptions of satisfaction and effectiveness often lead to conflicting signals between these two methods when port managers seek to allocate resources for performance improvements. The authors develop a mapping process based on determinant/performance gap analysis to address conflicting signals between the methodologies for evaluating performance effectiveness and thereby assist port managers in making appropriate performance investment decisions that will address users’ requirements.     

Assessing port governance models: process and performance components

This paper develops a conceptual framework that integrates various relevant port performance components in a way that can be used for a comprehensive port evaluation and adjustment of existing port governance models. The paper presents a synthesis of the literature on port governance models and port performance, arguing that the process of change is a dynamic one, and that the performance outcome of a reform process influences the next round of reforms. It also explores the potential for decomposing performance into two different, although related, port performances components, namely efficiency and effectiveness. Bringing into the analysis concepts like the need to integrate users’ satisfaction in port performance assessment, the paper explores the content of each of these components and their relationship. This discussion, along with empirical evidence provided by port authorities, leads to the conclusion that governance decisions, both at firm and government levels, are largely based on a very limited assessment of port performance. The effectiveness of port reform is largely neglected, with user perspectives not being an integral part of an effort to improve performance by the port or as feedback to assess the effectiveness of the governance model imposed by the government's port policy.     

Port reform in Australia: regulation constraints on efficiency

Privatization and corporatization of ports in Australia has meant the transfer of government-owned monopolies to privately owned monopolies. This has required the introduction of a regulatory regime to protect the interests of users as in some cases the privatized terminal owner or operator is also a customer of that facility. A complex regulatory regime for ports at the commonwealth and state government levels has, as a result, been created. This has meant that pricing policies and reinvestment strategies are constrained by the regulator. Inefficiencies and disruptions are likely to occur. This paper examines the regulatory regimes in place—the role of the state government regulator, the Queensland Competition Authority, and that of the Australian Competition and Consumer Commission, the national regulator. It will examine the impacts and constraints these have imposed on coal terminal expansion and operations. Recommendations have been made suggesting the transfer of state government ports to a single national regulator. This paper examines whether the proposed regulatory overhaul will resolve the dilemma of the Goonyella coal supply chain. It will argue that while regulation rationalization and overhaul will expedite the complex regulatory process, the solution lies with an integrated approach to the entire supply chain rather than the port focus.     

Global supply chain and port/terminal: integration and competitiveness

Much has been said of the importance of port and terminal integration in the supply chain. Authors have stressed the importance of agility to the port environment, which involves being proactive along supply chains, facilitation of intermodal integration, as well as organizational integration and partnership between ports and users. Despite the well articulated importance of the issues, little has been offered in terms of conceptualizations and empirical evidence of what really is meant by port/terminal integration in the supply chain, how such integration can be measured and quantified as well as the extent to which different ports/terminals in the world are integrated in the supply chain and competitive performance implications arising thereof. This paper aims to make a contribution in this respect by (i) reviewing the relevant literature on supply chain integration and port integration in the supply chain, (ii) conceptualizing measures for port/terminal integration in the supply chain, (iii) empirically testing the influence of port/terminal integration in the supply chain on port competitiveness and (iv) outlining the significance and value of the study for port operators, shipping lines, transport providers and for further research.     

Global supply chain and port/terminal: integration and competitiveness

Much has been said of the importance of port and terminal integration in the supply chain. Authors have stressed the importance of agility to the port environment, which involves being proactive along supply chains, facilitation of intermodal integration, as well as organizational integration and partnership between ports and users. Despite the well articulated importance of the issues, little has been offered in terms of conceptualizations and empirical evidence of what really is meant by port/terminal integration in the supply chain, how such integration can be measured and quantified as well as the extent to which different ports/terminals in the world are integrated in the supply chain and competitive performance implications arising thereof. This paper aims to make a contribution in this respect by (i) reviewing the relevant literature on supply chain integration and port integration in the supply chain, (ii) conceptualizing measures for port/terminal integration in the supply chain, (iii) empirically testing the influence of port/terminal integration in the supply chain on port competitiveness and (iv) outlining the significance and value of the study for port operators, shipping lines, transport providers and for further research.     

港机专用橡胶拖令移动软电缆研制与安装敷设

为提高港口用电缆的使用寿命和安全性能,开发了新型的高性能港机专用橡胶拖令移动软电缆。介绍了该电缆的技术性能、产品设计、生产工艺和试制要点,并介绍了该电缆的安装敷设,对电缆用户有一定的启迪。     

Market analysis and pricing policies for sea canals: the case of the Greek Corinth Canal

This paper develops a pricing policy for sea canals gained from the experience of a research programme on the Corinth Canal in Greece. The methodology followed is based on the dual role of the canal, as a private management company, operating in a competitive maritime market and as an instrument for the development and application of transport policy by the national authorities. The elaborated pricing strategy uses as inputs the canal's users profile as well as its competitors characteristics, that were determined through a survey conducted in the Corinth Canal market. The paper concludes with a policy that satisfies the goal of profit maximization and promotion of sustainable mobility at a national and international level.     

The changing structure of the UK port industry and its impact on stevedoring costs

This paper examines the impact the changing maritime technology has had on the structure and development of the UK port transport industry. In particular, it describes the major institutional changes that have occured in response to technological and other developments and the influence these have had on the cost structure of individual stevedoring operators. Finally, it describes the resultant pricing policies adopted by stevedores and concludes that these have been exacerbated by the failure of successive governments to adopt sound and consistent policies towards the industry.