Private Port Pricing and Public Investment in Port and Hinterland Capacity

This paper examines pricing and investment actions in a setting similar to that of European ports such as Rotterdam, Antwerp, and Le Havre. Key features of the scenario are that the ports are congestion prone, and that they serve a hinterland that they are connected to by congested transport networks. The ports compete for traffic in an oligopolistic setting. The analysis emphasizes the interaction between the duopolistic port market and hinterland congestion. Two aspects of shipments are focused on: the costs of using port services and the cost of hinterland transport toward those final destinations. The framework of the analysis is a two-stage game in capacities and prices. The governance structure is such that decisions about capacity are public, but pricing is private. Main results show that ports charge users for congestion at the port and also for the share of hinterland congestion they impose on other customers of the port. This “partial internalization” means that ports with heavily congested hinterlands will charge higher prices. A second finding is that extra investment in one port reduces congestion at both ports, but raises hinterland congestion where the port is located. Along similar lines, investment in the hinterland will lead to more congestion at the port that it serves and resulting higher port charges. A third finding is that local governments that invest to maximize welfare will invest in the local port, but the induced increase in hinterland congestion is an important factor in those actions. The results suggest that duopolistic port pricing induces public entities to invest less in port capacity. Finally, private ports do not necessarily charge higher port prices. In fact, if the country governments directly control prices of the port within their jurisdiction, they may charge even higher prices than private operators.

• Corporate Authors:

  World Conference on Transport Research Society

  Secretariat, 14 Avenue Berthelot
  69363 Lyon cedex 07,   France 
• Authors:
  • De Borger, Bruno
  • Proost, Stef
  • Van Dender, Kurt
• Conference:
  • 11th World Conference on Transport Research
  • Location: Berkeley CA, United States
  • Date: 2007-6-24 to 2007-6-28
• Publication Date: 2007

Language

• English

Media Info

• Media Type: CD-ROM
• Features: References; Tables;
• Pagination: 34p
• Monograph Title: 11th World Conference on Transport Research

Subject/Index Terms

• TRT Terms: Equilibrium (Economics); Freight traffic; Freight transportation; Mathematical models; Port congestion; Ports; Pricing
• Uncontrolled Terms: Hinterlands
• Subject Areas: Finance; Freight Transportation; Marine Transportation; Terminals and Facilities; I10: Economics and Administration;

Filing Info

• Accession Number: 01118815
• Record Type: Publication
• Files: TRIS
• Created Date: Jan 22 2009 9:34AM