OPTIMAL PRICING POLICIES FOR TEMPORARY STORAGE AT PORTS

Pricing schemes for temporary storage facilities (sheds) at ports are examined in this paper. It is recognized that shippers respond to pricing changes by choosing storage times that maximize their profit. Two types of strategies are considered. Nondiscriminatory strategies set the shed storage charges as a function of shipment volume and time in storage alone (the same for all shippers); they do not require much knowledge about the shippers' behavior and can be found easily. Discriminatory strategies have the potential for improved efficiency but require more information. In some instances, identified in this report, nondiscriminatory strategies can be just as efficient as their discriminatory counterparts. If the demand is steady and there is no alternative storage site, we find that shed prices should increase linearly with time, at a rate that will prevent overflows without causing undue hardship to users. If the demand is heavy, then the shed should be close to capacity most of the time. There is no need for discrimination. Stochastic fluctuations in demand complicate matters slightly because they may make it worthwhile to increase shed prices at an increasing rate with time and to discriminate across shippers. If overflow can be sent to a remotely located warehouse, there is more flexibility and the pricing strategies are almost as simple. Two problems are examined in this paper: finding the optimal shed prices for a given warehouse price and finding both sets of prices jointly. A computer spreadsheet can be used to find the best pricing schemes.

Media Info

  • Features: Figures; References;
  • Pagination: p. 66-74
  • Monograph Title: Freight transportation: truck, rail, water, and hazardous materials 1991
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00620547
  • Record Type: Publication
  • ISBN: 030905124X
  • Files: TRIS, TRB
  • Created Date: Mar 31 1992 12:00AM