Efficient Port Pricing: A New Methodology Applied to Spanish Commercial Ports

Abstract

This paper presents a methodology for determining efficient tariffs for the services provided by commercial ports. With this method, efficient unit profits can be obtained for the services offered and their margins of sensitivity can be found. This allows port authorities to determine what actions should be taken with regard to tariffs and/or variable costs in order to optimise their economic results. At the same time, shadow prices of port resources and their limits of sensitivity can be obtained, thus providing port authorities with orientation regarding which resources should be augmented and by how much. In the early 90's, this methodology was applied to all Spanish commercial ports and results were obtained for sixteen of them. Perhaps, the fact that port tariffs had not yet been liberalised, a fundamental condition for the model employed, made its implementation unattractive at that time. We were encouraged to take up the method again by the change in the Spanish situation as a result of the liberalisation of port pricing in December 1997.