Lecture 2: Demand For Port Services

Question 1

What does Port Demand refer to?

Answer 1

The need or requirement for a port’s services and facilities

Port Demand is influenced by various economic factors.

Question 2

List the 6 determinants of Port Demand.

Answer 2

• Global trade and production levels rise
• Incomes increase
• Population grows
• Prices of complementary goods/services decrease
• Prices of substitute goods/services increase
• Taxes or levies decrease

These determinants can affect the overall demand for port services.

Question 3

What is Price Elasticity of Demand (PED)?

Answer 3

The ratio of the percentage change in quantity demanded to the percentage change in price

PED helps understand how quantity demanded changes with price variations.

Question 4

True or False: The value of Price Elasticity of Demand is always positive.

Answer 4

False

The value is negative due to the inverse relationship between price and quantity demanded.

Question 5

What are the determinants of Price Elasticity of Demand?

Answer 5

• Availability of substitutes
• Luxury or necessity
• Proportion to the customer’s income
• Time frame

These factors influence how sensitive demand is to price changes.

Question 6

Fill in the blank: Necessities have relatively _______ demand, while luxuries have more elastic demand.

Answer 6

inelastic

This distinction affects pricing strategies and consumer behavior.

Question 7

How does the proportion to the customer’s income affect elasticity?

Answer 7

Items that take up a smaller proportion of income are less elastic, while more expensive items are more elastic

This impacts consumer spending habits.

Question 8

What is Port Demand Forecasting?

Answer 8

Predicts future port traffic, typically around 3% annual growth

Forecasting is essential for planning and resource allocation in port operations.

Question 9

What is Regression Analysis in the context of Port Demand?

Answer 9

Relates port demand (dependent variable) to independent variables

This statistical method helps identify relationships and predict future demand.

Question 10

List key factors influencing Port Demand.

Answer 10

• Macro-economic: GDP growth, currency exchange rates, commodity prices
• Industry-Specific: Freight rates, inter-port competition
• Regional: Hinterland connectivity, geography, infrastructure
• Shipping Industry: Vessel size trends, shipping alliances, seasonality
• Regulatory & Environmental: Environmental regulations, trade policies
• Historical/Operational Data: Cargo throughput history, vessel call patterns, customer profiles

Understanding these factors is crucial for accurate demand predictions.