Lecture 8: Port Cost And Pricing Flashcards
What does the CPV approach stand for in port pricing?
Cost, Performance, Value
What does the ceiling in the CPV approach indicate?
Charge cannot be more than value received by users
What does the floor in the CPV approach indicate?
Charge must not be less than the incremental cost it incurs in serving the user
What kind of behaviour does the CPV pricing approach promote?
Efficient behaviour of the users of a facility and accomplished by using the facility at an optimal level
What does the CPV approach focus on?
The value-added to users from the services and facilities provided by the port
What are the types of costs involved in CPV pricing?
Fixed cost (whether used or not) and Variable cost (only charged if used)
What incentive can be offered through port tariff rebates?
Rebates for ships that start work, for example, one hour after berthing
What penalty can be applied in port pricing?
Surcharges or fines to ships that start after 3 hours
How is value added to users estimated in CPV pricing?
Through their willingness to pay a price for a service/facility
What are marginal costs in port services?
Extra costs incurred in providing a given service/facility for additional time period originally intended
When should tariffs be increased in marginal cost pricing?
When the level of utilisation of facilities is above optimum
When should tariffs be decreased in marginal cost pricing?
When the level of utilisation is below minimum
What are the objectives of using marginal cost pricing?
Marketing (maximising use of port services) & Financial (covering VC of services)
What is the operational objective of marginal cost pricing?
Maximising throughput of port facilities while limiting congestion
What is the marketing objective of marginal cost pricing?
Minimising the loss of traffic owing to congestion
What are the financial objectives of marginal cost pricing?
Generating sufficient revenues to cover the ports’ cost incurred in providing services and facilities
What is average cost pricing based on?
Adding the total fixed and variable costs
What is variable cost pricing based on?
Dividing total variable costs by the projected demand for service & facilities (USD/TEU)
List examples of services priced based on variable costs:
Pilotage, towage, mooring, equipment hire, stevedoring
List services related to berth and storage under cost pricing:
Berth hire, transit storage
List services under conservancy-related charges:
Conservancy & Port Dues, wharfage, warehousing
How are the 10 charges being classified in CPV?
Cost- Pilotage, towage, mooring, equipment hire, stevedoring
Performance—berth hire, transit storage
Value- Conservancy & Port Dues, wharfage, warehousing
