Seminar on Port Performance Indicators
The interesting five-day seminar on PPIs held in Tema (Ghana) in July 2015 and organized by PMAWCA (Port Management Association of West & Central Africa) brought the opportunity to discuss about which performance indicators should be collected and analysed by ports in West and Central Africa.
The seminar was composed by presentations, where both instructors (Ports & Logistics Advisory team) and guest speakers talked about PPIs from their own perspective based on their previous work-experience, and by workshops, where both instructors and participants discussed which PPIs are more relevant and useful for a port complex and its stakeholders.
The debates and discussions generated during the workshops shed some light on the way these PPIs should be implanted in PMAWCA members. Many participants, as well as the instructors, agreed with the idea that PPIs are very important for port authorities, port users, terminal operators, stakeholders, and so on. For example, it is well known that the measurement of port performance is relevant for port users, policy makers, port developers and other stakeholders; port users may be especially interested in performance indicators related to items such as costs, reliability and transaction costs; policy makers may be interested in those indicators as well, but on top of that also find indicators such as employment in ports and CO2 footprint relevant; and environmental stakeholders may be especially interested in indicators of local (negative) environmental impacts, such as water quality and noise.
Furthermore, it is worth to highlight that participants and instructors also agreed that implanting these PPIs in all PMAWCA port members would bring the chance to analyse and compare data by the association itself. We cannot forget that the port industry works in a global market and seaports also need to be analysed from a wide perspective, not only from a port operator perspective.
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Pricing of transhipment by port authorities
COMMENT: How can pricing structures in ports be best explained; are they based on a specific historical trajectory in each port, or based on economic logic, asks Peter de Langen.
The variety of pricing structures is huge. For instance, a substantial amount of charges are paid by shippers in South Africa, contrary to most other countries. In Singapore, virtually all revenues come from port dues and virtually none from land rents in ports or charges to shippers. The opposite is true in many US and Canadian ports; here, the majority of revenues are from land lease agreements. This suggests that ‘history’ may be an important factor.
Prices may traditionally be designed from an administrative logic, and in some cases even be perceived as a kind of tax rather than as a price for a service. In such an environment, huge differences in pricing structures can persist.
The recovery of a certain range of costs (operational and to some extent investment) may often be the most important objective. This implies pricing may not always be based on economic logic. In such cases, changing pricing structures may be attractive.
This issue is relevant for port authorities looking to price transhipment flows. The administrative logic would regard ‘a ship as a ship’ and not price ships differently based on whether the cargo they carry is transhipped in the port.
From an economic or commercial logic, it may make sense to differentiate prices with the lowest price offered to the most price sensitive market segment. In many ports, transhipment cargo (containers, but also crude oil and even dry bulk) is the most price sensitive cargo flow. Furthermore, transhipment flows generate ‘double’ port dues because they move in and out by ship.
Thus, special pricing for transhipment seems worthwhile. Indeed, various port authorities have such special prices for transhipment. As a reference, most airports also have lower prices for transit passengers.
Two questions remain: why haven’t all port authorities developed such pricing structures? And for those port authorities that have special prices for transhipment, have they ‘tweaked’ historically developed pricing structures or have they really taken a fresh look at port pricing?