Problem

Underpricing of port services

Incidence:

In the absence of marked unemployment, labour can always be used in alternative ways and thus always has an economic cost. Land may, or may not, be capable of an alternative use, although in most ports situated in densely populated areas of great economic activity the value of the alternative use of land may be greater than that of its actual use in the port. Capital, on the other hand, frequently has no alternative use. Once a quay is built, it is useless for anything other than transferring goods between ships and inland; a breakwater can provide a sheltered haven and nothing else. Where there is no alternative use, there is no economic cost. Realistically, however, a port is concerned with its own costs in the sense of the annual cash outflow. In addition, port investments are very costly, and technical progress gives them a shorter useful life than was the case in the past. It is particularly important to use them economically, and port charges have a function to perform in this respect. Thus, while in principle, a pricing system has only to deal with economic costs, in practice, it has to provide a cash flow to meet the payments which the port must make, whether for costs which are recognized as economic or for those which are not.

Related UN Sustainable Development Goals:
GOAL 6: Clean Water and SanitationGOAL 9: Industry, Innovation and InfrastructureGOAL 12: Responsible Consumption and Production
Problem Type:
E: Emanations of other problems
Date of last update
18.09.2019 – 15:21 CEST