In 2008, Freight handling in EU ports fell by 0.5% after almost a decade of continuous growth. The total weight of goods handled in EU-27 maritime ports is estimated at 3.9 billion tonnes. Of these, nearly two thirds were goods unloaded.
Rotterdam, Antwerp and Hamburg - all located on the North Sea coast - maintained their positions as the three largest EU ports in terms of both gross weights of goods and volume of containers handled.
The number of vessel calls at EU main ports showed a decrease of 1.8% compared to 2007. However, in terms of gross tonnage of the vessels, a growth of 1.5% was recorded. This reflects the increasing size of vessels operating in EU ports.
EU-27 ports faced a 0.5% decrease in the handling of goods on an annual basis The negative effects of the economic crisis in the top three EU ports (Rotterdam, Antwerp and Hamburg) were mainly felt during the 4th quarter of 2008.
Rotterdam and Hamburg, the top two ports, both recorded a fall of 1% in 2008 compared to 2007, largely reflecting the impact of the economic crisis, since the fall only began in the 4th quarter of 2008.
The competition among ports in this region is fierce, as all ports try to increase their share market.
The port on Hamburg was chosen in this paper will look into the pricing system and assessing the demand, to stand on the competition in this region. Also, we will assess the cost structure of the port, and how the current pricing system can be improved in order to attract more customers.
The Port Of Hamburg was established in the 9th century; however, the official birth of Hamburg Port was on 7th May 1189. Back then, Hamburg was guaranteed privileges such as customs-free travel along the lower Elbe to the North Sea and the right to hold markets in an imperial charter.
The Port Of Hamburg today is the largest German seaport, with a total handling volume of 140 m tones. Also it is the ninth-largest container port worldwide, handling 9.9 m TEU of containers. Hamburg's geographical situation also offers interesting transport cost advantages. The location of the river Port Of Hamburg just 110 kilometers inland from the North Sea coast has proven a decisive natural advantage (Hamburg Port Authority, 2010).
The port blessed with efficient land and water links in and out of the hinterland, with general transport infrastructure enhanced by specific transport services offered by the port industry. Hamburg is Europe's largest hub for railborne container transport. The frequency of departures and the network of feeder ships were intensified in recent years. Feeder ships offer an average 25 departures every day. Hamburg's efficient and reliable distribution services in Baltic Sea transhipment in particular, give it the edge over competing ports in the North Range.
Port Of Hamburg Pricing System is divided into three main parts;
Part I: Port Fees and Charges:
Divided into three Price Categories and Special Tariffs:
Price category 1:
Comprise Oil tankers (Oil tankers with segregated ballast tanks (SBT), double hull oil tankers and other oil tankers). The classification into this category is independent of the type of transport and is determined according to shipping areas and G.T.
Price category 2:
Other bulk carriers (liquid or solid goods) This category comprises, Chemicals products and other liquid goods, Suction goods / agri-bulk (e.g. oil seeds, fertilizer, grain), Grab goods (e.g. coal, ore, scrap metal) and Different types of bulk goods, e.g. oil/bulk/ore - ships. The classification into this category is independent of the type of transport. Classification is based on shipping areas and G.T.
Price category 3:
comprise Break-bulk (general) cargo vessels, passenger / cruise ships and other carriers (Full container vessels, RoRo container ships, Other RoRo ships / multi-purpose cargo vessels, combined passenger/ RoRo ferries and Other cargo vessels and types of transport (Reefer ships, Heavy-cargo carriers without RoRo facilities, Pallet carriers or barge carriers, Oil rig supply ships, and Barges).
Special tariffs are further divided into Tariff Reductions and Tariff Exemptions.
Part II: Berth Occupancy Charges:
Are divided as follows:
Part III: Other Fees and Charges
Concern the use of public deviation dolphins by ships for a one-time compensation, for each 100 G.T. and the Electronic communication of ship data and ship movement data, annual fee.
(In the Port Of Hamburg, all operations at berth are carried out by stevedoring companies; thus, the tariffs for berthage, transit storage, warehousing, towage, pilotage Etc. are carried out by those companies. For that reason the tariffs for such services are missing in the pricing structure of Port Of Hamburg.
Port Of Hamburg hinterland extends from Lisbon in the southwest to Glasgow in the northwest, St. Petersburg in the northeast and Istanbul in the southeast. There are direct departures to thirty nine destinations outside Germany (Port Of Hamburg, 2008).
The biggest share of container transhipment in the Port Of Hamburg is bound for or from the states of North and Southeast Asia. China is the port's biggest trading partner by far. And Hamburg is the focus for Chinese goods distribution in Europe.
According to the Annual Port of Hamburg press conference (2010), the year 2009 was a difficult year. The port handled 110.4 million of sea-borne cargo, 30 million tons (- 21.4 per cent) less than the previous year. However, in the third quarter of 2009, there were initial signs of a stabilizing trend now there is slight upward trend. The cargo handling in the fourth quarter of 2009 showed that transhipments of cargo increased by 3.7 per cent compared with the first half of the year.
For 2010 the Port and port-related industries expects better growth. One of the factors is that China, which is considered the key foreign trade partner for the Port Of Hamburg, is going to increase its merchandise which mostly carried by sea due to increased exports. As Germany being a big universal port and the main hub for traffic between Asia, northern Europe and the Baltic states, subsequently the Port Of Hamburg will benefit from these positive trends, and expected overall growth is three to four per cent in 2010.
Port Of Hamburg is in fierce competition with Port Of Antwerp since 1985 when port on Antwerp was the second in container handling in the Hamburg Le Havre range. Port Of Hamburg managed to take the second place from Antwerp in 1987, since then and Port Of Hamburg is a head of Port Of Antwerp, not until 2009 when Antwerp came second with handling 7.3 million TEU's. Another big competitor is the Port Of Rotterdam who is leading the Hamburg-Le Havre range. Bremen who is a German port is increasing its share on the account of Port Of Hamburg, although both ports are German ports, yet they are competing for bigger market share.
(Table 3) shows the growth rate for Port Of Hamburg was +0.6% while the growth rate for Rotterdam, Antwerp, Bremen and le Havre was +2.7%, +3.5%, +12.2% and +2.4% respectively. The Table also shows a negative DRY Bulk Goods growth rate for Port Of Hamburg, at the same time both Ports of Rotterdam and Antwerp achieved a positive growth rate, and same goes for the Container Growth.
The cost structure for the Port Of Hamburg as follows:
1. Cost of materials.
2. Staff costs.
3. Amortization and depreciation of fixed intangible and tangible assets.
4. Other operating expenses.
Port Of Hamburg operating expenses for 2008 was a total of 279.4 million EUR. Half of the expenses attributed to goods and services purchased to carry out regular infrastructure maintenance work, expanding public road facilities and public flood protection facilities. The total value of these services is 130.5 million EUR are shown under cost of materials. The staff costs of the Hamburg Port Authority amounted to EU R 89.0 million which was approximately the same as in the previous year. Furthermore, depreciation and amortization amounting to 30.6 million EUR and other operating expenses of 29.3 million EUR were recognized as expenses. In particular, the operating expenses included rental payments, IT operating costs, marketing and consultancy costs (HPA annual report. 2008).
Port prices are an important element in interport competition. As a port authority will inevitably be concerned with improving its competitiveness, it had better work on reducing the costs underlying dues charged, not only for its own services, but, if applicable, also for services provided by private companies in the port area (Meersman. 2008).
Port pricing strategies and practices are mainly related to the objectives of the port companies (Cariou, 2010). In order for the port to increase its market share and attract new traffic; There are 4 usual tariff approaches exists; cost-based tariff, investment based tariff, comparative tariff, flexible and promotion tariffs (Cariou, 2010).
The flexible tariff is and aggressive traffic aiming to maintain or increase market share, these tariffs could take the form of, loyalty tariff for clients with large volume, penetration tariff to develop new traffic, predatory pricing to eliminate competitors and promotional tariff (Cariou, 2010).
In the Port Of Hamburg as mentioned above most of the operations such as stevedoring, pilotage, towing Etc are carried out by private companies and the cost of these services is much higher than to port pricing. For the strategy of the port to work the private companies should adopt the port strategy in order to have bigger market share and attract new traffic.
Table 4, shows that the Port Of Hamburg has 3.1elasticity,
Table 3: Price elasticities for selected North Range container ports (10% price increase, simulation results)
Source: Haralambides et al. (2001, p. 948)
On the other hand, the reduction of port pricing should not lead to congestion which may lead to losing customers. According to the queuing theory, If the port Utilization exceeds 60%, that would lead to congestion in the port which bring about delay time for the ships and that causes loosing traffic instead of creating new traffic.
Low port prices may bring traffic to the port but congestion could follow, investment costs may not be recovered in the long-run and the ports.
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Container Throughput Hamburg Le Harve Range Time Series. (2010). Retrieved March 28, 2010 from the World Wide Web: http://www.hafen-Hamburg.de/
Container Handling Forecast. (2009). Retrieved March 28, 2010 from the World Wide Web: http://www.hk24.de/en/productlabels/economic/port.jsp
General Terms and Conditions Applicable to Civil-Law Agreements on the General Use of the Port Of Hamburg. (2010). Retrieved March 28, 2010 from the World Wide Web: http://www.Hamburg-port-authority.de/en/component/docman/doc_download/82-agb-2010-english.html
Haralambides, H. E., Verbeke, A., & Musso, E. (2001). PORT FINANCING AND PRICING IN THE EUROPEAN UNION: Theory, Politics and Reality. Retrieved March 27, 2010 from the World Wide Web: http://www.maritimeeconomics.com/downloads/papers/HH_port%20financing%20and%20pricing%20IJME.pdf
Hamburg Port Authority Annual Report 2008. (2009). Retrieved March 28, 2010 from the World Wide Web: http://www.hamburg-port-authority.de/en/component/docman/doc_download/81-annual-report-2008.html
Meersman, H., Van de Voorde, E., & Vanelslander, T. (2004). PORT PRICING: Considerations on Economic Principles and Marginal Costs. Retrieved March 27, 2010 from the World Wide Web: http://www.ejtir.tbm.tudelft.nl/issues/2003_04/pdf/2003_04_03.pdf
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Notteboom, T. (2010). Pressure on cargo growth in the European port system: How is it affecting the cargo distribution among ports?. Retrieved March 28, 2010 from the World Wide Web: http://www.lgt.polyu.edu.hk/Event/IFSPA2009/IFSPA2009%20Conference%20pdf/KeynoteSession1/KeynoteSession1_1-TheoNotteboom.pdf
Port Reform At Port Of Hamburg. (2001). Retrieved March 28, 2010 from the World Wide Web: http://www.port.bg/conference/presentation/3.Hurtienne.ppt
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