REVENUE: Revenue Use from Transport Pricing
Interurban Case Study: Rotterdam Port
L. Rudzikaite, H. Visser, J. Kiel
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Presentation Contents
Research scope of the Study Case
Level Playing Field
Policy schemes analyzed
Modelling approach
Case Study Outcome
Conclusions
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Research Scope
 Existing and planned practices on pricing,
investment & revenue use at competing
ports of Rotterdam and Antwerp
 Testing theoretical trade-off alternatives
towards optimizing efficiency, equity and
acceptability
Focus exclusively on:
Container Transport (most rapidly growing branch)
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Why Container Transport?
TEU (mln)
Container throughput at the ports of Rotterdam and Antwerp
1995-2004
9
8
7
6
5
4
3
2
1
0
Rotterdam
Antwerp
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
years
Double volumes in 10 year time capacity shortage threaten both ports!
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Coastal map
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Level playing field
Both competing ports are driven by:
» rapid growth of container transport
» threatening infrastructure capacity problem:
• Rotterdam: reclaiming sea-land for Maasvlaakte 2 terminal
• Antwerp: building Deurganck terminal, ensuring/improving
access for bigger (container) vessels, minimizing tidedependence)
» Competition pressures (pricing/investment
trade-offs)
» Legal obligations (Dutch leg of the access to
Antwerp) versus environmental threats
» Sustainable welfare targets
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Elements Scrutinised
Port infrastructure capacity
(port access for container vessels, container terminal)
Pricing policy
(port dues policy for container vessels,
navigation charging policy on waterway network)
Investment policy
(of port authority, local authority, government :
infrastructure expansion, nature damage compensation)
Environmental concerns/legal obligations
(Interstate obligations Netherlands –Belgium)
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Policy Schemes Analysed
» Status quo situation (2004-2006)
• Ownership status (port authority-local authority-government)
• Current pricing/taxation policy (harbor dues for container vessels 2004)
• Ongoing infrastructure investment financing (new infrastructure at ports,
hinterland access)
» Adopted policy for the future (2004-2012)
• Launching new infrastructure (sea land reclamation Maasvlakte 2, Deurganck
container terminal)
• Sea-wall for Rotterdam
• Obligation to maintain necessary depth on the Westerschelde access route
» Negotiated trade-off policy for the future (2004-2012)
•
•
•
•
•
Launching new infrastructure (Maasvlakte 2, Deurganck)
Sea-wall for Rotterdam
Obligation to maintain necessary depth on the Westerschelde access route
Negotiated further deepening of the Westerschelde access route
Nature/flood protection on the Westerschelde access route
Low acceptability by the Dutch society
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Regulation schemes:
Theoretical option “User Pays”
Although navigation on waterways is free of charge, make an
exception on Westerschelde route by applying a “User Pays”
principle => i.e. assuming Belgium, as a major user of the
Westerschelde route, pays a contribution to the
“Westerschelde Investment Fund” of the Netherlands
Arguments:
• maintenance/deepening and nature protection costs are beared by
the Netherlands, the major benefits go to Belgium
• Indirectly supporting the biggest competitor
In fact, the Dutch and the Flemish governments
concluded a political trade-off:
– Netherlands fully bear the costs of deepening the Westerschelde
– Belgium facilitates the operation of a high-speed train service
“Amsterdam-Paris”
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Approach
Molino model
 Abstraction towards two port competition only (third option is
ignored)
 Artificial inclusion of passenger transport (to make model running)
 Simplification of port ownership relations (to trace revenue flow)
 Operator’s concept is replaced with Resultant Operator concept
(resultant shipper)
 Overcoming dual government problem
 Costs related to tide-waiting are assumed as infrastructure
capacity restriction costs
Having in mind the complexity of the port system
and the restrictions of the model, the outcome
should be considered as TENTATIVE
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Regime variants
(as suggested by MOLINO)
» Reference (actual port dues)
» Fixed toll (to pay-back investments)
» MSC-tolling
Methodological difficulties with
» Nash (Private/Private)
» Mixed (Private/MSC)
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Outcome:
Policy bound tolls (per variant)
Toll per TEU: Negotiated Trade-off Policy 2004-2012
Euro/TEU
10
8
6
Rot t erdam rout e
4
Ant werp rout e
2
0
Reference
Fixed
MSC
pricing variants
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
mln TEUs
Outcome:
Effects of pricing policy on demand
Adopted Policy Effects on Demand at Rotterdam and Antwerp
(Regime variants: Reference, Fixed, MSC )
20
18
16
14
12
10
8
6
4
2
0
Ref-Rotterdam
Ref-Antw erp
Fixed-Rotterdam
Fixed-Antw erp
MSC-Rotterdam
MSC-Antw erp
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Year
mln TEUs
Trade-off Policy Effect on Demand at Rotterdam and Antwerp
(regime variants: Reference, Fixed, MSC)
20
18
16
14
Ref-Rotterdam
12
10
8
Ref-Antw erp
Fixed-Rotterdam
Fixed-Antw erp
6
4
MSC-Rotterdam
MSC-Antw erp
2
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
year
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Outcome:
Policy Bound Revenues Versus Investments
Toll revenues
(Euro mln)
Status Quo Policy
Criteria
End 2006
Adopted Policy Critreria
Negotiated Policy
Criteria
End 2012
End 2012
/At the end of
the period/
Rotterdam
route
Antwerp
Route
Rotterdam
route
(+ maintenance
Westerschelde)
Antwerp
route
Rotterdam
route
(+ maintenance
Westerschelde)
Antwerp
route
(+ deepening &
maintenance
Westerschelde)
Reference
171.5
79.04
563.6
231.7
564.5
231.6
Fixed
204.4
120.4
752.3
414.4
752.4
464.3
MSC
93.3
78.8
344.0
195.2
489.9
250.0
Investments
47.6
191.2
767.6
221.3
803.6
721.3
Required
accumulative net
payment to
Westerschelde
Fund (“User
Pays”)
-
-
-
107.8
-
311.8
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005
Conclusions
 Fixing the level of charges sufficiently high to self-finance the
investment costs significantly reduces the container transport
volumes and has a negative impact on welfare levels
 Charging at marginal cost levels scores better, but does not
produce sufficient revenues to recover the investment costs for big
scale projects, like Westerschelde en Maasvlakte 2
 Existence of a “third port” competition makes it even more difficult
to earn the investments back
 Modification of current port tariffs might struggle with a legal
problem on waterways charging in the Netherlands
 Practical solution of the cross-border problem of the Westershelde
project is a political trade-off /an impropriate example on
transparency of seaport bound investments/
Study Case - Rotterdam Port, Final Conference Revenue November 29-30, 2005