Labor Toolkit

Port Regulation: Overseeing the Economic Public Interest in Ports


As mentioned earlier in this module, tariff control is the most commonly used method for economic regulation of ports. Tariffs differ from port to port as they tend to be a reflection of the services offered (for example, container handling, tug assist, and pilotage), the facilities being provided (for example, gantry cranes, storage yard, or sheds), the party that incurs the tariff charge (for example, the carrier or ship’s agent, or the shipper), and the basis on which a tariff item is calculated (for example, pilotage charges based on the vessel’s gross registered tons or vessel draught). Because of these differences, tariffs may seem highly fragmented and complex, but there is a core set of essential services required for handling ships and cargoes that all ports typically offer. These can be referred to as basic services. Regulators tend to focus on these services because they represent the bulk of the total charges and are commonly offered by all ports. Box A-1 shows the ranges of the percentages of total port charges represented by a core set of services.

Such services can be broken down into two categories:

In determining if tariff regulation is necessary, the regulator first has to identify the specific service and the service provider. In the traditional port, the public port authority was typically an operating port, meaning that the public entity provided virtually all of the basic services noted above. From a regulator’s point of view, this was a simple matter because of the public entity’s monopoly position over all basic services. Generally, one service provider would be regulated.

Today, many ports have evolved into a landlord port authority where facilities are leased by private operators, who in turn directly provide their services to carriers and shippers. In this situation, private operators may provide services previously under the domain of the public port authority, such as pilotage, tug assist, vessel stevedoring, storage, and yard services. Because of this shift in service provider responsibility, the entire tariff system as well as the transaction process has changed. The port authority (or other government entity) will likely continue collecting a navigation charge or port dues, and may also charge for dockage and gate service fees, depending on the structure of the lease with the operator as well as the port’s facility configuration. The port authority will also have a lease arrangement with the operator, who generally charges fees for the range of services provided from berth to gate (for example, vessel stevedoring, yard handling, or storage).

Thus, the regulator has gone from single-entity regulation to potentially regulating a full range of services provided by a number of operators.

Box A-3 shows the evolving complexity that privatization has introduced from a transaction point of view. Under the public operating port, the transaction process was quite clear, as ports assessed charges to only two parties—shipping lines and shippers. Under a privatized port arrangement, the port authority applies charges to operators, lines, and shippers. In potential antitrust settings, therefore, the regulator needs to be concerned not only with the port authority’s charges, but also the many private operators providing basic services, dramatically increasing the potentially regulated population.

Box A-4 shows an actual case of the interrelationships of port charges in the Port of Miami for containerized cargoes. The port is established as a landlord authority under local government jurisdiction (Miami/Dade County). At the time of writing, ship charges in Miami, like in most U.S. ports, include a special fee called the Harbor Maintenance Fee, collected by the U.S. federal government to cover dredging and aids to navigation. The charge is 0.125 percent of the cargo value, or about $63 per average box of $50,000 value. There is, however, a second charge called a harbor fee applied by the local port authority, which is based on the ship’s gross registered tons (GRT).

Dockage in Miami is also charged on the basis of GRT at a rate of $0.24 per GRT for every 24- hour stay. Cargo charges in Miami include wharfage, at $1.60 per ton, or the equivalent of $22.40 per 14-ton box, which has declined almost 6 percent since 1998. Cargo wharfage is billed directly to the line (carrier), which in turn incorporates the wharfage charge with the freight bill.

There are two separate handling charges, ship handling (stevedoring) and terminal or gate handling. Ship handling is performed by private stevedores, collecting a range from $35–50 per container, excluding crane services. Terminal handling is performed by POMTOC, a private sector joint venture of local stevedores and P&O Ports. POMTOC charges approximately $45–55 per move, for any type of container, including empties. The charge for gantry cranes is based on an hourly rate of $450 per hour (straight time). The cranes are owned by the port authority, but operated by the private stevedores and maintained by a private company.

The port has no direct charging relationship with shippers, only with shipping lines (carriers) and operators. Shippers pay directly only the federal Harbor Maintenance Fee.

Box A-5 shows how the flow of charges may differ from port to port. The figure also illustrates the flow of port charges for the Port Society of Cartagena, whose tariff reflects the operating arrangement in that port. In Miami, the facilities are administered by the local port authority. In Cartagena, as elsewhere in Colombia, the facilities are administered by a private sector company referred to in Colombian law as a port society. The port society’s primary responsibility is to operate the backup area (the area behind the berth), while private stevedoring companies handle the loading and discharging operation.35 In addition, other private operators provide pilotage and tug services. These operators, along with the stevedoring companies, are charged an installation user charge by the port society. Unlike the Miami case, the port society has a direct charging relationship with the shippers and also charges the port operators (stevedoring companies) directly for berth and yard wharfage. In Columbia, shippers are also charged directly for yard handling by the stevedoring companies.

The emerging complexities in privatized settings suggest that regulators will need to be more cognizant of how port services are provided and what party is charged by whom. It is conceivable that one country can have a variety of charge flow configurations depending on the operating arrangements in a particular port. As is shown in figures A-3 and A-4, depending on the extent of competition, it is possible that regulators will need to monitor the pricing practices of not only the port authorities, but also the various private parties engaged in port operations.


How To Use The Toolkit


Framework for Port Reform

The Evolution of Ports in a Competitive World

Alternative Port Management Structures and Ownership Models

Legal Tools for Port Reform

Financial Implications of Port Reform

Port Regulation:
Overseeing the Economic Public Interest in Ports


Regulatory Concerns When Formulating a Port Reform Strategy

Strategies to Enhance Port Sector Competition

Designing a Port Regulatory System

Summary and Conclusions



Labor Reform and Related Social Issues

Implementing Port Reform


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