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DEALING WITH PORTS Henry S. Marcus. Pricing Strategies Planning and Development Goals Investment Criteria and Policies Pricing Policies and Techniques Leasing Strategies Flat Rate Mini-Max Shared Revenues. ALTERNATIVE LEASES. Flat Rate Win/Lose Economies of Scale for Lease

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dealing with ports henry s marcus
DEALING WITH PORTSHenry S. Marcus

Pricing Strategies

  • Planning and Development Goals
  • Investment Criteria and Policies
  • Pricing Policies and Techniques

Leasing Strategies

  • Flat Rate
  • Mini-Max
  • Shared Revenues
alternative leases
ALTERNATIVE LEASES

Flat Rate

  • Win/Lose
  • Economies of Scale for Lease
  • Ideal Subsidy
  • No Cargo Auditing
  • High Risk

Mini-Max or Shared Revenue

  • Win/win
  • Both Set Minimums
  • Only mini-max sets maximum
  • Trigger
    • $ (Tariff)
    • Tons
example of shared revenue
Example of Shared Revenue

Calculate

Land and All Improvements @ “x”% = AA

+ Admin. Ovhd & Port-provided M = BB

Reasonable Total Annual Rental = CC

Amount (RTARA)

Set Lease Rates

Pay 100% Tariff Until you Reach 75% RTARA

Then Pay 60% Tariff (Until %)

Source: T. Dowd

other port issues
Other Port Issues

Length of Contract

  • Investment Life & Amount

Renegotiation

  • Timing
  • Inflation
  • CPI

Secondary Use

  • Underutilization
things to look for in a port
THINGS TO LOOK FOR IN A PORT

Desperation

Past Examples

  • Announced Public Plans: Buffalo
  • Planned Superport: Delaware Bay
  • New Empty Terminal: Baltimore

Underutilized Ports