Optimization of Pricing for Priority Use of Port Berths

Abstract

With the growth of container shipping demand and the increasing size of vessels, the scarcity of frontline port resources, such as berths and quay cranes, has become increasingly prominent. Traditional port operations usually treat berth allocation, quay crane assignment and charging mechanisms as separate decisions, making it difficult to fully reflect the internal relationship among resource scarcity, differentiated service demand and port revenue management. As a differentiated service with service commitment attributes, berth priority usage rights can guide vessels’ choices through pricing mechanisms and provide a new approach for optimizing port resource allocation and improving revenue. Therefore, this thesis studies the pricing problem of berth priority usage rights, focusing on the coordinated optimization relationship among priority pricing, berth planning and quay crane allocation. This thesis first defines the service connotation of berth priority usage rights, regarding them as differentiated services in which the port provides vessels with earlier latest service completion commitments. On the demand side, reservation price and consumer utility theory are introduced to describe vessels’ willingness to pay for different priority levels. Vessels make choices according to the net utility formed by the difference between the reservation price and the actual price of each level. When positive net utility exists, a vessel chooses the priority level with the highest utility; when all paid priority levels fail to provide positive net utility, the vessel chooses the non-priority option. In this way, the priority price is not only a charging parameter, but also an important decision variable that affects vessels’ priority-level choices, demand structure and resource allocation results.