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DEALING WITH PORTS Henry S. Marcus

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

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  1. 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

  2. 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

  3. 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

  4. Other Port Issues Length of Contract • Investment Life & Amount Renegotiation • Timing • Inflation • CPI Secondary Use • Underutilization

  5. THINGS TO LOOK FOR IN A PORT Desperation Past Examples • Announced Public Plans: Buffalo • Planned Superport: Delaware Bay • New Empty Terminal: Baltimore Underutilized Ports

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