Estimating Cost Incurred at Calling Port
Estimating cost to be incurred at calling port is always a complicated matter as various factors that determine pricing are out of control of shipping companies. However, despite the complicated nature of estimating the price incurred in calling a port, there are few general factors which ship companies use to estimate the cost incurred.
Nature of the Cargo
The first consideration is the nature of the cargo. Some products require special care and equipment to handle than others because of their size, quantity, flammability among others factors. Meersman et al. observed that it cost more to handle general cargo than for bulk cargoes. Therefore shipping companies know in advance the how much it will cost to manage their products depending on its nature.
Time Spent in Port
Another consideration is the time spent in port. The more time one spends in port, the more opportunity cost they will have to incur associated Terminal handling charges (Meersman et al.). Shipping companies can schedule to have their products in or out of ports in their time of choosing however this may not be the case due to factors beyond their control such as delays and congestion.
Port Dues and Charges
Port dues and charges is another factor. Shipping companies can factor in the already known port dues in advance. The other factor is the point of origin of products whereby imports have higher charges than export; therefore, shipping companies can calculate in advance the customs requirements. Closely related to the above point is the exchange rate (Meersman et al.). In the case of an international voyage, shipping companies must consider the variation in exchange rates and determine the amount they will pay.
Summary
In sum shipping companies estimate the cost incurred at calling a port through various general considerations as specify factors in different ports can also influence prices. These considerations include the nature of the cargo, time spent, port administrative fees, the origin of cargo and exchange rates.
Work Cited
Meersman, Hilde et al. "Port Pricing: Principles, Structure and Models". SSRN Electronic
Journal, 2014. Elsevier BV, doi:10.2139/ssrn.2432939.
