Question

how to represent the demand and supply in port economics

Answer 1

Port Economics

Port Economics is the study of economic decisions of the users and providers of port services where port users demand port services while service providers supply port services to users

A port is a place,at which the transfer of cargo and passengers move from waterways. It is an economic unit which provides a transfer service in respect of number of containers and passengers move to and from vessels .It utilises the resources such as labor, mobile capital( e.g. cranes),infrastructure (e.g. wharfs) in transferring cargo and. Passengers.

This is the reason,it seeks to maximise its throughput in the employment of a given level of resources.

# DETERMINATION OF PORT PRICES

Port prices are generally levied on ship,cargo and passengers for the port service,these are based on -----

- either its operating cost

- or by port competition ( forces of demand and supply)

DEMAND SIDE---

It is represented by the need for freight transport. The demand side is affected by ----

* seaborne commodities trade --- found in crude oil,grain or container trade

* Random shocks---- like wars,downturns,natural disasters

* World economy--- effect of business cycle as well as trade development cycle

* a Transport cost--- higher or lower cost depending upon availing economies of scale or not.

SUPPLY SIDE---

It is represented by ships that deliver the commodities. It is affected by-------

* The fleet productivity--- It depends upon the use of the vessel

* The ship building production--- As port industry is cyclical with time span of up to 4 years

* freight revenue--- it affects the supply side by speeding up the operation and delivering more trading capacity.

* World merchant fleet---- contracting and expanding in cyclical movements of up to 20 years

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In the above graph ,under port industry, the demand and supply curves intersect at equilibrium point E, which determine equilibrium quantity Qe and equilibrium price PE.