A Competitive Framework for Evaluating the Economic Benefits of Port Improvements

by Ira Hirschman, Parsons Brinckerhoff Quade and, Douglas Inc, New York City, United States,
Ogden Beeman, Parsons Brinckerhoff Quade and, Douglas Inc, New York City, United States,

Document Type: Proceeding Paper

Part of: Ports '92


This paper presents an economic model for analyzing the benefits and optimal timing of port capacity increases. The model is presented through a case study of the Port of Ningbo, along China's southcentral coast. Unlike most economic studies, which focus on reduced congestion in the port, this analysis jointly considers congestion cost savings and ocean transport cost savings within an overall equilibrium framework. In addition, the analysis is conducted within a competitive framework that considers the relative costs of transshipment through Ningbo versus other competing ports serving the same potential hinterland. The authors believe that the paper presents a useful analytical model for evaluating the benefits of port expansions, and is particularly effective in identifying the optimal timing of a major capital investment in the port when cargo projections indicate steady growth potential over time. In addition, the methods described here provide a marketing tool for ports to use as they evaluate their competitive potential vis a vis other ports.

Subject Headings: Ports and harbors | Economic factors | Benefit cost ratios | Case studies | Equilibrium | Project management | Ocean engineering | China | Asia

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