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What are the revenue stream in Port and Port Authority in Europe - How do they make money
Hello! Thank you for your question regarding revenue streams for European ports and port authorities. The best sources to answer your question include government reports and databases, and regulatory filings. The short answer is that European ports generate revenue through a combination of port usage, freight and cargo servicing fees, and land leases. The ability to generate revenue for European ports is significantly easier for major ports than smaller or island ports. A deep dive of my research follows.
OVERVIEW
As of 2016, most port authorities in Europe (87%) are publicly owned, predominantly by state or municipality. Public-private ownership is rare and exists in only a few countries. Full private ownership is only present in some UK ports. Port authorities operate for both economic and non-economic reasons, including:
• Maximization of added value
• Maximization of port throughput"
Maximizing profits of the port authority is only listed as a priority among 20% of the respondents to a survey of European port authorities. The survey also showed that, in an effort to be more transparent, port dues ("the infrastructure charges levied to ships and cargo for the general usage of the port") are published by 95% of port authorities, often on the respective port authorities' website.
LARGE VS. SMALL PORTS
According to a report by the Economic Development Council of the European Council, the ability to generate revenue is different for large, major European ports when compared to smaller and island ports. This impacts each ports ability to cover operating expenses, repay capital costs, and generate a profit.
Major ports earn significant revenue through foreign exchange as a result of high trade volumes. In contrast, smaller and island ports serve multiple purposes (i.e., container freight, general cargo, and passenger services), and may be the only possible access to these geographic areas. Thus, smaller and island ports struggle to cover the high costs of multiple types of infrastructure, operating and maintenance costs while being competitively priced. Operating efficiency is key.
REVENUE STREAMS
There are several charges that ports levy to raise revenue, These include vessel servicing and facilities fees, cargo services and facility fees, and charging for vessel servicing and facilities, cargo services and facilities, and leasing land for commercial and industrial activities.
Vessel servicing fees include "pilotage, tugs, stevedoring, water and sundry supplies." Vessel facilities fees include port dues, navigation costs, and mooring charges. Cargo service and facilities charges cover actual handling of cargo, shore services, wharfage and storage. Major ports situated on large tracts of land are increasingly leasing portions of their land as free trade zones and free processing zones.
Setting appropriate fees for different types of vessels and cargo shipments is a complicated process. Ports need to be both competitive in relation to nearby ports, and sufficiently profitable to cover costs. Larger ports that benefit from commercial and leasing revenues may reduce port charges to remain attractive to maritime companies.
PORT USAGE STATISTICS
The total gross weight of goods handled in EU ports is estimated at just over 3.8 billion tonnes (2015), an increase of 1.3 % from 2014. Rotterdam, Antwerp, Hamburg, Amsterdam and Algeciras were the five largest freight ports. The number of passengers passing through EU ports increased 0.6 % over the prior year to more than 395 million passengers. In contrast, the total number of passengers embarking and disembarking in EU ports fell by 7.0% since 2010. Italy is the leading European country for passengers passing through it ports (70 million), followed by Greece with nearly 66 million passengers. Combined, the two countries constitute roughly one third of the total seaborne passengers embarking and disembarking in the EU countries.
ROTTERDAM
An example of one of Europe's top cargo ports is Rotterdam. The Port of Rotterdam Authority is an unlisted public limited company.
The Municipality of Rotterdam owns roughly a 70% share, and the Dutch government owns the remaining 30%. Annual turnover is approximately €675 million, and roughly 1,100 are employed there.
The Port of Rotterdam Authority's self-reported main revenue streams are rental income and port dues. Port sites are rented to companies primarily for storage purposes. Port dues are required of ships using the port. Revenues are invested in public infrastructure (i.e., roads in the port area), customer-specific infrastructure (i.e., quay walls and jetties), traffic management systems, patrol vessels and emergency control.
ITALY
An example of tariffs charged for passenger ships at the Port of Venezia can be found here. Lump sums for assistance to ships range from €1.500,00/each call to € 2.000,00/each call. Passenger charges range from € 16,24/pax to € 25,71/pax. Berthing fees, luggage handling charges, and security costs are just some of the other fees assessed.
CONCLUSION
To wrap up, European ports generate revenue through a combination of port usage, freight and cargo servicing fees, and land leases. The ability to generate revenue for European ports is significantly easier for major ports than smaller or island ports
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