Port Financing and Pricing in the European Union: Theory, Politics and Reality

The issue of financing and pricing of port infrastructure has recently been the subject of widespread debate in Europe and it is now high on the political agenda of the European Union. This is the result of globalisation and the changing operational environment of ports, as well as of the increased port competition brought about by the completion of the internal market. Greater private sector interest in the port industry, as well as in the rest of Europe's infrastructure, necessitates some form of cost-based pricing that would allow the recovery of port investments. This could, however, disturb the existing ‘equilibrium’ among ports that has been established over the years as a result of each port's particular characteristics such as geographical location, proximity to markets, navigational constraints, subsidies and types of financing. Among competing container ports, like those of western Europe, such ‘disturbances’ can have marked impacts on ports' market shares, as a result of the easiness carriers can nowadays switch between ports. Furthermore, efficient pricing in the port sector could not bring about the expected welfare effects if the rest of the related infrastructure is not priced accordingly. The issue thus appears to be reaching a standstill, particularly in view of the fact that in most countries ports are considered as part of the country's infrastructure and thus State investment in ports is considered as ‘public investment’ outside the reach and mandate of the European Commission. The paper argues that the prime goal to be pursued at a European level is to achieve a level playing field among competing commercial seaports. It also reviews the past and present efforts of the European Commission in this area, the difficulties and challenges these efforts are faced with and, finally, it attempts to indicate the way forward; a way consistent with Europe's political thinking, priorities and realities.