Regulation and price setting of pilotage services in Brazil

The Ministry of Ports (SEP) was created in 2007 to improve the efficiency of Brazilian maritime ports and boost international trade. One of the most important and challenging issues that SEP has been dealing with is the pilotage service provision. Although recognized as of good quality, the service is considered to be too expensive and unregulated. This article's objective is to demonstrate that the Brazilian monopolistic and unregulated model is not suitable for a public utility service such as pilotage. To achieve this objective, two complimentary approaches were employed: a comparison of price and costs of pilotage services worldwide, and a comparison of service provision models worldwide. Alterations in the legal and institutional framework are suggested to implement an effective regulation mechanism. The authors propose the creation of a special committee, managed by SEP, to regulate pilotage prices. The results of the article have been submitted to SEP analysts and have been the cause of heated discussions involving pilotage associations, shipping companies, the maritime authority and SEP over pilotage legislation and pricing practices.