Green Port Pricing - A case study approach

Nowadays, a lot of attention is paid to the environmental impact in the shipping industry. Ports play a vital role within the industry and have big influence on carriers’ behaviour within harbour areas. In recent years, more and more ports introduced environmentally-friendly incentive schemes to encourage greener shipping and promote green ports. This research focuses on finding the crucial parameters to determine the best practice on environmentally-friendly incentive schemes. In this study, an overview of the current practice on environmentally-friendly incentive schemes of 43 world leading seaports is presented. In order to define the most critical parameters on port pricing, this study carries out the case study based on three representing ports with different sizes: Port of Hamburg, Port of Gothenburg, and Free Port Riga. Besides the solid analysis of the ports, the scenario analysis has been carried out to have a better insight into the changes on the regular price level when the discount price level is adjusted. In the case study, the turnover rate to ship owners was demonstrated in terms of three aspects: (1) the extra costs of building solely LNG-fuelled vessel recovered by the rebate granted from the LNG discount at port of Hamburg (2) the retrofitting costs of Selective Catalytic Reduction recovered by the rebate granted from the Clean Shipping Index discount at port of Gothenburg (3) the retrofitting costs of dual-fuelled LNG engine recovered by the rebate grated from the LNG discount at port of Gothenburg. Additionally, this study also looks into how shipping companies react to current green port incentive schemes. For this purpose, we conducted interviews with seven senior managers from four different liner shipping companies. In conclusion, we found that there is no one perfect formula of environmentally-friendly incentive scheme to apply to all ports. Each port should set up a scheme taking into account its own uniqueness. For this purpose, this research provided several parameters in assisting the ports to determine an appropriate incentive scheme.