Port Capacity Auctions

Most ports are subject to demand fluctuations. Particularly in the bulk port industry, seasonality, fluctuation in agricultural output, world market demand etc. make it hard to service demand when a peak hits. Building more assets (storage, elevators, berths) seems like the obvious answer. In reality, most port operators would be worse off financially if they tailored their capacity to peaks – having to wear the cost of their assets in off-peak.

If increasing the asset base is not the answer, how else can bottlenecks be addressed? The answer is: price differentiation. Guessing the ‘right’ price points (i.e. peak, off-peak) is risky, as getting it wrong will scare away customers or leave value on the table. The most efficient way of determining the right price is through a market based (auction-like) mechanism.

Tradeslot is currently operating Port Capacity Auctions at 9 large ports – and is creating consistent benefits:

  • Transparency of the process (shippers know the port operator is not playing ‘favourites’)

  • Fair market price (the port operator sets a lower limit and any premium is market driven, set by the customers themselves)

  • Reduction of phantom demand (as highly desirable time slots come at a premium and will not be hoarded lightly)

  • Speed of process (the self-serve function of the auction means minimal involvement of port operator resources)

If your port is looking to create better return-on-assets and address demand fluctuation, please contact the team at Tradeslot. We are looking forward to sharing our many years of experience in this field with you.