The supply of port services is impacted by four fundamental factors:
- Price of port services. According to supply curve S, if the price of port services increases, the supply of port services will increase. Alternatively, if the price of port services declines, the supply of port services will decline.
- Price at substitute port. If a port in the competitive hinterland offers a lower cost structure (b), then a share of the traffic will shift to this port. At any given price, the supply is lower under the new supply curve Sc. A reverse shift occurs when a port competing for the same hinterland increases its price (c), the new supply curve becomes Sb.
- Price of production factors. If one or all of the standard production factors, land, capital, or labor, increase, the supply curve shifts from Sa to Sb. For instance, producing the same port service supply at higher labor costs results in higher port service prices.
- Price of complementary port activities. The full cost of using a port often includes complementary activities such as warehousing. Even if a port has a competitive price, if the price of all, or some of these complementary services increases, it can experience a decline in traffic. For any price, the supply drops with a shift of the supply curve from Sa to Sc. Alternatively, lower complementary services can improve competitiveness and attract traffic.