Port Demand and Capacity Utilization

Source: adapted from Winkelmans, W., Notteboom, T. (2002). Dealing with uncertainty in port capacity planning, Port Technology International, edition 16, Summer 2002, 187-189

Port planning decisions are taken in a world full of uncertainty. Errors in port traffic forecasts can severely under or overestimate the demand for new port facilities. Therefore, traffic growth rates should be integrated explicitly in the planning model in order to circumvent the error risks in forecasting. Much attention must be directed to the combination of individual risk factors.

The interdependency between port capacity and port traffic demand is one of the main points of attention. In general, any port capacity extension will result (albeit not always) in a proportional growth in port traffic. Port user costs (PUC) rise sharply once port traffic approaches the existing effective port capacity limits (the HEAT or highest efficient attainable throughput). This creates a real danger of traffic decline or stagnation. The HEAT should be increased in due time to keep demand growth at a high level. An extension and optimization of port facilities will reduce waiting times. A crucial factor is to know whether the demand for new capacity exists. Port overcapacity is created when a port extension does not induce growth in port demand. In these circumstances, average port costs will be elevated, negatively affecting the competitiveness of the port.