Abstract

We analyze the characteristics of general cargo ports operation in developing countries, and the process of privatization. First, a general analysis of the production characteristics of container terminals (and general cargo) is made, giving special attention to market structure. It is argued that given the magnitude of freight flows in developing countries dispersion of operations in a number of terminals, in order to establish competitive conditions, is socially inefficient. Then a cost model is developed, considering private production costs (berths operating costs), congestion externalities and ship operating costs. A system of charges that internalizes external costs and makes the operator feel the social cost structure is proposed. In such situation short and long run average production costs for the concessionaire are defined. The advantages of concentration of resources and increases in throughput capacity, are also shown. Then, main variables and bidding conditions, necessary to obtain an efficient assignment and operation of concessions, are analyzed. Finally, the main conclusions and recommendations are summarized.