ON THE GLOBAL OPTIMUM SIZE OF PORT TERMINALS

Port terminal sizing problems have always been key items in port economics literature. Due to economies of scale of container ships, not only terminal costs, but also opportunity costs due to waiting times have become a crucial component of the total cost at port nodes. When terminal size increases, a trade-off occurs between increasing terminal costs and decreasing ship costs. A comprehensive concept of optimum terminal size is introduced, resulting from minimization of generalized costs (terminal costs + ship times) occurring at the port node. Overcapacity is then not just any case where terminal capacity is not fully utilized; but rather any terminal size larger than the one that minimizes global costs. This is shown to take place as a result of market structure and/or of opportunity costs of ships. An empirical survey concerning Italian container terminals, as well as related simulations on different terminal capacity and the organization of ship arrivals, support the conclusions of the paper concerning optimal sizing of ports and also allow some comments on current European Union policy issues.