Full cost recovery in EU ports operating as commercial undertakings

In their Green Paper on Sea Ports and Maritime Infrastructure the European Commission implies that full cost recovery pricing by ports requires current users to pay for sunk costs. Consequently, if this pricing policy were adopted by EU ports, it is argued by the EC that this would lead to strong increases in port charges. This paper compares three EU ports (two in the public sector and one privately owned) where the port authorities currently determine their charges on this basis. In doing so, it explains how full cost recovery works in practice and provides evidence which suggests the Commission is mistaken in its view that, if adopted, large increases in port charges would necessarily follow. (c) 2005 Elsevier Ltd. All rights reserved.