Profit-Maximizing Pricing Strategy
International Shipping Canal

To determine a profit-maximizing pricing strategy for canal transit slots to be implemented following a pending ownership transition.  The prior operators of the canal had a break-even pricing strategy with minimal variations from the standard transit slot price.


An analysis of customer segments, their demand for canal transits, alternatives to canal transits, and the cost of delays to customer segments was undertaken to understand the economic factors driving potential price levels.  Approaches for differentiating pricing for customer segments were modeled and recommendations were made based on the findings from the models.


An alternative pricing system was implemented following the transition of the canal to new ownership.  Canal revenue in 2016 was USD $2 Billion with costs of only USD $600 million.

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