What costs are relevant

when pricing a cargo

ship cruise?

Copyright © 2015 by Dr. Wendy Tietz.

Original blog posting (November 19, 2015) This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
 Cargo Ship Cruises
• Freight ship companies have
started to take passengers in
addition to cargo to earn an
additional source of revenue
• High demand – cruises are
booking months in advance
• Generally 2 – 12 passengers
with 15 – 25 crew members
• Average price is $115 per Photographer: http://www.123rf.com/profile_werbeatelier_jbk

day

Copyright © 2015 by Dr. Wendy Tietz.

This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
Question 1
What costs might be variable with
respect to passengers carried on a
cargo ship?

Copyright © 2015 by Dr. Wendy Tietz.

This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
Question 2
What costs might be fixed with
respect to passengers carried on a
cargo ship?

Copyright © 2015 by Dr. Wendy Tietz.

This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
Question 3
What costs and other information
would be relevant when the cargo
ship company makes its pricing
decisions about how much to
charge per passenger?

Copyright © 2015 by Dr. Wendy Tietz.

This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
Question 4
Should the ship depreciation costs
be allocated to the cost of a
passenger cruise when pricing the
passenger cruise? Explain.

Copyright © 2015 by Dr. Wendy Tietz.

This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
Question 5
Several news sources state that
passengers are “ten times more
profitable” than regular freight. Why
wouldn’t a freight company decide
to take on more passengers and less
cargo? How would costs change if
more passengers were carried?
Copyright © 2015 by Dr. Wendy Tietz.
This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.
 Question Recap
1. What costs might be variable with respect to passengers carried
on a cargo ship?
2. What costs might be fixed with respect to passengers carried on a
cargo ship?
3. What costs and other information would be relevant when the
cargo ship company makes its pricing decisions about how much
to charge per passenger?
4. Should the ship depreciation costs be allocated to the cost of a
passenger cruise when pricing the passenger cruise? Explain.
5. Several news sources state that passengers are “ten times more
profitable” than regular freight. Why wouldn’t a freight company
decide to take on more passengers and less cargo? How would
costs change if more passengers were carried?
Copyright © 2015 by Dr. Wendy Tietz.
This work is licensed under a Creative Commons Attribution-
NonCommercial 3.0 Unported License.