Marine transport services, such as cargo shipping and passenger transport, provide essential commercial linkages within and between Pacific island countries (PICs). These services are provided by state-owned enterprises and private companies, and in some cases with the support of a government subsidy. Subsidies are introduced when the cost of providing services on selected routes is higher than the tariffs collected from users.
Governments will typically introduce a subsidy to allow more frequent or more predictable services in a target area. The hope is that the introduction of the service will stimulate trade and increase demand for transport over time, gradually reducing the need for the subsidy. Published by the Private Sector Development Initiative (PSDI) with input from PRIF and its Transport Sector Working Group.