Cost analysis should determine level of port rates

Major increases in port charges threaten to flatten large numbers of companies in the freight industry, many of which are currently in survival mode, according to the SA Shippers’ Council. Controlling these increases would fulfil a primary objective of the National Ports Act of 2005, according to Dr Beverley Waugh, newly appointed executive director of SASC – and that is to promote the development of an effective and productive SA ports industry that is capable of contributing to the economic growth and development of the country. “Transnet National Ports Authority (TNPA) is responsible for determining rate increases and should ensure that port users are provided with an enabling environment to compete globally, while financing port infrastructure development,” said a council draft document on the TNPA tariff structure released to FTW. “The production sector of the economy is facing numerous challenges due to poor economic growth which is underpinned by deteriorating economic activities” While the SASC declared itself aware of the TNPA mandate to develop infrastructure ahead of demand – so as to avoid future infrastructure constraints as demand increases – it also stressed that “pricing should be linked to port productivity and efficiency levels to justify rates charged”. Its study therefore examined and analysed various factors that are areas of concern in the current TNPA tariff structure. These comprised: pricing strategy; real estate business; TNPA consultation with the National Ports Consultative Committee (NPCC); the mixture of source of funding streams; the applicability of cargo dues; and TNPA service reliability and efficiency. Its final conclusion was that a comprehensive cost analysis per activity per commodity should determine the level at which rates must be charged for reliable and efficient service. According to Waugh, the SASC feels that careful consideration should be emphasised in minimising the impact the increases will have on the production sector that contributes to economic growth of the country. “It is common knowledge that most organisations are on the verge of closing down or in a survival mode. Further financial pressure by increased tariff rates would exacerbate this problem going forward.”