‘Excessive’ TNPA tariff concern

There has been little joy following the publication by Transnet National Ports Authority (TNPA) of its annual tariff application, with many industry commentators saying it is excessively high. The requested tariff increase of 9.47% for 2015/16 comes on the back of the Port Regulator of South Africa granting the authority an 8.15% increase this year. TNPA has further requested a 15.91% increase for 2016/17 and 6.49% for 2017/18. It is estimated that if these tariff increases are approved and implemented over three years, South Africa’s marine and cargo dues will go up by a whopping 35% over that time. “Astonished is probably the best description at this stage,” said Dave Watts, maritime director for the South African Association of Freight Forwarders (Saaff). “It is still very early in the process and we really do have to wait for the regulator to host the roadshows and to get input from across the industry, but it does seem excessively high.” This sentiment was shared by Mike Walwyn, vice chairman of Saaff and chairman of the Cape Port Liaison Forum. “A 9% increase is very high and yes, traditionally, the regulator has awarded less of an increase than what TNPA has asked for and so we could very well see a lower tariff increase approved, but this application does raise some concern at present.” It is also the first time that TNPA has requested increases over a three-year period. “We were aware that they were going to do this and it is aimed at giving industry more insight over a longer period – to know what to expect and be in a position to plan accordingly,” said Walwyn. “Our understanding though is that the applications for the second and third years are only recommendations at this stage and are still subject to change and won’t necessarily be accepted.” He said whilst an average increase of 9.47% has been requested for 2015/16, TNPA only requested an 8.5% increase for cargo dues on containers and motor vehicles on own wheels. A 9.6% increase is being proposed for all other marine tariff categories. Concerns have, however, been raised over how TNPA comes to its tariff increase request. “It is based on their volume predictions and their capital expenditure over the next few years,” said Walwyn. “Business does not work that way. You can’t double your price because you want to buy new things.” Most industry experts agree that funding capital infrastructure by just hiking prices is making South Africa uncompetitive in the global scheme of things. The country already has some of the most expensive ports in the world. Also the volume predictions they are making are questionable, said Watts. “The revenue requirement is for the most part based on their volume forecasts and there are concerns over the figures they have come to. Ultimately we now have to wait to hear what the Regulator says first,” he said. The regulator ends its public hearings on the tariff increase next Monday in Port Elizabeth after meeting with industry in Durban, Cape Town and Johannesburg this week. INSERT Astonished is probably the best description at this stage. – Dave Watts