Ferraz labels SA ports ‘cash cows’

‘Competition will help improve efficiencies’ SOUTH AFRICA’S ports are a cash cow for the state, with their monopolistic positioning within the region allowing them to charge above internationally competitive rates to boost earnings. That was the hard-hitting message delivered by Jorge Ferraz, Dubai Ports World representative, at the recent Intermodal Africa 2007 conference in Durban. Ferraz believes that ports need to strike a balance between the role of revenue provider and trade enabler. The revenue provider, he says, is a port that offers just below average services and penalises users by charging excessively high rates for these services. Its objective is to maximise income at the customer’s expense. The trade enabler on the other hand drives trade by providing users with a reliable link to world markets at a subsidised cost that creates an artificial competitive advantage. The trade enabler’s objective is to encourage trade at the state’s expense – and this too is not a healthy approach, says Ferraz. “Finding a balance that will enhance trade and provide revenue earnings that encourage investment and efficiency is the ideal.” And this requires that competition is encouraged to improve efficiencies between terminals within the same port and between ports within the region. “This will improve efficiencies and ultimately contribute towards high margins and lower costs to the trade. The SA port authority, on its path to becoming an international player, should not do so at the cost of the local trade. “Instead, becoming competitive within the local market should be a priority, as this will open the doors to becoming competitive on the international scene.”