Forwarders object to TNPA’s multi-year tarrif proposal

A proposal by the Transnet National Ports Authority (TNPA) in its 2013/14 tariff application to introduce a “multi-year tariff application approach”, has drawn loud criticism from the forwarding industry. “We approve of the concept, but not the way it will be calculated,” said Dave Watts, consultant on maritime affairs for the SA Association of Freight Forwarders (Saaff). He added that the intention of the multi-year proposal – which has not yet been approved by the SA Ports Regulator, and will be a matter for discussion – is to provide port users with an understanding of tariff changes in advance and over a reasonable period of years. “This is to be applauded,” he said. However, the suggested process outlined in the executive summary of the application is cause for serious concern for the association. “Tariff increase calculations over recent years, including the current one, have utilised the inflation rate as a tool in assessing resource accounting and budgeting (RAB) and the weighted average cost of capital (WACC),” said Watts. “In other areas the consumer price index (CPI) has borne little or no relationship to actual cost increases. As the authority’s assessment of possible cost and revenue is based on figures such as WACC and RAB and historic operating expenses which have little or no relationship to inflation rates, we question the use of CPI and the intention to increase this by 3% with a floor of 8.5%. “Annual increases at this level over a six-year period will mean the final year will see a tariff structure over 63% higher than that in year one.” Saaff has submitted this concern to the ports regulator, and also drawn attention to past tariff increases. “An example,” said Watts, “is the cargo dues rate for a 20-foot container, which in 2003 was R1 510.00 and in 2012 was R2 177.63 (excluding the rebate). This is an increase of plus/minus 45% over the ten year period – or plus/minus 4% per annum. Other TNPA charges over the same period reflect similar changes.” The association has also urged the regulator to insist that the authority reins in increases over future years. “This,” Watts added, “to levels that are within the producer price index (PPI) rate, not CPI, and are broadly comparable with tariffs applied by similar authorities elsewhere.” CAPTION Where to port charges? Forwarders want TNPA to rein in increases