Jubilation at Regulator’s decision

With the SA Ports Regulator (PR) decimating the Transnet National Ports Authority (TNPA) application for an 18.06% increase in tariffs to what was termed a “reasonable” 2.67%, there was a distinct sparkle of joy amongst the freight, trade and associated industries and bodies. “This, together with the R1-billion decrease in certain tariffs announced by President Zuma in the State of the Nation address, is very good news for industry, which has been bracing itself for a substantial increase,” said maritime lawyer, Andrew Pike. However, he did admit that it was not yet clear exactly how and when this discount on port charges would come into effect. FTW thinks that it is reasonably fair to assume that the billion rand discount off base rates, along with the PR-approved 2.76% tariff increase, should mean that the change in rates for 2012/13 is likely to be zero or even negative on a net basis. And an executive in a shiping and logistics company, and an authoritative voice in the freight industry, confirmed this calculation, saying that it did, indeed, make for a negative increase – and expressed himself delighted. “It’s just fantastic,” he added. According to Andrew Robinson, maritime lawyer and partner of solicitors, Norton Rose, this PR-determined increase is lower than expected and less than the tariff increases that the regulator has approved in recent years. “In 2010/2011, it approved an increase of 4.42% instead of the 10.62% increase that was applied for by the TNPA,” he told FTW. “In 2011/2012, the TNPA applied for an overall increase of 11.91% in tariffs but also proposed the adjustment of certain ‘misaligned’ tariffs, including proposed increases of over 600% for selected commodities. But the regulator granted an overall increase of only 4.49% and rejected the adjustment of the misaligned tariffs beyond the approved 4.49% tariff increase. “In the 2012/2013 tariff application, the TNPA appears to have abandoned any attempt to adjust any misaligned tariffs.” Anthony Dawe, CEO of the Bidfreight group, welcomed the rate cuts, but suggested that they were a mere quantum of the whole costs involved in the supply chain. “Those portions of logistics costs are low as part of the whole,” he said. “But, having said that, everyone feels that our port costs are too high – so anything that contributes to lowering them helps. And it’s a welcome trend. We’re not now seeing the high double or even treble figure, increases of the past.” For views on behalf of industry and commerce, FTW talked to Mervin Webb, procurement manager of Hulamin, producer of semi-finished and fabricated aluminium products; and Martin Deal, logistics executive of clothing, footwear and textiles (CFT) retailing group, Edcon. “This has delighted industry,” said Webb, “which has lobbied against that huge increase that TNPA applied for. But Durban is still running one of the most expensive ports in the world, and that still hasn’t been addressed. “The inefficiencies and poor systems that are in place (at Transnet Port Terminals) could be vastly improved by putting a smart operator in to run the terminals.” Deal condemned TNPA for asking for an 18.06% increase in tariffs, and suggested that it was a ridiculously high figure at a time when business in SA is struggling just to survive. “As a retailer,” he told FTW, “we’d never be able to get increases like that. And, if it had been granted (to TNPA), we would have had no option but to pass it on to the consumer – and that would not be good for the country as a whole.” Referring to the billion rand discount proposed by President Zuma, Deal said that there would be some benefit. “But it would apply more to the manufacturers that we deal with, rather than directly to our group.” Representative bodies were equally delighted about what Keith Brebnor, CEO of the Johannesburg Chamber of Commerce and Industry (JCCI), described as “a definite step in the right direction”.