The jury is out on port tariff hike

The application by Transnet
National Ports Authority
(TNPA) for an 18.06% tariff
increase for the 2012/13 tax
year has met with screams of
complaint from a widespread
range of business interests
and representative bodies.
There was a similar
thought trend reflected
in a large number of the
complainants’ submissions
made to the Ports Regulator –
which is tasked with deciding
on what would be a fair tariff
increase to allow TNPA.
This was that 18.06%
is far and away above the
current inflation rate of about
5.5%; that it would have a
negative impact on the cost
of doing business for the
already hard-pressed export/
import, freight and transport
industry sectors; that it would
render SA’s global exporter
industries uncompetitive;
that it was unfair to allow
what was claimed to be
an inefficient parastatal
to charge that much more
for poor service; and that
allowing the TNPA to build
in guaranteed profit to its
costing model for the new
tariff was unacceptable.
Business Unity South
Africa (Busa) introduced
its extensive submission
by saying: “Inflating
proposed profit margins is
counterproductive and works
against all efforts to stimulate
economic growth and create
job opportunities.
“The proposed increase
will hamper economic
growth and development.
Therefore, we oppose it.”
The business association
used a number of FTW
articles to illustrate certain
of the points it was making,
including: “Truck queues (at
the Durban port terminals)
are the longest in the history
of containerisation”; “The
highest port costs in the
world are driving trade away
from SA”; and “Lines skip
Durban to avoid persistent
congestion”.
After lengthy argument
against the 18.06% increase,
Busa concluded by saying it
regarded the proposed tariff
and cargo due increases
for the 2012/13 year as
being “excessive”.
“It is thus hoped that
the Ports Regulator (PR)
will carefully consider the
TNPA’s application not
just in the light of what is
good for Transnet but, more
importantly, what is good for
the country.”
The SA Association
of Freight Forwarders
(Saaff) had a similar
in-depth analysis behind
its submission to the PR,
and used a complex set of
arithmetic calculations to
support its verbal argument.
It also expressed a hardbiting
conclusion. “For a
state-owned utility such
as Transnet, controlling
virtually all ports and
indirectly the vast majority
of marine cargo movements,
to contemplate an annual
tariff increase at triple that of
the current consumer price
inflation (CPI) is simply
breathtaking.
“It is incomprehensible that
increases of this magnitude
in such an important area
are being proposed at a time
when the country’s economy may just be starting to
recover from the worst global
recession in seventy years.”
Similar dissatisfaction
was expressed by other
complainants.
Anglo American, for
example, said: “(We)
believe the 18.06% increase
is unreasonable when
considering the September
consumer price index (CPI)
of 5.7% and the producer
price index (PPI) of 8.9%.
“SA port tariffs are among
the highest in the world,
and an increase of 18.06%
will further impact on our
competitiveness in the
international market.”
And the Fresh Produce
Exporters’ Forum (FPEF)
introduced its submission
by saying: “The proposed
increase of 18.06% is
starkly incongruous with
the government’s monetary
policy of inflation targeting.”
Forestry SA was equally
dismissive of the increase
proposed by TNPA.
“Due to the high volume
of industry exports,” it said,
“the proposed across-the
board-increase requested
by the TNPA will have farreaching
impacts not only
on the timber processing
industry but also on the
forestry industry....
“It has become a worrying
trend that “administered
price” inflation is consistently
out of line with the general
inflation rate, with parastatals
frequently requesting (and
often being granted) tariff
increases that bear absolutely
no relation to the CPI or PPI
inflation rates.”
As part of its submission,
Safmarine/Maersk made an
interesting point. “TNPA
tariffs are considerably higher
than other regional and global
ports,” it said, “justifying a
decrease of 9.2% and not an
increase of 18.06%.”
All the other businesses
and bodies also questioned
the justification behind the
TNPA costing model for its
application – and all utterly
condemned the 18.06% level
of the tariff increase.
There were 22 submissions
received by the PR, of which
seven were classified as
confidential, PR CEO Riad
Khan told FTW.