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Sea Freight

Massive hikes in port charges on the cards

05 Aug 2020 - by Liesl Venter
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Industry is bracing itself for massive additional charges after Transnet National Ports Authority (TNPA) asked for a whopping 19.74% tariff hike for the 2021/22 financial year.

This comes as the Ports Regulator of South Africa yesterday confirmed it had received the annual TNPA tariff application and that it had started a process of public consultation.

In a statement the regulator called on stakeholders to submit written comments on the application saying its annual roadshow would still take place this year, but be hosted via webinar. Dates and times were not yet available.

In its application for a nearly 20% tariff hike, TNPA stated that the South African economy had been challenged with slow economic growth, underinvestment, and increasing levels of unemployment for some time. “The recent downgrades of South Africa’s sovereign credit rating to sub-investment grade by rating agencies has added to the woes of government burdened with rising debt levels, collapsing state-owned enterprises, and weak business confidence levels.

“The advent of the Covid-19 pandemic and response to it locally and by countries around the world has exacerbated an already fragile local economy. Therefore, while commercial activities are showing signs of improvement, it is projected to take 2-3 years before trade flows return to pre- Covid-19 levels.”

The Authority argued that it was viewed as a catalyst for economic growth and therefore more than ever needed to deliver on its mandate. To do so it required the 19.74% tariff hike.

Using the prescribed tariff methodology, TNPA calculated its required revenue for 2021/22 would be R13 569bn, comprising marine business revenue of R9 708bn and real estate business revenue of R3 861bn. “This translates into a tariff adjustment of 19.74% for 2021/22.”

TNPA indicated that tariff adjustments for 2022/23 and 2023/24 would be lower at -0.29% and -7.86% respectively.

Consultant for the South African Association of Freight Forwarders, Mike Walwyn, said the Regulator had in the past few years been conservative with tariff adjustments. “It is, however, very difficult to know how the Regulator will react this time around, given the huge loss of revenue suffered by TNPA recently.”

Walwyn, like several other industry experts, said all bets were off. They were all, however, in agreement that an increase of this magnitude would be granted.

“The ability of port users to withstand any increase after what they have been going through in the past few months must also be questioned and considered,” said Walwyn

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