Port tariff cuts rev up auto competitiveness

The SA Ports Regulatorinduced cuts in the Transnet National Ports Authority (TNPA) tariffs in 2012/13 and 2013/14 have gone some considerable way to overcoming the uncompetitive supply chain costs for the SA motor vehicle industry, according to National Association of Automobile Manufacturers of SA (Naamsa) director Nico Vermeulen. This followed his comments to FTW on the link-up of the SA auto industry with the newly established state-owned companies’ (SOC) automotive industry competitiveness forum last year. “Essentially, the motor industry production and development programme (MIPDP) which kicks in in 2013 and lasts to 2020 requires the industry to increase vehicle production of light commercial vehicles and cars from the current 550 000 a year to 1.2 million in 2020,” he said at last year’s interview. “The MIPDP is a very important incentive in achieving that growth, but still more needs to be done to increase the industry’s international competitiveness.” Vermeulen noted at that time that the first thing the industry had identified was that the logistics value chain was essentially uncompetitive. This translated to improving the efficiency and cost of the ports and railways operations. Reducing port charges, in the form of cargo dues, played an important role in improving the competitiveness of the supply chain. They were out of line with ports in other parts of the world, Vermeulen suggested, and the SA ports needed to benchmark to these international norms to reduce the cost of doing business. And the one-off cargo dues discounts of R1 billion to SA exporters in 2012/13 and the Regulator-fixed lower tariffs of 2013/14 have done much towards achieving this cost reduction, according to Vermeulen. The discount programme involved a discount of R200 made available for each automobile exported, and totalled about R60 million in the 2012/13 financial year. And this looks set to continue with the Regulator’s decision that the appropriate tariff book adjustments for the tariff year 2013/14 should be a 21.1% reduction for cargo dues on motor vehicles exported on own wheels (ro-ro). “It’s assisting the export of built-up vehicles and valueadded component exports,” said Vermeulen. And, although it’s still a “wait and see” situation, Vermeulen hinted that more cost reduction could be in the pipeline for 2014/15. “There may be other changes to the ports’ pricing structure which could provide other benefits for exports of value-added manufactured products – including vehicles,” he told FTW. “We just have to wait and see when the revised pricing policy will be implemented.” In the meantime, Naamsa is involved in on-going dialogue with Transnet management to improve the rail and port operations in the supply chain. “We are looking at things like doubling the carrying capacity of trains; accelerated data management; and hubto- hub rail operations,” said Vermeulen. “It’s all basically about improved scheduling and planning, wagon design and other collaborative programmes.” But, he added, things were moving in the right direction to improve the competiveness of the supply chain for the SA vehicle industry. INSERT 1 R60m The value of the export discount programme in 2012/2013 INSERT 2 1.2m The number of vehicles to be produced by 2020