Should performance dictate port tariffs?

Should performance drive tariffs? That question arose in FTW’s think-tank when Herbert Msagala, COO of Transnet National Ports Authority (TNPA), suggested that in future TNPA would like the performance of a port to be the regulator of its tariffs. At the same time, he knocked the idea firmly on the head that purely capital investments should drive rates. “This means that we cannot always increase the tariff without looking at how well capacity is used, otherwise we will keep on pouring concrete and charging the customer,” Msagala said. And the disturbing point is that currently the TNPA has found that capacity is being wasted in all areas of the port system – marine, terminals, rail and road – although the extent of the waste did differ between the segments. His sentiment should please large numbers of port users who have complained loudly that the TNPA wants to inflate the tariffs with monies bound for the costs of future upgrades at the Port of Durban. You shouldn’t be asked to pay for what you haven’t yet got, was the shared sentiment amongst users. And even worse, leaders of users’ groups have said, is that the massive costs of the proposed dig-out port lurk there just in the background – waiting for their turn in the tariffs. But the big question about performance driving tariffs is: How do you calculate just how much performance will dictate the levels of tariff? However, users should not be concerned. Nothing like this will happen without a keen eye being cast on the TNPA tariff methodology before anything is cast in stone, according to new CEO of the Ports Regulator, Mahesh Fakir. “We’d certainly welcome better performance,” he told FTW. “It certainly could be one measure to fix tariffs. It could be a component of how to take it forward. But it can’t be the whole story.” Fakir also noted that supply of capacity (and returns made) must be put ahead of demand. “But that was not allowed for in the last tariff determination,” he said, “and nothing has been decided on that.”