Shipping agents are happy, shipping lines are unhappy and Transnet National Ports Authority has some thinking to do. This was the outcome of the overall 2,5% increase in port tariffs for the 2018/2019 year announced in Durban today by the Ports Regulator Chief Executive Mahesh Fakir.
Over the past three years starting from the 2015/16 to 2017/18 financial years the overall port tariffs have been 4,8%, zero, and 8,2% respectively.
Itemising the tariffs Fakir said marine services excluding cargo dues will increase by 8,5%; coal export cargo dues will increase by 8,5% while there will be no increase on container cargo dues and RoRo (automotive) tariffs. All other cargo dues will increase by 5,4% and all break-bulk tariffs are capped at R100/ton.
Fakir said the tariff Record of Decision is a balanced and sustainable average negative real tariff change that will result in a 6,3% year-on-year increase in allowed revenue that will enable TNPA to recover R12.414 billion versus the R12.665 billion they requested.
“By ensuring that TNPA was able to recover 98% of the applied for revenue would ensure the organisation was sustainable and that its capital programme totalling R3.053billion would be implemented,” said Fakir.
It was critical for TNPA to be able to continue with its capital expenditure programme because the port system as a facilitator of trade had to be ready for the next economic upswing.
TNPA Chief Executive Shulami Qalinge said that they appreciated the allowed 98% recovery of revenue and the R345million put into the Excessive Tariff Increase Margin Credit (ETIMC) reserve to ensure that tariffs over the following two years remain with the inflation target.
However, she anticipated that despite this it would have an effect on the organisation. “A 2,5% tariff increase has its own financial implications and the real work will start now,” she said.
Dave Watts KZN representative of the South African Association of Freight Forwarders (SAAFF) congratulated the Ports Regulator on this year’s tariffs. The overall tariff announcement was not bad and the ships agents would be happy. A zero percent increase for containers and automotive vessels was good news. It was a big change from past years when it demands were has high as 22% and 18%, he said.
On the other hand Malte Kersten Chairman of the South African Association of Ship Operators and Owners (SAASOA) said shipping would not be happy at all. The shift has been from cargo dues to marine dues paid by the shipping lines for port services. “The difference has been cargo dues and marine services has been tolerated for years and now suddenly it needs to be addressed.”
Cargo owners are going to be paying more to enter SA ports from next year and lines will not be able to pass the increase onto their clients. Freight rates were global and there was a lot of downward pressure on them.
“If we were able to at least get the service that we are paying for then we would not mind. The helicopters are out of action, the pilot boats are down, port closures, there are a lot of things happening and we are not getting the service. If the marine dues are going up then we must get the productivity. The ships must get in and out. There must be no queues or problems with the berthing.
It’s been a month since the October storm that wreaked havoc in the port and Kersten described the current situation as “crazy”. We still question why nobody warned them of the storm that was coming. “To have a ship in the harbour entrance that turned around and got damaged and nearly closed the port is a disaster. Vessels are standing outside for 7-8 days because of productivity and loosing on bunkers among other things.”
Peter Besnard Chief Executive of SAASOA said the slot system which is being rolled out is attractive but if there are no pilots or helicopters and the port is closed its worthless.
Describing the current situation at the Port of Durban as a “joke” and a real problem with vessels berthed all over the place Watts pointed out that this is the same problem that the shipping industry has been discussing the Port for years.
Currently thirty coal vessels anchored outside Richards Bay. Since the loss of a trainee pilot some weeks ago the pilots are refusing to go on-board if there is a swell and two of the three helicopters are down so the remaining one is servicing Richards Bay and Durban, said Besnard.
If the performance of the Port of Durban and the higher port dues continues Kersten predicted that lines would close their offices in Durban and no longer service the country, as Zim Lines had done in the past year or so, because of the constant battle with port service.
Thato Tsautse, Chairperson of Regulatory Committee, outlining the initiatives of the Ports Regulator said that since its inception it had saved port users R6billion and more than R2 billion had been set aside to offset more than inflation tariff increases.
In the second multi-year tariff methodology the Regulator intended to introduce a performance based incentive for TNPA – weighted efficiency gain on operations (Wego) and is currently considering submission on the appropriate Key Performance Indices (KPI’s) to use.
She said the regulator had completed a BEE compliance audit of maritime industry and additional adjustments to the National Ports Act 2005 have been submitted to the Department of Transport. Under the old codes compliance is at 98% but she warned that the new codes which address equity will reduce this figure substantially. They were urging TNPA to also look at the BEE requirements of leases as they are renewed and ensure that they are at least a level 4.
Adv. Gugu Thimane a member of the Regulatory Committee told guests that the Port Tariff methodology now has a strategy to allow for incentives or cross subsidisation in the best interests of the public and aligned to government policies. The strategy enables the Regulator to quantify a suitable level of cross-subsidization and make periodic changes to the scheme depending on the type of requests that are received.
Developed by the Regulator in consultation with TNPA, the Departments of Transport, Trade and Industry and the National Treasury, the Port Tariff Incentive Programme (PIPT) aims support beneficiation, industrialisation and localisation through tariff regulation. This scheme will be used to determine which cross-subsidies will be in the public interest, she said.
It will be launched in next week from December 4 to 11 in Johannesburg, the Ports of Durban, Ngqura, and Cape Town. Thereafter applications will be open for the next tariff cycle.