Categories: South Africa

Port fees open for discussion

Proposed port fees give with one hand,and take away with the other. Robyn Joubert reports.

The proposed pricing strategy (PPS) for charges on goods moving through South African ports has been made available for public comment by the Transnet National Ports Authority (TNPA). Cargo tariffs paid by the cargo owner are proposed at R333/ TEU (20-foot equivalent unit). This is a 62% decrease. The PPS will address shortcomings of tariff principles and support manufactured goods exports, with extra reductions for highly beneficiated goods.

However, cargo dues for break bulk containers will increase by an average 85% to R54/t; liquid bulk will increase by 15% to R18/t, and dry bulk will increase 63% to R8/t. These increases will be borne by three parties – cargo dues paid by the cargo owner, rent paid by the terminal operator and marine charges paid by shipping lines.

“The higher the level of beneficiation, the lower the tariffs. For some that is good news. But for farmers who use bulk and break bulk, shipping may become more expensive,” said Mihalis Chasomeris, economics lecturer at the Graduate School of Business & Leadership, University of KwaZulu-Natal.

In the context of wage disputes, power tariff increases and land claims challenges, port tariffs were increasing farmers’ problems. “The PPS is not looking at the broader context of the agricultural sector. It might result in a migration from break bulk to containers,” Chasomeris said.

Value adding rewarded
TNPA’s new Beneficiation Promotion Programme (BPP) proposes a reduction on export cargo tariffs according to the level of beneficiation. A stage 1 product (such as cotton fibre, wheat, timber or hides) would not enjoy any tariff reduction; a stage 2 product (yarn, basic wheat flour, cut timber, tanned leather) would receive a 10% reduction; a stage 3 product (woven fabric, processed flour, seasoned wood, lubricated and dyed leather) would get a 60% reduction; stage 4 items (clothing, bread, furniture and finished leather goods) would enjoy an 80% reduction.

The proposed structure for the import and export of dry bulk items at R18,70/t would see TNPA tariffs for wheat drop by 30%; agricultural products by 43%; fertiliser by 9%; wood chips would increase by 58% and maize increase by 10%.
The break bulk tariff adjustment to R112,50/t would see TNPA tariffs for citrus increasing by 94%; rice by 71%; fertiliser by 90% and timber increasing by 3%.

TNPA tariffs on liquid bulk items face significant changes, with crude and petroleum product tariffs increasing by 82% to R36/t; animal and vegetable oils and sunflower seed oil decreasing by 36% to R36/t. The new tariff structure would be fully in place by 2019. Mitchell Brooke, Citrus Growers Association logistics manager, said it would submit against the 94% increase in citrus tariffs. “It will affect mainly break bulk terminals, which handle a small percentage of citrus exports to Japan and the US,” Brooke said.

A Transnet benchmarking study found that port costs can significantly impact on the margins of fruit exporters. Agbiz CEO John Purchase said it was crucial that government kept increases by the port regulator in check and drove port efficiencies so that port tariffs did not undermine the agricultural sector’s ability to compete globally.

“Of further concern is that the BPP implies cross subsidisation and an indirect ‘export tax’ on so-called non-beneficiated products, in this case many agricultural products. The agribusiness sector will seek clarity from TNPA on this issue,” Purchase said.

DTI minister Dr Rob Davies said Transnet’s intention to lower port charges would alleviate a constraint to industrial development. “High port charges and port and rail inefficiencies constitute a major constraint to the manufacturing sector because they lower the competitiveness of SA’s tradeable goods in export markets. Lowering port charges will end the system in which the export of bulk commodities and the import of manufactured goods was cheaper than the export of manufactured goods,” Davies said.

Transnet has put two proposals out for public comment: the PPS and a tariff study determining the total revenue that Transnet may recover from ports. Affected parties have until 31 May to respond.

Details of the proposed new tariffs are available on www.transnetnationalportsauthority.net.
For TNPA tariff enquiries contact 011 351 9059.

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