In a report released this month by the Ports Regulator of South Africa, it was found that South African cargo holders and shipping agents are responsible for the majority of port infrastructure costs, whilst foreign cargo companies receive discounts or globally competitive rates. The Global Port Pricing Comparative Study compared local port tariffs as of 1 April 2012 with those from ports around the world, and found that foreign cargo owners received “free on board” export, meaning that local sellers assumed the cost of transportation. Furthermore, with the addition of “cost, insurance and freight” when finalising international trade contracts, South African cargo owners assume the bulk of the port charges.
Comparison with the Global Average
Local cargo owners pay a premium of 721% for containers, whilst the total charge for container vessels docked at ports comes to the equivalent of $287217.16, 360% above the global average rate. Average container handling costs amount to 183% of the global average – $275 000 as opposed to $150 000. Bulk commodities, meanwhile, are charged at lower rates than the global average – 57% for coal, and 81% for iron-ore.
Pricing Trends
The study also found that South African port tariffs tend to penalise those industries that lead to higher local job creation, i.e. industries exporting goods that are fully developed here and not sent to other countries to have further value added to them. Sectors with lower levels of job creation pay approximately one quarter of the price that higher-value industries are charged.
The Ports Regulator of South Africa had the following to say: “With the bulk of South Africa’s manufactured goods arguably exported through containers, this is clearly contradictory to current industrial policy aiming to incentivise value addition, the broadening of the manufacturing base and increasing manufactured exports”.
The Regulator will begin having public hearings in early March to discuss the Transnet National Ports Authority pricing adjustments and tariff strategies. The proposed pricing strategy as it stands aims to better support Government economic policy whilst moving towards international price standards.
