South African cargo owners carried the bulk of the burden of port infrastructure costs, while foreign cargo owners and vessels received globally competitive rates or discounts, the Ports Regulator of South Africa’s yearly Global Port Pricing Comparator Study (GPPCS) has shown.

The study, which was published for comment in February, compared South African port pricing and pricing structures as at April 1, 2012, to those around the world.

However, the regulator asserted in a statement that the study was based on the level of charges that were faced by third-party service users with- out ‘special’ pricing arrangements – this excluded the automotive sector, where the volume discount programme was taken into account.

“The studies were conducted under a set of assumptions that will arguably open it up for debate. It is, however, clear that the anomalies in the results are significant enough that they require attention,” the regulator said.

It further indicated that the global averages identified in the study did not represent the port tariffs it considered should be charged in South Africa, but that it rather suggested the direction that the country’s port pricing should be moving in.

“It also provides us with a reasonable indication that would allow assessment of the alignment between port policy, port pricing and economic policy,” the regulator stated.

Based on information gathered from samples, the GPPCS suggested that the South African ‘free-on-board export’ and ‘cost, insurance and freight’ import predominance in concluding international trade contracts ensured that the bulk of the port charges liability lay with South African parties.

It was determined that local cargo owners were faced with an 874% premium to the global average for containers. Taking the 2012/13 rebate into account, the number remains significantly higher than the global average with a premium of 721%.

While Transnet National Ports Authority’s (TNPA’s) container call tariff for vessel owners was $24 523.90 – 26%below the global average of $33 140.93 – the total costs of container vessel calls at container ports came to $287 217.80 – 360% above the global average of $62 414.89.

“South African cargo owners are subsidising foreign cargo owners and liners transshipping through our ports, with cargo dues faced by a full transshipped container below the global average.

“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 put forward.

Ports Regulator of South Africa policy and research manager Chris Lotter told Engineering News that the publication of the GPPCS formed part of the engagement and consultation process with regard to TNPA’s proposed pricing strategy, which was based on, besides others, the need to support government policies and being more strongly aligned with international norms and standards.

Ports Regulator of South Africa CEO Riad Khan added that the tariff strategy proposal dealt with the tariff incidence or which sector of the total client group would have paid which portion of the total returns that were allowed to TNPA under the tariff methodology that was determined.

TNPA proposed that a revised ‘revenue requirement’ tariff methodology be used by the Ports Regulator for determining the tariff increases from 2014/15 onwards.

The GPPCS further highlighted that the trend in port pricing in South Africa appeared to subsidise the industries that had lower levels of job creation and value addition in the country, while the higher job creation industries tended to be penalised.

An industry that stopped at one level in the value addition process and exported its product to have further value added in another country paid roughly one-quarter of the price paid by the producer that took that product and added further value for the use of the same infrastructure. Although the specific instance had already been corrected by the Regulator, it is still the pattern.

“This is clearly not in line with South Africa’s economic development policies. The need for stronger alignment between different policies and regulatory regimes is critical in advancing a coherent and sustainable industrial policy,” the Regulator indicated.

The study also found that bulk commodities were charged significantly lower total port costs than the global averages. Coal (Richards Bay) and iron-ore (Saldanha Bay) were found to face costs of $71 049.64 and $208 489.86 respectively. This was lower than the global averages of $124 307.82 and $257 113.17 respectively. Cargo dues payable by cargo owners were 50% for coal and 10% for iron-ore, below the global norm.

Meanwhile, average container handling charges in South Africa of $275 000 were more expensive than the global average of $150 000.

The automotive sector faced a 744% premium to the global average of $31 724.64, with total cargo dues incurred by smaller automotive companies on vehicles being $267 678.93. However, this would fall to 710% if the 2012/13 R1-billion rebate for automotive exporters, announced by President Jacob Zuma last year, was taken into account. This discount expires at the end of March.

In addition, the study revealed that volume discounts of up to 60% reduced the cargo dues payable by larger automotive manufacturers to a 204% premium to the global average, or $96 378.76. This included the 2012/13 rebate.

Vessels in the automotive trade were entitled to a 47% discount to the global average of $61 211.41.

The Ports Regulator was due to start public hearings into TNPA’s tariff methodologies and adjustments in early March.