Total costs at South Africa’s ports have been described as “relatively high”, despite a dramatic decrease over the past six years, according to the latest Global Pricing Comparator Study (GPCS) by the Ports Regulator of South Africa (PRSA).
“In general, some prices are far higher than in other countries, but they are coming down steadily,” PRSA CEO Mahesh Fakir told FTW. “Additionally, where prices had previously been below the global sample average, they were now moving closer towards the average.”
Total port costs have fallen from 360% above the sample global average in 2012/13 to 166% in the 2017/18 financial year.
The study points out that the high port tariffs, relative to the global average, can largely be attributed to the high levels of potential cross-subsidisation between manufactured goods (containers and automotives) and bulk commodity exports “due to continued imbalances between container vessel costs, container terminal handling charges and container cargo dues”.
In the 2017/18 financial year, container vessel costs were around 50% below the global average. The study pointed out that the 8.02% vessel costs tariff increase allowed by the regulator in 2017/18 had not significantly changed this below-average position. This indicates that foreign vessels were not subjected to high tariff levels in South Africa as was the case globally.
Conversely, container terminal handling charges remained relatively more expensive when compared globally, with the Port of Durban recording charges 136% above that of the global average.
“Efficiency levels in container handling remain a concern, but are an area of focus for the current implementation of the Weighted Efficiency Gains from Operations (Wego) that incentivise or penalise the National Ports Authority based on operational efficiency starting in 2018/19,” a PRSA spokesperson said.
Container cargo dues were recorded at 267% above the global average, increasing from 182% in 2016/17 and indicating an upward trajectory in tariffs. However, at full implementation of the Tariff Strategy over ten years, PRSA believes that container cargo dues will be 43% below the global average.
The depreciation of the rand was highlighted as another factor that significantly impacted tariff levels paid in South Africa’s port sector in a way that was not equally beneficial to all port users. “The impact of the rand’s depreciation against the US dollar is different for different players in the industry,” Fakir said. “As shipping lines are dollar-based, but SA port tariffs are rand based, they have more advantages as they pay less in the conversion.
“The exchange rate between the US dollar and the rand is an intensive factor in trade which affects import and export volumes, but it is not easy to predict the impact on future port tariffs in any one year,” he added.
“A weakened rand may be beneficial to exporters but it would leave importers at a disadvantage and vice versa; nonetheless this would happen regardless.”
While acknowledging that port tariffs in the country continued to be relatively high in the sample, the study still claims that South Africa’s commercial ports remain competitive.
“The GPCS is not meant to determine the tariffs we should be charging in our ports but rather should be viewed as a benchmark against other countries in the world,” said Fakir.
“It’s not saying that the global sample average should be the right price, as the right tariff prices are cost-reflective and are determined in the Tariff Methodology and Tariff Strategy. The study is an initiative taken in order to create country awareness of our current place in the world in terms of port tariffs.”
