The Department of Transport (DoT) revealed its intention to create a state-owned company (SOC) to own and operate merchant vessels in November 2022 when it released a pre-draft Bill for comment.
This Bill would become known as the Merchant Shipping Bill and was introduced to the National Assembly in May 2023.
It lapsed but was revived in July 2024 and the Transport Committee of the National Assembly called for written submissions by October last year. Finalising the Bill into an Act is said to be a priority of the next administration.
There is little, if not no, argument against having a fleet of SA-registered vessels. The significance of national registration lies in the fact that these vessels will carry the SA flag and be legally and fiscally linked to South Africa as far as their activities are concerned.
Several reasons have been put forward by the DoT for establishing this company. They include ensuring revenue derived from imports and exports accrue to SA companies; the fiscus derives the tax benefit from this revenue; SA will benefit from the skills and employment opportunities; SA will have a fleet of merchant ships under its control for strategic purposes; all other Brics countries have state-owned merchant fleets and it will assist in driving transformation in shipping.
Two significant economic issues have, however, been largely ignored: competition in international shipping is fierce and profit-driven, dominated by several huge and long-standing corporations; and South Africa’s SOCs have all almost universally failed financially.
Some concerns have been highlighted regarding the government's aim to boost future economic growth underpinned by an inclusive maritime sector, warning that legislation should not be drafted at the expense of the nation with narrow interests in mind.
Of significant concern is Section 64(1) of the Bill, which, in short, states that no ship, other than an SA-owned ship, is permitted to engage in coastwise traffic for the conveyance of goods between SA ports.
This, in effect, introduces a ‘one port of call’ restriction on deep sea (foreign) vessels calling at our ports.
The Bill further states that the owner or master of a ship engaged in coastwise traffic must be in possession of a permit, which will be issued by Samsa. The serious implication to consider is that if a permit is not issued, a foreign vessel will have to choose one port in SA to discharge all its cargo.
Ultimately, this means that cargo may have to be diverted to road or rail for onward moving, which will result in significant delays and additional costs.
The idea of a globally competitive merchant marine service should not detract from more urgent methods of boosting SA’s shipping industry, which has established itself as a ‘refreshment station’ for vessels on which our shipping industry was built.
In recent years, however, port calls for bunkering, provisions and repairs appear to be declining, with vessels choosing cheaper and more efficient alternative ports.
Besides concerns regarding upgrading the existing port infrastructure, it is important that the availability of bunkering, ship repair, increased port efficiency, service delivery and revised port tariffs receive urgent attention as a significant amount of revenue can be generated by increased vessel calls in South Africa.
