Agricultural exporters fume at port tariff hikes

Agricultural exporters fume at port tariff hikes

FMCG SUPPLIER NEWS

Business Day - Sep 26th 2011, 08:18

Agriculture exporters are up in arms over proposed new port tariffs, saying additional costs will have a detrimental effect on the industry’s competitiveness and the economy as a whole. 

Transnet National Ports Authority has proposed new tariffs for exporters and importers using the country’s ports, saying it needs the revenue to recover its investment in owning, managing, controlling and administering ports and its investment in port services and facilities.

The proposed 2012- 13 tariff application was released in July , in which an 18,06% tariff increase — more than three times the inflation rate of 5,3% — is proposed by the ports authority based on its projections to raise R9,65m in revenue.

According to the tariff document, the increase allows the authority to recover its costs for maintaining, operating, managing, controlling and administering ports, and costs for providing services and facilities.

Revenue generated by cargo dues will be used to maintain and expand dry infrastructure such as quay walls, roads, rail lines, buildings, fencing, port security, and lighting outside terminals, bulk services and in certain cases terminal infrastructure within South African Ports.

Ms Lindie Stroebel, manager for economic intelligence and finance at the Agriculture Business Chamber, said yesterday that as Transnet was a state-owned enterprise, it was strange the enterprise was profit- driven and its cargo dues were about to increase drastically at a time when "the fragile local economy is highly dependent on state support".

She said there seemed to be a lack of understanding that the cost of doing business in SA needed to decrease so that exporting industries could increase market share.

"The agricultural exporters now have to consider the proposed increased port tariffs into their costing structures, which will directly influence their competitiveness," Ms Stroebel said.

In the 2011- 12 financial year the ports authority proposed a 11,9% tariff increase, but this was not applicable to all commodities within the tariff book as some commodities — such as ores, minerals and olivine — received a 76,02% decrease in tariffs from R95,90 to R23, while others received extremely high increases. For example, the tariff for logs was increased by 644,81%, to R40,89 from R5,49 .

The ports authority gave port users a chance to submit grievances and comments to the Port Regulator regarding the 2011- 12 tariff application by mid-November last year .

The South African Shippers Council and the South African Association of Freight Forwarders entered submissions on behalf of their members, highlighting the unfairness of the different adjustments for different commodities as well as the negative consequences they would have on the economy. After the submissions, the regulator adjusted the tariff increase from 11,9% to 4,49% across the board.

Ms Stroebel said South African exporters of agricultural goods were already under strain, as the rand had been relatively strong over the past two years and foreign earnings for the products exported had decreased accordingly.

In general, international demand had also been sluggish, considering the slow economic recovery and low business sentiment.