South Africa’s port in Durban charges more than any other major dock in the world, forcing up costs for companies such as Sappi and Mondi and undermining government attempts to boost exports and create jobs.
State-owned Transnet charges an average container vessel $182 151 (R1.3 million) to dock in Durban, according to the Ports Regulator of South Africa. That’s more than double a global average of $86 251 and the highest of 100 top harbours.
Things may get worse next year with Transnet’s application to increase fees for port services and facilities by 18 percent.
Combined with the rand’s strength and rising labour and energy costs, such charges were limiting profits at exporters including Sappi, the world’s largest maker of glossy paper, rival Mondi and ArcelorMittal, Africa’s biggest steelmaker, said Mohamed Kharva, an analyst at Nedbank.
“Companies such as Sappi are plagued by higher costs and don’t have the pricing power to pass this on to customers,” Kharva said in a telephone interview from Johannesburg.
“It’s extremely negative for the company. Their profitability starts to diminish and that doesn’t make it a great investment.”
Kharva recommended that investors sold their shares in Sappi, Mondi and ArcelorMittal.
The rand has climbed about 33 percent against the dollar since January 2009, wage increases averaged 7.5 percent in the first half and power costs are up 26 percent this year.
Hamburg-based MACS Maritime Carrier Shipping was reducing its business in South Africa because of rising costs and the unreliability of port services, managing director Felix Scheder-Bieschin said in a telephone interview from Cape Town.
Johannesburg-based Sappi is considering using Maputo port in neighbouring Mozambique for exports from its Mbombela mill in the northeast of the country.
“It hobbles the economy of South Africa,” Glenn Adriaanse, the export services manager at Sappi Trading, said in a telephone interview from Durban.
“These costs all add up and eventually filter down to the bottom line.”
Sappi, which has shut mills in South Africa and Switzerland in the past year, posted an unexpected loss of $0.13 a share in the three months to June, the company said earlier this month.
Exporters and shippers say a lack of competition contributes to the high costs.
More than 90 percent of goods sold overseas pass through South Africa’s harbours, and the National Ports Authority, a unit of Transnet, manages all ports except the Richards Bay Coal Terminal. Durban handles 61 percent of South Africa’s container cargo.
“We’re paying first-class prices for economy-class services,” Scheder-Bieschin said.
“We see cost and efficiency as a threat to our business.” – Bloomberg