SHIPPING companies will heave a sigh of relief as the Ports Regulator of South Africa (PRSA) has rejected the Transnet National Ports Authority's (TNPA’s) inflation-related proposed tariff hike, opting instead for a zero increase for the 2024/25 financial year.
This comes as shipping companies are facing rising costs due to extended waiting times at a number of South African ports as a result of the weeks-long backlog caused by the ports infrastructure and logistics systems.
In September last year, TNPA applied for an effective average tariff increase of 4.98% for the period April 1, 2024 to March 31, 2025, which includes an amount of R1.2 billion retained in the Excessive Tariff Increase Margin Credit (ETIMC).
PRSA CEO Johanna Mulaudzi yesterday announced that the regulator had concluded that an appropriate increase in overall effective weighted average tariff for the financial year 2024/25 was determined at 0.00%.
Mulaudzi said the regulator took into consideration economic challenges facing port users and end-customers when evaluating the space within which the tariffs were applicable.
He said the financial year for which the tariff application being evaluated will apply coincided with the mixed economic conditions locally and globally.
“The sea trade and ports operate within the challenging space with geo-political tensions, climate change risks, higher inflation increasing input costs and effectively, customers with diminished disposable incomes,” Mulaudzi said.
“Having considered the application, input made by all stakeholders during the consultation period and their written submissions, and based on latest available data, the Regulator has concluded that an appropriate increase in overall effective weighted average tariff for the financial year 2024/25 is determined at 0.00%.”
Mulaudzi said the decision was made after much internal deliberation and consultation with the industry at large, considering the economic conditions locally and internationally.
"We have considered the diminished income of port users and their ability to trade through our ports with the focus on delivering sustainability, affordability and accessibility in the port sector,” he said.
“Regulator’s decision follows a prudent approach and takes cognisance of the economic environment within which port users, importers and exporters find themselves in. With the binding constraints evident in the ports sector, the Regulator is committed to incentivising the behaviour that will lead to efficient ports, through the implementation of WEGO on the Authority.”
Mulaudzi said the regulator deemed it necessary to remind the ports sector that the purpose of the ETIMC is not to subsidise inefficiencies and/or profits for the Authority.
According to the PRSA, marine services and related tariffs are to increase by 2.98%; all container cargo, RoRo cargo, liquid bulk cargo; and all other tariffs are to decrease by 3.00% while dues are to decrease by 3.00%; dry bulk coal, magnetite, and all other dry bulk cargo to are to increase between 2.70% and 3.00%.
Mulaudzi acknowledged that the ports' operational efficiencies were declining, which was a concern for the regulator and port users.
She said the challenges in operational inefficiencies in the ports system could not be ignored, and the regulator had again noted the continued deterioration of port performance caused by a myriad of factors including lack of adequate and fit for purpose marine craft, cargo handling equipment, exposing exporters and importers to loss of business.
“The operational efficiencies of the South African ports are declining and that is a concern for both the regulator and port users,” Mulaudzi said.
“The regulator has noted the deterioration of operational performance in FY 2022/23, with the Weighted Efficiency Gains from Operations (WEGO) results recording a 14.19% decrease, a further decrease of 12.05% was recorded in FY 2021/22 performance.”
PRSA non-executive director Percy Manzini said whilst the regulator's tariff decision had been delayed this year, it had been given sufficient time for industry still to plan and implement the changes ahead of the new tariff implementation on April 1.
“In reaching this tariff decision, the Regulator has considered not only the local economic conditions, including high inflation and the energy challenges, but also the state of the global economy and shipping industry that geopolitical tensions and conflicts in the Middle East, Russia, Ukraine and attacks in the Red Sea have severely impacted,“ Manzini said.