City makes the case against increases in Cape Town port tariffs

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City makes the case against increases in Cape Town port tariffs

The Mayoral Committee members for Economic Opportunities and Asset Management Alderman James Vos, and Transport, Alderman Felicity Purchase, have written to the national Minister of Transport Fikile Mbalula, and the Ports Regulator to make the case against any increase in port tariffs. Businesses simply cannot afford to absorb any more costs. Any increases will certainly lead to business closures and job losses. In these difficult times, businesses need support, not more costs.

THE Ports Regulator of South Africa issued the Tariff Methodology on 6 March 2020 to be used to determine the Transnet National Ports Authority (TNPA) revenue. Using this, the TNPA determined that a tariff increase of 19,74% for the 2021/22 financial year is required, and a subsequent adjustment of -0,29% in 2022/23 and -7,86% in 2023/24.

However, the economic performance projections used in the TNPA’s application are based on data collected during the pre-COVID period and therefore, do not take into account the economic devastation brought by the lockdown measures on businesses and our economy.

Reducing port costs and improving efficiencies is not only critical in times of relative normality, but in the current COVID-19 context, it is vital that the pursuit of these key objectives should be accelerated.

‘I oppose any port tariff increases, especially during these times, because now more than ever, we must assist Cape Town products to reach key markets to help our companies to expand and create jobs. Through extensive interactions with business port users, exporters and importers, City officials have compiled the following list of challenges faced by businesses, including a weak national economy, a weakened currency, forced and self-imposed shutdown of business activities and the loss of shelf-space for many locally based exporting companies to competitors in other markets,’ said Alderman James Vos.

‘The scale of COVID-19 impact on businesses is not yet fully known, but it is clear that the business sector is under significant strain. That is why we have developed key interventions designed to retain and expand business in Cape Town,’ he said.

Alderman Felicity Purchase said: ‘The Regulator’s objective now should be to bring port costs down, in line with other international ports, guided by comparative studies. Numerous authoritative studies have found that maritime trade in South Africa is time-consuming, cumbersome and costly in comparison to global benchmarks.’

The Global Pricing Comparator Study (GPCS) 2019/2020 prepared by the Ports Regulator of South Africa found that container cargo dues are still 233% above the sample average and that terminal handling charges (THC) are also at 117% above the sample average.

‘If there was ever a time to not increase costs, in line with findings of the Regulator’s commissioned study that time would be now. The TNPA should look at the existing budgets at current tariff levels to fund its operating requirements while at the same time, ensuring that it is affordable and progressive for port users.

‘At the end of the day, we cannot afford to increase the already high port tariffs – it would be catastrophic,’ said Alderman Purchase.