South Africa's port regulator has rejected Transnet's application to increase port tariffs for the coming year to 18.06%, imposing a limit of 2.76%.

South Africa's Citrus Growers' Association (CGA) chief executive officer Justin Chadwick, welcomed the decision to turn down the port operator proposed price hike.

"It's well below the rate of inflation at 5%. Transnet have been making a lot of money from the ports and using this to subsidize other arms of their organization."

University of KwaZulu-Natal Graduate School of Business & Leadership Dr Mihalis Chasomeris, said Transnet's proposal failed because it was unable to give sufficiently strong evidence as to why the 18.06% hike for 2012-13 was necessary.

"This is good news but what is going to happen in the future if Transnet can come up with a good rationale for big increases then they may go through."

He said current cargo dues left agriculture at a disadvantage because charges are organized on either a container or tonnage basis, which favors high value low volume material, as opposed to high volume low value commodities.

In his state of the nation address earlier this month, South African President Jacob Zuma announced the port regulator and Transnet had agreed to decrease charges for manufacturing exporter,s saving the industry about 1 billion rand (US$129 million) in the coming year.

Intensive lobbying by the automotive industry about high charges at Port Elizabeth and Uitenhage ports last year appeared to have worked.

"What about exporters of agricultural goods? Why are they not getting a better deal. Perhaps they don't have the same voice or contacts as manufacturing," said Dr Chasomeris.

A benchmarking study by South Africa's regulator looking at 12 international ports, showed Durban port to be the most expensive and inefficient.

For example, in 2008 Durban achieved 23 crane container moves per hour compared with Antwerp's 94, and had an average container vessel turnaround of 72 hours compared with Rotterdam's 40 hours.

Port tariff increases over the last few years have been consistently below the rate of inflation. Last year's increase was set at 4.49% by the regulator, despite Transnet's 11.91% % proposal, and 2010-11 increases were limited to 4.42%.

Transnet's proposed increased tariffs would have helped it with its 10-year 8 billion rand (US$1.04 billion) development plan to improve the infrastructure of the country's eight ports.

Transnet also runs South Africa's freight rail, rail engineering and oil pipelines.

Photo: Ports.co.za

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