The findings show that the complementary system of ports and uniform pricing policies in South Africa are different. South Africa's port regulator has the potential to address stakeholder concerns, but this authority needs to be strengthened.
Background and Context
In addition to owning and controlling the ports, Transnet also manages the ports through Transnet Port Terminals. 1 The eight commercial ports in South Africa are: Richards Bay Port, Durban Port, East London Port, Ngqura Port, Port Elizabeth Port, Mossel Bay Port, Cape Town Port and Saldanha Port.
Objectives, Need for the Study, and Research Questions
Research Approach/Methodology
Structure of this Dissertation
Introduction
Port Services, Infrastructure and Pricing
Common Tariff Categories
Wharf charge A charge payable for the occupancy of a wharf or wharf, relating to the cost of providing and maintaining such wharf. Mooring Berth service charges are paid for the services of berthing staff for ships mooring and launching in the port and are based on the cost of the staff employed.
Pricing Principles for a Good Port Pricing System
Shipping services Collected per vessel (per gross ton) in all ports to provide shipping services, port environment security and port control. Increased to facility use service based on vessel size (per gross ton) for dry dock, floating dock and syncrolift fees.
South Africa’s Ports
South Africa’s Ports: Policy, Governance and Pricing
The Ports Regulator (2010) and Chasomeris (2011) note that the Port of Durban handles about two-thirds of the country's container volumes. The introduction of the South African Ports Regulator has changed the entire institutional structure of the South African maritime port system.
Port Evolution in South Africa
The Port Authority also assesses the application and whether it is consistent with the country's legislative objectives, including the National Ports Act and the country's National Commercial Port Policy, and then makes a decision accordingly. In 2007, however, the current institutional structure was changed by the creation of the Ports Regulator of South Africa. One of the obstacles was the uniform tariff structure, which was not cost-based and ignored commercial disparities between South African ports (Chasomeris, 2007).
Port Doctrine: Ownership, Financing and Pricing
On the other hand, the Anglo-Saxon doctrine does not pursue objectives of regional or national interests. Lee and Flynn (2011) note that the multidimensional roles of central government have been the driving force of Asian seaports. The central government facilitates the cargo clearance process although different parts of the government control the customs administration which may be geographically fragmented.
Conclusions
In order to maintain control over stable economic growth and to monitor national price levels, the central government retains control over the port authority in regulating overall port prices. South African ports could not be categorized into a common conceptual framework of the port function matrix. The application of a clear seaports doctrine may be the solution to South Africa's port policy, management and pricing dilemma.
Introduction
Need for the Study, Research Aim and Research Questions
Quantitative and Qualitative Research
Jackson (1995) argues that research methods are mainly differentiated into two categories, namely quantitative research and qualitative research. Differences between qualitative and quantitative research methods Quantitative research The hypotheses of qualitative research are explicitly formulated and. Concepts can be in the form of classifications, motifs, or themes and can be inferred in multiple ways.
Research Method Employed
Data Selection and Reliability
The data used is in the public domain; publicly available from Statistics South Africa, TNPA and Ports Regulator South Africa. Data and perspectives are submitted by port users for the Ports Regulator of South Africa to decide on port tariffs for the relevant period. The TNPA must apply annually to the South African Ports Regulator for approval of port tariffs.
Data Analysis
The highest number of stakeholder submissions occurred in 2010, as information about the tariff process was better communicated than in the previous year. The decline in stakeholder submissions in 2011 was partly due to some stakeholders operating in a similar sector choosing to submit their views collectively. Furthermore, this study's literature review suggests that some of the current discontents have been articulated in the past by port stakeholders in South Africa.
Ethical Considerations
Thirty-five stakeholders participated in the tariff procedure during the period under review. Twenty-four of these stakeholders submitted perspectives for only one of the tariff years, nine for two tariff years and three for all three tariff periods. For example, SAASOA represents the population of shipping operators and agents in South Africa, SAAFF represents the population of freight forwarders in South Africa, SAPIA represents the population of oil companies in South Africa, and NAAMSA represents the population of automotive companies in South Africa. Africa.
Conclusion
This study aims to critically examine stakeholders' views on seaport pricing in South Africa. The study also uses descriptive statistics to analyze the annual trends of port prices in South Africa from 1999 to 2012. The results of the analysis and discussion on the prospects of port prices in South Africa as mentioned in this chapter are presented in the fourth chapter.
Introduction
South African Maritime Ports: Governance, Pricing and Stakeholders’ Perspectives
Monopoly Power
Notteboom (2011) asserts that the power of Transnet has prevented international terminal operators from entering the South African market. Furthermore, TNPA argued that their sustainable business routine is indeed essential to the well-being and future of the South African economy. Forestry South Africa (2011: 2) notes that the TNPA, like other South African parastatals, “occupies a monopolistic position and therefore operates.
Global Competitiveness
The Fresh Produce Exporters Forum (FPEF, (2011) argues that tariff increases increase input costs resulting in high costs of doing business in South Africa. Furthermore, one should note that it is only in South Africa that freight charges even for containers NAAMSA (2011: 2) states that "the global automotive sector is one of the most competitive in the world".
South Africa’s Economy
A proper benchmarking study can help in trying to clearly identify the strengths and weaknesses of the South African port pricing strategy. If South Africa still intends to maintain its position as one of the largest exporters in the world, the TNPA needs to reduce its tariffs (MASA Chrome, 2010). SAAFF (2010: 8) suggested that the ports regulator reject TNPA tariff proposals and direct TNPA to submit proposals that "recognise the needs of the South African economy and trade facilitation." South Africa Africa's economy is about 60% dependent on international trade (BUSA, 2011).
Above Inflation
South Africa's ports must create a doctrine that matches the country's economy and vision. Percentage change in South Africa's port costs, 2002 to 2012 Note: -South Africa switched from using VPIX to using CPI in 2009. Administered tariff increases that have no relation to CPI are unacceptable and place a worrying trend on the community (BUSA, 2011; Forestry SA, 2010).
Job Losses
Inconsistency and Non-compliance
Shell (2011) points out that in previous TNPA tariff applications, the Regulator decided that the TNPA property business exemption was inconsistent with the terms of the regulations and thus advised the TNPA to include this section in subsequent applications. The Regulator's 2010/2011 Record of Tariff Decision (“ROD”), when the Regulator rejected the 10.62% tariff increase applied by TNPA and allowing only 4.42%, advised TNPA, inter alia, to “(1) engage in a public process, (2) present a timeline for resolving the disputed valuation methodology, (3) evaluate the capital structure used in the application, (4) evaluate the estimates used to determine future expenditures of amortization and finally (5) to comply with the directives of the regulator on the relative equality in the determination of different tariffs" (Xpanse, 2011: 3). However, Xpanse (2011) submitted that the TNPA did not engage all stakeholders in a public process nor did it submit any timelines, therefore, there is no agreed evaluation methodology; no estimate has been made, neither for the capital structure used in the application nor for the estimate used to determine future depreciation expenses; and still TNPA does not fully comply with the directives of the Regulator.
Tariff Methodology
For the 2011/12 rate increase application, TNPA incorrectly applied Hamada's formula which they used to calculate the relevant cost of equity (Jones et al., 2010). Given that Transnet is a parastatal, the debt risk premium that they used appears to be excessive (Jones et al., 2010). In addition, Jones et al. 2010) argued that the risk-free rate used by the TNPA in the 2011/12 rate application does not take into account the then-recent significant decline in global interest rates.
Non Cost-based Nature of the TNPA Tariff
The required revenue model requires port users to pay for all port revenues and costs, which may include costs that may be due to inefficiencies. Mondi (2010) argues that the current TNPA pricing regime does not provide incentives for TNPA to reduce costs. Mondi (2010: 3) suggests that "The Ports Regulator should implement strict cost management measures in TNPA".
Transparency on Information
Mondi (2010) argues that the tariff application did not disclose the level of risk assumed by the TNPA, thus making it difficult to properly understand the entire tariff methodology. The level of detail provided by TNPA does not allow port users to properly interrogate the justification for the requested tariff increase (NAAMSA, 2010). However, SAASOA (2010) acknowledges that the level of detail in the 2011/12 TNPA tariff application has been improved.
Low Productivity and Inefficiency
FPEF (2011), NAAMSA (2010) and Xpanse (2011) suggested that the regulator should request TNPA to provide details on (1) how the Capex requirements were determined, justified and calculated; (2) Cash flow forecast; (3) the calculation of the forecast costs; (4) the previous year's pre-tax income as a percentage of income; (5) the estimated volume increase; (6) how the tariff will affect the cost of doing business in South Africa; (7) promoting access to South African ports. Importers and exporters from neighboring countries avoid South African ports due to inefficiency and exorbitant costs (Busa, 2011). Benchmark studies in the literature clearly show that South African container ports have relatively low productivity compared to their peers around the world.
Differentiation in Tariffs
NAAMSA (2010) argued that the preferential tariff for OEMs is actually misleading and actually causes a further increase in costs for the automotive industry. Despite the regulator's intention to increase rates by 4.42% for 2010/2011, the moving volume threshold on freight costs actually increased by about 20%, while in the 2011/2012 rate year the increase was about 15% would amount to. However, NAAMSA (2010) appreciates that TNPA has initiated a tariff revision project, the benefits of which can be reaped in the coming tariff years.
Price increases above tariff applied for
Tariffs for ores and minerals: olivine would decrease by 76.02%, scrap steel would decrease by 64.55%, asbestos and its products by 46.47%, aluminum and fluoride and ferric sulfate would decrease by 44.07%, chemicals and product of which by 44.05%, and Magnesium to reduce by 16.07%. Chasomeris argues that "the proposed rate increases likely show the intentions of TNPA." With proper regulation, some of the extraordinary increases in table 4.4 have been corrected. According to the key pillars of the TNPA's (2012) pricing strategy, prices must be easy to understand.
Unresolved Matters
Customer Service
According to the batho pele principles, customer service is the key to the success of any organization. TNPA should employ dedicated staff to engage with the industry and take timely decisions related to the industry.
Misalignments
Security Efficiency
Discussion
South African Contemporary Ports Pricing Rationale
With the proper regulation of South Africa's ports will come the potential to contribute to improving the county's economic growth. Only three of South Africa's eight ports consistently dominate cargo handling volumes. Lee et al., (2008) confirmed that some elements of the Asian doctrine are also being practiced in South Africa.
The Impact of Allowed Tariff Increases on Required Revenue
In Table 4.6, the difference in RAB is because TNPA used a CPI inflation rate of 6.46% and a CPI inflation forecast of 5.87% in their WACC calculations. The regulator considered the CPI forecast of 5.87% to be credible and therefore used it for all elements requiring inflation. For the WACC, the TNPA used an average of a selection of ports to calculate the beta coefficient of 0.62 and assumed a market premium of 6.0%.
Conclusion
TNPA (2010b) believes that the current institutional structure is indeed in line with the objectives to overcome these challenges, but they need to generate enough revenue to better face these challenges. The TNPA in its current state cannot achieve its goals to contribute to the country's efforts to become a democratic developmental state. South Africa needs to develop its own clear port doctrine that is consistent with the country's visions and policies.
Introduction
Research Aim and Methodology Employed
The study further compares and contrasts contemporary practice in South Africa's ports with the three port pricing theories identified in the literature, specifically the Anglo-Saxon, the Asian and the European theories in order to identify a better way forward for South Africa.
Findings on the Research Questions
- What are the perspectives of the stakeholders on South African port pricing?
- What are the reasons, rationale and arguments proposed by TNPA that support the large
- What are the strengths and weaknesses of the TNPA tariffs proposals for 2010/11, 2011/12
- What are the significant issues raised in the stakeholders’ submissions?
South African ports have the potential to contribute to improving the county's economic growth. However, South Africa needs to develop its own clear port doctrine that would be consistent with the country's visions and policies. The South African Ports Regulator needs to be strengthened as proper regulation can better address the concerns of port stakeholders.
Limitations of this Dissertation and Areas for Future Research
SUBJECT: Shell's comments in relation to Transnet's National Ports Authority tariff application for the period 2012 to 2013. Transnet's comments on the Ports Regulator "Economic Review of Participation in the Operation and Services of Ports in South Africa", August 2010. Ports National Regulator (Ports Regulator) comments on the Transnet National Ports Authority (TNPA) Tariff Application.
Themes on Stakeholders’
Ethical Clearance Certificate
Turnitin Report
