The bulk of South Africa's maritime trade, particularly on the export side, consists of shipments of primary (raw) or derived primary products, accounting for approximately 140 million tonnes of all cargo (National Port Authority, 2003). . The export of primary products or goods is a vital part of the South African economy and generates significant amounts of the country's foreign exchange.
THEORETICAL BACKGROUND
Overview of international maritime transport
The fleet of oil tankers and dry cargo ships together make up 70.3% of the total world fleet. An overview of the world fleet divided by the most important vessel types for the years 2000-2002 can be seen in table 2.2 below.
Dry-bulk shipping
Economies of scale, which are most pronounced in bulk shipping, arise mainly from differences in the trading costs of the vessel. No mention is made of shipper or consignee, who is the party to the contract responsible for settling the freight bill.
Trade in the dry-bulk commodities
Generally, shipping terms are important because they spell out the buyer's and seller's legal and cost responsibilities. The shipper can be either the buyer or the seller of the item being shipped, but in some cases a commercial intermediary will be responsible for the transport arrangement.
CIF versus FOB dilemma and the Balance of Payments
The government is committed to "promoting an initiative to educate exporters of South African goods about the benefits of shipping their cargo on South African vessels or on CIF terms" (White Paper, 1996:36). Moreover, consensus was reached on the influence that the choice of trade terms can have on the country's overall performance, in particular on the services account of the balance of payments (BOP). The point here is clear: "an increase in CIF or CFR export sales is likely to have a significant positive impact on the balance of payments", according to Lones (1991), and also that "shipping is clearly an important part of the balance of payments" . McConville, 1999:207).
Interestingly enough, it is often argued that the existence of a national merchant navy is beneficial to the country's balance of payments and the author agreed, and (Chrzanowski states: "A national merchant navy allows a country to reduce the outflow of foreign currency for imported shipping services and earns foreign exchange by selling its services to foreign residents. Unfortunately, this is not the case in the South African scenario, where the lack of a home-flagged fleet entails losses of important foreign exchange. for the first time in history, they have allowed ships chartered to South African nationals to be registered in the country's shipping register.
South African Maritime Safety Authority (SAMSA) has estimated that approximately 60 ships currently sailing on the high seas involve South African interests (Conway, July 2003). Howard (July, 2003), the government is currently looking for ways to ease fiscal tax regimes for the country's ship owners. See Chasomeris, 2003b for further discussion on the potential benefits of a tonnage-based corporate tax for South Africa and the South African Shipping Industry). After such a powerful background on the affairs of the global shipping business and especially shipping in South Africa, the author presents in chapter three of this thesis a critical analysis of the international terms of shipping in dry bulk commodity exports from the port of Richards. Bay.
A SURVEY OF DRY-BULK COMMODITY EXPORTERS IN THE PORT OF RICHARDS BAY
The Port of Richards Bay
Richards Bay Coal Terminal, the world's largest steam coal exporter, with a capacity to export 72 million tonnes per year; Island View Storage handles a wide range of bulk liquids and liquefied gases such as propylene, ammonia, octane, acetone and butadiene. Cargo volumes passing through the six high-tech cargo handling terminals at the Port of Richard Bay are shown in Table 3.1.
Annexes V, VI and VII graphically show the performance of the Port of Richards Bay in comparison with other South African ports. So far, only 40% of the available area has been built on, but this does not include the future development potential of areas outside the harbor boundary. There are major developments in the port area coming from commodity producers who continue to invest significant funds in expansion projects of their facilities in Richards Bay.
During the 1960s and early 1970s, according to a Department of Transport project called "Movement feasibility studies in South Africa indicated that a dedicated coal export port at Richards Bay would not be a viable option , the government nevertheless decided to proceed with the project". Almost three decades on from inception, the Port of Richards Bay has grown into a self-sufficient, fully integrated cargo handling complex, ensuring the global competitiveness of the South African economy. The port facilities and traffic base have subsequently diversified significantly, particularly in the broad category of neo-bulk commodities such as steel, forest products and iron alloys' (Jones, 1997:16).
The Survey
- The survey of Richards Bay coal exports
- Survey of ferrochrome exporters
- Export of neo-bulk
Unfortunately, only an overview of shipment terms is available, with the exception of Eyesizwe, which exports all its coal on an FOB basis. The port of Richards Bay plays an important role in the export of South African metals and minerals. The rest of the aluminium, which is produced from the two smelters at Bay Richards, approximately 120,000 tonnes is shipped in containers from the Port of Durban.
Furthermore, this sector exhibits a variety of shipping terms according to established market practice and the relative bargaining power of sellers. It is important to mention that almost 90% of the world's raw phosphate supply is destined for agricultural use, mainly in the form of manufactured fertilizers. As can be seen from the table, the exporters of ferrochrome shipped their cargoes on six different shipping terms, almost half of the thirteen available in Incoterms 2000.
When it comes to exporting granite from the port, there are two prominent exporters, Kelgran and Kudu/Marlin, which together account for approximately 78% of the South African granite industry. For example, this section records the results of the investigation into the conditions of carriage of dry bulk goods from the port of Richards Bay. The next chapter further analyzes the study's findings, along with an evaluation of the data results.
RESULTS OF THE DATA EVALUATION AND FINDINGS
- Combined analysis of the Survey results
- Factors influencing the terms of shipment
- Factors in favour of FOB terms
- The choice in terms of shipment depends on customer requirements;
- Customized practices in the trade of certain commodities;
- Buyers have stronger market power;
- Buyers can negotiate better freight rates, compared with abilities of the sellers;
- FOB terms are dictated by exporter's commercial decisions and provide shorter terms of payments as opposed to CIF terms;
- Extensive knowledge of the market conditions, or necessary, involvement in shipping is not a value added activity, and firms
- Factors in favour of CIF terms
- Control by exporters over the value chain and logistics of the operations;
- Shipment on CIF terms allowed buyer to secure the vessel most suitable for trade;
- Ability of the seller to negotiate better freight rates, than buyer;
- CIF terms provide exporters with additional revenue
- Terms of shipment and South African ship operators
- The terms of shipment and the balance of payments
In terms of cargo volumes, of the more than 78 million tonnes of cargo covered in the survey, more than 64 million were shipped on FOB terms, accounting for approximately 82% of all goods exported from the Port of Richards Bay. These three products show relatively the most consistency in shipping terms over the past 15 years. Some of the changes in shipping conditions in Table 4.2 can be attributed to the dramatic changes that have occurred in South Africa over the past decade.
Global MNCs are not only responsible for a greater variety of shipping terms when exporting from the Port of Richards Bay, but are also responsible for a greater incidence of CIF and more advanced contract of arrival conditions when conducting their export operations. However, it should be emphasized that CIF terms are of the same nature as FOB terms as the seller fulfills the contract in the country of shipment. Nothing was mentioned about the more comprehensive arrival conditions such as DDU and DES which are featured in the list of shipping conditions from the Port of Richards Bay.
However, if the parties wish to include in the seller's obligations the risks and costs of handling the goods from the quay to another place (warehouse) inside or outside the port, the duty delivered free of charge (DDU) or the duty delivered paid (DDP). the terms (Incoterms 2000: 105) should be used. Shipment terms where the sellers named the carrier allowed the exporter to use warehouse facilities in the destination countries. Finally, it is necessary, within the framework of this paper, to make a statement that emphasizes the importance of terms of remittance for the balance of payments of a country.
CONCLUSIONS, POLICY RECOMMENDATIONS AND AREAS FOR FUTURE RESEARCH IN THE FIELD OF SOUTH
- Conclusions
- A realization by exporters, that shipment on FOB terms can only offer short-terms solution in the marketing approach;
- A vertical integration of domestic companies into the value chain activities and willing participation in shipping;
- The availability of the home flagged shipping tonnage;
- An acknowledgement by all role players of the strategic importance of the shipping industry in the South African economy;
- The creation of conditions most favourable for attracting additional shipping tonnage onto the South African Ship Register
- Policy recommendations
- Areas for further research in the field of South Africa's dry-bulk exports
Completion of a critical analysis of shipping conditions for dry bulk exports from the Port of Richards Bay led to conclusions in testing the three hypotheses identified in the dissertation. The chart serves as unequivocal evidence of the imbalance in terms of shipment dispersion and clearly shows the dominance of FOB terms as the leading term used in port dry bulk exports. Shipping terms as a percentage of total volumes exported from the port of RichardsBay*.
Furthermore, the author strongly believes that the government's abdication of the country's transport policy responsibilities hurts the South African economy and acts as an encouragement to some of the worst standards of the international shipping industry. The strategic role and economic benefits of the South African maritime industry have been superseded and. This dissertation has explored many areas relating to the recognition of shipping conditions as one of the key determinants of the fate of the shipping industry, commercial achievements in the dry bulk export sector and the prosperity of the South African economy as a whole. .
Unfortunately, the data collected in this research only related to one of South Africa's dry cargo ports - Richards Bay Port. Finally, with the forthcoming announcement of the Proposed Black Economic Empowerment Charter, further studies are urgently needed to assess the impact of this policy on the South African maritime industry. Especially in light of the possible intervention envisaged by the government to reserve African cargoes moving through South African ports to be carried on South African ships.
BIBLIOGRAPHY
United Nations Conference on Trade and Development, 2002, Review of Maritime Transport, published by UNCTAD, New York and Geneva. Editor, 2002, Ports of Southern Africa and Mauritius, 53rd edition, published by Pharmaceutical Printers and Publishers, Pretoria. Editor, 2003, Ports of Southern Africa and Mauritius, 54th edition, published by Pharmaceutical Printers and Publishers, Pretoria.
