A body advising the minister of transport on setting port tariffs has urged the ports regulator not to grant Transnet National Ports Authority (TNPA) above-inflation tariff increases — and warned that excessively high tariffs would increase the cost of doing business in South Africa.
The ports authority has proposed an average tariff adjustment of 7.9% to the Ports Regulator of South Africa for the 2025/26 financial year to meet its R15.6bn revenue target. It also proposed an 18.61% tariff hike for 2026/2027 and an extra 2.52% the following year to raise R18.7bn and R19.4bn respectively.
The authority manages eight commercial ports and generates revenue by charging tariffs for services including maintaining port infrastructure and handling cargo. It has also proposed a 14.19% tariff hike on shipping lines, a 4.57% increase in ship repairs, a 4.57% increase in container imports and exports, and a 6.67% increase in deep-sea container empties.
TNPA said its tariff submission took into account the potential effect on the broader economy and port users and the overall effectiveness of the South African port system.
However, the National Ports Consultative Committee (NPCC) — which advises transport minister Barbara Creecy on tariffs — wants the regulator to consider granting an overall increase of between zero and inflation, which at the time of submission was about 7%.
Amounts sought by TNPA ‘could chase shipowners and cargo operators to other countries’
The committee said the proposed tariffs would affect the cost of doing business at the ports managed by the Transnet subsidiary. “Some of the proposed tariff increases are in line with consumer price index (CPI), which may be seen as an effort to sustain the port's operational costs without heavily affecting the cost of doing business. The higher increases in specific sectors like marine charges and bulk commodity exports could potentially make these operations more expensive.”
The proposal comes as South Africa's biggest ports — Cape Town, Durban and Port Elizabeth — have been ranked among the world’s worst-performing container ports, according to the World Bank’s recent 2023 Container Port Performance Index.
The World Bank cited low productivity and deteriorating container performance, among other factors, when it ranked Cape Town last of 405 ports assessed about the world. Ngqura was ranked at 404, Durban at 398, and Port Elizabeth at 391.
In its request for tariff increases, TNPA said it was planning to roll out a capital expenditure programme for the 2025/2026, 2026/2027 and 2027/2028 financial years, which would require it to spend R3.35bn, R5.467bn and R5.373bn. Its planned capital investment in the next six years is R23.86bn.
It said in its submission that it was aiming to build a world-class and sustainable port system. “In line with the functions of [TNPA], the tariff application allows for the effective recovery of [its] investment; recovery of costs; and a return commensurate with the risk; and further allows for efficient port pricing signals to be sent to the market.”
However, the NPCC said it considered TNPA’s financial practices as potentially harmful to its risk profile, as its assets and revenues were being leveraged by Transnet, which could introduce additional risks not being accounted for in its profit margin. “The NPCC’s evaluation indicates a need for clearer financial delineation between the authority and Transnet to ensure the proposed profit margins are truly reflective of the authority's standalone risks,” the NPCC said.
“The current practices raise concerns about the proper use of funds and the effect on the authority's risk profile, which in turn could affect the broader economic landscape and the cost of doing business in South Africa's port system.”
Malcolm Hartwell, director at Norton Rose Fulbright South Africa, said shipowners and operators are going to be unhappy because they face port tariff increases of 14%. “This will be a bitter pill for the large shipping lines whose ships have been delayed excessively because the ports are not operating efficiently. Having to pay well over the inflation rate in increases when the port efficiencies remain so poor will add insult to injury,” he said.
He said the tariff increases sought by TNPA could chase shipowners and cargo operators to other countries. “No doubt, shipowners and container line operators will view the proposed increase as another reason to consider locating their hub ports and other operations in neighbouring countries — which does not augur well for the South African economy.
“We all know, and the government has belatedly accepted, that logistics are at the heart of all economies, particularly one like ours that relies heavily on exports and imports. Transnet is the backbone of the economy on which all the mines, farmers, traders, importers and exporters are forced to rely due to their monopoly over port and rail infrastructure,” Hartwell said.
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