Administered Prices Study on Economic Inputs: Ports

by GOODE, R. et al, 2007
HSRC report prepared for NEDLAC, Trade and Industry Chamber, NEDLAC, August 2007

Improvements to the competitiveness of commercial transport systems in South Africa will significantly boost economic and employment growth, given the high concentration of economic activity on the inland plateau, the sensitivity of foreign trade to freight cost, and the distance to market of South Africa’s major trading partners. Transport is largely shaped by government, through both policy and the operations of state-owned enterprises. This research was commissioned as part of a broader Nedlac project, analysing the impact of administered pricing sectors on South Africa’s competitiveness and ability to attract direct investment. Goode examines administered prices in the ports sector; two companion reports examine the water and rail sectors respectively (LINKS TO INFRA06 AND 07). The report benchmarks the competitiveness of the country’s ports and reviews the approach to setting prices. The focus is on the port infrastructure and services provided by the National Ports Authority and port operations provided by South African Port Operations, both divisions of Transnet. The report examines pricing levels for marine services, port and marine infrastructure, container operations, break-bulk and bulk operations. It indicates that the institutional framework of the state-owned transport system that determines port prices is almost impervious to change, despite explicit tariff reform between 2001 and 2003. Ports that are leaders in pricing and performance measures around the world are located in regions characterised by a high degree of port competition. The implication for administered pricing in South African ports is the critical need to encourage practical intra- and inter-port competition.