Western Cape Business News

Send  Share  RSS  Twitter  25 Oct 2011

SHIPPING: Port Increases Could Lead To Job Losses


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The City of Cape Town has opposed any port tariff increases, as this would result in massive job losses.

In its submission to the Port Regulator, the City has objected to the 18% tariff hike proposed by Transnet’s National Ports Authority as this was “unreasonably high and will undermine job-creation initiatives.”

A University of KwaZulu-Natal study has indicated that South African ports are already among the most expensive in the world. The study found that ports with much higher input costs such as Antwerp, New York and Rotterdam were less expensive than those in South Africa, as well as importantly being more efficient. For example port fees for a 20-foot container handled at a South African harbour can be as high as R3 190, compared to R620 in China. The financial model governing ports needs to be revised. South African ports need to be benchmarked against comparable international ports and costs kept in line with international best practise,” says Alderman Belinda Walker, Mayoral Committee Member for Economic, Environmental and Spatial Planning.

The manufacturing sector is heavily dependent on harbours. This is a sector that employs almost 50% of Cape Town’s unskilled and semi-skilled workforce. Unrealistically high port fees could lead to the closure of factories, resulting in massive job losses,” she says.

According to Cllr Brett Herron, Mayoral Committee Member for Transport, Roads and Stormwater, the tariff hike is unrealistic as South African ports are part of state-owned Transnet.

In 2009, ports contributed 67% towards Transnet’s group profits. These profits are apparently used to cross-subsidise other less-profitable operations. With the current profit margins, the National Port Authority should lower their charges and thus stimulate economic growth,” he says.

The City says that the steep increase would also curb Cape Town harbour’s potential as a job creator as this will hamper harbour-related industries such as boat-building. It will also have a damaging effect on Cape Town’s global competitiveness as a port and as a city.

The City believes that government should create economic environments in which the private sector can flourish and generate more jobs. One of the tools at the government’s disposal is to keep administered prices such as transport and electricity costs as low as realistically possible,” says Herron.

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