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Manufacturing Circle warns against higher port tariffs

4 Apr 2014

Industry body the Manufacturing Circle says Transnet's port terminals tariff increase of 9.25% across the board is "an unwelcome development for manufacturers"‚ as the sector depends on imports and exports for its competitiveness and to grow volumes.

Manufacturing Circle's Coenraad Bezuidenhout says the tariff increases by Transnet are inappropriate. Image: Manufacturing Circle

On Thursday (3 April)‚ the organisation called on Transnet to review the increase if it did not want to be the source of further job losses.

It said in the long run an urgent review was needed of the regulatory regime that resulted in such inappropriate cost increases at such an inappropriate time.

While evidence is emerging that a weaker rand is starting to support domestic exports‚ the Kagiso purchasing managers index fell 1.4 points to 50.3 last month‚ a decline in the pace of expansion in manufacturing.

Manufacturing Circle executive director Coenraad Bezuidenhout said that South African economic growth had fallen and inflation was on the up. He said this was particularly on the back of cost-push‚ rather than a result of demand.

"Transnet (Port Terminals) is actively promoting stagflation with this increase - it threatens not only manufacturing and jobs‚ but also our very macroeconomic stability‚" he said.

Labour unrest

Manufacturing is already being hit hard by the unresolved strike in the platinum sector‚ which the sector both supplies and is supplied by.

"This has amplified weakness in a domestic market that depends on an already weakened consumer‚" Bezuidenhout said.

"Mirroring this‚ jobs are also declining in the manufacturing sector‚" he said.

While increased exports could alleviate this situation‚ a recent World Bank Report on South Africa's export competitiveness highlighted that Transnet's ports authority already charged a 360% premium over the global average for non-mineral exports.

"These costs‚ plus railway bottlenecks‚ should make it abundantly clear why South African manufacturers find it difficult to increase export volumes even when the rand is weaker‚" Bezuidenhout said.

"Had our port tariffs not been so excessive‚ we would have been able to narrow the current-account deficit much quicker‚ leaving the economy much less vulnerable to external shocks and able to grow more vigorously."

Source: I-Net Bridge

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