With the end of economic sanctions and government’s precipitous trade policy reforms introduced since 1994, the South African maritime industry experienced an unprecedented turnover of goods, stretching the capacity of ports, especially in Durban where volume outstrips capacity by 26% by 2000. There has been phenomenal growth in exports and imports both by value and tonnage since 1994, exacting pressure on all the South African ports, especially the container terminals. South African ports handle about 98% of the country’s imports and exports, with cargo volumes totalling 160 million tons in 2000. In Durban vessels arrivals almost trebled between 1994 and 2000. Container traffic in and out of the Durban Container Terminal (DCT) has been increasing by an unprecedented 7% per annum. DCT actually handles 66% of the country’s containerised cargo.

In a way, the seven South African ports operated by the National Ports Authority of South Africa, which is divided into two, namely the port authority and port operations, have each an area of speciality;

• Richards Bay – Coal / Mining exports
• Durban – Container cargo
• East London – Vehicle exports
• Port Elizabeth – Motor industry components
• Mossel Bay – Oilrig supply base
• Cape Town – Deciduous fruits
• Saldanha Bay – Iron ore

Already in 1999, the freight earnings of domestic and foreign ship owners amounted to about R18 billion, whilst revenues earned by port operators, both the South African Ports Operations (Sapo) and private companies, worth R75 billion per year. This excludes stevedoring, freight forwarding, ship repairing, ship chandling, bunker trade and seafaring. The handling of containerised cargo, which tends to be of high value and therefore making container terminals of strategic significance in the South African economy is dominated by Sapo, a subsidiary of the State Owned Enterprise (SOE) Transnet. On the other hand, private quayside operators who actually handle 52% of cargo (by weight) in South African ports, dominate the bulk and breakbulk operations such as coals and grains. In 2000 the South African maritime industry had a workforce of about 28 500, (excluding fishing and SA Navy), of whom 8 000 are Sapo employees, making the public operator the biggest single employer.

With the notable exception of some terminals such as the car terminal in Durban and iron ore terminal in Saldanha Bay, most of the terminals are struggling to cope with container volumes. They are also faced with other problems such as;

• Shipping companies providing inaccurate information about ship arrivals
• Weaknesses in the marine services (pilotage, etc.) provided by the South African Ports Authority
• A 24 month delivery time on urgently required straddle carriers to move containers in the terminals
• Import clients limiting available space by not removing their containers from the terminal quick enough
• Limits to the space available for stacking
• Difficulties with the private stevedoring companies handling cargo on board.

There has been a rise in casualisation of labour and increased shifts up to 12 hours. These could be attributed to ad hoc solutions introduced in the ports, including the introduction of incentive bonuses, new computerised cargo planning and control system, training and appointment of new managers which have proven inadequate to deal with the problems. Government’s move to concession Sapo’s operations, which has become a stock responseds to such restructuring challenges, is unlikely to yield any improvements, unless a comprehensive trilateral engagement that includes government, labour and management is first explored in line with the National Framework Agreement.

As the Congress of South African Trade Unions (Cosatu) and the South African Transport and Allied Workers’ Union (Satawu) we construe the introduction of the National Ports Authority Bill (hereafter refer to as the Bill) ahead of a meaningful trilateral engagement on the restructuring of the ports as premature and pre-empting the outcomes thereof. We are concerned that through a blueprint from its consultants, the government could be impetuously lead government to a haphazard cherry picking concessioning of the potentially lucrative DCT to multinational companies, leaving the rump of unviable operations under state ownership.

Cosatu and Satawu see the ports as strategic economic loci with great potential to anchor and foster more balanced spacial and economic development in South Africa. With their inter-modal attributes, integrating different transport systems, ports also catalyse the development of different but related industrial and service sectors around them. Hence, as labour we call for a greater role for the public sector not only in the maintenance and extension of infrastructure but also in the operations of services critical in crowding-in development of other industries around ports in support of provincial and municipal spacial development plans.

Cosatu and Satawu argue for the maintenance of Sapo’s cargo-handling and marine services in public hands, informed by an understanding that port planning, operations and pricing are key determinants of;

• The efficiency of export and import chains
• The cost-effectiveness of imports and exports
• Modal choices of domestic and sub-regional transport users
• The competitiveness of South African ports in the world marine service market, such as bunkering, supply and ship repairing service.

Ports in South Africa are on the whole natural monopolies in terms of their customer base since user choice between different ports have more to do with integrative infrastructure, location and costs of transport to or from ports than other factors. By and large each port enjoys a niche market, a situation that can be detrimentally changed by a restructuring approach attempting to foster competition between ports. Such competition could also reinforce the uneven distribution of industries and service enterprises between ports, causing some deindustrialisation in weaker ones, thus undermininge the provincial and local economic spacial plans. Already, as a result of the liberalisation of stevedoring trade, the majority of workers employed by the private sector are casuals, and competition within ports has resulted in outright wage competition, declining safety standards, and almost zero-investment in training. Consequently, safety provisions within stevedoring licences have been compromised.

Cosatu and Satawu do not support the incoorporation of the National Ports Authority. Our approach, calls for a public agency model, in line with practices in other countries such as New York, Singapore, Rotterdam, Philippines, St Johns (Canada), Sri Lanka, Dubai, Antwerp and London. The Public agency model guarantees a long-term maintenance of the Ports Authority under the ownership and control of the state.

Cosatu and Satawu acknowledge and welcome some improvements on some aspects in this Bill from the previous Draft Bill version. In particular;

• The draft Bill is now easier to follow in its sequencing of chapters and clauses
• The exit of the Port Authority from Transnet is now more controlled and subject to ongoing assessment and review
• The inclusion of a number of references to equity and black economic empowerment, even though we believe BEE should not be used to justify privatisation.

However, we continue to be concerned about the following:

• The emphasis on concessioning and other private sector arrangements at the expense of the role of the public sector
• The parallel lines of responsibility and authority between the Minister of Public Enterprises (mainly responsible for the Port Authority) and the Minister of Transport (mainly responsible for the Regulator).

Clause 2 (e) (iii) states the following as an object of the Act; to "strengthen the state’s capacity to facilitate the transfer of technology, information systems and managerial expertise through private sector involvement and participation."

It is not clear to as to how in terms of the functions of the Authority what is meant by this object, how it is to be realised i.e. transference of technology, information systems and managerial expertise from who to whom?

We see the state playing an active development role in the sector, and therefore we propose clause 2 (e) (iii) to read;

to "strengthen the state’s capacity to facilitate development [transfer] of technology, information systems and managerial skills both in the private and public sector.

In the previous Draft Bill, clause 3 made provision for the Minister of Transport to proclaim national commercial ports. In this Bill, there is a new provision in clause 70 stipulating the role of Cabinet in closing down a port. However, there is no provision for the declaration of a port, as provided for in the Draft Bill.

Cosatu and Satawu propose the retention of clause 3 as stipulated in the Draft Bill, in terms of which the Minister of Transport was accorded the powers to proclaim national commercial ports.

• Clause 11 (1)

The functions of the Ports Authority in Clause 11 (1) are listed in obligatory terms. In other words, whereas in the previous Draft Bill Clause 6 (2) (a) stated that the Port Authority may perform various listed functions, in this Bill’s version as per clause 11 (1), the functions of the authority are stated in obligatory terms where there has been the substitution of "must" for "may".

We propose the Bill reverts to the previous wording i.e. "may". Clause 11 (1) should be enabling rather than obligatory.

• Clause 11 (2)

It follows that if clause 11 (1) is amended to read "the Authority may", then the distinction between 11 (1) and 11 (2) no longer stands.

• Clause 11 (1) (i). Also clauses 16 (i), clause 56, clause 68 and clause 81 (k)

There are five distinct clauses that restrict the Port Authority to particular forms of contracts – especially concessioning and private-public partnerships.

We reiterate our position as stated in the Public Hearings held in February this year. These clauses are far too restrictive in that they narrow the NPA to particular forms of contracts. In any event, a port restructuring process has been agreed between government and organised labour that provides for exploring a range of options for port restructuring. On 13^th May 2003 an agreement was reached whereby government and labour would examine options as to who should operate Sapo’s terminals. The options are to be evaluated on the basis of;

• Potential to improve efficiencies in the transport network
• Capacity to provide job security
• Potential to grow employment
• The positive or negative impact on Transnet as a whole of any decision on Sapo restructuring
• The potential to leverage wider ownership i.e. real black economic empowerment
• The potential to leverage regional/provincial integrated economic planning and growth

On the basis of the above, we proposes:

• Clause 11 (1) (i) should read "The Authority may [must] enter into concessions, lease agreements, public-private partnerships, public-public partnerships or any other commercial contract for the provision of services in terms of this Act".

• Clause 16 (i) on the functions of the Board, we support the stipulation in the previous version, and therefore we propose clause 16 (i) should read;

• Clause 56 (1) should read "The Authority may enter into a concession agreement or a public-private partnership agreement, or a public-public partnership agreement, or any other commercial contract with any person in terms of which that person is for the period in accordance with terms and conditions of the agreement authorised to –".

• Clause 68 (2) should read "The Authority may establish public-private partnerships or public-public partnerships and enter into agreements for planning, construction, development and maintenance of port infrastructure"

• Clause 81 (k) should read "guidelines for entering into a concession or public-private partnership or public-public partnership agreement or other commercial contracts contemplated in section 34:"

Clause 11 – Tariff-setting function

The previous Draft Bill made provision in clause 6 (p) for the Authority to prescribe tariffs; rates charges and dues. Similarly, clause 10 (1) (d) and (e) of the previous draft also referred to tariff setting.

This Bill makes no reference to this function. Clause 30 (1) ((k) gives the Regulator the function of "approving and reviewing tariffs set by the Authority", but nowhere does the Bill state that the Authority has this power in the first place.

Cosatu and Satawu propose the re-insertion of old clause 6 (p).

• Clause 11 – the order of functions

• Clause 12 (h) – intra and inter-port competition.

As argued above, we are opposed to the inclusion of this clause as part of the aims to be pursued by the authority, given the already manifest impact of such intra-port competition on the incomes and working conditions of the workers. Similarly, we point to the potential counter-productive impact of inter-port competition on other public policy objectives. Moreover, intra and inter port competition are stated in this Bill as ends in themselves.

We propose the deletion of this clause. Likewise Ch 5 clause 30 (h) should be deleted.

• Clauses 17 & 18

Clause 18 (4) (d) states that the Shareholding Minister must remove a member of the Board from office "For becoming an employee of the State".

The manner in which this clause has been stipulated, suggests that it would be illegal to become an employee of the state being a member of the board.

We propose an addition of a sub-clause

to clause 17, which states that;

Old clauses 24 and 25 made provision for a half-yearly statement of activities from the Ports Authority to the Minister, and an annual report (including audited financial statements) from the CEO of the Authority. In this Bill the provision for compulsory reporting seems to have fallen away.

Cosatu and Satawu propose that the old clauses 24 and 25 be re-instated.

We foresee substantial problems around the separate functions of the "Minister" (Transport) and the "Shareholding Minister" (Public Enterprises).

The current formulation is unwieldy and unnecessary, we propose that the NPA should be completely under the Minister of Transport. In line with our opposition to the incorporation of the NPA, given its stated functions we see the National Department of Transport (NDOT) playing an active role in the development of the ports and related transport infrastructure. We also a think it is necessary that one Ministry takes complete responsibility to whom the NPA would be accountable.

It is an unnecessarily fragmentation that the Board of the Port Authority is to be appointed by the Shareholding Minister, whilst the Board of the Regulator is to be appointed by the Transport Minister. After all, the functions of the Board of the Port Authority are largely transport related.

If this unnecessary fragmentation is to be maintained, we think it would be imperative that the Bill elaborate on how the lines of accountability will working.

Cosatu and Satawu have some general concerns about the envisaged Ports Regulator. This will be a statutory body, funded by parliament (via the NDOT), and employing a CEO and other staff members. We see a multitude of agencies and regulators (the Rail Safety Regulator, the SA Maritime Safety Authority, SA Roads Agency, and so on) constituting needless duplication and fragmentation, when a streamlined single sector regulator could be established to perform these functions. The impact of these institutions on the fiscus has to be taken into account.

Clause 64 makes provision for the Shareholding Minister to authorise the Authority to suspend the licence of an operator in the event of industrial unrest, strike, lockout or any other event which gives rise to an emergency which creates a threat to the national interest of the Republic. Presumably the intention of this clause is to permit the Authority to licenceto an alternative operator. We view this clause as undermining the right to industrial action, and therefore objectionable.

Cosatu and Satawu propose clause 64 in its entirerity should be deleted.

Clauses 74 (d) and (e) have been amended from the previous Draft Bill, with the insertion of the words "or procure" in relation to both pilotage services and tug services. This suggests that it is envisaged that providers other than NPA could provide such services. This has restructuring implications in terms of the NFA, as it would affect employment. There has been no such a proposal put to organised labour in terms of the NFA.

Cosatu and Satawu therefore propose that the words "or procure" be deleted and that the two clauses revert to their original form as per the previous Draft Bill.

In the previous Draft Bill, clause 50 on safety on land within ports had five clauses, four of which have not been included in this Bill. Cosatu and Satawu call for the retention of these three clauses dealing with safety and security, as per the previous Draft Bill.

We therefore proposes the re-insertion of the original clauses so that clause 75 would read:

Cosatu and Satawu, recognise the need for the restructuring of the South African ports and the maritime industry in general. However, we are not convinced that concessioning in itself is a solution to the problems afflicting the operation of ports. We do not believe that the National Ports Authority Bill should readily commit government to particular policy options, even before comprehensive trilateral engagement has concluded discussions on various options available in the restructuring of the ports system. Cosatu and Satawu propose the suspension of the finalisation of this Bill until an agreement between government, labour and management has been reached on the restructuring of the ports.