Port are under-valued, says economist

May 2, 2003
Author: P&S

A leading economist says the importance and size of seaborne commerce involving South African ports is not always realised.

Professor Trevor Jones, of the School of Economics & Management at the University of Natal was commenting on the role that South African ports play in global shipping, ahead of the 23rd International Association of Ports & Harbours (IAPH) Conference to be hosted in Durban between May 24 – 30 by the SA National Ports Authority.

The conference features a session devoted to the prospects and challenges of the global economy and trade, with four international experts due to address a number of issue concerning the economic importance of seaborne trade.

According to Professor Jones the seaborne commerce broadly associated with the South African economy and ports is substantial by global standards.

“The approximately 190 million tons of cargo of all types (including petroleum products that are traditionally excluded from port traffic data) handled in 2001 in the ports of South Africa represents approximately 3.5 per cent of world sea trade in tonnage terms.”

But, he says, the “real” demands South African sea trade makes on the international sea transport industry are very much larger than this. “Real demand for transport is driven by both tonnage and transport distance. In the case of South Africa, the significant distances that separate us from foreign markets drives up this real demand very substantially.”

Professor Jones emphasised that in terms of “real” sea transport activity, traffic passing through local ports generated some 12,000 million ton-miles of maritime freight activity annually, or about six per cent of global activity – a performance that places South Africa within the top twelve nations on the international maritime-trading league table. SA’s share of global maritime activity consequently exceeds its share of global GDP by more than twenty to one.

“There must be few broad macroeconomic indicators in respect of which South Africa’s global performance or contribution would be larger.”

He said the ports have the fundamental task of keeping the lifeblood of this international seaborne flowing. Since South African sea trade activity is so high, it was no surprise that South Africa’s ports were large by African and indeed by global developing-country standards.

On a localised level Jones said the impact and value of individual vessel calls to the economy at a port and city such as Durban was not always fully understood. Giving a conservative example of a container ship working a total of 400 TEUs (twenty foot equivalent containers) at the Durban Container Terminal, he pointed out that this ship generated a Durban-based expenditure of R1.16 million per call in direct, first-round expenditure, based on 2002 prices. This figure excluded Ad Valorem Wharfage (now Cargo Dues) receipts entirely as these did not remain in Durban.

“This expenditure does not affect the local economy in a one-shot fashion, but has a multiplied effect, as income is re-spent. Even with the value of the multiplier being reduced by tax and ex-Durban spending leakages, a conservative estimate is of a local spending multiplier of approximately 2. This would give a multiplied expenditure of R2.32 million in 2002 prices, with further income and re-spending through indirectly port-related activities.”

He said that expenditure by multi-purpose vessels was also high, while that by bunker/transit callers would be considerably smaller but was by no means insignificant.

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