Dont kill Dar port with unjustifiable charges

Opinion/Editorial

Dar es Salaam port 

Tanzania International Container Terminal Services (Ticts) wants to increase the cost of loading and unloading of containers at Dar es Salaam port by over 30 per cent. Last month, The Citizen broke the story that Ticts had filed an application with the Surface and Marine Transport Regulatory Authority (Sumatra) to increase its container handling costs.

Ticts has applied for a 31 per cent increase in charges for loading onto ships and unloading (stevedoring) of 20 and 40-foot containers and a 32 per cent increase for handling containers at the terminal.

The decision, however, on whether to grant the application now lies with Sumatra, which has the legal mandate to approve or reject the tariff increment application.

Currently, stevedoring charges for a 20 and 40-foot full container load (FCL) intended for domestic use stand at $71 and $107, respectively, and Ticts has proposed new rates of $93 and $140.

The rates for handling a 20 or 40-foot domestic container now stand at $79 and $119, respectively, but Ticts has proposed an increment to $104 for a 20-foot container and $157 for handling a 40-foot container.

We fully understand that cost is not a fixed item because it varies depending on external and internal factors. This being the case, it means that Ticts has the right to adjust its charges, provided there are justifiable reasons for doing so and which are acceptable to stakeholders across the board, especially Dar port users.

Ticts wants to increase its charges because it claims it has invested heavily at Dar port, and any return on investment should come from users. The danger we see, should the regulator accept the application, is that port users would pass the extra cost on to the end user – the common man on the street.

Investment costs

Port users would do the very same thing Ticts wants to do, which is pass investment costs on to their clients. Such a move would make Dar port, which is already facing stiff competition from Mombasa and other ports in Mozambique and South Africa, even more uncompetitive.

Ticts does not tell us whether its plan on capital re-investment was motivated by the huge profits it has been making over the years or if it was just an ambitious plan to be funded by users. We say this because a serious firm worth its salt can only embark on capital re-investment if its business is profitable and seems to have a bright future.

Otherwise, authorising capital re-investment by hoping to increase the price of your products or service is a poor business plan. For the sake of transparency, Ticts should make public its audited accounts, which show the company’s earnings for the past ten years so that all stakeholders can be on the same page when debating its application for tariff increases.

Dar port is crucial to the economies of Tanzania and its landlocked neighbours. This being the case, any move to adjust container handling costs should be thoroughly scrutinised, not only by the regulator, but also by other key stakeholders such as the Tanzania Truck Owners Association (Tatoa) and Tanzania Shipping Agents Association (Tasaa).