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Transport pricing: private sector safe for now 

August 15, 2018
6,161 Views

Road hauliers have apparently ignored the government’s invitation to comment on the Economic Regulation of Transport Bill 2018, probably because it does not seem to affect them directly.

That assumption is correct insofar as it applies to all the state-owned entities involved in transport, but the minister of transport can apply the legislation to any transport company if satisfied that certain circumstances exist. In any event, the economic regulation of state-owned transport will indirectly affect road hauliers and logistics companies.

The stated intention of the Bill is to promote an effective, efficient and productive transport sector. In order to achieve these goals, it establishes two parallel and independent regulatory agencies. The two bodies will determine price controls and service standards, collect regulatory and industry information, and resolve disputes affecting all the regulated entities.

The first body, to be known as the Transport Economic Regulator, will be the primary technical administrative and enforcement regulator once the Bill becomes law. It will be responsible for carrying out education, research, price control approval, the investigation of complaints and enforcement of the Act.

The Transport Economic Council will monitor the conduct of the regulator, review the regulator’s decisions and review the decisions of the regulated entities.

The Bill provides broad powers to the regulator and council, and enumerates a host of offences, with penalties of up to five years’ jail time and/or an appropriate fine.

At this stage, the Bill only applies to the National Ports Authority, Transnet’s rail and port terminal operations, the Passenger Rail Association of South Africa (Prasa), the South African National Roads Agency (Sanral) and the Air Traffic and Navigation Services Company. It does, however also extend to any operations where Sanral has granted a concession and, more importantly, to any other market, entity or service – whether state or privately owned – that has been declared by the minister to be subject to the Act.

The minister can apply the Act to, for example, road hauliers, only if the minister has determined that they are a monopoly operator, or that they are not functioning competitively, or if he or she is of the view that economic regulation can address the non-competitive nature of the market.

This is a very broad discretion which the minister would have to exercise reasonably, but it is entirely possible that the minister might decide that the Act should apply to, for example, all road hauliers operating on the Gauteng to KwaZulu-Natal corridor; in which case it would directly affect the readers of this magazine.

Even if the minister does not extend the Act to private companies, the economic regulator will, among other things, determine prices to be charged by Transnet rail or road hauliers. This, in turn, will have an effect on the prices that can be charged by private operators.

The period for commenting on the Bill has closed and it is not yet clear whether this legislation will work its way through Parliament before the next general election. Road hauliers and logistics companies, however, need to be alive to the fact that the state-owned entities should become much more price competitive, and that there is a possibility the minister will extend economic regulation into the private sector.

Malcolm Hartwell is a director based in Durban. He is a master mariner and the team leader for transport and has been with Norton Rose Fulbright since 1994. He is a shipping lawyer and specialises in admiralty, international trade, marine insurance and all aspects of maritime casualties, in particular investigating the maritime aspects of cases involving salvage, collisions, grounding, flooding, fires, anchor dragging and cargo claims. He has been involved in most of the casualties in this region in the last twenty years.

1 Comments

  1. Transnet Freight Rail is seriously focusing on the FMCG markets with the strategic intent of increasing containers and creating intermodal solutions to shift cargo from Road to Rail. This is being done through a collaborative strategy within the hub to hub methodology where rail will do the long haul service, whilst road will support the same supply chain on the short haul services. It also allows for collaboration with warehouses and terminals to create a total supply chain that makes econnomic sense which will drive the country’s GDP growth whilst creating employment and transforming the lives of the huge number of disadvantaged citizens. There is a huge potential in this space and it can achieve the appropriate levels of success through total collaboration across the supply chain making every player into a winner. We have these opportunities waiting to be tapped into from local services to regional integration into Africa.

    I look forward to engaging the different parties across the supply chain so that we can collectively design the ultimate solutions that will drive SA as a successful global player.

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