REFLEXIONES FINALES

148. In the introduction of the review, it has been established that various approaches can be followed to determine optimal performance standards against which the terminal performance can be assessed. This includes the Stochastic Frontier Analysis approach, Data Envelopment Analysis approach, Benchmarking against international ports etc. This requires much expertise as well as data and has not been used in this initial study. In addition, efficiencies and utilisation can also be weighed against investment and availability of capital in analysis such as financial and economic NPV, internal rates of return, payback analysis, economic value add and many others. At most, the analysis presented in this document serves to paint a picture of some of the PRSAs observations within the limitation of the data and expertise available.

149. Another approach, which is presented below, is to use the UNCTAD berth utilisation factor to determine whether South African terminals are operating optimally. It is proposed that the NPA be engaged further on this approach, as outlined below.

150. In determining optimal performance standards; berth and terminal utilisation rates as well as across the ship rates must be calculated using the UNCTAD international norms. Berths and terminals are the point of interface amongst various players in the port systems, primarily exchange between vessels and cargo. Terminal and berth utilisation rates i.e. the time available to vessels to exchange cargo across the quay wall and the rate at which that

47 exchange happens are key indicators of how well a port or terminal is doing. The following are the formulae and input parametres used in calculating optimal berth utilisation and ATS for South African terminals:

151. Operational hours, number of berths per terminal as well as throughput per terminal are required to calculate both berth utilisation and across the ship rates.

Operating hours:

Ports: No of. Operating hours As per tariff book

Durban, Richards Bay, Ngqurha, Port Elizabeth, Cape Town, Saldahna

365 days * 24hrs = 8760

East London 16hrs * 5 days a week: 60 * 52 = 4160 plus 6hrs on Saturdays: 8*52 = 416

Total hrs: 4576

Mossel Bay 12hrs * 5days a week: 60*52= 3120

Total hrs: 3120

Usable berths:

152. Usable Berths instead of total berths would be used. The intention is to determine the utilisation of operational rather than design capacity. However as has been done in the report, the same calculations can be done to determine productivity level of the full infrastructure that port users are paying for.

153. The terminal utilisation rate describes the ideal number of hours that all the berths, collectively; in a terminal should be operating cargo. This can be used as a standard by which South African terminal’s actual utilisation should be compared to.

154. Berth Utilisation calculates an optimum utilization rate of a terminal (in hours) based on the number of berths (as per utilisation factor) and number of terminal operational hours i.e. the number of hours that the terminal should be operational per annum.

Berth/terminal utilisation factor

155. The Berth Utilisation Factor attempts to standardize across various factors that influence operations in a berth to arrive at a commonly agreed figure that a berth must operate in a year. The Berth Utilisation factors are based on those set by the United Nations Conference on Trade and Development (UNCTAD:1986) in the port performance measurement manual. Although determined in the 1980s, these factors have not required material adjustments over the years, except for upward revisions on container terminal factors. Berth utilisation factors used in the calculations are provided in Table 15.

48 Table 15: Berth Utilisation Factor

Number of berths Vehicles (%) Liquid Bulk(%) Containers (%)

Dry Bulk(%) Break Bulk(%) 1 45 45 45 70 45 2 50 50 50 70 50 3 55 55 55 70 55 4 60 60 60 70 60 5 65 65 65 70 65 6 70 70 70 70 70 7 70 70 70 70 70

UNCTAD: where there are more than 7 berths, the factor remains 70%.

156. These represents the percentage of time that a berth or number of berths when available will allow optimal use thereof without congestion or low service. The highest utilisation factor is 70%. This is however not the maximum but rather the optimal utilization for a terminal with x number of berths. Where actual utilisation is above the utilisation factor, the likelihood of congestion is high, pointing to a need for either operational improvements or additional capacity.

Formulae for calculations:

a. Terminal Utilisation rate (%) = Operational hrs x no. of berths x utilisation factor (UNCTAD utilisation factors in table above)

b. Berth Utilisation rate (%) Terminal Utilisation rate Number of berths c. Across the ship rate (ATS) = Throughput

Terminal Utilisation

157. As an example, using the 2013/14 cargo throughputs gives the following indicative utilisation rates:

49 Table 16: Example of possible optimal berth utilisation and ATS for SA terminals

158. According to these calculations for Durban container terminals as an example, the optimal berth utilisation rate for this 7 berth, 8760 hrs terminal must be 42 924hrs in a year. Across the ship working rate, is 62 TEU per hr, which can be verified by simply multiplying the calculated optimal ATS and Berth Utilisation to find the Annual throughput 42 924 x 62 = 2 660 144. However, actual performance must be assessed when actual terminal availability in hours and actual ship working rates are computed.

159. Table 15 therefore provides an indication of the optimal levels or standard for ATS and Berth Utilisation rates as per the UNCTAD model which should be compared to the actual ATS and Berth Utilisation for South African terminals as reported by the NPA.