TRANSPORT LIBERALIZATION: Maritime Maritime status

1. TRANSPORT LIBERALIZATION: MaritimeMaritime status

2. CONTENTS • Global Maritime overview • Maritime trade in services overview • Maritime trade in services by country • Key issues and recommendations • Way forward

3. Maritime sector overview

4. SADC ports are part of an international networkServices to West Africa (examples) CMA/CGM Midas CMA/CGM Angola Shutle • Some west coast services use hubs in Europe and the Mediterranean • Lines include Maersk, OACL-Safmarine, OATL, MSC

5. SADC ports are part of an international networkServices to East Africa (example) NYK • MSC operates a service to East Africa using the Salalah hub • Other lines include Ethiopian Shipping Lines, Messina, H&H lInes, Delmas

6. Export corridors are being developed • Regional rail corridors are being developed in East Africa and West Africa to unlock export potential • These require co-operation and harmonisation along entire corridors, including across countries • Africa is rapidly developing as a strategic supply of resources • Both east and west coast have mineral and other natural resources

7. Maritime industry developments • Larger vessels require upgraded infrastructure • Largest container ship is the Maersk Triple-E class (18,000 TEU) • Largest container vessel to call in Durban (MSC Sola - 11,660 TEU) • Ports aspire to hub status • Improved frequency, service levels • Reduced cost/TEU • The industry dominated by relatively few international entities • Global terminal operators control 71% of container capacity (includes public sector operators e.g. PSA) • Top 5 operators control almost 50% of capacity • Shipping lines are coming off a period in which they incurred severe losses

8. Key issues • Ports handle over 90% of import-export cargoes • Shipping lines are highly mobile • Port and hinterland capacity has not kept pace with demand throughout the Region • Congestion and delays result in higher costs to cargo owners (missed calls, surcharges, etc.) • An under-developed maritime sector constrains economic growth

9. Factor that support a successful maritime sector • Connectivity • Trade routes • Hinterland • Volume • Infrastructure • Support services • Trading environment • Partnerships

10. Maritime trade in services

11. Maritime trade in services • The SADC Protocol on Trade in Services (PTCM) in transportation is expected to reduce or remove barriers that impede the flow of trade between SADC countries • The maritime sector for this study includes vessel operations (sea freight and sea passengers), and supporting services for maritime transport, namely WTO codes 7211, 7212 and 745** • Maritime countries within SADC are the Democratic Republic of the Congo(DRC), Angola, Namibia, South Africa, Mozambique, Tanzania, Mauritius and the Seychelles • The objective of the PTCM is facilitate an efficient, cost effective and fully integrated infrastructure and operations • The process is expected to result in request-offers by August and initial offers (including transport) by November 2012

12. PTIS (maritime) key elements • Maritime transport is an area of strategic importance to regional economic growth • Realising the potential of this sector requires harmonised international and regional transport policies and regulations • It is understood that developing coastal shipping, encouraging joint ventures with the private sector are key components for developing the sector • Regional co-operation and harmonised tariff structures should not result in uncompetitive business practices

13. Issues affecting implementation • The port sector has strong control and influence from government in all SADC countries. The industry often reflects national priorities • Investment backlogs, inefficient port operations and undeveloped skills are critical factors affecting the industry • Relatively low volumes limit the ability of SADC maritime nations to negotiate service and price advantages with large international carriers • Creating capacity and requires large-scale investment. Skills development also requires investment and co-ordinated effort • SADC countries are at different levels of implementation regarding international maritime regulations and conventions

14. Liberalisation status (maritime) • No maritime states currently restrict foreign flagged vessels. Angola is considering a state-owned shipping company • Coastal maritime trade is restricted in Angola, Tanzania • Private sector participation • Only Mozambique has private sector involvement in port authority functions • All SADC countries support concession arrangements for port operations • Only Mozambique has an initiative to privatise marine services. South Africa considers this an option

15. Maritime trade in service by country

16. Maritime trade in services by country • Angola • Democratic republic of the Congo • Mauritius • Mozambique • Namibia • South Africa • Seychelles • Tanzania

17. Maritime sector profileAngola • Resources attracting investment , including from China • Strong government influence in the sector

18. Maritime trade in service environment: Angola • Current status • Priority given to national economy. Priorities for Angolan companies • Not yet taken binding commitments to WTO • Controlled entry long-distance maritime and access for coastal shipping is limited • Concession and private sector involved in port operations, ship repair • Limited transparency • Developments • Intention to establish a state owned shipping company may result in restrictions on foreign vessels Luanda Port

19. Maritime sector profileDemocratic Republic of Congo • State-owned Onatra is the dominant provider • Lack of deep water capacity adds time and cost to cargo • Volumes remain low

20. Maritime trade in service environment: DRC • Current status • Port revenue used to subsidise other Onatra divisions • Political climate coming off an unstable base • Port authority and operations (mostly) performed by Onatra • Approval required for market entry • Ratio of foreign to national employees a restriction ( mode 4) Matadi Port • Developments • Recently joined OHADA to improve legal stability and facilitate regional economic integration • Lack of capacity to progress harmonisation and liberlaisation

21. Maritime sector private profileMauritius • Cargo Handling Corporation is a government owned operation • Private firms handle oil tank farms, fertiliser, flour, cement, etc.

22. Maritime trade in service environment: Mauritius • Current status • No current concessions for authority and port operations • Private sector currently excluded form container operations and other designated general cargoes • o Private sector currently excluded form container operations and other designated general cargoes • o Foreign equity ownership subject to approval (some areas restricted to nationals) Port Louis • Developments • Initiative to concession the container terminal is being revivied

23. Maritime sector private profileMozambique • Mozambique has regional port authorities, each with a stake held by state-owned CFM • Port services provided by authority and operators

24. Maritime trade in service environment: Mozambique • Current status • Concessions for authority and port operations • Cabotage by coastal vessel limited to national individuals / companies • Regulations that prevent ownership of land are restrictive • Regional transit bond guarantees • New Labour Law restricts the hiring of foreign staff Maputo Port • Developments • Increasing focus on governance to improve transparency

25. Maritime sector private profileNamibia • Namport provides both authority and operations functions • Trans Namibia corridor seen as an opportunity for growth

26. Maritime trade in service environment: Namibia • Current status • State owned entity Namport engaged in landlord and port operations • Some private terminal operations • No foreign company may provide towing services • Access by foreign nationals remains difficult Walvis Bay Port • Developments • Corridor initiatives to promote regional co-operation • Planned container expansion considering private investment

27. Maritime sector private profileSouth Africa • Transnet is the dominant provider in the sector • Extensive private sector involvement in shipping (non-local), ship repair, agency and port terminal (non-container) operations

28. Maritime trade in service environment: South Africa • Current status • State owned entity controls ports and engaged in port operations • Competition in bulk, general purpose cargoes • Policy and regulations to encourage private sector participation • Restrictions on foreign employees ( mode 4) Ngqura Port • Developments • Transaction advisor appointed for Ngqura Container Terminal. Also enquiry for new dig-out port in Durban • Revised maritime policy being drafted

29. Maritime sector private profileSeychelles • Seychelles competes with Mauritius, Madagascar, Reunion for passenger volumes • Shallow draft except for Mahe Quay (9.5m – 11.5m)

30. Maritime trade in service environment: Seychelles • Current status • State owned entity controls ports and engaged in port operations • Foreigners require permission to own land • Investment in port infrastructure a reserved strategic area – permission subject to conditions • Restricted and strategic areas limits competition and limit attractiveness to foreign investors • Gainful Occupation certificate issued once no suitable Seychellois application Port Victoria • Developments • Seychelles is currently negotiating accession to WTO. GATS schedule

31. Maritime sector private profileTanzania • Transnet is the dominant provider in the sector • Extensive private sector involvement in shipping (non-local), ship repair, agency and port terminal (non-container) operations

32. Maritime trade in service environment: Tanzania • Current status • State owned entity controls ports and engaged in port operations • Container terminal (TCITS) has been concessioned • Only Tanzanian ships in coastal trades • Restrictions on foreign equity ownership (60% in listed companies) • Increasing cost of permits for foreign workers Dar Es Salaam Port • Developments • Fair Competition Act to promote effective competition • Extensive port and hinterland developments planned

33. Key issue and recommendations