Transnet Seeks International Help for South Africa’s Port Operations

   January 17, 2024 60210
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South African ports operator Transnet is seeking international assistance in its efforts to turn around the operational issues at the country’s terminals. The company has launched a series of tenders seeking to bring in expertise as it struggles with the operations and persistent delays and backlogs in the major ports including Durban and Port of Richards Bay.

Issues at the perennially underperforming ports grew especially bad in the past few months with South African President Cyril Ramaphosa personally intervening after a strike and other operational issues ballooned the problems at the two primary ports. Ramaphosa called for immediate action and investigations saying people would be held accountable for the problems. 

The problems in the ports have been long known with experts citing a lack of investment and expansion. The ports are understaffed and use outdated equipment. The World Bank in its annual ranking of ports has consistently ranked Durban and Port of Richards Bay at the very bottom based on performance. Transnet promised equipment investments while saying it takes time to get new equipment built and delivered.

Part of the solution they announced is to bring in an international panel of service providers to help oversee the operations of the ports. They announced a tender this week which was launched in December saying it will cover eight of South Africa’s primary ports and focus on terminals where existing service contracts were being suspended or terminated. The goal is for the providers to oversee ports without a terminal operator and “close operational gaps.”

Given the unfortunate name of “Terminal Operators of Last Resort,” the panel will have a three-year interim mandate. Their goal will be efficient terminal operations and they will bid to provide services specifically to mitigate the disruption of cargo handling operations. The scope of the panel will include import/export, transit storage, handling and distribution of cargo on and off vessels with the appropriate terminal equipment, and distribution of cargo inland through road and rail.

It is the latest in a series of steps designed to modernize the ports. On January 10, Transnet also reported it has selected Vopak Terminal to develop South Africa’s first LNG import terminal to be located in the Port of Richards Bay. Vopak will form a partnership with Transnet Pipelines and will have a 25-year concession for the terminal. Vopak will be responsible for developing and operating the terminal while the public sector will support the project with port infrastructure improvements. Having been selected, negotiations are now underway for an operator’s agreement with commercial operations set to start in 2027.

Transnet also reached terms last July to sell a nearly half interest in Durban’s Container Terminal Pier 2 to Filipino billionaire Enrique Razon’s company International Container Terminal Services. They would assume responsibility for operating and expanding the container operations in Durban. The port accounts for nearly half of South Africa’s total port traffic and handles nearly three-quarters of the container volume in the southeast of the country. 

The deal however is now meeting with opposition. South Africa’s labor unions announced that they sent a letter to Transnet in December demanding that the company and ICTSI agree to no job cuts. It was the most significant in a series of demands made by the union to support the planned sale. Without the unions' support, it is feared the deal could face long delays or collapse entirely. 

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