South African ports were ranked among the worst in the African continent by the World Bank and S&P Global Market Intelligence’s Container Port Performance Index 2022..
Two of the most popular South African ports Durban and Cape Town ranked 341 and 344 out of 348 respectively in the index which provides a comparable assessment of port performance based on the time that vessels spend in ports across 348 ports globally..
There are however some signs of potential improvement in the performance with Transnet’s announcement that they have concluded the process of selecting an equity partner for its flagship Durban Container Terminal (DCT) Pier 2..
For this key private-public partnership, Transnet has selected an international terminal operator, International Container Terminal Services Inc. (ICTSI) for a 25-year joint venture to develop and upgrade the terminal..
As per Transnet’s information, DCT Pier 2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic..
“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port. We are delighted to have a global player of ICTSI’s standing on board to drive this process,” said Transnet Group CE Portia Derby in a statement..
This agreement has been concluded following approvals from the Government in terms of the Public Finance Management Act (PFMA) and is expected to help reposition the terminal for best practice performance, ensuring growth in volume throughput..
This partnership and upgrading of the terminal is aimed at improving the logistics associated with servicing South African ports and play a significant role in stimulating South Africa’s exports and imports..
Through this growth strategy, Transnet’s Pier 2 is expecting to increase its current capacity from 2 million TEUs per annum to 2.8 million TEUs.. This strategy is aligned with Transnet National Ports Authority’s (TNPA) plan to increase the current container capacity in the total Port of Durban from 3.3 million TEUs to 11.4 million TEUs..
“The partnership in Pier 2 is a major step forward for our programme to bring in global
expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to
crowd in the private sector in areas identified for growth” added Derby..
ICTSI was chosen from out of 18 bidders including 9 global terminal operators vying for this project..
As per Transnet’s statement, the key elements of the transaction are :
- A new company will be formed to manage the operations at DCT Pier 2, in which Transnet will have majority ownership of 50% plus one share.
- The term of the transaction is 25 years, with an option to extend to a maximum of 30
years in the event that berth deepening of the North Quay at Pier 2 is delayed.
- Non-current assets will be transferred into the new company, together with customer and supplier contracts. The new company is required to achieve a minimum level 4 BBEE
- The terminal operating licence and lease will be subcontracted to the new company, after
seeking approval from Transnet National Ports Authority.
- DCT Pier 2 employees will be seconded to the new entity. There will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of the private sector partner.
Transnet is expected to start its work with ICTSI soon to implement the components of the deal through the execution of the legal agreements, and ensuring compliance with all legal and regulatory matters.
ICTSI is a leading independent global developer and operator of container terminals globally, headquartered in Manila, Philippines, and is the largest independent terminal operator..
The company operates 34 terminal operations in 20 countries across six continents, including four (4) in Africa, and is ranked the eighth-largest container terminal operator in the world, in terms of TEU equity volume..
In the 2021/22 financial year, ICTSI handled over 12.2 million TEUs and generated more than 2.2 billion USD in gross revenues from port operations serviced by 11,000 employees globally..