South Africa’s Transnet partners with Philippines port operator ICTSI to manage Durban’s Pier 2

By bne IntelliNews March 4, 2024

The board of South Africa’s logistics parastatal Transnet has approved the finalising of a contract awarded to Manila-headquartered International Container Terminal Services Inc (ICTSI) following a financial due diligence to manage Durban’s Pier 2.

The pier is Transnet’s biggest container terminal, handling 72% of throughput from the Port of Durban as well as 46% of South Africa traffic, according to IOL.

ICTSI was selected last July as the preferred bidder to partner in a 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade the terminal.

“The partnership [with ICTSI] will have a positive impact on Transnet, container supply chains and on the competitiveness of South Africa’s economy,” the company said, noting completion of the financial close is still subject to other “non-financial processes, which are currently underway, and set to be concluded without undue delay”.

Congestion at South Africa’s ports, especially at the largest, Durban, has been exacerbated by poor overland infrastructure and ageing equipment.

According to The Loadstar, South Africa lost about $2.63bn worth of coal exports in 2022 due to the 15-year-old logistics crisis that deteriorated sharply towards the end of last year.

Some exporters, wary of using local ports, are trucking their cargoes to neighbouring Mozambique for export. In mid-January 2024, fruit exporters threatened to sue Transnet to recoup losses due to delays resulting in the loss of quality and condition and internal movement of fruit in South Africa simply to get the fruit out of the country.

The near conclusion of the deal with ICTSI follows key appointments last week of Michelle Phillips and Nosipho Maphumulo as CEO and chief financial officer of Transnet, respectively, a move IOL reports was “welcomed by business as bringing much-needed certainty to governance issues at the faltering state-owned enterprise”.

The government earlier also announced that an upgrade project at the Cape Town Container Terminal was gathering momentum. The Port of Saldanha is undergoing an extension to the multipurpose terminal.

With the Cape Town Container Terminal now surpassing its daily targets, there is renewed optimism that reforms at Transnet are taking place to fix port inefficiencies that have slowed the movement of raw materials and finished products, IOL writes.

The Cape Town terminal said on March 1 that it had exceeded its daily target of 2 302 twenty-foot equivalent units (TEUs) by 35% following the handling of 3 110 TEUs on February 25.

“This achievement outperformed the terminal’s set stretch target of 3 000 TEUs, which the terminal last exceeded in November 2023,” Transnet said, as quoted by IOL.

Meanwhile, the parastatal’s board has now placed on suspension Transnet Ports Authority (TNPA) CEO Pepi Silinga and two other managers over allegations of improperly awarding a fencing tender to associates, which saw the costs soar from ZAR80mn ($4.2mn) to more than ZAR300mn.

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