While awaiting the outcome of a court battle brought by losing bidder Maersk over who gets to control the port. From Moneyweb.
Durban Container Terminals (DCT) has acquired 20 straddle carriers and nine rubber-tyred gantries to help improve efficiencies at its Pier 1 and 2 terminals, which last year handled 60% of SA’s container traffic.
This is part of a R3.4 billion investment by port operator Transnet earmarked for 2025 to boost equipment and operational efficiencies at its container ports. The lion’s share of this investment will go to the country’s busiest container ports in Durban.
Read: ‘Spurious’ legal battle over Durban port threatens SA economy
Durban is also slated to receive four ship-to-shore cranes for the South quay, 40 haulers and 67 trailers, with arrival scheduled between April and December 2025.
This investment in new equipment will proceed while a battle plays out in the Durban High Court over who gets to control the port DCT 2.
Philippines-based International Container Terminal Services Inc (ICTSI) won the bid to operate Durban’s Pier 2 in 2023, but that decision has been challenged by losing bidder Maersk, which argued that the tender award was irregular.
The Durban court interdicted Transnet from concluding the deal until an application to set aside the tender, due to be heard next month, could be heard.
Transnet has decided to proceed with equipment upgrades pending the outcome of the court case.
“Our recovery hinges on directly addressing the challenges that led to the decline in our performance, hence investment in infrastructure is at the core of our plans,” said Transnet chair Andile Sangqu at a launch event on Thursday in Durban.
“Investments such as this one lay the foundation for a more efficient and dependable Transnet.
“These investments underscore our commitment to take the necessary steps to ensure well-functioning port infrastructure system.”
Sustainable, strategic
Transnet opted for diesel-electric hybrids with the approval of the Environmental Protection Agency.
“The equipment we have on hand is not only sustainable, but it also has higher stacking capacity than any of the models before 2025,” said Transnet CEO Michelle Phillips.
The Durban equipment upgrade will be followed in 2026 by similar enhancements at Port Elizabeth and Cape Town. Port Elizabeth will receive 12 straddle carriers and Cape Town 28 rubber-tyre gantries and straddle carriers next year. In all, Transnet will take delivery of more than 100 pieces of new cargo handling equipment in 2025.
Last year, Durban’s Pier 2 container terminal took delivery of 20 haulers, two reach stackers, one empty container handler, 10 trailers, two forklifts and eight straddle carriers.
In a statement, Transnet says other initiatives are underway aimed at port recovery, including a maintenance regime on the existing fleet, the greenlighting of an additional shift to allow for 24-hour operations, and speedy delivery of spares by original equipment manufacturers.
“There have also been several initiatives aimed at making the terminal fluid, including dedicated channels for the evacuation of import containers as well as stacking of export containers four–high to create capacity on the landside,” says Transnet.
Durban’s Pier 2 handled 1.7 million 20-foot equivalent units (TEUs) in 2023/4, with Pier 1 handling a further 650 000 TEUs.
Further capital will be spent in 2025 on other terminals in Richards Bay, East London, Cape Town, Gqeberha, and Saldanha Bay.
Court case
ICTSI was the only bidder that was allowed to use market capitalisation rather than balance sheet equity to prove its solvency. The Durban High Court last year interdicted Transnet from concluding the contract with ICTSI pending the outcome of the second and crucial part of the case in which Maersk wants the contract award set aside in its entirety.
Business Day reports that respected economist Brian Kantor has been roped in as an expert witness in the case in defence of ICTSI. Kantor reportedly supports the use of market capitalisation relative to debts as a measure of a company’s ability to meet its obligations.
ICTSI’s use of market capitalisation gave it a solvency ratio of 0.40, well in excess of the 0.24 minimum required.
Read:
Maersk questions ICTSI’s solvency in battle over Durban container port
Has Transnet botched the ‘privatisation’ of the Durban container terminal?
This will be a key part of the argument to be presented to the court next month when the case resumes. ICTSI and Transnet argue that the success of the tender did not revolve around the point of solvency alone but was one of several criteria that had to be met.
Based on the same criteria applied in the tender, the world’s largest company, Apple, would not qualify, nor would many of the JSE Top 100 companies.
ICTSI, which operates 32 container terminals in 19 countries, won the bid to operate the Durban container port based on its global track record and its undertaking to pump R11 billion into the terminal, nearly R2 billion more than Maersk.
Read: Logistics crisis: Neighbours eat SA’s lunch
A transport expert contacted by Moneyweb suspects the new equipment being installed in Durban was likely ordered more than a year ago, around the time that Durban faced an unprecedented backlog of vessels at anchor waiting to be offloaded ahead of the 2023 festive season.
Global ranking
SA ports are rated by the World Bank as some of the worst in the world, with Cape Town being ranked dead last at 405th, followed by Ngqura at 404th, Durban 398th, and Port Elizabeth (Gqeberha) 391st.
Though not the worst in the world, crane moves per hour at Durban’s Pier 1 and Pier 2 are about 30-33% below global averages.
The reasons cited for poor performance are ageing infrastructure, equipment breakdowns, staffing shortages and weather disruptions.
The recent recovery efforts by Transnet should see improvements in the Container Port Performance Index (CPPI) used by the World Bank. There has been some criticism of the metrics used by the CPPI, such as anchorage time, which includes voluntary waits, rather than throughput.
Read: Let’s not worry too much about the World Bank ranking our ports rock bottom
Interim results for the state-owned logistics company for the December 2024 period show a R2.2 billion loss, R10.5 billion in capex, and R13.1 billion in debt servicing costs for the six-month period. It is reckoned it needs more than R100 billion to return it to financial viability.
