Overview
The South African Government views the country’s ports and terminals as key engines for economic growth. South Africa is situated on one of the busiest international sea routes‚ critical to international maritime transportation‚ and its geographical location presents a huge opportunity for investing in a diversified maritime market. Transnet National Ports Authority (TNPA) which is one of five operating divisions of SOE Transnet, is responsible for the safe, effective, and economically efficient functioning of the national ports system, encompassing eight commercial seaports, which it manages in a ‘landlord’ capacity. While this is the current organizational structure, in July 2021, the South African Government announced plans to address some of the Port operations problems, by creating a clear separation between the roles of the infrastructure owner, which is the Transnet National Ports Authority, and the terminal operator, which is Transnet Port Terminals. It is hoped that the functional and legal separation of these roles, which are currently operating divisions of the same company, will enable each to be fulfilled more independently and with greater efficiency. In the long term this could mean that revenues generated by the ports can be invested in port infrastructure, both for the replacement of old equipment and for the upgrading and expansion of South Africa’s ports. In addition, this will allow the ports authority to make its own investment decisions and will ensure that it treats all terminal operators fairly and equally in the interests of port users. Transnet will remain the sole shareholder of the subsidiary “to prevent any negative impact on the group’s balance sheet, and to ensure that the ports authority remains an important part of the Transnet group. This reform forms part of the South African Government’s Economic Reconstruction and Recovery Plan. The need for structural changes is evidenced in the recent World Bank report that was published in May 2021, which ranked the Ports of Cape Town, Ngqura, Gqeberha, and Durban as 4 of the 5 worst ports in the world in operational efficiency (including Durban at #351 out of 351 ports analyzed).
More recently, in response to the continued poor performance of the Port operations, the South African Government created a National Logistics Crisis Committee (NLCC), that will meet with the President every six weeks to adopt a two pronged approach to addressing the rail, port and road crises currently undermining growth and job creation in South Africa, whereby several urgent interventions will be pursued in parallel to a reform agenda with longer-term implications, including the opening of rail and port networks to private operators. In terms of Port operations, a specific workstream will be created to focus on key corridors handling commodities such as coal and iron-ore, as well as containers.
In addition to this, the government has begun to embrace concession and privatization plans for its Port Operations which is a move away from its previous position of having State Owned Entities being the catalyst for economic growth in South Africa. In July 2023, South Africa’s port authority announced a 25-year partnership with International Container Terminal Services (ICTSI). ICTSI as preferred bidder for a joint-venture that will initially expand Durban Container Terminal Pier 2’s capacity from 2m to 2.8m teu. Under this agreement a new company will be formed with Transnet retaining a 50% stake.
Opportunities
The first area of focus for Operation Phakisa, which was announced in June 2014, relates to maritime development of the ‘Blue Economy.’ There are four priority sectors for the Blue Economy: marine transport and manufacturing activities (coastal shipping, trans-shipment, boat building); offshore oil and gas exploration; aquaculture and marine protection services; and ocean governance. The South African Government has consulted with 180 stakeholders in the four priority areas to develop detailed plans of action for each sector. Operation Phakisa complements U.S. interests in protecting fragile ocean ecosystems and generating economic development through the utilization of South Africa’s abundant maritime resources. It is estimated that Operation Phakisa could create over a million sustainable jobs.
The Ports Authority has several additional development projects planned for the next five to ten years. One such project will deepen the entrance channel of Durban harbor and widen it from 122 to 230 meters. The Ports Authority also plans to work with the municipality to build a R17 million bridge into the port. A dedicated car terminal for automobile transit will be created.
Port of Durban is the main container port on the South African coastline. While handling approximately 60 percent of South Africa’s container traffic, the port serves KwaZulu-Natal, the Gauteng region, and a large portion of inland Southern Africa. Together with containers the port also accommodates dry bulk, liquid bulk, automotive and break bulk. Other port activities include facilities for local fishing industry, ship repair industries, visiting cruise liner vessels and recreational boating. The Port of Durban is bounded by the city center to the north, residential areas to the west and east, and industrial land to the south. Thus, the development of the Durban Dig-Out Port (DDOP) at the old airport site (11 km south of the existing port) is vital for future expansion. Improvements to the throughput capacity of the existing precincts in the Port of Durban have been a priority in recent years. These projects include deepening and lengthening of the north quay at Berths 203 to 205, infilling at Pier 1, Maydon Wharf and Island View berth reconstruction and berth deepening and construction of a new passenger terminal. Long-term expansion is planned at the Durban Dig-Out Port.
In 2019 Durban’s container berth capacity dropped from 3.3 million TEUs (Twenty Foot Equivalent Units) per annum to 2.9 million TEUs per annum due to the berth deepening project at DCT. During this time the container demand will exceed container terminal capacity. The shortfall in container capacity will be accommodated by diverting containers to the Port of Ngqura. By 2023, however, the container berth capacity is anticipated to increase to 3.8 million TEUs per annum. This increase is based on the expected completion of the berth deepening (additional 0.4MTEU/a) and lengthening (additional 0.5 MTEU/a) project. In terms of its performance, it currently handles 152 41106 million tons of Dry Bulk cargo and 3329 907 million tons of Break Bulk cargo, as well as 33 122 million tons of Automotive equipment including vehicles.
The Port of Richards Bay is positioned as the bulk port of choice in the Southern African region. It is currently has 13 deep water berths in operation and handles 8 million tons of Break Bulk and 20 million tons of bulk product per year. Furthermore, the signing of the MOU between uMhlathuze Municipality, Richards Bay Industrial Development Zone (RBIDZ) and Transnet National Ports Authority (TNPA) has ensured that the port is positioned to be a natural location for bulk handling capabilities, although foreign demand for bituminous coal is decreasing. With the two phases of RBIDZ that are juxtaposed with first class industry while the deep-water Port of Richards Bay provides substantial volume for beneficiation opportunities for investments. With strategic projects such as Richards Bay Expansion Project, additional liquid bulk terminals and the upgrading of roads and services will see the port take advantage of the N2 Business corridor links to provinces such as Gauteng, Mpumalanga, and Limpopo and further into East Africa. Currently the Port handles 149 58475 million tons of Dry Bulk Cargo and 832 0002 million tons of Break Bulk cargo as well as 585 17903 million tons of Coal.
Cape Town is South Africa’s second-biggest seaport, and its strategic location ideally positions it as a hub terminal for cargo to South America and the Far East. West/East Africa cargo has grown substantially, making the Cape Town Container Terminal the terminal of choice for trans-shipment cargo. The port exports fruit, perishable and frozen products, and fish and has a cruise ship terminal. The terminal handles 1035896 million tons in Dry Bulk cargo, 459 118 million tons in Break Bulk cargo and 4933587 million tons in Liquid cargo. It is also the busiest container port 841 609 vessels per year. Transnet National Ports Authority (TNPA) has selected the V&A Waterfront as the preferred bidder for the development of a cruise terminal at the Port of Cape Town. The V&A Waterfront would invest about R179-million in financing, design, and develop the terminal, which would remain at E berth, Duncan Dock, in the Port of Cape Town. All international cruise liner vessels are required to dock at the Port of Cape Town as the first port of call. The upgraded Cape Town cruise terminal facility to be developed by V&A Waterfront will be a new gateway for tourism. About R1.2-billion on capacity-creating projects in Richards Bay will be set aside as Transnet pursues re-engineering of the port to create additional capacity for bulk products at the terminal.
The Gqeberha Container Terminal is one of the three specialized container-handling facilities along the South African coastline. Located in the center of South Africa’s southern coastline, Gqeberha serves the immediate area of the Eastern Cape, where its main business focuses on the needs and requirements of the motor vehicle and components industry as well as various agricultural products. The terminal offers value-added services in the form of storage, packing and unpacking of containers and logistics management. The port is exploring the untapped market of boat building in niche market of tugboats and navy vessels. The Port of Gqeberha handled most of the cargo in the region. With the Port of Ngqura becoming operational, the role of Gqeberha is changing from being the primary central port to one providing complementary services to Ngqura. In the short term, Transnet plans to shift manganese exports and liquid bulk imports to the Port of Ngqura, while the Port of Gqeberha and East London will continue to handle significant volumes of containers and vehicles.
The Ports of South Africa currently operate on average at 65% of its overall capacity. This is largely due to Storage capacity and handling equipment constraints.
Sub-Sector Best Prospects
Transportation Equipment and Infrastructure:
- Business Model Analysis
- Port Mobile Cranes
- Ship Repair
- Cargo Handling Services
- Weigh bridges
- Quayside Systems
- Upgrading of Existing Port Equipment
Resources
Transnet National Ports Authority
Richard Bay Coal Terminal Consortium
For More Information, the U.S. Commercial Service, South Africa, can be contacted via email:
Phone: +27 (0)31 305 7600 X3150, or visit our website at: