ANALYSIS: First rays of optimism are shining on South Africa's struggling ports

The port of Durban (Photo: Tom Westcott)

From Durban’s shoreline, the immediate horizon of the Indian Ocean is still decorated with freight vessels on anchorage, waiting for berthing slots in South Africa’s largest port, a legacy of several months’ of port congestion. Although it was hoped the backlog could be cleared by late January, industry experts now say the whole of February is needed to clear the congestion at the country’s eight main ports that has seen shipping rates soar and some major lines pare down port calls.

But in a sector beleaguered by over a decade of difficulties, including neglected infrastructure, ageing equipment and a stagnated economy, that maritime horizon looks set to start clearing metaphorically as well as literally, with local industry favourite Michelle Phillips taking the helm as the acting CEO of Transnet National Ports Authority.

“We’ve seen some really good moves from Transnet in recent months, especially with changes to the executive board, which have helped a lot,” research and development head of the South African Association of Freight Forwarders (SAAFF) Jacob van Rensburg told The Loadstar. “It’s very promising and good things are starting to happen, but this is against a backdrop of 10-15 years of stagnation, so a lot of hard work is taking place behind the scenes.”

Durban remains the most afflicted port in terms of vessel congestion, with outdated and insufficient port equipment at the forefront of the crisis. The straddle carriers, on which Terminal 2 relies, are functioning at half capacity, with only between 50 and 60, of the 108 carriers the port technically has, being operational per shift, the remainder awaiting either maintenance or repair.

“One big problem with equipment now is that there’s no 24/7 maintenance workshop, so when hardware breaks down, there’s a significant wait forit to be repaired or reconditioned and put back in service,” explained van Rensburg. “Considering the equipment limitations, port staff are actually not doing a bad job.”

Although lacking sufficient modern landside equipment to optimise operations, the ports have already made initial improvements. Durban has boosted tug availability to six vessels and introduced a 24-hour helicopter service to help speed up turnaround, and Cape Town has upped capacity through the acquisition of seven second-hand rubber-tyred gantry cranes (RTGs), according to a report by the South African branch of international law firm Clyde & Co.

This does not address Cape Town port’s challenge of equipment being unable to operate in winds of over 80 kph. January’s gale force winds halted work for 65 hours one week and terminal productivity has been slow to recover.

“All three berths at the main terminals are fully operational and, on average, 27 rubber-tyred gantry cranes are available and eight out of nine ship-to-shore cranes are working,” said Terry Gale, chairman of the Western Cape Exporters Club. “But productivity levels are still down. We should achieve 36 container moves per hour, but are only achieving 25.”

The situation became so acute by mid-January that fruit exporters’ organisation Hartgro’s executive director, Anton Rabe, told the local press they were seeking legal advice, regarding taking Transnet to court “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”.

South Africa’s freight industry is dominated by the public sector, with the state not only owning the land but also operating the terminals and running regulatory bodies, an archaic (and increasingly unworkable) model rarely now seen outside oil-rich Middle Eastern countries. SAAFF believes the key to regenerating the country’s port infrastructure is facilitating public private partnerships (PPPs), something governing bodies have resisted, rejecting investment offers from some of the biggest shipping lines.

But this latest berthing crisis which, at its worst, saw almost 100 vessels across the country left at anchorage, has pushed the point that PPP is the only available option likely to produce swift results.

Fears long voiced by unionised port workers of PPPs leading to job losses are, van Rensburg says, unfounded, with preliminary studies indicating that private sector involvement could, in fact, create some 25,000 new jobs.

SAAFF’s Jacob van Rensburg (Photo: Tom Westcott)

Sub-standard operations caused by ageing infrastructure and equipment, both in ports and, crucially, in overland transport, led to a host of missed opportunities, including the country losing out on some R50bn ($2.63bn) worth of coal exports in 2022, when prices peaked. Logistics issues meant the mined product simply could not reach ports. To this day, trucking coal overland for shipment from Mozambique remains swifter and more cost-effective for some businesses with mines relatively close to the border, despite lengthy delays at border posts. In the past few years, the former daily average 400-500 trucks crossing the border has more than tripled, to 1,800.

Traditionally the dominant player in the sub-Saharan region of the continent, decades of sector neglect, stalled growth and deterioration of port and transhipment infrastructure have seen South Africa’s role increasingly under threat, with other African countries threatening to fill the gap.

“We are still a big player, with South Africa doing more than half of all sub-Saharan containerised exports and about a quarter of all containerised imports, but while our sector has been on a downward trajectory, we are seeing infrastructure projects develop in other countries, such as Kenya and Mozambique, which are doing really well,” said van Rensburg.

The World Bank’s 2022 Container Port Performance Index (CPPI) ranked Mozambique’s Beira Port (a private joint-venture between Moçambique Ports and Railways and Rotterdam-based Cornelder Holdings) as the most efficient in southern Africa. By contrast, South Africa slid down the ratings, Durban ranked 341 out of 348 global ports (disastrous for the largest port in southern Africa), and Cape Town faring still worse, at 344th.

“We’re trying to get the public sector to understand that trade flows like a river, and it will flow to other countries if not South Africa,” said van Rensburg. “We are positive and optimistic about the future, and especially development, despite both the soft and hard issues we are facing. If we can get the structure and model right, we can move forward and not see the flow of cargo going to neighbouring countries.”

Transnet was recently described in an article by South Africa’s media outlet Moneyweb as ‘a huge vessel which necessarily takes time to turn’. And the maritime metaphors don’t end with the notion of Transnet now slowly moving in very much the right direction after being adrift in the doldrums for years.

For South Africa to maintain its market share in the southern African cargo sector, says van Rensburg, it must be “all hands on deck for Transnet”.