ICTSI Fights Maersk After Court Delays Deal for Durban’s Container Terminal

 

Philippines-based International Container Terminal Services (ICTSI) announced that it will be fighting Maersk’s legal challenge to the awarding of the concession to operate Durban’s container terminal. The company won in July 2023 a tender process conducted by Transnet to invest in the terminal and operate it under a 25-year concession but has faced opposition to the deal which so far has prevented it from proceeding.

A court in South Africa has now issued an interdict against Transnet’s selection of ICTSI permitting the case to proceed in court and further delaying the effort to privatize operations of the beleaguered terminal. APM Terminals, the port operating company for A.P. Moller-Maersk, filed a protest in March against the awarding of the concession. The court ruled yesterday that Maersk can proceed with its claims.

The delay is another blow for South Africa which decided to pursue the privatization of terminal operations after a long history of operating challenges. Durban has ranked at the bottom of reports such as the World Bank’s annual index and has been considered to be one of the least efficient ports. It experienced significant backlogs which the government owner-operator of the port Transnet conceded were due to a lack of investment in port operations. 

ICSTSI which bills itself as the largest independent terminal operator was selected after a two-year process that initially received 18 responses to the original tender. APM was the runner-up in the process but quickly protested that ICTSI did not meet the terms of the tender including a solvency threshold. The tender established a minimum solvency ratio as a requirement for bidding. Maersk is seeking to disqualify ICTSI from the tender.

APM in a statement welcomed the court’s decision and said it will continue to voice its objection. The company said it is committed to playing a role in the development of South Africa’s terminal operations.

“While ICTSI is fully respectful of the court, it strongly disagrees with the decision,” the company said in a stock exchange filing. “ICTSI maintains that it met or exceeded the tender requirements set out by Transnet and will be countering this case in the appropriate legal manner.”

Transnet finds itself caught in the middle saying it will evaluate its options after the court’s decision. 

“Transnet is committed to concluding the transaction expeditiously in the interest of economic growth and development,” the company said in its public response to the court’s decision. Transnet had hailed the selection of ICTSI and the potential for significant investment in Durban’s operations.

The Durban Container Terminal (DCT2) is the key import center for South Africa handling 46 percent of the country’s container traffic. It is also the largest terminal operated by Transnet. Overall, it handles 72 percent of the annual volume in Durban. 

Transnet has announced plans to proceed with additional privatizations. In April 2024, it announced the beginning of a search and tender for an operator to run Cape Town’s liquid bulk terminal. To further address the challenges in South Africa’s port operations, it is also reported to be preparing a tender for the RoRo terminal in Port Elizabeth.