3714
Views

South Africa Select ICTSI for Privatization of Durban Container Terminal

Durban container terminal
Durban's Container Terminal will be the first in South Africa to be privatized (Transnet file photo)

Published Jul 18, 2023 7:14 PM by The Maritime Executive

South Africa has selected its first partner for the privatization of port operations in a long-planned program designed to modernize operations and improve efficiency. South Africa’s ports have long been criticized for their inefficiencies, aging infrastructure, and congestion.

Transnet, the government-run company responsible for the ports and transportation system, announced that it has selected Philippines-based International Container Terminal Services (ICTSI) as the preferred bidder for the privatization of Durban’s container terminal on Pier 2. The process began in 2021 and initially generated 18 responses, including nine from international companies. Ten companies were ultimately shortlisted and six bidders submitted proposals.

Following government approval, Transnet reported that it selected ICTSI and will form a new joint venture to operate the terminal. Transnet will own just over 50 percent of the new company which will have a 25-year lease that can be extended to 30 years based on the timing of the berth-deepening operation planned for the North Quay at Pier 2.

“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port,” said Portia Derby, Chief Executive of Transnet Group. “The partnership in Pier 2 is a major step forward for our program to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth.”

Transnet believes that the partnership will play a critical role in repositioning the terminal in Durban. In announcing the agreement, they predicted it will not only improve the logistics associated with South African ports but also play a significant part in stimulating exports and imports. Durban has been losing volumes in recent years due to its operating challenges.

South Africa’s ports have long been criticized for their poor operations. The World Bank in its 2022 index of container ports ranked Durban number 341 out of 348 ports. Critics have long said the port is operating well below capacity and experiences frequent delays. South Africa had the three lowest-ranked ports for Sub-Saharan Africa in the 2022 World Bank report. Cape Town was the lowest at number 344.

Transnet National Ports Authority calls the Durban Container Terminal its flagship operation. It currently has the capacity to handle 2 million TEUs annually with plans to increase capabilities in the near term to 2.8 million TEUs. The port operator says that Durban will be expanded to a total of 3.3 million TEU with a longer-term target to grow to a capacity of 11.4 million TEU.

DCT Pier 2 is the country’s biggest container terminal, handling just under half of the total container volume for South Africa. It moves nearly three-quarters of all the containers through Durban.

Transnet reports it will work with ICTSI to complete the legal agreements for the new partnership. They are also expected to outline plans for the second privatization project which will be for Port Elizabeth’s Ngqura Container Terminal. Starting operations in 2009, it today has a capacity of 1.3 million TEU annually and has emerged as the transshipment hub for South Africa. The country’s president Cyril Ramaphosa is a supporter of the privatization effort pushing for international investment to modernize the country’s capabilities and global standing.