Two Top Execs at South Africa's Port and Rail Operator Resign
The CEO and CFO of South African state logistics company Transnet resigned last Friday. The departure of Transnet’s CEO Portia Derby was a culmination of pressure from business and labor groups, which have expressed concern over a deepening operational crisis at the company.
One of the major pain points for Transnet has been with its rail management division. Shortages of freight trains and destruction of railway infrastructure have resulted in massive disruptions, especially for the iron ore industry, which relies on rail to deliver its product to seaports.
According to recent data by the lobby group Minerals Council of South Africa, the country’s mining output has fallen to below pre-pandemic levels with electricity outages and rail disruptions cited as the leading causes. Mining output and sales for the 12 months to May 2023 were down by an average of four percent year-on-year.
These problems saw Transnet declare an annual loss of $302 million in the 2022/23 financial year. Transnet said the financial year was challenging with cable theft and vandalism of railway infrastructure reaching “crisis levels.”. Operational inefficiencies have also become common especially at Durban, South Africa’s largest container port. Trucks congestion at the entrances of major ports is now a huge barrier to movement of goods.
Displeased with Transnet services, the Durban Chamber of Commerce recently wrote to the Public Enterprises Minister Pravin Gordhan requesting the resignation of the company’s senior management team.
“We would like to bring to your attention our concern regarding the current CEO and her executive team. The business community of e eThekwini has reached a point where we can no longer tolerate poor service delivery at the Port of Durban,” wrote the Chamber.
In the wake of Portia Derby’s resignation, Transnet Group said Michelle Phillips - currently the head of Transnet Pipelines - would take over as the acting CEO. In addition, Transnet’s chief financial officer Nonkululeko Dlamini also departed, taking up the same position at South Africa’s telecommunications company Telkom.
President Cyril Ramaphosa appointed Portia Derby in 2020 to head Transnet, filling a position which had remained vacant for almost two years. In 2018, Transnet fired its former CEO, Siyabonga Gama, for what the board described as “serious violations of his financial, procurement and fiduciary responsibilities.” Gama has denied the allegations.