South Africa

Durban port privatisation will treble productivity

The privatisation of Durban’s container terminal will potentially treble the productivity of the port as the strategic equity partner will radically modernise the terminal and overhaul its management. 

Head of ports, transport, and logistics at Bowmans Law, Andrew Pike, told 702 that the track record of Transnet’s equity partner, International Container Terminal Services Inc. (ICTSI), is very impressive. 

ICTSI has entered into a 25-year partnership with state-owned utility Transnet to operate Durban’s container terminal, the largest on the African continent. 

The Philippines-based company is the largest independent terminal operator in the world, with operations in over 20 countries. 

Pike said that ICTSI’s track record resulted in it beating out six competing bids for the container terminal.“If you look at their ports, it is really world-class. They are a very good partner to go with.”

ICTSI also has experience in dealing with unionised labour in the Philippines, enabling the company to operate effectively with Transnet’s heavily unionised workforce. 

Transnet will have a 50+1% share in the joint venture, and the utility will remain the employer of workers contracted out to ICTSI. 

ICTSI will have management control of the company and “will be fairly free to introduce change”.

Pike expects the company to overhaul the port’s management structure and operational systems, focusing on automation and digitisation. This will increase the productivity of the port immensely. 

“If you look at some of their performance figures from around the world, it is not unreasonable to expect them to double, if not treble, the productivity of Durban’s port.”

This does not mean ICTSI will have it easy, as there are at least five months of negotiation before the deal is completed. 

“Transnet is used to running a monopoly, and they will not take kindly to being told what to do,” Pike said. 

There are also major problems with getting goods to and from the port as Transnet’s rail infrastructure is collapsing. 

“Without an efficient logistics system, a well-functioning port is a bit of a waste of time,” Pike said. 

However, it is still a huge step in the right direction and will benefit the South African economy if ICTSI can do what it has done at its other ports. 

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