Mediterranean Shipping Company’s (MSC) legal bid to overturn a multiyear contract between Transnet and rival Maersk to develop vacant land at Transnet Park, aimed at increasing rail capacity between Belcon precinct and the embattled Port of Cape Town, has been dismissed.
The Belcon facility will provide warehousing and cold-storage container depots operated by the Danish group.
Maersk told the court it had already spent R700m to develop the premises through what it calls the Belcon Logistics Park project. Belcon has three major components: a depot, a cold store and a warehouse.
Its primary function is to facilitate the handling of imports and exports of items such as fruit. The cold store is designed to extend the life of the fruit.
The depot has been in operation since February 2023. Maersk anticipates that it will be completed in March 2025.
MSC challenged the legality of the contract between Maersk and Transnet Freight Rail.
The tender, published in 2022, called for bidders to develop a parcel of land measuring over 100,000m². The investment categories included road infrastructure between the Bellville Container Terminal and Transnet Park to enable efficient transfer of containers from Belcon to the leased facility, landside upgrades on storage and loading areas.
Though the request for commercial proposals invited bids for a minimum of five years, Transnet ultimately awarded Maersk a lease for 20 years.
MSC challenged the contract on the basis that the scoring used by Transnet in awarding the contract to Maersk was in breach of SA’s procurement rules and that Maersk’s non-compliant documents were used for scoring.
Maersk’s argument was that cancelling the contract would result in a loss of investment and short-term jobs, and hinder long-term job creation, particularly in construction-related employment. It said halting the project would expose Maersk to significant penalties, professional fees and claims for loss of profits and other damages.
Judgment
The high court in Pretoria found the tender adjudication was above board.
“There is no suggestion of any misconduct by Transnet, Maersk or anybody else. The anticipated benefits which should accrue from the completed Belcon project will be substantial,” the judgment reads.
“MSC’s prospects of success, on the assumptions I have made in its favour, are slender. Any success which MSC might achieve is unlikely to result in material benefit to MSC. Delays to the Belcon project would potentially have serious adverse consequences for the public, Transnet and Maersk.”
MSC earlier in 2024 overtook Maersk to become the world’s largest shipping line with the addition of over 1-million TEUs (20-foot equivalent containers), according to new numbers shared by Alphaline.
Private participation in the country’s ports has often landed in court as multinational firms fight over the lucrative contracts. Maersk’s port operating subsidiary, APM Terminals, has taken Transnet to court over its decision to appoint Filipino operator ICTSI to operate Durban’s Pier 2 terminal — the country’s busiest.
The process of privatising SA’s container ports progressed further in June after Transnet National Ports Authority named Grindrod as the preferred bidder to develop a new box terminal at Richards Bay.
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