Transnet, which manages all eight SA commercial ports, is looking to develop formal partnerships with private shipping companies at the port of Cape Town as a means of speeding up the movement of goods.
The state-owned ports and railway operator — which is still recovering from a strike that cost the economy billions of rand — has in recent times turned to the private sector as it battles to improve its operations which threaten to cripple key sectors of the economy, including large foreign exchange earners such as agriculture and mining.
Transnet is seeking R100bn in private sector investment over the next 10 years for the expansion of some of its ports, while it has also undertaken to provide third-party access to its freight rail network which is expected to increase competition, boost efficiency and reliability, and reduce costs for customers.
A formal partnership with shipping lines is now in the pipeline.
According to public enterprises minister Pravin Gordhan, initial assessments show that for the port of Cape Town there would be real benefit in enhanced collaboration with the shipping lines and the potential to draw this community closer to Transnet as the terminal operator.
“The important difference between this terminal and other container terminals in the country is Cape Town’s requirement to rapidly evacuate seasonal exports of agricultural products. Working with shipping lines offers a unique opportunity to deal with these periods of extremely intense demand and to plan shipping in alignment with port operations,” Gordhan said in a written reply to a question from the DA published in parliament on Monday.
According to Port Economics, Management and Policy, an international project that aims to provide information about the port, shipping and logistics industry, shipping lines view co-operation as one of the most effective ways of coping with a trade environment characterised by intense pricing pressure.
Container shipping is a highly capital-intensive industry. As such, those in the industry have undertaken strategies aimed at increasing operating margins, mainly through alliances and capacity management.
Co-operation with ports can involve using a preferential rate structure for shipping lines that provide a minimum volume or meet a reliability level, which could mean access to infrastructure at a lower cost.
While Gordhan didn’t provide further details of the exact nature of the proposed partnership with shipping companies, he said closer co-operation offers a “fuller value chain approach than simply focusing on terminal performance, which ... is also important”.
“Although still at an early stage, options are being considered for deepening the involvement of the shipping lines at the terminal, as has been applied in the Port of Singapore as well as closer to home at the Port of Walvis Bay [Namibia],” Gordhan said.
“The development of options and a business case supporting this initiative are at an early stage. In the meantime, several initiatives are being implemented to improve operational performance and include deployment of additional equipment in the terminal and implementation of an interim truck staging facility. Application to the Infrastructure Fund (a budget facility for infrastructure grant funding) is also at an advanced stage,” the minister said.
The port of Cape Town is a critical channel for the movement of goods and is a major economic gateway for the Western Cape, with imports and exports amounting to more than R150bn per year.
But importers and exporters have recently been left frustrated amid operational challenges including ageing, out-of-service infrastructure and congestion. Similar issues have also hampered other ports in the country, not least those at Durban and Richards Bay.
Making matters worse are the already high cost of tariffs that has resulted in increased use of other ports in the region at the expense of SA ports.
In 2021, Minerals Council SA, the mining industry lobby representing about 90% of the country’s mineral output, highlighted that port charges in SA were higher than competitors’, and the cost structure of Transnet’s port charges needed to be rebased to improve competitiveness. It said that at $117 per 20-foot container, SA is located in the upper-middle cost quartile of the top 50 terminals worldwide.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.