Transnet is considering opening the door to companies to second mechanics at the dysfunctional Port of Cape Town. This is to help speed up equipment repairs and avoid an escalating logistics crisis that threatens exports.
The dysfunction has made the harbour one of the world’s worst underperformers, costing billions in lost fiscal revenue.
“Transnet is considering allowing the private sector to second its people to fix equipment at the Port of Cape Town,” Transnet told Business Day, after its meeting with fresh produce industry leaders.
Business Day reported on Monday that finance & economic opportunities MEC Mireille Wenger warned of an impending export crisis at year’s end due to significant deterioration at the port, particularly of critical equipment.
Transnet and fresh produce industry leaders issued a joint statement on Tuesday, mapping a way forward to address the port’s challenges.
“Industry also agreed to investigate mechanisms to contract and second maintenance capacity [mechanics and millwrights] and to investigate ways to fast-track the procurement of key pieces of equipment ... The cost and contractual arrangements for Transnet to use and reimburse such procured equipment need to be resolved.”
The industry was represented by Hortgro, the SA Table Grape Industry and the Fresh Produce Exporters Forum.
Continuing shipping delays at local ports have been highlighted as a risk to exports.
Bad timing
The crisis comes at a bad time for the deciduous fruit export sector, which is ramping up for its export season. Long waiting times harm the quality of fruit sent to markets abroad, cutting growers’ returns. The Western Cape accounts for more than half of SA’s agricultural exports.
The associations said Transnet’s management committed to better planning, sourcing additional equipment, on-site maintenance capacity and increasing the availability of spares. The private sector is looking into other remedies.
Most of the performance indicators for the Port of Cape Town are down. It has a target to receive 20,000 containers a week but achieved this only once in 2022. It received as few as 7,316 containers in one week.
Its four-day target for average turnaround time has been difficult to achieve. It hit this milestone only twice in 2022 and the worst performance was 17 days.
In the World Bank’s container port performance index 2022, Cape Town ranked 344 out of the 348 ports surveyed and was in the top 20 that increased average arrival times most.
The Ports Regulator of SA says in a port benchmarking report that ships spent more time anchored and waiting to enter the Port of Cape Town than at all other SA terminals. Africa’s busiest harbour, the Port of Durban, fared little better.
Impose fees
Operational challenges at SA ports have led shipping companies to impose fees to soften the blows that come from delays in moving goods in and out of the country. Shipping majors Maersk and MSC said they will impose a congestion surcharge fee for all dry containers to SA from early December.
“Due to congestion in the SA ports generating difficult conditions to operate, MSC will as of December 3 apply a congestion surcharge for cargo to all SA ports to maintain our services provided,” said MSC in a communiqué dated November 2.
The increases are likely to be passed on to consumers but this can be averted by cutting waiting times.
Transnet’s reported request for R100bn in debt relief was put on ice recently by finance minister Enoch Godongwana, who said the National Treasury would not bail out the state-owned logistics company without seeing proof that it had pulled out all the stops to halt the bleeding. Transnet had indicated it would not be able to deliver on its turnaround plan without a capital injection from the shareholder.
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