The R1.36bn deal that will see logistics firm Grindrod take full control of Maputo’s Matola coal terminal is a new sign of the growing preference SA businesses have for Mozambique’s trade infrastructure.
Capitalising on rival Durban’s relative sluggishness in attracting private investment, and with SA’s logistics sector — especially its creaking railway network — plagued by inefficiency, the Maputo port is threatening to eat into SA’s export market share.
The Matola terminal is a subconcession of the Maputo port, in which Grindrod also has a stake. The deal sees it taking the remaining 35% stake in the terminal from the Vitol Group.
In 2023, Grindrod’s Maputo terminals handled 28% more cargo than the previous year, as shippers sought alternatives to SA’s congested ports.
Maputo Port Development Company CEO Osório Lucas told Business Day that over the past 20 years the site had received about $870m in investment, all privately sourced. About two-thirds of this funding had materialised in the past decade under the leadership of UAE firm DP World.
These investments had rapidly borne fruit. In 2021-23, the port increased the volume of handled cargo from 22.2-million tonnes to 31.2-million tonnes. Transit goods accounted for more than 70%, and more than 95% of that came from SA, Lucas said.
“The entire SA freight logistics sector has been facing high levels of congestion for years, especially as more and more freight is moved to road, away from rail, primarily owing to the inefficiency of Transnet Freight Rail (TFR),” said Marisa Lourenço, an independent risk consultant covering Southern Africa.
“This has a knock-on impact on the ports, which don’t move goods quickly enough, weighing on firms’ overall profitability.”
Most of the bulk passing from SA through Mozambique was chrome, coal and magnetite. Compared with Richards Bay, Maputo benefited from a geographical advantage, being situated closer to many of SA’s coalfields and chrome operations, Lourenço said.
“I also suspect that TFR itself has encouraged firms for at least three to four years now to divert their goods through Maputo, to ease pressure on Transnet as a whole. Transnet’s performance issues come from years of mismanagement, but also because SA serves as the main export route for the wider Southern and Central African region, putting a lot of pressure on its infrastructure,” she said.
Maputo port has spent recent years building its capabilities. In 2016, it began dredging the channel and expanding berths to accommodate “capesize” vessels, the largest dry cargo ships in the world. Today, the port is fully digitalised, with systems that allow for direct communication between the client, port and road border crossing to provide transparency and minimise cargo losses.
Implementing it involved establishing a specialised port school, which has so far trained more than 2,000 workers.
Thanks to the developments, in 2022 Maputo overtook Durban in the World Bank’s container port performance index.
Maputo Port Development Company has ambitious plans. In January, the DP World-led consortium negotiated a 25-year extension on its concession to run Maputo port until 2058 on the condition that it invests an extra $2bn in the port. About $1.1bn will be committed before 2033, when the original concession was due to end.
In addition to introducing new digital systems to manage rail operations, Maputo port is aiming to enlarge its capacity to 52-million tonnes by 2058 from its current maximum of 37-million tonnes. This would amount to about 1-million containers, an impressive feat, though still lagging behind Durban’s 3.6-million container capacity, which secures its place as one of the southern hemisphere’s busiest shipping terminals.
For all of SA’s logistical woes, it still enjoys an immense lead over its competitors.
“Mozambique is not about to dislodge SA as a key import-export route,” Lourenço emphasised, pointing out that when Houthi attacks diverted merchant vessels away from the Red Sea last October, most traffic came through SA, not Mozambique. “In fact, no other African port was able to absorb the excess cargo to the same extent as SA, despite its challenges.”
Though its exports have grown impressively, Maputo port’s attempts to send imports to SA have been frustrated by the dominating economies of scale of its neighbouring competitors.
“We need to attract return loads. That would really help to make the [Maputo] corridor more attractive. But people rely on Durban because there is a lot of volume there, efficient and not efficient,” Lucas said.
“There’s nothing fundamental on the port side that is preventing imports going to SA. It’s a question of convincing the market to experiment.”
In a way, SA has been a victim of its own success in failing to ensure investment kept pace with demand for its infrastructure. Mozambique has undoubtedly benefited from SA’s internal turmoil, while successfully harnessing private finance to make rapid advances — something SA could learn from amid delays to privatise its own ports. But in the end there may be more than enough growth to go around.
“Sometimes the press come out with headlines saying ‘we are eating someone else’s lunch’. We are not eating anyone’s lunch. We are having our own lunch,” Lucas said.
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