Trade, industry & competition minister Parks Tau has relaxed competition rules for SA’s port and rail network sector as part of government-wide efforts to get the country’s underfunded and underperforming logistics sorted out.
Tau issued in a government notice a block exemption for the rail and ports industry from sections of the Competition Act that prohibit agreements between competitors that prevent or lessen competition. Under the exemption, set to be in place for at least 15 years, entities can co-ordinate on the repair, maintenance and upgrading of port infrastructure, including joint funding of these projects.
Companies can also collaborate “on procurement and sharing of the services of independent technical experts and other independent consultants for the improvement of port infrastructure”. On the rail front, entities will be allowed to co-ordinate on sharing capacity on locomotives, and synchronise the use of rail and port facilities to reduce congestion.
The exemption extends to “key feeder road corridors” of the country’s logistics network. To this end, exempted co-ordination on the feeder road corridors that interface with rail and ports will include the maintenance, management and expansion of infrastructure.
The department said the measures were geared to reduce costs and resolve operational breakdowns in port and rail infrastructure. This was in response to the challenges facing the logistics sector, which have hurt the economy. The exemption excludes price fixing and collusive tendering.
“Firms in the ports, rail and key feeder road corridors that wish to enter into agreements or engage in practices covered by the exemption ... must first seek confirmation from the [competition] commission in writing whether the agreement or practice falls within the scope of these regulations before implementing,” the notice reads.
The exemption comes at a time when SA’s logistics sector is undergoing its most fundamental reform in decades, with the private sector set to play a more pronounced role in the funding and construction of catalytic projects.
In December, transport minister Barbara Creecy approved publication of the Transnet Network Statement, a major step in facilitating open access to the country’s rail network by third-party operators. Transnet needs about R14bn a year of investment in its six rail corridors, which have been plagued by theft, vandalism and outdated systems.
In March, Creecy followed up with the launch of a request for information to “develop an enabling environment for private sector participation and enhanced investment in rail and port infrastructure and operations”.
The request for information is not a formal procurement process but a mechanism to understand and source information from the market, with the government intending to publish requests for proposals in August.
One of the corridors the request for information focuses on is the Northern Cape to Saldanha bulk minerals corridor, primarily for iron ore and manganese exports.
Strategic position
Transnet National Ports Authority (TNPA) occupies a strategic position in SA’s transport and logistics chain, managing the eight commercial seaports — the ports of Cape Town, Durban, East London, Mossel Bay, Ngqura, Gqeberha, Richards Bay and Saldanha Bay. Transnet also operates six rail corridors stretching over 21,323km.
TNPA has already made strides in getting private sector players to fund and construct several terminals. The entity’s largest private sector partnership deal with Philippines-based International Container Terminal Services Incorporated (ICTSI), the preferred bidder for the Durban Pier 2 terminal (DCT2), has been held up by a court interdict. DCT2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of SA’s port traffic.
The legal challenge to set the deal aside, brought by losing bidder APM Terminals, a subsidiary of Danish logistics major AP Moller-Maersk, was heard by the Durban high court this month, with judgment reserved.
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